Labor Secretary Thomas Perez fielded questions about current Department of Labor rulemaking, past sub-regulatory actions, and future agency plans during a hearing before the House Committee on Education and the Workforce to discuss the DOL’s FY 2015 budget proposal. Committee Chairman John Kline (R-MN) emphasized that “budgets are about priorities,” and that the hearing would elucidate the areas and policies the Department deems most important.
Notably, neither the FY 2015 budget nor the DOL’s regulatory agenda mentioned planned revisions to the federal overtime exemption regulations for white collar workers, which the President recently ordered the DOL’s Wage and Hour Division (WHD) to do. Rep. Thomas Petri (R-WI) asked Perez which areas of the overtime regulation the agency intended to review.
Perez explained that in 1975, the WHD established a $250 per week minimum salary level for white collar exempt employees, and that in 2004, this threshold was increased to $455 per week. One issue the WHD would look at, he said, would be what the appropriate threshold should now be. In addition, he expressed disdain for the exempt employee test. The 2004 rule, Perez said, established that if an employee engages in management functions for even a small percentage of his or her time, the employee would be deemed exempt from overtime. Perez said that the agency would look at how this test works and whether it should be adjusted. He noted, however, that the agency would “be casting a wide net” in reaching out to interested stakeholders to better understand the impact of any proposed change.
Chairman John Kline (R-MN) said an area “of great concern” was the impact a revised rule expanding the universe of what constitutes reportable activity under the Labor-Management Reporting and Disclosure Act, while also narrowing the scope of the advice exemption, would have on employers and their relationship with their attorneys. He said that although the final rule was slated for release in March of this year, the DOL recently announced the rule would be delayed and the agency still had plans to go forward with the amendments. Perez said that while he was limited in what he could say about a rule still under development, he acknowledged “we have heard a number of concerns,” and that he would “continue to stay engaged” with stakeholders.
Other Labor Issues
Other union-management topics came up during the hearing. Rep. Scott DesJarlais (R-TN) asked Perez about OSHA’s recent change of policy implemented via a Letter of Interpretation that now permits union agents and community organizers to accompany safety inspectors into non-union worksites. DesJarlais asked why this was not accomplished through formal notice-and-comment rulemaking, as it “raises a number of troubling questions,” including exposing employers to potential premises liability from non-employee inspectors. Perez claimed that he did not believe this was a change of policy, and that the liability concern “has not been an issue.”
Much of the hearing focused on efforts to raise the minimum wage. To that end, Rep. Todd Rokita (R-IN) asked Perez whether he believes an employer – regardless of a union contract – should be able to give its employee a raise. “Why be beholden to a union contract if the employer wants to give an employee a raise?” Perez evaded the question, and instead cited Bureau of Labor Statistics findings that unionized employees, on average, earn higher wages than their non-union counterparts.
Other committee members asked Perez about OSHA’s proposed standard governing occupational exposure to crystalline silica. Rep. Tim Walberg (R-MI) said that OSHA acknowledges that many laboratories cannot currently provide an accurate measurement of the proposed exposure limit, and therefore would be given a two-year period to figure out a solution. Walberg questioned why employers would not be afforded a similar compliance grace period under the proposal: “how can a regulation propose to regulate what cannot be accurately measured?”
Perez responded that hearings on this issue are still underway, and at the end of the process, the agency “will gather information and address concerns that are raised.”
The DOL’s decision to re-propose a rule that would more broadly define who constitutes a “fiduciary” for the purposes of rendering investment advice under the Employee Retirement Income Security Act (ERISA) was mentioned several times during the hearing. Chairman Kline asked whether the revised proposal – which the DOL last said would be issued this summer – would address several bipartisan concerns. Perez responded “I can assure you outreach will be robust and we will continue to listen” to these concerns. “I have met with a number of you and will continue to do so.”
Rep. Matt Salmon (R-AZ) noted that the FY 2015 budget proposal includes increased funding for the DOL’s whistleblower protection program. Perez said that Congress has passed a number of important whistleblower statutes in recent years, and that these new laws “have remarkably robust protections.” He said that older whistleblower laws “could use updating.”
Larry Bucshon (R-IN) mentioned that in recent correspondence, Perez repeatedly referred to healthcare providers as “TRICARE subcontractors.” The DOL’s Office of Federal Contract Compliance Programs (OFCCP) has made persistent attempts to assert jurisdiction over many healthcare providers based on TRICARE participation, despite 2011 legislation that was thought to have explicitly limited the agency’s reach. Because of this confusion, Rep. Tim Walberg (R-MI) introduced the Protecting Health Care Providers from Increased Administrative Burdens Act (H.R. 3633), which would prevent the OFCCP from asserting jurisdiction over healthcare providers based on their federal health program participation. In response to this legislation, Perez recently offered a “compromise” that included a five-year moratorium on OFCCP audits of healthcare institutions. Rep. Bucshon asked Perez whether he believes such healthcare providers are indeed federal subcontractors. Perez responded that the OFCCP “has been exercising jurisdiction over TRICARE subcontractors since the late ‘90s,” but said he would “continue to work on this issue” with members of the committee.
An archived webcast of the hearing can be accessed here.