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Legislative Updates
Two Lawsuits and a Bill Challenging the DOL’s New FLSA Rules

This has been a busy couple of weeks for the U.S. Department of Labor’s (“DOL”) new FLSA rules.  First, two lawsuits have been filed in a Texas federal court to seek an order preventing the DOL from enforcing its new overtimes rules.  In addition, a House bill - HR 6094 – is making its way through Congress to postpone implementation of the new FLSA rules for six months.  The new rules are currently set to take effect on December 1, 2016, which is just about two months away.


The first lawsuit was filed by 21 states and argues that the DOL overstepped its authority by raising the salary level for the FLSA’s Executive, Administrative and Professional exemptions (“EAP exemptions”).  The lawsuit argues that, instead of raising the salary level, the DOL should have reexamined the duties of the EAP exemptions.  In addition, the 21 states also challenged the automatic increases that are set to increase every three years “without regard for current economic conditions or the effect on public and private resources.”  Finally, the lawsuit posits that new DOL’s rules violate the Tenth Amendment because employment budgetary matters such as the pay requirements of state employees are subject to state sovereignty.

The second lawsuit was filed by a coalition of business groups, including the National Federal of Independent Businesses (“NFIB”) and several Chambers of Commerce.  This lawsuit argues that setting new salary threshold at an exceedingly high level and scheduling automatic increases both violate the Administrative Procedure Act.

(Both lawsuits have been assigned to Judge Amos Mazzant, who was appointed to the bench by President Barack Obama.  So, that’s not exactly great news…)

Finally, the U.S. House of Representatives just voted 241-177 in favor of passing a bill that would delay enforcement of the DOL’s new rules for six months.  The bill will now go to the U.S. Senate for consideration.  However, President Obama has previously threatened to veto the measure if it is passed and the Office of Management and Budget issued a statement that “strongly opposes” the bill.  Therefore, employers should plan to implement whatever changes they deem necessary by the December 1, 2016 effective date.

Social Media Privacy Bill Vetoed

Following up on his notice of intent to veto HB 1739, this year’s social media privacy bill, Governor David Ige issued his veto of the measure on July 11, 2016.

veto stamp

In his veto message, the Governor noted that the bill contained no enforcement authority or due process.  In addition, the Governor also stated that the Department of Labor and Industrial Relations (“DLIR”) does not currently have the staff, resources, or expertise to administer the measure, including such actions as intake of complaints, determination of violations, education of rights, determination and collection of fees, and administrative review.  Furthermore, the DLIR is also struggling with case backlogs in other areas.  Finally, the Governor noted that the Legislature did not provide any funding for administration of this bill.  Therefore, he vetoed the bill.

You can review a copy of the governor’s veto message here:  GM 1322.

Governor Ige Might Veto Social Media Privacy Bill

On Monday, June 27, 2016, Governor Ige announced his intent to veto HB 1739 CD1, a bill that would make it unlawful for an employer to request, require, or coerce an employee or job applicant to disclose their social media login credentials or access the  individual’s social media account in front of the employer, subject to certain exceptions.

Governor Ige

This issue has been a hot topic of discussion at the legislature for several years.

Nevertheless, throughout the multitude of hearings and discussions over the bill, I have yet to hear anybody provide a single concrete real life example of where an employer in Hawaii has ever asked a job applicant or employee to disclose their social media login credentials to an employer.  There have been claims that countless employers are demanding that employees disclose their social media passwords to their employers, but when pressed for details, nobody is ever able to provide any – not the advocates, and certainly not the lawmakers who wrote/support the bill.

In my job, I work with Hawaii companies on a daily basis on HR matters.  For the past several years, I have also spent a considerable amount of time counseling employers on issues related to social media in the workplace.  In fact, I have presented several seminars on the topic dating all the way back to 2008.  I can say that with 100% certainty, in all my time working with employers on employment related matters, I have never had a single employer ask me if they can ask their employees to disclose their social media passwords.

To me, this is a bill that seeks to solve a problem that doesn’t exist.  Personally, I commend Governor Ige for his stance on the matter.

Brace Yourselves: The DOL’s New Overtime Rules Are Here

On Tuesday, May 17, 2016, news broke that the U.S. Department of Labor (“DOL”) will be publicly issuing their final rules regarding overtime exemptions under the Fair Labor Standards Act on Wednesday, May 18, 2016.  The final rule will raise the salary threshold exemption from $23,660 to $47,476, which is more than double the current amount.  While the salary threshold is not quite the $50,440 that was initially proposed by the DOL, it is still certainly a very high number that will negatively impact many small businesses, non-profit organizations, and other companies that simply cannot afford to raise salaries to $47k for all of their exempt employees.

The final rule will also trigger automatic increases to the salary threshold every three years, beginning on January 1, 2020.  To put it lightly, this escalator clause could prove to be a real back breaker for many companies.  Under the DOL’s estimation, this would increase the salary threshold to $51,168 in 2020.  It is also not clear whether the DOL has fully thought about the implications of this escalator clause, but that is a different discussion for another day (see below).

In addition, the final rule also raises the salary threshold that is used for the “highly compensated employees” exemption from $100,000 to $134,004.   With the escalator clause, this number is estimated by the DOL to be $147,524 in 2020.

Finally, the new rule also provides that non-discretionary bonuses and incentive payments (including commissions) can be used to satisfy up to 10% of the new standard salary level, as long as they are paid on a quarterly basis (or sooner).

The new rules will take effect on December 1, 2016.  This gives employers just under 200 days to start preparing for these major rule changes.

Certainly, this is BIG NEWS!  And bad news, too.

In order to assist employers with understanding and preparing for the DOL’s final overtime rule, the Hawaii Employers Council (“HEC”) will be conducting a seminar/webinar next Wednesday from 8:30 to 10:30 am.  This program will contain three main components:  (1) a discussion of the current and new rule; (2) actions plans employers can implement in response to the new rule; and (3) how to communicate with employees about changes that are (or will be) implemented by the employer.  I will be presenting the first part of the program.  

Here are some links for further information:

Oh, one last thing – I should also note that the final rules do not make any changes to the duties tests for the Executive, Administrative and Professional exemptions.  Employers can probably view that as a good thing, although I do not think such changes were likely because the DOL did not include them in its proposed rule.  Therefore, implementing such changes would have probably been in violation of the Administrative Procedures Act anyway.

New Persuader Rules Issued!

They’re finally here:  the DOL’s new persuader rules have been published in the Federal Register and – at first glance – they look pretty bad.  The DOL watered down their proposed rules just a lil’ bit, and even provided a small set of different rules to allow trade associations to engage in certain activity without triggering any reporting requirements, but overall the rules will be a game-changer for most employers.

discussionI’m currently going through the rules with a fine tooth comb (the rules are either 129 or 446 pages long, depending on whether you read the version with small print or the one with a larger font and double spacing).  In a nutshell, the new persuader rule will no longer accept the “accept or reject” test for the “advice” exception.  As a result, persuaders and employers will be required to file a report for “indirect” persuader activities, which could include the following:

  • Planning, directing, or coordinating supervisors or managers;
  • Providing persuader materials;
  • Conducting seminars; and
  • Developing or implementing personnel policies or actions.

It appears trade associations are exempt from the reporting requirements if they (1) host a counter-organizing seminar but bring in outside speakers or (2) simply provide “off the shelf” materials to an employer for a union campaign.  To get a firmer grasp on how these new rules will affect organizations like the Hawaii Employers Council (“HEC”), however, I need to read through the rules and examine them in more detail.

For anybody who wants to read up on the rules, you can view the following:

In addition, HEC will be providing a seminar on May 11, 2016 that will provide an overview of the new rules, a discussion of how the new rule will impact employers, instructions on how to fill out the LM-10 form for employers, and a review of some of the legal challenges that have arisen against these new rules.  That seminar will be available to HEC members only, and on a first-come-first-served basis.

Finally, once I have a chance to read through all the rules, I’ll prepare and send out an article summarizing the new rule – which will also be available only to HEC members.