United States: Overtime, Fiduciary And Blacklisting Rules Discussed During House Committee DOL Budget Hearing

The day after the House Appropriations Committee held a hearing to discuss the Department of Labor's budget proposal for FY 2016, a separate House committee put Labor Secretary Thomas Perez in the hot seat over the same issue. Members of the House Education and the Workforce Committee posed to Perez many of the same questions asked of him during yesterday's hearing, but did veer into some new territory, particularly with respect to pending regulations governing overtime and changes to the so-called fiduciary rule. 

As previously discussed, President Obama's proposed budget for the DOL includes a request of $13.2 billion in discretionary funding, and a $41.5 billion increase in new mandatory spending. Lawmakers used the hearing as an opportunity to ask Perez about a number of imminent rules. 

As in the prior budget hearing, the recent hoopla surrounding the H-2B visa program came up during Wednesday's discussion. Perez explained that on March 4, a federal judge in Perez v. Perez enjoined the DOL from implementing its 2008 H-2B regulations on the grounds that the agency did not have the authority to issue them in the first instance. The DOL and the Department of Homeland Security stopped processing prevailing wage determination requests and labor certification applications under this program shortly thereafter. Many lawmakers expressed dismay that this program – which provides visas for temporary, non-agricultural workers – was temporarily halted, believing the DOL could have continued the program by acting in consultation with the DHS. Perez said the DOL has filed a motion to stay the court's ruling, and has made a commitment to issue an interim final rule with the DHS by April 30 to get the program up and running again. He stated also that yesterday the DHS re-opened the application process.  

Chairman John Kline (R-MN) asked Perez about what would happen if efforts to fix multi-employer pension system – which is facing a significant funding shortfall – are unsuccessful. Perez responded, "there is indeed a multi-employer crisis." He said there are four options: "We have a bad option, we have a very bad option, we have a very very bad option, and then we have the cataclysmically bad option." He continued: "as time goes by, the bad option gets removed from the table, and then we have the discussion of whether we should do the very bad option or the very very bad option or the cataclysmically bad option," and that it is "undeniable" that there is more work to do on this issue. 

Rep. Mark Takano (D-CA) brought up the proposed regulations in development to revise the Fair Labor Standards Act's white-collar overtime exemptions. Takano said only about 11 percent of salaried workers are eligible for overtime, and said the DOL needs to raise the salary thresholds to entitle more workers to overtime under the FLSA. He asked Perez what the DOL is doing to address the overtime regulations, and whether a timeline for the regulations' release was in place. Perez said that the department is "working overtime on this," and that the proposal will be released "sometime this spring." Following the release of the proposal, the DOL will allow interested stakeholders to provide another round of feedback before a final rule is issued. Perez said the "goal is to make a rule that's fair and facilitates compliance and is simpler."  

Takano asked whether the rule will index the salary thresholds to inflation. While he did not definitively say the proposed rule includes such a provision, Perez did note a "number of people" have raised this issue through informal feedback.  

Rep. Tim Walberg (R-MI) picked up on this line of inquiry, and said he hoped the DOL was looking not only at wages relative to hours in revising the exemption, but also other factors such as respect and the opportunity of the individual to be in a position of leadership. 

Rep. Brett Guthrie (R-KY) brought up the pending rule that will revise the definition of "fiduciary" under ERISA, noting the importance of allowing companies to provide employee stock option plans (ESOPs), and expressed hope that the rule would not do anything to deter this benefit. Perez allayed some of Guthrie's concerns on this topic, explaining that unlike the prior rule that was issued and subsequently withdrawn, the new fiduciary rule will not include the ESOP provision.  Meanwhile, Rep. Phil Roe (R-TN) wondered why the DOL was pursuing rulemaking concerning the provision of investment advice in the first place, as this is an area within the Securities and Exchange Commission's purview.  Perez said the DOL has been in consultation with the SEC on this rule. 

As in yesterday's hearing, Perez also received questions about the Fair Pay and Safe Workplaces or Blacklisting regulations, which are currently under review at the Office of Management and Budget. 

Next week, the Committee on Education and the Workforce will discuss various bills addressing actions and policies of the Equal Employment Opportunity Commission. That hearing is scheduled for Tuesday, March 24 at 10:00 ET, and will be webcast

More information on today's hearing can be found here.

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