The Dept. of Labor Should Be Feared


Obama - what a help he has been for my business! Whether I agree or disagree with his politics really has nothing to do with how I feel he has helped my business grow! Last year with all the questions on the Affordable Care Act, insurers cancelling employer plans for not complying with the ACA, fines being set then reset then postponed for employers has been a great conversation starter. Over this past year, thanks to the Affordable Care Act, generally known as Obamacare, as soon as anyone finds out that I am a Human Resources Consultant, they spring into questions. Trying to make heads or tails of this and how it effects them and their business. It made every business owner and corporate leader nervous, and a bit frightened.

This is really nothing to worry too much about in comparison to the Executive Order President Barack Obama proposed to change the Fair Labor Standards Act (FLSA) to direct the Department of Labor to revamp its regulations to require overtime pay for several million exempt employees who are currently classified as “executive or professional. Now this, if you're smart enough to understand the implications, should scare the begeebeez (sorry, can't find the proper way to spell this) out of you.

Over the last several years I have spent quite a bit of time working with employers to properly classify their employees and to make sure they are paid any overtime due. Some, eager to comply to the DOL standards have gone so far as to even give their employees that can be classified as exempt, overtime. Finding that no one ever complains if they get more money for working more than the regular 40 hours each week.  Other employers are so resistant that we either add additional responsibilities to match exempt criteria or I am told "this is my business and I can do what I want!" or, and this is my favorite, "they (the employees) are my friends, they love me. They'll never file a complaint."  That one just cracks me up. I've seen this play out over the years and no one, not even your best friend, can take working 10 hour days with you  (or more), 7 days a week and be sooo happy for you as you sail away for some hard earned R&R on the boat you just bought with last year's profit. While they have to get their kids braces or patch up their roof.

This order, when it is adopted would lay waste to all the job descriptions I have been asked to revamp. The various duties criteria that made job classifications such a tedious business will pretty much be mute. Now the criteria will be based on salary level. According to press reports, the proposal will likely include an increase to the “salary basis” amount from $455 a week “by a significant amount.” This means that a substantial number of employees currently classified as exempt from the overtime requirements would be eligible for overtime pay.

Now here is the best part. Before this was even let out to the public, Department of Labor budgets for 2014 in many states, as well as the federal DOL, have been padded by tens of millions of dollars to provide enough funding to audit employers and enforce DOL violations. You see, they got wind that so many employers misclassify their employees and disregard the rulings, especially in this particular wage and hour area, that they see it as a cash cow and are more than willing to invest that much money to tap into this income stream.

Although we still know little about what changes to the duties tests the administration will propose, it is likely that the changes will touch almost every employer and employee in the country. At this time, it is not clear whether the change to the FLSA will be issued as a proposed regulation from the Department of Labor (which is the normal process for a change of this magnitude) or an Executive Order from the administration, as a formal proposal has not yet been released by the administration. Either way, with it or without the DOL is a force to be reckoned with.

Unlike the IRS, which many people fear already, the majority of issues they deal with from employers makes them slap on some fines. The Department of Labor also slaps on some fines, but they also make employers pay rewards to employees (sometimes with a 3-5 year look back) AND they can also slap on a pair of handcuffs.

To make matters worse, as I presented in a previous blog, with the technological advances put into all the governmental regulatory agencies, once you are in the system, you are on everyone's radar.

My suggestion to you would be to start looking into your HR efforts, make sure they are current, fair and in compliance. Let a trained professional help you see what you can't and maybe when the big bad DOL and their friends comes a huffin' and a puffin' they won't have cause to blow your whole house down.