Congress returned from its summer recess and faces a September 30th deadline to fund the government for the next fiscal year starting on October 1st. An appellate court has invalidated the FLSA tipped employee rule issued by the Department of Labor. The National Labor Relations Board has decided that it will no longer accept consent orders. Comments on OSHA’s proposed heat standards are due by December 30th. Federal agencies agreed to collaborate on labor issues resulting from a merger.
Congress Returns – Congress has returned from its summer recess and its focus this month, as it is every September will be on passing legislation funding the federal government for the fiscal year that begins on October 1st. Of the twelve appropriations bills that need to be passed, the House of Representatives has passed five and the Senate has yet to pass any. The last time that Congress passed all the appropriations bills by October 1st was 1996. It is expected that Congress will need to pass a continuing resolution that funds the federal government temporarily. If this does not occur, there will be a partial government shutdown starting on October 1st.
Court Invalidates FLSA Tipped Employee Rule – The United States Court of Appeals for the Fifth Circuit ruled that the tipped employee rule issued finalized by the Department of Labor (DOL) was contrary to the text of the Fair Labor Standards Act (FLSA) and also was arbitrary and capricious. In the case of Restaurant Law Center v. U.S. Department of Labor, the Fifth Circuit concluded that “Because the Final Rule is contrary to the Fair Labor Standards Act’s clear statutory text, it is not in accordance with law. And because it imposes a line-drawing regime that Congress did not countenance, it is arbitrary and capricious.”
The FLSA defines tipped employees as engaged in an occupation in which they receive more than $30 per month in tips. The law allows employers to take a tip credit that enables the employer to pay tipped employees $2.13 per hour since a large part of the earnings of those employees come from tips. The law requires that the tips of employees make up the difference between the $2.13 per hour wage and the minimum wage of $7.25 per hour. Where that does not occur, the employer is responsible for the difference.
In 2021, DOL issued a final rule that provided that the tip credit could only be taken for work performed by tipped employees that is part of the tipped employees occupation. The rule defined three categories of work: 1) directly tip-producing work, 2) directly supporting work, and 3) work not part of the tipped occupation. The rule provides that if more than 20% of the workweek of tipped employees is spent on directly supporting work, the employer cannot claim the tip credit for the excess. Additionally, directly supporting work may not be performed for more than 30 minutes at a time and the tip credit is unavailable for any time spent on work that is not part of the tipped occupation.
The Fifth Circuit believed that DOL was not allowed to “rewrite clear statutory terms to suit its own sense of how the statute should operate.” The court criticized the rules inconsistent treatment of supporting work based solely on its duration. The court noted that those who receive tips will consistently be asked to perform duties that support tip producing work such as restaurant servers setting and bussing tables. The Fifth Circuit stated that the rule “ties the tip credit not to the character of these various duties as integral to their respective occupations, but to the amount of time these duties take.” The Fifth Circuit concluded “as to supporting work, the Final Rule replaces the Congressionally chosen touchstone of the tip-credit analysis—the occupation—with one of DOL’s making—the timesheet.”
NLRB Will No Longer Accept Consent Orders – The National Labor Relations Board (NLRB) issued a decision in Metro Health, Inc. d/b/a Hospital Metropolitano Rio Piedras determining that it will no longer accept consent orders where an administrative law judge resolves an unfair labor practice case based on terms offered by the respondent but objected to by both the charging party and the general counsel. NLRB Chairman Lauren McFarren stated that this decision “preserves the benefits of true settlements, while eliminating a practice that has no foundation in the Act or our regulations.”
In 2017, the Board issued a ruling in which it decided that approving consent orders would result in the early resolution of litigation that furthered the interests of the Board in encouraging voluntary dispute resolution and promoting industrial peace. In the current case, the Board overruled the 2017 decision and distinguished a settlement agreement, which reflects the voluntary resolution of a dispute between the parties from a consent order, which it found has “no clear basis in the Board’s Rules and Regulations, poses administrative difficulties and inefficiencies, tends to interfere with the prosecutorial authority of the General Counsel, and fails to effectuate the policies of the Act.”
OSHA Heat Standard Comments Due By December 30th - The Department of Labor’s Occupational Safety and Health Administration (OSHA) announced that comments on its proposed rule designed to protect workers from the health risks of extreme heat are due by December 30th. When OSHA released the proposed rule, it was waiting publication in the Federal Register and the publication date would determine the date by which comments are due. When finalized, OSHA estimates that the rule would help to protect about 36 million workers. According to OSHA, employers would need to develop a written injury and illness prevention plan for workplaces impacted by extreme heat. The plan would need to include a comprehensive list of the types of work activities covered by the plan as well as at least one heat safety coordinator to implement and monitor the plan.
Federal Agencies Agree to Collaborate on Merger Labor Issues – The Department of Labor (DOL), the National Labor Relations Board (NLRB), the Antitrust Division of the Justice Department, and the Federal Trade Commission (FTC) have signed a memorandum of understanding designed to strengthen worker protections and fair competition by collaborating on labor issues in antitrust merger investigations. “Workers are the backbone of our economy, and it’s critical that the impact on workers and the labor market are given due consideration when analyzing mergers and acquisitions,” said Acting Secretary of Labor Julie Su.
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.
