Department of Labor’s (DOL) New, Unilateral Overtime Rule Punishes Employers and Employees

This one agency alone is causing havoc in the business community, and they are just one of many government agencies issuing countless new rules and regulations for business to follow and assessing more new penalties for failing to comply.

Department of Labor’s (DOL) New, Unilateral Overtime Rule Punishes Employers and Employees
By J. Allen Tharp

By J. Allen Tharp

In my article last week, I asked everyone to use this Congressional break while Congress is back home to push for the markup and passage of the FADA. This week please focus on the Protecting Workplace Advancement and Opportunity Act (H.R. 4773). Although the bill has 190 co-sponsors, it has not received a vote as of now, but a provision defunding the rule has been added to the Fiscal Year 2017 Labor, Health and Human Services, Education and Related Agencies Appropriations Bill.

This bill is designed to overturn the Department of Labor’s (DOL) new, unilateral overtime rule that punishes both employers and employees by drastically raising the threshold for mandatory overtime pay from $23,660 to $47,476. This radical DOL rule will cause employers to move salaried professional employees to hourly wage earners or even part-time employees and will destroy workplace flexibility.  Obviously federal mandates on how much employers can pay their employees have many unintended consequences.

Please let your representatives know that this DOL rule is bad policy and will cause many problems for both employers and employees. Ask them to support H.R. 4773 to stop this bad policy in its tracks.

In fact, this rule is so bad that even Democrats have concerns and want to slow down implementation. They proposed the Overtime Reform and Enhancement Act (H.R. 5813). The Democrat plan would delay full implementation of the rule until December 1, 2019, instead of the current scheduled date of December 1, 2016.

The best solution is to stop implementation and funding of this overtime rule altogether and pass H.R. 4773. Bad policy in 2019 is still misguided policy, even if it happens three years later.

tough decisionsEmployers around the country are busy trying to keep up with the fast and furious rule-making from the DOL. The torrent of government regulations has become so overwhelming and unmanageable for employers that entire industries of businesses have developed exclusively to help employers stay compliant with the myriad regulations that they deal with constantly. It has become impossible to stay aware of and compliant with so many quickly changing regulations, without someone who specializes in the many different regulatory categories full time.

For example Professional Employer Organizations (PEOs) have popped up everywhere over the last few years. Staying on top of these ever shifting regulatory sands has driven many employers to use PEOs as co-employer because they feel they can no longer adequately manage the additional regulations pertaining to their own labor force on their own. The PEO assumes control over compliance-related tasks, like Human Resources, Safety and Risk Management, Benefits and Payroll.  All this is done at considerable cost, of course.

us-job-future-ordering-kioskKnowing that the fast and furious DOL rule-making is leaving many employers struggling to understand the new rules and remain compliant, the DOL is also aggressively increasing its audit and enforcement activities. They bombard business with a flood of new rules and then rake in millions of dollars in fines on unfortunate employers they determine are not compliant. This unprecedented assault on business reminds me of a small town speed trap where the town gets its funding from setting up unsuspecting drivers, by setting various speed limits in a short distance and using confusing sign placement to intentionally trick drivers into breaking the limits.

The cost for noncompliance with the new DOL rules is so staggering that it is crippling many businesses. To drive this point home, let me share just a few examples of the kinds of fines being imposed on employers.

On June 30, 2016, on the heels of a holiday weekend, the DOL quietly issued an interim final rule (IFR) that significantly increases their fines and civil penalties for violations of ERISA, FLSA, FMLA, and OSHA.

ERISA

  • Failure to file a Form 5500: The current penalty of up to $1,000/day for failing to timely file a Form 5500 will increase almost 100 percent to $2,063/day.
  • Failure to file a Form M-1 Multiple Employer Welfare Arrangements (MEWAs): The current penalty for not including a Form M-1 with the annual Form 5500 will increase from up to $1,100 per day to a maximum of $1,502 per day.
  • Failure to provide documents requested by the DOL: Increased from $110 per day to $147 per day.
  • Willful failure to provide a Summary of Benefits and Coverage: $1,087 per failure (up from $1,000 per failure).

FLSA

  • Section 16(e)(2) of the FLSA and the regulations at 29 CFR 578.3(a) provide for assessment of civil money penalties for any person who repeatedly or willfullyviola tes FLSA Sections 6 (minimum wage) or 7 (overtime). The interim final rule increases the maximum penalty for a repeated or willful violation of Sections 6 or 7 from $1,100 to $1,894 per violation. There is no definition for willful violation, but in one case it was determined that a company violated the FLSA by just failing to keep adequate records of extended hours worked by an employee. The penalty is assessed in addition to any actual back wages owed to the employees.
  • Plus, section 16(a) of the FLSA authorizes criminal sanctions against any person who is shown to have violated the FLSA voluntarily.
  • The child labor penalties also increase from $11,000 per violation to $12,080.

FMLA

  • Fail to post one of the DOL required notices? Pay a fine.  The penalty for these violations increased from $110 to $163 for each separate offense.

OSHA

  • Under a new interim final rule, OSHA’s maximum civil penalties will increase by 78 percent. The interim final rule adjusts the penalty of not more than $70,000.
  • For each violation, but not less than $5,000 for each willful violation, to a maximum penalty of $124,709 for willful and repeated violations, and the minimum penalty to $8,908 for willful violations. The updates are set out in Section 1903.15(d)(1) and (2).

The interim final rule also makes these adjustments:

  • For violations under Section 17(b), which provides that employers who have received a citation for a violation of Section 5 requirements, the maximum civil penalty is increased from $7,000 per violation to $12,471.
  • For violations under Section 17(d), which provides that any employer who fails to correct a violation for which a citation has been issued under Section 9(a) within the period permitted for the correction, the maximum civil penalty is increased from $7,000 for each day during which such failure or violation continues, to a maximum penalty of $12,471.
  • For violations of a posting requirement under Section 17(I), the maximum civil penalty of $7,000 for each violation is increased to $12,471.

These few examples are only the tip of the iceberg. There are thousands more that could be listed, but I think you get the point. This one agency alone is causing havoc in the business community, and they are just one of many government agencies issuing countless new rules and regulations for business to follow and assessing more new penalties for failing to comply.

Allen Tharp is President of the San Antonio Tea Party.

 

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One Response to "Department of Labor’s (DOL) New, Unilateral Overtime Rule Punishes Employers and Employees"

  1. Iris Martinez  August 6, 2016 at 9:37 pm

    I surmise in the Government’s quest to mandate how much employers must pay employees, they are doing nothing more than looking at their bottom line……more taxes. On a side note by shifting lower minimum wage employees into a mandated higher wage, Uncle Sam can then claim they can afford their own health coverage. Therefore no subsidies and the poor employee will gain nothing except higher taxes and a health care premium expense with a net gain of zero.

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