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Wage and Hour Law Needs Update, More Guidance, HR Pro Tells Congress
 

By Bill Leonard  7/24/2014
 

Human resource professionals and their employers would welcome any effort to improve government outreach and guidance on complying with the complex rules and regulations of the Fair Labor Standards Act (FLSA), according to witness testimony at a congressional hearing on July 23, 2014.

“Today’s examination of how to improve the FLSA regulatory structure is an important discussion,” said Nancy McKeague, SPHR, senior vice president, employer and community strategies and chief HR officer for the Michigan Health and Hospital Association (MHA). “Additional guidance would certainly be helpful given the practical challenges most employers face when complying with the FLSA."

McKeague testified before the House Subcommittee on Workplace Protections on behalf of the Society for Human Resource Management. She told the committee members that the U.S. workforce and nature of work had changed dramatically since the FLSA was enacted more than 70 years ago, and even though the statute has been amended and regulations updated, the law was not written for the digital age and the workforce of the 21st century.

“In the health care sector, we have many jobs that didn’t even exist 10 years ago—some technology-related and some due to medical and scientific advances,” McKeague said. “With the outdated nature of the FLSA, many of our members feel limited with how nonexempt staff can use their time when working from home.”

FLSA Lawsuits Up

The hearing was scheduled as a follow-up to a report released by the U.S. Government Accountability Office (GAO) in December 2013, which examined the reasons for a steady increase in FLSA-related lawsuits. In addition, the GAO researchers looked at how the Labor Department Wage and Hour Division developed and disseminated guidance documents. The report recommended that the Secretary of Labor direct the administrator of the Wage and Hour Division (WHD) to “develop a systematic approach for identifying and considering areas of confusion that contribute to possible FLSA violations to help inform the development and assessment of its guidance.”

Andrew Sherrill, the GAO’s director of education, workforce and income security, testified on July 23 that officials with the WHD had agreed with his agency’s recommendations and were in the process of developing systems to analyze trends and communications. According to the GAO’s findings, the WHD did have a systematic procedure for determining which industries should be targeted for enforcement.

“And through these processes, the WHD determines which industries have a higher likelihood of wage and hour violations,” Sherrill said. “However, when developing guidance for FLSA compliance, [the WHD] does not use a systematic approach for identifying the subjects or number of requests for guidance from employers and workers.”

Sherrill concluded that there clearly was a need for more guidance from the WHD, but he said it was unclear that the agency’s lack of a systematic guidance process was contributing to any dramatic increase in claims of FLSA violations.

According to Sherrill, the number of FLSA lawsuits increased from approximately 1,300 lawsuits filed in 1991 to more than 8,100 suits in 2012. He told the committee that the reasons for the increase appeared multifaceted, and pointed to issues such as increased worker awareness of wage and hour laws and a growing willingness among attorneys to file FLSA claims for plaintiffs.

Lack of Guidance Cited

In his opening statement at the hearing, Subcommittee Chairman Tim Walberg, R-Mich., appeared to disagree with Sherrill and focused on the WHD’s reduced outreach and output of guidance to employers.

“As litigation has increased, the number of guidance documents issued by the department has sharply declined,” Walberg said. “Between 2001 and 2009, the department released an average of 37 guidance documents each year. Yet in the last three years, the Obama administration has issued a total of seven.”

Emphasizing his point on a lack of guidance offered to employers, Walberg asked McKeague about the impact of the Labor Department's decision to forgo issuing any more opinion letters on FLSA compliance.

“The opinion letters are very helpful to those of us that are working through these issues and trying to do the right thing,” she responded. “I would welcome any further guidance and help in sorting through the challenges we face.”

She told Walberg that although fact sheets issued by the WHD were helpful, opinion letters tended to be more current and up-to-date and typically addressed specific examples. Walberg then asked why she thought most employees preferred to be exempt from the overtime requirements of the FLSA.

Exempt-Status Preferred

“You have really hit on the key point and what is for me the biggest concern,” she replied. “Employees prefer to be exempt because they have more control over their work schedule, and it makes it easier for them to fulfill their work and family obligations.”

McKeague told the committee members that complying with the outdated requirements of the FLSA not only has created morale issues for employees who want more flexibility in their work schedules but also has reduced the funds that hospitals in Michigan have to spend on patient care.

“Complying with the statute can create high legal costs for employers, which is difficult for an organization like the MHA with a tight budget,” she said “Simply stated, increased litigation related to alleged FLSA violations leads to less funding for a nonprofit’s core mission, whether that is providing patient treatments, providing child care or conducting research. This is why improved guidance from the department which can help prevent baseless lawsuits is critical.”

Bill Leonard is a senior writer for SHRM.

 

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