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The Employee Notification Initiative Expands… to FLSA Exempt Employees and Independent Contractors

 

Pursuant to Executive Order 13496, the Department of Labor requires all Federal contractors and
subcontractors to provide written notice to employees of their rights under the National Labor Relations Act (NLRA) to organize and bargain collectively with their employers and to engage in other protected concerted activity.  On December 22, 2010, the National Labor Relations Board (NLRB) issued a news release describing a proposed rule seeking to expand the requirement to all businesses,
not just federal contractors, to post notices to employees of their NLRA similar strategy is now being utilized by the U.S. Department of Labor’s Wage and Hour Division (WHD), which announced a proposed rule that could significantly impact how companies determine whether an employee should be classified as exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).  The proposed rule requires businesses to conduct a written classification analysis for each exempt employee and to provide the analysis to the employee.  Additionally, a copy of the written analysis
would be required to be retained on file and provided to the WHD in the event of an investigation.  Moreover, and consistent with the Department of Labor’s efforts to target employers who misclassify workers, employers would be required to prepare and retain similar analysis records for any individual the employer classifies as an independent contractor–as opposed to an employee.

Clearly, the Obama administration over the past few years has been expanding enforcement efforts through a significant increase in compliance audits and investigations into wage practices.  The developing initiatives to require employee notification of workers rights and the documentation of details and analyze in writing the working relationships will create significant issues should the proposed rules be adopted.

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