Regulations Clarify Extension of Dependent Coverage Rule Under Affordable Care Act

By Paul Fleck, Amber Solano, and Jonathan Judge

On May 11, 2010, the Internal Revenue Service, Department of Labor, and Department of Health and Human Services issued interim final rules regarding the extension of health coverage for adult dependent children until the age of 26. The rules provide guidance on how the Affordable Care Act provision regarding extended coverage to adult dependents affects health insurance plans and employers.

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Effective June 21, 2010, Federal Contractors Are Required To Post Notices Informing Employees Of National Labor Relations Act Rights

By Jonathan Judge

On May 20, 2010, the Department of Labor ("DOL") issued a final rule requiring federal contractors with prime contracts over $100,000 and federal subcontractors with subcontracts over $10,000 to post notices informing employees of certain rights under the National Labor Relations Act ("NLRA"). This new requirement takes effect June 21, 2010.

The required notice identifies employees' rights under the NLRA to form a union, to join a union, to support a union; provides examples of conduct by employers and conduct by unions that interferes with those rights; and states how employees can contact the National Labor Relations Board to ask questions or to file complaints.

Contractors and subcontractors subject to the new rule must post the required notice in the workplace so that it is prominent and can be readily seen by employees. Specifically, the required notice must be posted where other similar required notices are posted.

Although electronic posting cannot be used in place of physical posting, contractors and subcontractors that customarily also post electronically required employee notices must also post electronically the NLRA rights notice via a link to the Office of Labor-Management Standards ("OLMS") website. The link to the OLMS website must state: "Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employers." Employers that post the notice electronically, must place the required link to the notice where the employer customarily places similar required notices, and the link to the OLMS website must be no less prominent than other notices.

Posters can be downloaded in two formats: (1) a 11x17-in one-page poster or (2) a 11x8.5-inch two-page poster.

If a significant portion of an employer's workforce is not proficient in the English language, the employer must post the required notice in the language or languages the employees speak. The OLMS states it will provide translations of the required notice.

Employers who violate the posting regulations will be subject to sanctions for non-compliance. The potential sanctions include: suspension or cancellation of an existing contract, debarment from future Federal contracts or subcontracts, and placement on a list of contractors and subcontractors declared ineligible for future contracts. The Director of the OLMS will distribute that list to all Federal executive agencies.

This new rule implements Executive Order 13496 President Obama signed on January 28, 2009, and represents a 180 degree departure from Executive Order 13201 President Bush signed on February 21, 2001. Executive Order 13201 issued by President Bush required providers of goods or services to the executive branch to post a Beck notice informing employees of their rights to not join a union and their right to not pay agency fees associated with the political and other non-representation activities of a union. Executive Order 13496 issued by President Obama revoked Executive Order 13201 issued by President Bush, and employers are no longer required to post a Beck notice.

Department of Labor Administrative Interpretation States Duties Of Mortgage Loan Officers Do Not Qualify As Exempt Duties

By Ronald W. Novotny

As we previously reported here, On March 24, 2010, the United States Department of Labor ("DOL") Wage and Hour Division made a significant change in its compliance assistance by moving from its longstanding practice of issuing fact specific opinion letters to issuing more general, across-the-board Administrator's Interpretations. The change is significant because it likely signals the DOL's intention to more aggressively establish its own interpretation of federal wage and hour laws.

In the first such Administrator's Interpretation, the DOL revisited the seemingly settled issue of whether mortgage loan officers qualify as exempt employees under the Fair Labor Standards Act ("FLSA"). Reversing two prior determinations that mortgage loan officers ordinarily qualify as exempt employees and therefore not entitled to be paid premium pay when they work overtime, the DOL now takes the position that the routine duties of such employees do not qualify as exempt duties.

The DOL defined the position as persons employed by financial institutions as mortgage loan officers, representatives, consultants, or originators. The typical duties include receiving internal leads, contacting potential customers, collecting required information from customers and entering that information into a computer, assessing and recommending loan products, and compiling customer documents for handling by underwriters or loan processors.

The DOL revisited the issue of whether such duties should be characterized as "non-manual work directly related to the management or general business operations of the employer or its customers" and therefore within the scope of the "administrative employee" exemption from the premium pay requirements of the FLSA.

The DOL now concludes that loan officers do not qualify as exempt employees because the work they perform is predominantly "production work" and not "administrative work." Likening mortgage loan officers to inside salespersons, the DOL now characterizes loan officers' duties as the "production work of an employer engaged in selling or brokering mortgage loan products" and not related to internal management of the business. The DOL now takes the position also that loan officers' duties do not relate to the "general business operations" of the employer's customers (who are typically individual consumers).

As part of its interpretation, the DOL withdrew a 2001 opinion letter and a 2006 opinion letter stating mortgage loan officers can qualify as exempt employees.

We think this new administrative interpretation signals a willingness on the part of the Obama Administration to reverse prior administrative interpretations interpreting FLSA exemptions more broadly.

Although this more recent administrative interpretation is not binding on the courts, current or former employees asserting they are or were misclassified as exempt employees can cite to this new administrative interpretation as persuasive authority from the administrative agency charged with enforcement of the FLSA.

In light of this new interpretation, financial institutions should consider consulting with experienced counsel to determine whether employees previously thought to be exempt would still be considered exempt employees.

Click here to download and to read a copy of the administrative interpretation.