Among the regulatory initiatives identified by the Department’s Wage and Hour Division is titled “Records to be kept by employers under the Fair Labor Standards Act.” The description in the regulatory agenda contains the seemingly innocuous description of, among other things, “updat[ing] the recordkeeping requirements to foster more openness and transparency in demonstrating employer’s compliance with applicable requirements to their workers, to better ensure compliance by regulated entities, and to assist in enforcement.”

The Department, however, also released a fact sheet regarding the proposed rule, in which it made clear exactly what it would be proposing. The Department is considering a proposed rule requiring any employers that seek to exclude workers from the FLSA’s coverage to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to Wage and Hour Division enforcement personnel who might request it. Although the fact sheet references exclusions from the FLSA’s “coverage,” it also discusses issues related to exempt status. It is unclear at this time whether the proposal will include a requirement that employers perform the analysis for exempt employees.

The proposal will also require covered employers to notify workers of their rights under the FLSA, and to provide information regarding hours worked and wage computation. It will also address burdens of proof when employers fail to comply with records and notice requirements.

These proposals, if adopted, would impose significant financial costs on companies as they seemingly would be required to prepare an analysis for each and every exempt employee employed or independent contractor used by the company. Moreover, workers are already notified of their rights under the FLSA by required postings, so the proposed rules would seem to require something more onerous (and costly). Precisely what will be required to be disclosed to employees will be contained in the Notice of Proposed Rulemaking.

To be clear, these requirements are not yet in effect. Once the Notice of Proposed Rulemaking is issued (which the Department lists as anticipated in August 2010), the public has a limited period of time — usually 60 to 90 days — to provide comments in response to the proposed rule. In addition, there are numerous other opportunities to affect the regulatory process. If you believe that your company might be adversely impacted by these proposals, you should begin planning a response to the proposals now.

Among the regulatory initiatives identified by the Department’s Wage and Hour Division is “Records to be kept by employers under the Fair Labor Standards Act,” which is described as, among other things, “updat[ing] the recordkeeping requirements to foster more openness and transparency in demonstrating employer’s compliance with applicable requirements to their workers, to better ensure compliance by regulated entities, and to assist in enforcement.” 

The Department, however, also released a fact sheet in which it made clear exactly what it would be proposing.  Specifically, the Department is considering a proposed rule that would require any employer that seeks to exclude workers from the FLSA’s coverage to perform a classification analysis, disclose that analysis to the worker, and retain that analysis for enforcement personnel who might request it.  Although the fact sheet references exclusions from the FLSA’s “coverage,” it also discusses issues related to exempt status.  It is unclear whether the proposal will include a requirement that employers perform the analysis for exempt employees.

These proposals, if adopted, would impose significant financial costs on companies as they seemingly would be required to prepare an analysis for each and every exempt employee employed or independent contractor used by the company.  Precisely what will be required to be disclosed (and to whom) will be contained in the Notice of Proposed Rulemaking.

These requirements are not yet in effect.  Once a Notice of Proposed Rulemaking is issued (anticipated August 2010), the public has a limited period of time — usually 60 to 90 days — to provide comments in response to the proposed rule.  In addition, there are numerous other opportunities to affect the regulatory process.  If you believe that your company might be adversely impacted by these proposals, you should begin to planning how you might respond.