On September 24, 2019, the Department of Labor (DOL) announced its final rule to change the Fair Labor Standards Act's (FLSA) Salary Basis Test, which is required to classify an employee as exempt from overtime payments. In order to designate an employee as FLSA overtime exempt, an employer must ensure that the employee meets a salary basis test, which establishes a salary threshold, a duties test, as well as the types of responsibilities and knowledge required to be eligible for an exemption. The salary basis requirement is currently $455 per week, or $23,660 per year. PilieroMazza previously blogged about the proposed DOL overtime exemption rule here. Effective January 1, 2020, the final rule will increase the threshold amount to $684 per week or $35,568 per year, a slight increase from the originally proposed amount. Employers, including government contractors, with salaried employees making under $35,568 annually, need to determine if it makes business sense to convert employees to non-exempt status or to raise their salary. Not understanding this requirement could lead to costly DOL violations.
September 30, 2019 marks the newly announced deadline for employers who submit annual EEO-1 reports to report employee 2018 pay data to the Equal Employment Opportunity Commission (EEOC). The EEOC revealed the new deadline in a federal court submission last week. The judge in the case will still need to approve of the EEOC's plan before it becomes the official cutoff date. UPDATE: On April 25, the court issued an order confirming the September 30, 2019 deadline, and requiring the EEOC to collect a second year of data in addition to the 2018 pay information. On May 2, the EEOC announced its decision to collect 2017 pay data which will also be due this September. Employers (government contractors and commercial businesses) should work with an experienced labor and employment attorney to ensure they comply before the September 30, 2019 deadline.
Tomorrow, SBA will issue an interim final rule increasing the receipts-based size standards for inflation. An unpublished version of the rule is available here. The change should be effective August 17, 2019, 30 days after the scheduled publication of the rulemaking. Comments to the rule are due September 16, 2019. For government contractors whose status changes in the System for Award Management ("SAM") from "other than small" to "small," as a result of the inflation adjustment, SBA advises that the business update their SAM profile and complete the "representations and certifications" section of SAM. Doing so will provide a more competitive environment for government contractors whose status changes to a "small business."
The California Consumer Privacy Act ("CCPA") will go into effect on January 1, 2020. Similar to the European Union's General Data Protection Regulation ("GDPR"), CCPA creates significant compliance challenges for government contractors and commercial businesses doing business in California, with several states following suit. Under CCPA, fines from the Attorney General for businesses that do not comply could be as high as $7,500 per violation, with CCPA also granting consumers the right to bring private action, exposing companies to actual and statutory damages.
On June 24, 2019, the Small Business Administration (SBA) published its long-awaited proposed rule changing the period of measurement for a receipts-based size calculation from three years to five years. This change was prompted by the Small Business Runway Extension Act (the Runway Act), which became law on December 17, 2018. SBA was slow to implement this change because SBA believes that the Runway Act amended a section of the Small Business Act that does not apply to SBA. "Nevertheless," SBA says, "to promote consistency government-wide on small business size standards, SBA proposes to change its own size standards to provide for a 5-year averaging period for calculating annual average receipts for all receipts-based size standards." Smaller and larger small businesses industry wide could be impacted in terms of gaining access to government contracts. PilieroMazza will be submitting comments to the proposed rules on behalf of our small business clients before the August 23, 2019, deadline.