December 14, 2015 Labor /Human Resources Committee Update

Contact: Frank Kerbein

Minimum Wage Changes Take Effect 12/31/2015

Significant Increase in OSHA Penalties On the Way

On November 2nd, President Obama signed a budget deal approved by Congress. Hidden in that budget deal was the Federal Civil Penalties Inflation Adjustment Act which will allow OSHA to dramatically increase the amounts they can fine and penalize employers. OSHA’s penalties have been fixed and not adjusted for inflation since 1990. This Act will allow OSHA to “catch up” and increase fines accordingly.

OSHA’s current maximum penalties are $7,000 for other-than-serious and serious violations, and $70,000 for repeat and willful violations. Those amounts will projected to increase to about $12,500 and $125,000 - and then increase annually thereafter indexed to inflation. OSHA must implement an interim final rule by July 1 that will go into effect by August 1.

Update on Final Rule Regarding OT Exemptions

As you recall, in July 2015, the US Department of Labor issued a proposed rule that would significantly increase the minimum salary required for an employee to be considered exempt from the overtime provisions of the Fair Labor Standards Act. The rule proposed to increase the “salary level” test from its current Federal minimum of $455 per week ($23,660 per year) to an indexed number as high as $970 per week ($50,440 per year) with that number indexed to a formula the will ensure future annual increases. We don’t know for sure when the final rule will be announced and implemented.

There have been two developments on that front. First, the Solicitor of Labor, Patricia Smith, told a conference of the American Bar Association on November 5th not to expect the final rule until late 2016. Concerns are that such a late announcement will not leave employers much time to make changes before implementation.

However, the Department of Labor’s semiannual regulatory agenda indicates that the final rule may be published as soon as July 2016. It is widely believed that the Department is feeling pressure to release the final rule as soon as possible for political reasons. If the rule is released late in 2016, and should a Republican win the Presidency in 2016, the new President could revoke the rule before full implementation.


Claiming that the average “freelancer” loses more than $6,000 per year in wages owed, but not paid, by “deadbeat” companies, the Freelancers Union is proposing legislation to the New York City Council that would require all freelance relationships be committed to a written contract. This contract would be required for all work with a value greater than $200 and spell out the terms of the project and timing of payment. Violators would be subject to fines and criminal penalties.

A similar bill was introduced at the state level this past spring and was opposed by The Business Council. You can read our memo in opposition here. The Business Council strongly opposes any legislation that would dramatically and unfairly alter the relationship between a business and any sole proprietor that they contract with as an independent contractor.