Combining Classrooms and Class Actions: Trump Proposes Combining Labor and Education DepartmentsCould the Department of Labor (DOL) and Department of Education (DOE) possibly merge in the near future? President Trump thinks so and recently announced his desire to combine the two departments into a single federal agency to be called the Department of Education and the Workforce. According to a White House Statement, the new agency would be “charged with meeting the needs of American students and workers from education and skill development to workplace protection to retirement security.” The proposed restructuring would provide for four sub-agencies: K-12, Higher Education/Workforce Development, Enforcement, and Research/Evaluation.

Current Status

DOE is the smallest cabinet agency with just under 4,000 employees and a $68 billion budget, and oversees federal student loans, distributes K-12 education funding, and enforces civil rights laws at colleges. DOL, by contrast, has about 15,000 employees and a $13 billion budget to support its broad agenda of training programs, enforcement of wage and safety laws, and the Bureau of Labor Statistics.

The proposal is part of a larger plan by the administration to reorganize and reduce the size of federal government agencies. Other combinations of sections of federal agencies have been discussed by the OMB, which itself may have a shrinking role.

Reactions to the Proposal

Not surprisingly, reaction to the proposed combination has been mixed. Current administration members support it. Secretary of Education Betsy DeVos promoted the idea to help break down “artificial barriers” between education and career development. Mick Mulvaney, director of the federal OMB, spoke in favor of the plan to reduce the size of the federal government which he described as “bloated, opaque, bureaucratic, and inefficient.”

Opponents say it would be a bad idea. Chris Lu, a former Deputy Secretary of Labor under President Obama, pointed out that only parts of the two agencies deal with worker training because most of DOL consists of enforcement agencies such as OSHA, MSHA, Wage & Hour, and OFCCP that were created to protect workers. The National Employment Law Project (a union-backed think tank) denounced the proposal as a “half-baked idea” that would only betray the workers for whom President Trump pledged to advocate.

Members of the business community may welcome entities such as OSHA and MSHA falling under the DOE, which has a more educational (and less enforcement-oriented) focus.

Likely to Happen?

Odds of the combination actually coming to fruition seem unlikely. Congress has to approve a major reorganization of cabinet departments, which means 60 votes in the Senate. POLITICO (a Washington, D.C. political news outlet) surmised that the plan “would pose a heavy political and legislative lift” as previous attempts to eliminate the DOE have failed in Congress. President Obama had his own reorganization plan in 2012 that never went anywhere. Seth Harris, Deputy Secretary of Labor under President Obama, predicted that the merger will not happen.

From a high level, some of the mandates of these two agencies overlap. One pursues education to enter the labor force while the other focuses on the workforce (with some training programs). The proposed merger faces many obstacles before the finer details are even discussed, such as what (and who) gets cut. If nothing else, the announced plan has attracted attention, and it is worth keeping an eye on. Having DOL sections combined and altered with a focus on education (rather than just on enforcement) would certainly be a game changer for many employers.

When Lump-Sum Payments to Employees are Earnings for Garnishment Purposes

Welcome to Part 3 of our series on the Department of Labor’s three new opinion letters. We previously looked at the opinion letters on FMLA intermittent breaks and travel time compensation. If you missed those posts, you can catch up here (FMLA breaks) and here (travel time).

When Lump-Sum Payments to Employees are Earnings for Garnishment PurposesNext up is the wage garnishment letter, which analyzes when a lump-sum payment to an employee constitutes “earnings” subject to garnishment under Title III of the Consumer Credit Protection Act (CCPA). As background, the CCPA limits the amount of earnings that may be garnished pursuant to court orders, such as for child support. Those limits are 50% of an employee’s disposable earnings (i.e., earnings after applicable withholdings) if the employee is supporting another spouse or child, or up to 60% of disposable earnings if the worker is not. (Garnishments may be subject to additional limits under applicable state law.)

The CCPA recognizes “earnings” as any “compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program.” As the DOL has previously noted, earnings under the CCPA include lump-sum payments made in exchange for the employee’s services. This new opinion letter addresses three categories of lump-sum payments: earnings, partial earnings, and not earnings.

Earnings Subject to Garnishment

Most lump-sum payments to employees are earnings and thus, as subject to garnishment. Though the CCPA specifically identifies commissions and bonuses as earnings, the letter emphasizes that bonuses in particular come in many forms: signing bonus, referral bonus, relocation incentive, attendance award, etc. Regardless of its name, all of these are still bonuses subject to garnishment. Similarly, retroactive merit increases, holiday pay, or termination pay are all tied to an employee’s work and thus are earnings and garnishable.

Partial Earning Maybe Subject to Garnishment

Some lump-sum payments are partially earnings, such as workers’ compensation and lawsuit settlements. In the workers’ compensation context, for example, an employee may receive payments to replace lost wages as well as medical expenses. The wage substitute payments are earnings (subject to a garnishment order), and the medical expenses are not. Similarly, for a lawsuit settlement, if an employee receives some portion for lost wages and another portion for compensatory damages, any payment for wages counts as an earning (garnishable), but compensatory or punitive damages would not.

Not Earnings Not Subject to Garnishment

Lastly, the letter recognizes only one instance in which a lump-sum payment is categorically not an earning: the buyback of company shares from the employee.

As always, ask your lawyer if you have questions about what constitutes earnings. Questions about lump-sum payments also appear frequently in the wage and hour context—if a non-exempt employee receives a non-discretionary bonus, that amount should be factored into his or her hourly rate for overtime calculations.

When Traveling Employees Are Due Compensation (Or Not)

When Traveling Employees Are Due Compensation (Or Not) Welcome to Part 2 of our series on the Department of Labor’s three new opinion letters. Last week, we looked at the new opinion letter on FMLA intermittent breaks. If you missed that post, you can catch up here. Next up is the travel time letter.

The Facts

A crane repair company asked the DOL to clarify when it must pay its technicians for their travel time and asked for guidance on three scenarios. The letter examines all three scenarios and explains why the company must pay the technicians for that time (or not).

Scenario 1

An hourly technician travels on a Sunday by plane to an out-of-town training class and attends the class from Monday to Friday. The technician then flies back home on Friday or, if a Friday flight is unavailable, on Saturday.

The DOL explains that travel time is compensable work time when it cuts across the employee’s regular workday. Travel on public transportation outside of regular work hours, however, does not constitute worktime and thus does not require compensation. (The same goes for an employee who turns down a plane ticket and opts to drive instead.)

The letter also addresses what to do if the employee does not have a “recognized workday.” If the employee has an inconsistent schedule, the employer should try to ascertain the employee’s average work hours to determine if and when travel time must be compensated. The DOL recommends reviewing employee time records for average start and end times and paying the employee for travel time within that window.

Lastly, the DOL clarifies that the traveling employee is not due compensation for his commute between the training site and the hotel in which he stays during his trip. As far as the FLSA is concerned, this is no different from an employee commuting between work and home during a regular day.

Scenarios 2 & 3

In the second and third scenarios, an hourly technician travels in a company-owned vehicle from home either to the office to pick up an itinerary (Scenario 2) or to multiple customer locations (Scenario 3), after which he travels to and from other customer locations throughout the day. Depending on where the technician lives, the home-to-office commute can range from 15 minutes to one hour or more.

The DOL notes that the same principles apply to Scenarios 2 & 3 that applied in Scenario 1. A technician’s travel time from his home to his first stop of the day, whether it’s the office or a customer location, is generally not compensable other than in extraordinary circumstances (i.e., a customer site several hours away). Once the technician arrives at the first stop, however, he or she is on the clock and must be compensated for travel between stops throughout the workday.

If you have employees who travel during the workday or are sending an employee out of town for business and have questions, ask your lawyer for clarification on the front end about whether they are due compensation. Tune in next week for the third and final opinion letter.