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On October 15, the Department of Labor’s (DOL’s) Solicitor of Labor released a Special Enforcement Report on workplace contract provisions. Specifically, U.S. Solicitor of Labor Seema Nanda’s report announced that the agency would target seven specific employment-related contract provisions. Chiefly, she believes these provisions are “coercive” and could discourage workers from exercising their rights under federal workplace laws. Earlier this month, the DOL launched a new tool to assist employers in creating reasonable accommodations.
Overview of the DOL’s Special Enforcement Report
According to litigation firm Fisher Phillips, affected employers should not ignore the information in the agency’s report. Certainly, the firm calls it a “stark warning to employers.” This is mainly because Solicitor of Labor Nanda stated that the DOL will take “innovative approaches” to address its concerns. Explicitly, these approaches may include filing “groundbreaking” lawsuits and “friend-of-the-court” briefs against at-fault employers.
The Seven Questionable Workplace Contract Provisions
As has been noted, the Special Enforcement Report specifically calls out seven workplace contract provisions that the agency will be carefully examining. The following is a list of those provisions as provided by Fisher Phillips.
- 1. Requiring Workers to Waive Wage and Hour Rights. The DOL report says clauses like these are illegal. Markedly, they undermine an employee’s ability to hold a business accountable for unfair pay or excessive hours.
- 2. Incorrectly Classifying Workers as Independent Contractors. Employers may reclassify workers as contractors to dodge legal responsibilities. Specifically, these responsibilities include following minimum wage, overtime, and safety standard rules. According to the report, that is an illegal practice, and the DOL often challenges such mislabeling.
- 3. Shifting Liability for Legal Violations to Workers or Others.Some workplace contract provisions shift the financial risk of legal violations onto workers, forcing them to cover the company’s legal costs. In fact, under some provisions, the worker is still responsible even if they successfully win the claim. The DOL considers this illegal as it can discourage workers from taking action when rights are violated.
- 4. Forcing the Losing Party to Pay Attorneys’ Fees in Legal Disputes. Similarly, some contracts require workers to pay the employer’s attorney’s fees if they lose a legal dispute. The DOL believes the financial risk to workers could be so high that they wouldn’t pursue a claim.
- 5. “Stay-or-Pay” Provisions. “Stay-or-pay” provisions require workers to reimburse employers some amount if they leave the job before a set period. For example, this could include training or relocation costs. The DOL believes these penalties could “trap” workers in a job, even if they face poor working conditions.
- 6. Confidentiality, Non-Disclosure, and Non-Disparagement Agreements. Some contracts may include restrictions on what workers can discuss or disclose to third parties. Accordingly, the DOL says these clauses make employees feel they can’t report issues. Moreover, they effectively prevent them from working in a safe and respectful workplace.
- 7. Requiring Workers to Internally Report Safety Concerns Before Going to Government. Finally, some companies require workers to report safety concerns to management before going to workplace safety agencies like OSHA. The DOL believes that this kind of policy often discourages workers from reporting violations if they think management will retaliate or ignore the issue.
Employer Takeaways
In conclusion, the DOL’s Special Enforcement Report can act as a roadmap for employers to comply with current labor laws. In detail, employers should review all of their policies, applications, and forms to revisit any language that might be considered illegal. Lastly, the DOL mentioned that it would look specifically for “fine print” workplace contract provisions. What this means for employers is that every agreement should be carefully examined, no matter how long it has existed.
Accordingly, to assist employers in complying with at least one of the talking points in the DOL’s Report, WorkWise Compliance created the comprehensive, digital Worker Misclassification Prevention eLearning Module. This resource was explicitly designed to help employers ensure that workers are properly classified as “employees” or “independent contractors” in compliance with applicable laws and regulations.
The DOL is cracking down on seven specific workplace contract provisions, including waiving wage rights and misclassifying workers. Employers should review policies to ensure compliance, utilizing tools like Workplace Compliance Checklists to address these issues effectively.
