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10/20/2017

OFDA Board of Directors Legal Report - October 18, 2017 Meeting

Prepared by T. Scott Gilligan, OFDA Legal Counsel

  1. DOL “WHITE COLLAR” EXEMPTION UPDATE. Several significant developments have occurred with regard to the proposed White Collar Exemption regulation since the Board’s last meeting in May, 2017. That regulation, which was scheduled to take effect on December 1, 2016, would have required employees who are covered by the White Collar exemption to receive annual compensation of at least $47,476 in order to maintain the exemption.  The regulation increased the salary level test from $23,600 to $47,476.  Therefore, Ohio funeral homes were facing the dilemma of either paying $47,476 as a minimum annual salary to licensees or to start paying overtime compensation. 

 

That dilemma was temporarily resolved when a federal court in Texas issued a preliminary injunction against the regulation in November, 2016.  That preliminary injunction  was shocking to most observers because it held that Congress never gave the DOL the authority to set any type of minimum salary level.  Therefore, the judge was not ruling that the proposed $47,476 salary level test was excessive; he was ruling that the DOL has no authority to set any type of salary level as part of the white collar exemption.

 

 Shortly after the federal district court issued the preliminary injunction, the Obama Administration’s DOL appealed the ruling to the Fifth Circuit Court of Appeals and requested an expedited appeals schedule.  Then the Trump Administration came into office and things were delayed as we waited for Trump to appoint a new Secretary of Labor.  Finally, on April 27, 2017, the new Secretary of Labor, Alexander Acosta, was confirmed and we saw a change in strategy.

 

            Because the Trump Administration did not agree with the judge’s decision that the DOL had no authority to issue any type of salary level, it continued the appeal.  But it also issued a Request for Information which indicated that it was going to re-examine the Obama Administration’s proposed regulation.  So, the Administration supported the judge’s decision to stop the Obama white collar regulation, but not for the reason stated by the trial judge.

 

            All of this got resolved when the trial judge issued his permanent injunction which took the place of his earlier preliminary injunction.  In this August 31, 2017 decision, the federal court judge backtracked on his earlier decision that the DOL had no authority to set a salary level.  Rather, he found that the proposed regulation, in more than doubling the salary level, exceeded the DOL’s authority.  Not surprisingly, the Trump Administration is satisfied with that result and will not appeal it.  So the Obama Administration’s proposed White Collar regulation is officially dead. 

 

            We now will wait to see what action, if any, the DOL takes with regard to the white collar exemptions.  In the Request for Information (RFI), the DOL asked interested parties to submit comments on a number of issues, including whether there should be a salary level test and, if so, how it should be set.  NFDA submitted comments on the RFI pointing out that any increase must be implemented over time and should account for the cost of living differences around the country.  We will continue to track this issue.

 

  1. FUNERAL RULE REVIEW.  Speaking of delays, the Trump Administration has taken no official action to fill three vacancies at the five-person FTC Commission.  The FTC currently has an acting Chair and one other Commissioner whose term expired at the end of September, but who is apparently still on the job.  With more than one-half of the seats vacant, an acting Chair waiting to be replaced, and one other Commissioner whose term has expired, the FTC is not inclined to undertake any more actions than it has to.  So, the review of the Funeral Rule, which was to start this year, has been pushed back to 2018.

           

            While the official review will not start until next year, the FTC is informally asking interested parties what issues they wish to look at during the review.  NFDA will be submitting its wish list that involves modifying the distribution requirements for price lists, allowing a variable basic services fee, eliminating price ranges on the GPL, and making several other changes to the Rule. 

 

  1. LATTS ACT OF 2017. NFDA has worked with Representative Gosar of Arizona to introduce the Labeling and Transporting Tissues Safety Act of 2017 (LATTS Act) as House Bill 2022.  It will require tissues banks dealing in non-transplantable tissue to be licensed by the Secretary of Health and Human Services.  Tissue bank facilities would be inspected by HHS and their procedures in obtaining consent for donation would be scrutinized.  In addition, shipments containing human tissue specimen would have to be labeled and tracked.  The bill would also prohibit the selling of tissue for profit, although reasonable payments to cover the costs of operating the tissue bank would be allowed.  The Bill was introduced in April, 2017, but no hearings have been scheduled as yet. 

 

  1. ALKALINE HYDROLYSIS.  We now have 15 states that have legalized alkaline hydrolysis as a method for disposition of human remains with Alabama, Nevada and California passing it this year.  They join the states of CO, FL, GA, ID, IL, KS, ME, MD, MN, MO, OR and WA that have already legalized it. The California law will not go into effect until 2020.  Washington may become the 16th state as it has a bill pending.