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OFDA Board of Directors Legal Report - July 2017 Meeting

Prepared by T. Scott Gilligan, OFDA Legal Counsel

1.  DOL “WHITE COLLAR” EXEMPTION UPDATE. Two new developments in the tortured path of the Department of Labor’s (DOL) new White Collar exemption regulation were reported in the past two weeks.  On June 27, 2017, the DOL sent a formal Request for Information on the White Collar regulation to the Office of Management and Budget (OMB).  This filing indicates that the Trump Administration will be re-opening the rulemaking with a new proposed White Collar rule that would lower the salary level.   

As reported previously, the regulation, which the Obama Administration approved and 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.  This would have required Ohio funeral homes to pay licensees at least $47,476 annually to maintain the exemption from the overtime provisions of the Wage and Hour Law.

The DOL White Collar regulation was blocked last November by a federal district court in Texas and has never taken effect.  In issuing the injunction, the federal district judge did not rule on the propriety of the $47,476 salary level, but instead found that the DOL never had the authority to set any type of salary level even though the Department had been doing so for the past 75 years.

In order for the Trump Administration to set a lower salary level, like the $33,000 figure proposed by Secretary of Labor Alexander Acosta during his confirmation hearings, it needs to negate the court’s ruling that the DOL has no authority to set a salary level.  Therefore, when it filed its reply brief to the Fifth Circuit on June 30, 2017, the DOL asked the appellate court to: (1) reverse the trial court’s decision that the DOL has no authority to set a salary level; and (2) to dismiss the appeal of the $47,476 salary level because the Trump Administration will be replacing it with a new number developed through its new rulemaking.

Once OMB finishes its review of the DOL’s Request for Information, the Request will be published and we will learn the details of the DOL’s plans for the White Collar regulation.  We are also tracking the ongoing appeal to see what the Fifth Circuit Court of Appeals will do on the DOL’s request to restore the salary level, but dismiss the appeal of the $47,476 regulation.

2.  HERITAGE CREMATION PROVIDERS.  OFDA recently issued an advisory to members regarding Heritage Cremation Providers (Heritage).  Heritage, which also uses the name Legacy Funeral Service (Legacy), operates an online cremation services.  Its website portrays Heritage as a low cost, family-owned, locally based provider of complete cremation services.  However, it is actually an unlicensed operator that collects funds from consumers and then uses funeral homes and crematories throughout the country to provide the services. 

Heritage’s track record of losing bodies, botching cremations, and ignoring consumers once they have their money has resulted in enforcement actions by state funeral boards in Colorado, Florida, Georgia, Massachusetts, North Carolina, Oregon and Tennessee.  While Heritage has been able to operate for several years without regulatory scrutiny because it had no physical presence, the flood of consumer complaints have now moved these state boards to issue injunctions against Heritage operating in their states.  In North Carolina, the state board also issued a warning to funeral homes in that state that if they provide cremation services for Heritage, they will be charged with assisting an unlicensed operator.

Heritage/Legacy provides a good example of the problems states face in trying to shut down non-licensed internet providers that can cross state lines by operating through the internet.  This is an issue not only for funeral service, but a number of other professions.

While there is currently no state board action against Heritage or Legacy in Ohio, OFDA members were alerted to this situation and advised by OFDA not to contract with Heritage or Legacy.  Since that advisory went out, we have spoken with two Ohio funeral homes that indicated they have decided to no longer work with Heritage.

3.  WORKING FAMILIES FLEXIBILITY ACT. As previously reported, the U.S. House passed H.R. 1180, the Working Families Flexibility Act, on May 2, 2017.  That bill would amend the Fair Labor Standards Act (FLSA) to allow private employers to offer compensation time (comp time) to their hourly employees. 

Comp time is the option of paying employees with paid time off instead of time and one-half for overtime.  For example, assume an hourly employee works 50 hours in one week.  According to the FLSA, that employee needs to be paid his or her regularly hourly rate for 40 hours, then 150% of the hourly rate for the 10 hours of overtime.  With comp time, the employee could choose to “bank” those 10 overtime hours and carry them forward as 15 hours of paid leave.  In lieu of receiving 10 hours of overtime pay, the employee chooses to receive 15 hours of normal pay in the future when he or she wants time off. 

Under the FLSA as it now stands, private employers may not offer comp time even if an employee opts for it.  The government believes that even if the choice between overtime pay and comp time is purely voluntary for employees, some employers may coerce the employee to accept comp time.  So the FLSA prohibits it.  Ironically, public employers, such as federal, state and local governments, can offer it to their employees while private employers may not.  Therefore, despite repeated efforts to amend the FLSA to include comp time options over the past twenty years, it is still unlawful under that statute for a private employer to offer comp time to an hourly employee.

The Bill has been introduced in the Senate, but no hearings have been conducted.  The Senate has been bogged down with the health care legislation.  The Bill’s future in the Senate is uncertain.  While the Republicans hold a 52-48 edge in the Senate, the Democrats could filibuster S. 801, the companion bill in the Senate.  Given the Democrats’ united opposition to H.R. 1180 in the House, it is unlikely that the Republicans in the Senate will be able to mount the necessary 60 votes to cut off a filibuster.  So, if the Democrats do elect to filibuster S. 801, it may end up just being another futile attempt to allow private employers to offer comp time. 

4.  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 LATTS Act has been assigned to the House Committee on Energy and Commerce.  No hearings have yet been scheduled.

5.  ALKALINE HYDROLYSIS.  We previously reported that the five states of California, Indiana, Nevada, Utah and Washington had legislation introduced earlier this year to legalize alkaline hydrolysis as a method of disposition for human remains.  Currently, 12 states (CO, FL, GA, ID, IL, KS, ME, MD, MN, MO, OR and WY) recognized alkaline hydrolysis as a lawful form of disposition for human remains.    

Of the five states with alkaline hydrolysis bills, only Nevada has approved it as a form of disposition.  Alkaline hydrolysis will be legal in that state on January 1, 2018.  The bill in California (AB 967) passed the Assembly and is in committee hearings in the Senate.  If approved, it would make alkaline hydrolysis legal in California on July 1, 2020.  The bill in Washington (HB 1700) is still in committee hearings.  The Indiana bill, which was not supported by the Indiana Funeral Directors Association, died a quick death.  The Utah bill could not get passed by the deadline for the legislative session and will be introduced next term.