Hello, and welcome to Training with LegalEase. Today’s topic is about the Department of Labor’s crackdown on employment contracts.

The Department of Labor recently announced that it will crack down on specific provisions that are often found in employment agreements. Let’s talk about it.

First, the Department of Labor plans to crack down on employment agreements that contain provisions that require employees to waive their rights under the Fair Labor Standards Act. Employees cannot waive their rights under FLSA. It is non-negotiable. Employees are entitled to all the benefits under FLSA, including minimum wage and overtime.

Second, the DOL will not tolerate misclassification of workers. That  typically relates to employees misclassified as contractors, and it’s often done when employers are trying to avoid paying certain benefits to employees, such as overtime, adhering to certain safety standards, or even paying taxes. The DOL plans to crack down on those provisions in employment agreements.

Third, indemnification provisions. It is common for employment agreements to contain these provisions that really shift the risk from employer to the employee. The DOL does not want the contracts to contain these indemnification provisions any longer.

Another provision that’s consistent with indemnification is a provision that basically says the losing party pays attorney’s fees. These provisions are problematic because they typically discourage employees from filing claims against their employers, even valid claims, out of fear of having to pay the attorney’s fees if they lose. That’s a provision that will be strictly reviewed by the DOL.

Five, “stay or pay” provisions. Now, these are common in executive compensation packages. Typically, you will see a “stay or pay” provision when an executive receives something like a relocation bonus or a sign-on bonus. The money is given in exchange for an agreement  that the employee will remain employed for a specific period of time. What’s the problem with this? Well, the DOL is of the opinion that these provisions discourage employees from leaving situations that may be unsafe or where there may be harassment, discrimination, retaliation, or other legal violations taking place. The DOL does not want to discourage workers from leaving those kinds of situations.

Okay, we have discussed confidentiality, non-disparagement, and non-disclosure provisions in the recent past. These provisions have been under strict scrutiny by the DOL because they can discourage employees from discussing terms and conditions of employment. The DOL does not want workers to feel like they cannot openly discuss issues that occur at work.

Finally, provisions that require employees to report safety violations internally before going to the government are a no-no in the eyes of the Department of Labor. The law supports employees making reports to government agencies like OSHA, even before reporting to employers. Oftentimes, employees don’t want to tell employers because they fear retaliation.

We have discussed seven different provisions the DOL will start to review in employment agreements. The DOL intends to start filing suits, joining suits, and really trying to crack down on any provision that discourages employees from taking action that they are otherwise  encouraged to do by law.

What can you do as an employer? Review, review, review!  Review your policies, review your application forms, review your employment agreements, review your independent contractor agreements, and conduct an internal audit. We want to make sure that these provisions are not worded in a way that is inconsistent with state and federal law, and you want to try to avoid being the target of a DOL investigation.

If you have questions, contact us. We are happy to conduct the internal audit for you and modify your agreements so that they are compliant. Our link is in the bio, and you can schedule a discovery call straight from our website. Thank you so much for joining Training with LegalEase.