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Biden Acting Wage Chief Looman Steers Agency to Enforcement Mode

April 21, 2021, 4:01 PM

Jessica Looman spent her first three months as President Joe Biden’s top wage regulator erasing Trump-era rules, but she says the flurry of activity hasn’t prevented a forward-looking enforcement agenda.

As principal deputy administrator of the U.S. Labor Department’s Wage and Hour Division, Looman oversaw proposed withdrawals of a pair of industry-backed rules that would’ve made it easier to classify workers as independent contractors and narrowed the circumstances in which multiple companies are joint employers who share liability for wage violations.

Division investigators will now forge ahead by focusing on independent contractor misclassification and joint employment relationships when they police businesses for payroll violations, she said.

The big picture issue, of course, is that in order to get the protection under the law, we need to figure out who an employer is and we need to figure out who the employee is,” Looman said in an April 16 interview from her spare bedroom home office in St. Paul, Minn. “Those are just sort of two fundamental issues that have to be part of the evaluation of the cases that we look at from an investigative standpoint.”

The prior administration’s regulation on joint employment came after heavy lobbying from the franchising industry, which found the DOL rule essential to shielding fast-food and hotel corporate brands from shared responsibility with franchisees over owed back pay. The independent contractor rule was strongly supported by gig-economy platform companies such as Uber Technologies Inc. and Instacart, who argued their drivers enjoy the flexibility afforded by independent contractor status.

Asked if the public has clear guidance available on how to expect the WHD to investigate joint employment and employee versus contractor classification, Looman replied: “I think we have good law and we have the ability to enforce the laws that we do have.”

Trump’s regulations on independent contracting and joint employment—neither of which are in effect—are still clouding Looman’s actions. Industry associations are defending both rules in pending legal challenges that seek to preserve the prior administration’s business-friendly measures.

Her remarks come during a period of instability on federal wage-hour policy that’s typical of the early months of a new administration when a predecessor’s work is discarded but a robust vision for the future is still undetermined. Looman is charged with heading the WHD until Biden nominates and the Senate confirms a permanent administrator. The former Minnesota state official and construction union chief was selected as part of a senior team of day-one acting appointees hired during the Biden transition with the purpose of jumpstarting the worker-focused agenda and avoiding confirmation delays.

The WHD under Democratic presidents tends to attract criticism from Republicans and the business community for being overly aggressive with investigations, but Looman struck a more politically neutral tone.

“We want to make sure that everybody who can get the protection of the Fair Labor Standards Act is there and is able to do that,” she said. “I don’t think that’s different or inconsistent with any of the practices of prior to us.”

‘Very Interested’ in Gig Workers

Looman said retreating from Trump policies—such as curbing double damages in employer settlements and ending a program that allowed businesses to self-report violations—is by no means her sole mandate during this phase. She hinted that new guidance or regulations on the core principles of contractor status and joint employment could be under development.

“I’ll be candid with you. I think that this is an issue that we have to continue to look at,” Looman added. “We really need to think about ... how we continue to support an economy that provides worker protections based on being an employee.”

Amid evolving state policy and federal court developments, there’s an external sense of urgency for the department to weigh in on whether gig-economy companies can continue to escape minimum wage and overtime pay liability by treating workers as independent contractors.

The pressure increased when Labor Secretary Marty Walsh took command last month. He’s thus far avoided policy pronouncements when questioned on the topic of gig-worker status.

“He is very interested in this issue,” Looman said of Walsh. “He wants to learn more about it and we’re eager to get the opportunity to do that.”

Staffing Up

Looman highlighted the agency’s outreach to prevent violations before they take place, such as a series of webinars starting in May to educate workers, employers, unions, and other advocates about how to apply wage-hour and family leave laws to protect vulnerable employees who’ve been forced to work in person during the pandemic.

But safeguarding those workers also entails rooting out the bad actors, prompting Looman to strive to place more investigators out in the field.

“We’re down about 25% in terms of the number of investigators over where we were five years ago,” Looman said. Hiring to replace those losses “is absolutely something that we’re looking at.”

She’s hoping to overcome attrition among the division’s enforcement team, but her flexibility to do so depends in large part on whether Congress appropriates the boost in investigators the White House proposed in a preliminary budget for fiscal 2022.

Looman’s also working to reallocate existing resources and indicated additional information on investigator hiring for the current fiscal year could be made public within weeks.

Boosting WHD’s enforcement capacity will take on added importance if various policy proposals backed by the current administration come to fruition. That includes a $15 minimum wage—either for the full economy in legislation or federal contractors in an executive order—and an infrastructure package that would expand the number of government contractors subject to WHD-enforced prevailing wage and benefits laws.

Paid family leave provisions would also likely fall under the division’s responsibility to enforce, if Congress were to pass such a requirement.

But by that time Looman will have likely slid over to WHD’s deputy spot, serving a newly confirmed administrator. For now, she’s working to ensure the agency will be ready.

“We are already thinking about what is next, what is coming, and how do we make sure that we are a worker-focused organization that levels the playing field for the employers that want to get it right,” she said, “and making sure that we’re out, boots on the ground, across the country to demonstrate our commitment to that.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Travis Tritten at ttritten@bgov.com; Andrew Harris at aharris@bloomberglaw.com

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