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Biden Wage Chief Restores Staff Power to Police Employer Abuses

March 18, 2021, 1:40 PM

The Biden administration’s Labor Department is empowering career officials across the U.S. to deploy a range of enforcement tools when scouring businesses for wage violations, overturning a Trump-era policy that consolidated approval of such decisions under one politically appointed leader.

Jessica Looman, the principal deputy administrator of DOL’s Wage and Hour Division, earlier this month revoked 2019 instructions issued by the Trump-appointed WHD Administrator Cheryl Stanton, according to an internal memo obtained by Bloomberg Law.

Looman, who arrived on Inauguration Day, is ceding control to regional and district office personnel, who now gain final approval on multiple actions—such as more stringent back-wage settlements—that crack down on employers accused of shorting workers on pay.

Previously, many of these activities required Stanton’s final approval, which sent a chilling effect to the enforcement field that stopped some career officials from pursuing those means and methods, according to current and former DOL officials.

By spurring more frequent and faster use of wage investigation tactics, the changes are likely to deliver a more punitive enforcement philosophy when WHD investigators scrutinize company payroll practices.

But scattering this expanded authority across five regions and more than 50 district offices also opens the agency to criticism from management-side attorneys and Republicans who argue inconsistent and overly aggressive enforcement can delay or prevent the recovery of wages owed.

Reining in career staff, including those perceived as overzealous, to achieve uniform enforcement protocols was a signature priority under Trump’s secretary of labor, Eugene Scalia.

Off-Limit Tools

Looman’s March 8 memo came amid a series of DOL regulatory and policy decisions that voided employer-friendly measures. It delegated to regional administrators, who are career civil servants, authority to greenlight their staff’s use of:

  • “Enhanced compliance agreements” in settlements, which generally require more egregious violators to take steps to ensure adherence to wage laws;
  • Visa certifications for undocumented workers who are victims of severe workplace crimes;
  • Cooperation agreements with state agencies to share information;
  • “Sharing letters” between WHD and other government agencies investigating the same workplace; and
  • Requests to withhold payments to government contractors who owe workers wages.

Utilizing those means often requires time-sensitive decisions that must be made by the qualified, veteran officials on the ground, not by the national administrator, said Michael Hancock, a former senior WHD official in the Obama administration who worked at the division for two decades.

“If the reality is I can’t decide which of these tools that I can use today, those are effectively tools that aren’t available to me,” said Hancock, now a plaintiff attorney at Cohen Milstein in New York. He called Looman’s memo an “important step in trying to rebuild the relationship between the national office and the field.”

DOL media representatives didn’t make Looman available for an interview and declined to comment for this article.

2019 Memo

The business community has opposed some of the investigation procedures that career staff can now wield without waiting for political clearance. A harsher posture compels employers to drag out settlements or test the allegations in court when they would’ve otherwise paid back workers faster, said Tammy McCutchen, a former WHD administrator under President George W. Bush.

That’s likely one reason Stanton reorganized the delegations in September 2019 as a means of getting a tighter grip on the field actions that she felt were stalling cases. Her memo, which has never previously been reported, memorialized some of the steps she took shortly after her arrival to WHD that blocked investigators from proceeding with enforcement tools until she had signed off, according to a copy of her memo reviewed by Bloomberg Law.

“Cheryl’s strength is what she did operationally to make the Wage and Hour Division more efficient, and that memo was a large part of it,” said McCutchen, a former management attorney. “The proof of that is in the enforcement numbers.”

The Trump WHD placed emphasis on employer compliance outreach, including a recently disbanded program that encouraged businesses to self-report wage violations. The division set an all-time record in overall back-pay collection, recovering $322 million in fiscal 2019. The Obama-era annual high was $281 million.

“So how does undoing all these operational reforms that Cheryl put in to make that division more efficient help employees?” McCutchen said.

Looman, speaking at an American Payroll Association conference March 16, said, “The measure of the Wage and Hour Division’s success won’t be enforcement statistics showing the amount of back wages we have collected. Rather, success will be demonstrated when workers are getting the wages they have earned and employers are in compliance with the law.

“We are always thinking about and I encourage you to help us think about ways we can prevent violations before they happen,” Looman added.

A former Minnesota government official and construction union advocate, Looman is serving as the acting WHD chief for the foreseeable future. President Joe Biden has yet to nominate someone for the permanent position, which would then require Senate confirmation.

Looman’s new policy was silent on another controversial wage-hour component that the Trump administration scaled back—the use of liquidated damages that double the amount of unpaid minimum wages and overtime employers pay to workers following a WHD investigation. But the 2020 revisions to liquidated damages were included in a separate Stanton memo, likely requiring an additional memo if Looman wants to expand her staff’s use of those penalties.

The new memo also reserves Looman—and her successor as WHD administrator—as the sole final authority to approve debarments of construction and service companies that temporarily block them from eligibility for federal contracts and debarments of employers that prohibit them from participating in the H-1B, H-2B, and H-2A visa programs.

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

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

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