Punching In: The Latest on LGBT Bias, Apprenticeships, and Tips

Monday morning musings for workplace watchers

Behind the Scenes at the EEOC| Who’s Hand is that in the ETA Cookie Jar? |This Judge is 100% Against 80/20

Chris Opfer: As expected, the Justice Department late Friday told the Supreme Court that it should overturn an appeals court decision finding that gender identity bias is a form of sex discrimination already banned by federal law. The DOJ also said a separate appeals court got it wrong when the panel ruled that sexual orientation bias is similarly prohibited by Title VII of the 1964 Civil Rights Act.

Noticeably absent from the brief was the Equal Employment Opportunity Commission, which the DOJ is now representing in the litigation. The EEOC successfully sued on behalf of a transgender woman fired from her job at a Michigan funeral home, but the Justice Department represents the government in all cases before the high court.

We reported last week that Solicitor General officials were putting the screws to the EEOC to flip its position and tell the court that Congress has to update the law if it wants to protect LGBT workers. That seemed like a longshot, given that the commission’s three current members would likely have to vote to approve such a move. Commissioners Victoria Lipnic (R) and Charlotte Burrows (D) didn’t seem ready to budge on their previous position that LGBT bias is sex discrimination.

Behind the scenes, the talks also raised some interesting questions about new EEOC General Counsel Sharon Gustafson and the extent of her authority as the agency’s top lawyer. Some had speculated Gustafson could take the position that the commission empowered her to make any decisions about the case—including changing legal positions—when it authorized EEOC lawyers to go to court in the first place. And while that might violate the spirit of the commission’s authorization, to say the least, its not clear what sort of recourse Chairwoman Janet Dhillon (R) would have if Gustafson had signed onto a DOJ brief without the commission’s explicit blessing.

This all comes after Dhillon toyed with the idea of revoking some of Gustafson’s litigation authority just weeks before she was confirmed for the job by the Senate. With another Republican expected soon to join the five-seat panel—President Donald Trump has nominated Labor Department official Keith Sonderling—this may not be the end of those talks.

Ben Penn: It was only a matter of time before acting labor chief Pat Pizzella had his first real showdown with organized labor since assuming control of the Frances Perkins Building last month. In this case, it appears Pizzella wasn’t trying to pick the fight, but nonetheless wound up on the receiving end of some harsh words from a senior building trades coalition official.

This led to the DOL’s about face on Friday, in which the agency reversed an initial move to cancel apprenticeship contracts that were up for renewal with North America’s Building Trades Unions and other labor and industry groups. Pizzella apparently personally called up NABTU President Sean McGarvey to inform him that the building trades will get their new contract after all, while outsourcing to lower-ranking DOL officials the apology calls to other contractors.

It’s plausible that Pizzella was kept out of the loop on the initial decision, as DOL explained in a statement. But there is less clarity with John Pallasch, the brand new assistant secretary for the Employment and Training Administration, the massive subagency that issued the abrupt cancellation notices.

The former Kentucky workforce official has kept a low profile since becoming this administration’s first Senate-confirmed ETA boss in July, a surprising delay considering ETA’s portfolio intersects with Trump priorities like trade and apprenticeship.

After the criticism from NABTU and other discontinued contractors, the DOL leadership huddled before declaring that Pizzella and Pallasch weren’t aware of the move to end those contracts. But a DOL spokesman later asked me to retract the portion of their statement that declared Pallasch wasn’t involved.

I’ll let you all form your own conclusions about that timeline.

Now for the more pertinent question: What about Gene?

Eugene Scalia, the presumed next labor secretary, still has to undergo a confirmation battle in the fall. The progressive wing of organized labor will be working the Hill to call attention to Scalia’s business ties in a longshot bid to sink the nomination. At a minimum, they’ll be trying to make Scalia a campaign issue for Senators up for reelection.

If there remains any lingering resentment among NABTU’s more politically moderate leaders about a Trump administration that they’ve tried to maintain a relationship with, the AFL-CIO sure would love their help in the anti-Scalia messaging. But even though the building trades took a rare public stance against the Trump DOL on Friday, they’re still not ready to go nuclear.

Expect NABTU to sit out the Scalia fight.

CO: A recent court decision in a case involving P.F. Chang’s could take some of the bite out of the Labor Department’s plans to update minimum pay requirements for tipped workers.

A federal district court judge last Thursday ruled that the Chinese food restaurant chain can’t pay the lower tipped minimum wages to servers for the time that they spend performing tasks that don’t usually generate gratuities. Judge Anita Brody rejected DOL guidance issued last year, in which the department said employers can pay servers the $2.13 an hour tipped minimum wage—instead of the $7.25 minimum rate for nontipped workers—for any tasks related to serving and other jobs that usually come with tips.

Brody instead sided with the Obama-era “80/20" approach, in which the DOL had previously said workers who perform nontipped tasks for at least 20 percent of their time on the clock must be paid at the higher rate for that time. She said the department’s new guidance was not entitled to deference because it is “unreasonable.” Although the guidance appears to indicate that there is some limit on how much nontipped work and employee can be asked to perform at the tipped minimum wage, the department has not made clear where that line should be drawn, according to Brody.

“This internal inconsistency alone undermines the reasonableness of the interpretation,” Brody said.

The decision comes as the DOL is set to unveil a new tip rule, which the department has said will revise its approach to the “dual jobs” question in an effort to “provide greater clarity.”

If the P.F. Chang’s decision is a guide, the department will want to clearly identify when untipped tasks have to be paid the full minimum wage. If the department opts against picking new numbers to replace “80/20,” it could instead specify which tasks count as “dual jobs” for which only tipped tasks can be paid at the lower rate and which qualify as “related duties” that can be compensated at the tipped minimum wage level.

The decision focused on the department’s use of guidance to interpret the existing regulation, a practice that the Supreme Court limited in a June decision. If and when the DOL finishes formally rewriting the rules through the notice and comment process, some of the analysis could change.

We’re punching out. Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us: copfer@bloomberglaw.com and bpenn@bloomberglaw.com or on Twitter: @ChrisOpfer and @BenjaminPenn.

See you back here next Monday.

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