Monday morning musings for workplace watchers.
DOL Doesn’t Know Bottom Rate for Contractors| Joint Employment Challenge Returns with Trump
Rebecca Rainey: Weeks after President Donald Trump canceled a Biden-era executive order raising the minimum wage for federal contractors to $15, the US Department of Labor has still not clarified what the minimum wage is for companies doing business with the federal government.
The DOL has said it will no longer enforce its rulemaking implementing the now-defunct EO 14026 and intends to go through the regulatory process to officially get the policy off the books. That begs the question DOL hasn’t answered: what’s the minimum wage for contractors?
But, a current Wage and Hour Division employee said they’ve been given no instruction as to what the current wage is.
Attorneys representing federal contractors say that they’re advising clients to comply with the wage rate set out in an Obama-era executive order 13658, which had been superseded by Biden’s $15 wage order. Obama set a lower minimum wage for contractors at a rate that would now be a little over $13. By comparison, Biden initially set the contractor minimum wage at $15, but by 2025 the rate had increased to $17.75 due to built-in annual adjustments for inflation.
“There is a bit of confusion,” said Eric Meyer, a partner at Pierson Ferdinand LLP in New Jersey. “You enter into a contract with the government today what are you supposed to be paying?”
Still, workers on federal contracts covered by the Biden EO could start to see pay cuts, attorneys say. Contractors who currently have agreements with the federal government that include wage rates from Biden’s order can request a change order to remove them, according to Timothy Taylor, an employment and litigation attorney at Holland & Knight LLP.
“The prudent approach would be to approach a contracting officer and get in black and white the removal of that higher minimum wage,” Taylor said.
If the administration were to revert back to the Obama-era wage rate, Heidi Shierholz, a former chief economist at the DOL said it would mean a “25% pay cut for a full-time federal contractor earning the minimum wage—a loss of over $9,000 a year.”
Shierholz, now president of the Economic Policy Institute, added that there’s enough confusion around what the rate is that “employers won’t feel any need to comply.”
Robert Iafolla: Litigation over the National Labor Relations Board’s regulation for joint employment minted at the tail end of the first Trump administration is restarting in a federal courthouse after a three-year pause.
A federal judge in the US District Court for the District of Columbia issued a scheduling order last week again starting the clock for the Service Employees International Union’s challenge to the joint employer rule.
The case was shelved after an influx of Biden appointees flipped partisan control of the board in 2021 and declared its intention to issue a new joint employer rule.
The legal standard for determining when multiple companies share liability and union bargaining obligations for the same set of workers has been one of the most hotly contested issues in federal labor law over the past decade. Joint employment is an important topic for franchise companies and firms that rely on contract labor.
The current joint employer test comes from the rule that an all-Republican board issued in 2020 that turns on a business exerting direct and immediate control over the job terms of workers directly employed by another company.
The SEIU’s lawsuit against that regulation remained in deep freeze as the new Democratic majority went through the rulemaking process, finalized a regulation setting a more employee-friendly standard, and then saw it struck down in a Trump-appointed judge’s Texas courtroom last March.
The SEIU persuaded the D.C. District court to keep the litigation on ice so that the NLRB could consider its petition asking the board to revoke the Trump-era joint employment rule and return to shaping the legal standard through individual case rulings.
But eventually the union decided there was no need to keep delaying. The NLRB hasn’t acted on the SEIU’s petition, and the board’s ability to do so is in question due to the uncertain status of member Gwynne Wilcox, the union said in a March filing.
Trump nullified the NLRB’s ability to act on the rulemaking petition when he fired Wilcox in January, which robbed the board of its three-member quorum. Although a district judge allowed Wilcox to rejoin the board, an appeals court is weighing whether to pause that reinstatement order.
The scheduling order issued by Rudolph Contreras, an Obama appointee, sets forth the timing for briefs on a few disputes that need to be resolved before the judge can consider the arguments against the rule, including the NLRB’s bid to have the case transferred to the US Court of Appeals for the District of Columbia Circuit.
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