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Punching In: Labor Department Revs Up for Regulations

Oct. 21, 2019, 10:30 AM

Monday morning musings for workplace watchers

Agenda on the Menu| All About A.B. 5 | Guidance Marching Orders

Ben Penn: New Labor Secretary Gene Scalia is slated to address the Trump administration’s top brass this morning at a White House Cabinet meeting.

This could also be the week we get an update on the administration’s regulatory plans. The White House is expected to soon release its latest semi-annual regulatory agenda, previewing each federal agency’s anticipated rulemakings over the next 12 months.

The agenda’s specific timelines for when each rule will be published are seen as more of a best guess than a reliable forecast. But when it comes to the Labor Department’s regulatory slate, the list of rules and corresponding timetables carry a bit more weight this go-around. That’s because the fall 2019 agenda represents what the DOL wants to get done under Scalia’s leadership in the guaranteed time remaining for the Trump administration.

Scalia was only sworn in Sept. 30, after the department’s discussions were likely well underway with the White House Office of Information and Regulatory Affairs about what to include in the agenda. Still, his top policy official Jon Berry offered a hint last week that his new boss will be preoccupied with some new rulemaking initiatives throughout the last year of the Trump White House’s first term.

When the agenda is “ready for publication, I think that’s going to reflect some of the latest and greatest thoughts, and I think things are going to keep maturing and keep developing, especially with Secretary Scalia...hitting the ground running and I think is going to have a lot more to talk about before too long,” said Berry on a teleforum hosted by the Federalist Society.

That means we’ll soon have answers as to whether the next year will be defined strictly by the pre-established big-ticket rules (overtime, joint employer, apprenticeship, etc.) or if there are some new tricks up the Labor Department leadership’s sleeve.

Chris Opfer: Consider the lawsuits filed.

California isn’t the only place where gig economy businesses and others that classify workers as independent contractors are feeling some heat. As lawmakers in New York are set to take up legislation to restrict that classification, labor officials across the Hudson River in New Jersey are investigating Uber and Lyft for skirting state employment taxes by treating rideshare drivers as self-employed entrepreneurs.

Still, the Golden State promises to be a hot bed for the classification debate as a new law designed to force businesses to make most workers employees goes into effect in a little more than two months.

Much of the action will center on the statehouse in Sacramento, where business groups will be angling for all kinds of exemptions to the law—A.B. 5—which they say could threaten their existence. It’s also worth keeping an eye on the courts, where some of the same groups are likely to challenge A.B. 5 on state and federal constitutional grounds.

“All options are on the table,” Matt Haller, an executive with the International Franchise Association recently told me. The IFA is concerned that the California law could be interpreted in a way to make large fast food chains and other franchisors employers of workers at businesses owned and operated by separate franchisees. That would not necessarily make those workers eligible to unionize under federal law, but it could help unions make the argument for collective bargaining.

“Organized labor holds all of the cards in California,” Haller said. “This is unlike anything else that we’ve ever dealt with and it is incredibly frustrating.”

Whether it’s the IFA, the Chamber of Commerce, or some other group (we’re looking at you, Pacific Legal Foundation), whoever winds up suing to try to overturn the law in federal court will likely pursue a couple of arguments. They will try to convince various judges that A.B. 5 violates due process and equal protection rights by haphazardly drawing an “unduly vague” line in the sand between workers and contractors with little or no respect for individual contract rights.

Many of A.B. 5’s fiercest supporters will be quick to point out that critics face an uphill legal battle. But that effort might soon become easier. The long reliably liberal U.S. Court of Appeals for Ninth Circuit is getting closer and closer to flipping to a majority of Republican administration nominees, who could take a more business-friendly look at cases.

BP: Back to the Labor Department and its top policy official for a concluding thought. While speaking on that same Federalist Society call, Berry was given an opportunity to divulge what President Donald Trump’s recent executive orders on agency guidance and enforcement actions will mean for DOL.

Berry’s response was to simply summarize the contents of the orders. He focused on the order requiring fairness and notice in enforcement actions and in jurisdictional determinations, all fitting under the theme of ensuring the regulated community isn’t caught by surprise. That EO’s language surely got the attention of the same management attorneys who have been complaining about Labor Department enforcement agencies and their “gotcha” games in recent years.

“I think it’s fair to say the administration is still very much in the process of taking those new orders from the president and working those out specifically for what that’s going to mean for any particular case, for any particular class of cases,” Berry said. “We’ve received word loud and clear from the president that enforcement actions really need to take into account the proper standards and make sure that there’s been fair notice of those.”

In other words, the Labor Department doesn’t know how the president’s orders will impact operations.

CO: 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, @BenjaminPenn.

See you back here next Monday.

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To contact the reporters on this story: Ben Penn in Washington at bpenn@bloomberglaw.com; Chris Opfer in New York at copfer@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com