Daily Labor Report®

Punching In: Legal Drama for Labor Department

Feb. 11, 2019, 11:00 AM

Monday morning musings for workplace watchers

Lone Star State Overtime Showdown | Oracle War of Words | New NLRB Name Surfaces

Chris Opfer: Jaclyn and I didn’t set out to be crime reporters, but the new Epstein-Acosta investigation had us going behind the scenes at the Justice Department last week. The probe into what some call a “sweetheart deal” for accused pedophile Jeffrey Epstein means questions about Labor Secretary Alex Acosta’s role as lead prosecutor in the 10-year-old case aren’t going away anytime soon. There’s no indication, however, that the inquiry is immediately threatening Acosta’s Cabinet seat.

Meanwhile, there could be some new legal drama for the Labor Department when it rolls out a much-anticipated rule to update federal overtime pay requirements. The DOL is widely expected to bump the OT threshold to somewhere in the $33,000 range from the current $24,000. This threshold is the salary level under which workers are automatically entitled to time-and-a-half pay for all hours after 40 per week. Business advocates are once again saying they’re ready to sue if the department also decides to include a provision to automatically increase the threshold every few years or staggers it based on regional cost of living differences.

“I can tell you here today that if the DOL somehow ignores us, they will be sued again by the business community to challenge their authority to do that,” Littler Mendelson attorney Tammy McCutchen told a group of management lawyers last week about possible indexing and cost of living tweaks. “And guess what? We’ll bring it in Texas again.”

The Chamber of Commerce, the National Federation of Independent Business, and other groups sued the Labor Department in a Texas federal court two years ago to stop an Obama administration rule that would have kicked the overtime threshold to nearly $48,000. The groups were mostly concerned about the broad expansion of time-and-a-half pay liability, but also none too happy with an auto-indexing provision that would have occasionally increased the threshold to track inflation.

Acosta has said publicly that the department should at least consider indexing as a form of regulatory efficiency that would allow for overtime updates without having to go through the extensive rulemaking process. He has also signaled that he’s at least aware of the argument that regional threshold differences could address concerns about the impact of new requirements on businesses in areas with lower living costs.

The DOL probably isn’t going to include either feature in its proposed overtime rule, but the department may ask the public to weigh in on whether those provisions should be part of the final regulation.

Hassan Kanu sat down with Adam Klein from Outten & Golden to talk about another closely watched employment issue—bans on asking job applicants about salary history—in this week’s Punching In podcast.


Jaclyn Diaz: Speaking of lawsuits and DOL: The continuing legal fight between the department and Oracle is showing no sign of slowing down, and another problem is coming down the pike for the tech giant. On Friday, New York City Comptroller Scott Stringer called for the Securities and Exchange Commission to investigate whether Oracle misled investors about alleged pay bias.

In case you need a refresher on where this all started: The DOL’s Office of Federal Contract Compliance Programs is claiming Oracle paid women and minority workers less than other employees, steering them into lower-level jobs and imposing an “extreme preference” for immigrant visa holders. The OFCCP alleges the discrimination resulted in a loss of about $400 million in wages for these workers, according to Paige Smith’s dogged reporting on the issue. This all stems from a 2014 audit the OFCCP did on Oracle’s pay data.

The legal dispute recently descended into a war of words with a snippy filing by the company. It alleged that the DOL engaged in secret, improper agreements with private plaintiffs’ attorneys to bring hiring and pay discrimination claims against the company. Oracle then asked an administrative law judge to reject the department’s request to file an amended complaint in a case stemming from the 2014 pay data audit. Now we must await the DOL’s brief in response, which should be coming sometime this week.

I wonder if this Oracle case will serve as the canary in the coal mine for other tech companies facing OFCCP pay and hiring bias complaints. The federal contractor watchdog has filed complaints against major names like Google, Microsoft, and Dell. Is it possible that we’ll see this kind of yearslong controversy involving other contractors?

Chris Opfer: Now that former National Labor Relations Board Member Mark Pearce has removed himself from consideration for the board’s open Democratic seat, the question is who will take his place.

Discussions are in the very early stages and there’s no sign that the White House is ready to announce a nomination anytime soon. Still, one person said to be in the mix is SEIU 32BJ General Counsel David Prouty. The former UNITE HERE lawyer recently joined the SEIU local after a stint with the Major League Baseball Players Association.

Prouty has one thing going for him in terms of potentially getting enough Senate Republican support to be confirmed: His name isn’t Mark Pearce. The business community has been in an all-out blitz in recent months to try to keep Pearce from returning to the board. They’re likely to continue to urge the White House and Senate to keep the seat open until around the time Lauren McFerran’s (D) term ends in December, when both Democrat seats could be filled at the same time as potentially part of a larger deal.

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 on any and all labor and employment news: copfer@bloomberglaw.com, and jdiaz@bloomberglaw.com or on Twitter: @ChrisOpfer and @JaclynmDiaz.

See you back here next Monday.

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To contact the reporter on this story: Chris Opfer in New York at copfer@bloomberglaw.com