Welcome
Daily Labor Report®

Punching In: Letters, Lawsuits and the Future of Work

Oct. 15, 2019, 10:00 AM

Monday morning musings for workplace watchers

Paging Dr. Weil | Can I Get an Overtime Plaintiff? | House Still Waiting to Go PRO

Chris Opfer: President Donald Trump last week signed a pair of executive orders aimed to ban federal agencies from issuing a wide range of subregulatory guidance. Those policy proclamations have long been chided by the small government crowd as thinly veiled rulemaking without the public notice and comment process required for actual regulations.

The White House pointed in particular to a 2015 guidance document from the Labor Department, in which Obama Wage and Hour Administrator David Weil said the vast majority of workers should be considered employees—rather than independent contractors—covered by federal minimum wage and overtime pay requirements.

The new orders exempt the legal opinion letters that the Department’s Wage and Hour Division revived in place of the Obama DOL’s “administrator’s interpretations” early in the Trump administration. Those letters are often touted as an alternative to sweeping policy statements because they respond to compliance questions and are supposed to be narrowly tailored to a specific situation.

The irony is that an opinion letter that the DOL issued earlier this year on the same worker classification topic that Weil’s administrator’s interpretation addressed was written so broadly that some folks have called it a regulation dressed up as a letter. The DOL said in the letter that an unidentified gig company isn’t required to classify workers that it connects with customers via online platforms as employees because the company simply acts as a “referral business.” The department also laid out a six-part test for determining whether a worker is an employee or contractor.

The letter is “very, very broad, but it is not binding on anyone else,” says Peter Wozniak, a business attorney for Barnes & Thornburg in Chicago. “Anybody who wasn’t that employer would be hard pressed to say in court ‘we’re covered by the letter,’ but it could still have persuasive value if they are in a similar situation.”

Weil told me that the Trump DOL is “using a very narrow device to send a much bigger message about employee status.” On Weil’s watch, the department decided it was better to give everyone covered by federal wage and hour requirements a sense of how the DOL was enforcing the law.

The repealed guidance was meant “precisely to provide greater clarity on an issue where we did not have regulatory authority but we did have enforcement obligations,” Weil said. “We wanted to give employers clarity on their obligations under the Fair Labor Standards Act, which we enforce.”

Ben Penn: Since its late September release, we’ve heard little in the past few weeks about the Labor Department’s high-profile rule to lift the overtime pay salary threshold to $35,600 from $23,600. This could just be the calm before the storm, with the rule’s Jan. 1 effective right around the corner.

And by storm I mean lawsuits. Plural.

Progressive advocacy groups, unions, and the plaintiffs’ bar have all been coordinating in recent weeks on how to craft the litigation strategy that would have the best shot at knocking down the regulation in federal court, several sources say. Worker advocates have been trying to find the appropriate plaintiffs to bring lawsuits, which would argue that the rule is “arbitrary and capricious” under the Administrative Procedure Act.

They say a qualifying plaintiff would be a worker who earns more than the Trump DOL salary threshold but less than the pay cutoff set by the Obama administration in 2016 ($47,500).

“I think the strongest kind of plaintiff is somebody who is working long hours at relatively low pay who is directly impacted by the failure of being covered by overtime,” said Michael Hancock, an attorney at plaintiff firm Cohen Milstein in New York and a former Obama Wage and Hour Division official. “You find a Dollar General assistant manager who is working 60-70 hours a week and is being paid this relatively low salary, that’s a pretty good plaintiff to have.”

One big question to highlight right now before the legal brouhaha gets underway is whether the those filing the lawsuits will seek to replace the Trump rule with the currently enforced salary level of about $24,000 that was set in 2004. Or will they go bolder and try to swap it out with the Obama version, which never actually took effect because it was enjoined?

Jaclyn Diaz: Congress is back from recess today after a brief two-week break. Lawmakers have just around legislative 30 days left in session.

House Majority Leader Steny Hoyer (D) announced Friday a few bills expected to move this month. Missing from the list is the Protecting the Right to Organize Act, the major labor reform bill that has continued to collect Democrat co-sponsors. The bill’s cosponsorship list is up to 213 as of Friday afternoon.

This week promises to be fairly quiet in the labor front, but one thing to keep an eye on is the Outsourcing Accountability Act of 2019 (H.R. 3624). The bill is expected to get a floor vote this week. It would force public companies to disclose the number of employees in each U.S. state and territory and in each foreign country, and show how the numbers changed from the previous year.

The House Education and Labor Committee is holding a future of work roundtable at 10 a.m. on Wednesday. The event will be sans lawmakers. It is designed as a general discussion for hill staffers with academia, labor, and others from the private sector.

The committee has turned its attention to future of work issues of late, and this fall we should continue to see hearings on the topic. The panel over the summer held talks with various stakeholders on the topic. Employer groups, including the International Franchise Association, were part of these “open discussions,” one source familiar with the meetings said.

As we enter deeper into impeachment territory it feel like Congress has never been so polarized, but that’s not the case everywhere. If you can believe it, there are lawmakers who have found common ground on some issues. Exhibit A: Sens. Bill Cassidy (R-La.) and Kyrsten Sinema (D-Ariz.) on paid leave, a topic that Bloomberg Law’s Genevieve Douglas and I will be digging into later this week.

The lawmakers’ child tax credit proposal reflects the pair’s shared legislative philosophy that simple, targeted bills are a better strategy than larger, complicated cure-alls. Although they haven’t formally introduced their plan as legislation, Cassidy and Sinema have set out to craft a voluntary proposal that wouldn’t create new tax burdens.

Sinema’s support for this bill is unusual given the progressive labor platform the Democratic Party has embraced, which includes a broad paid family leave plan. But the Arizona Democrat hasn’t been one to follow the party blindly, especially when it comes to employment topics. She’s also crossed the aisle on another controversial workplace policy question: “joint employer” liability.

The reason? Just look back at her district, one political observer told us. Sinema and Cassidy represent constituents largely opposed to new taxes and made up of many low- and middle-income workers and small businesses.

“Politically, she’s fitting in well with where Arizona is headed,” said Marcus Dell’Artino, a partner at political strategy firm First Strategic. “Is Arizona going purple? Yes. She’s representing that as she focuses on her legislation and in her career.”

The Cassidy and Sinema proposal may be bipartisan, but it’s still a long shot that has yet to be embraced by folks on the left or the right.

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, bpenn@bloomberglaw.com, and jdiaz@bloomberglaw.com or on Twitter: @ChrisOpfer, @BenjaminPenn, and @jaclynmdiaz.

See you back here next Monday.

Bloomberg Law® helps labor and employment law practitioners provide rapid, accurate, and complete advice to clients by bringing together trusted, market-leading Bloomberg Industry Group content like Daily Labor Report® and treatises like Covenants Not to Compete: A State-by-State Survey and The Developing Labor Law, with a fully integrated, innovative legal research platform. Click here to request a free trial.

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

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