Punching In: The Summer of Joint Employment? (1)

July 16, 2018, 10:00 AMUpdated: July 16, 2018, 3:19 PM

Monday morning musings for workplace watchers

Confirmations Slow Roll |Pearce Takes a Powder | The Pon That Got Away

Chris Opfer: I’m hopping a plane to Ireland this morning for some long overdue R and R. When I get back, we’ll be just about five weeks out from Labor Day. We all know that the late August holiday means my white jeans go back on the shelf until next summer. Perhaps more importantly, Labor Day is something of an informal deadline for the National Labor Relations Board to roll out a proposed regulation on joint employer liability for affiliated businesses.

NLRB Chairman John Ring (R) told lawmakers last month that the board plans to unveil a proposed joint employer rule “as soon as possible, but certainly by this summer.” Some skeptics say that timeline is ambitious for tackling what’s become the marquee legal question in labor circles: When can one business be considered the joint employer of another business’s workers for unionization and other purposes?

Folks on both sides of that debate largely expect the board to return to a narrower test for joint employment that was in place before the 2015 Browning-Ferris Industries ruling. Before BFI, the board said a business can be a joint employer only if it exerts “direct” control over the workers. In 2015, a Democrat-majority board found that even “indirect” control over another’s workers could do the trick.

I’m hearing the board’s Republican majority might not just flip BFI but also take the extra step of pointing out some common arrangements in certain industries that don’t create a joint employment relationship. Those could include some of the brand management standards that fast food and other franchisers impose on their franchisee owners, like training and scheduling requirements. The board may also want to wade into the contract and subcontract relationships that are common in the construction business.

If the NLRB doesn’t address some of those scenarios in the proposed rule, it’s safe to say that employers in the industries likely to be most affected will ask them to do so in the final version.

Ben Penn: Don’t forget that the White House and Labor Department also have a joint employer rulemaking on their radar. The idea was floated in the first year of the administration, and it’s something to watch as the Wage and Hour Division and DOL policy office continue to get staffed up.

And Chris may be abandoning us for vacation, but I’m feeling energized and eager to make the most of these remaining few weeks I have on the beat before giving my byline an eight-month rest to pursue a journalism fellowship. That means if you have any hot tips, please send them before my last day on Aug. 17.

Here’s a story playing out below the radar that we’re tracking: What, if anything, will the Wage and Hour Division do with the Obama-era regulation to extend minimum wage and overtime protections to some 2 million home-care workers?

After a litigation battle that stretched throughout the middle years of the Obama administration, the rule finally took effect in late 2015, much to the home health lobby’s dismay. The National Association for Home Care & Hospice may have lost the legal battle, but they aren’t abandoning the fight.

NAHC President Bill Dombi tells me he met with a room filled with DOL officials a little over a month ago to discuss the unwieldiness of the rule for his members. He said he walked away from the meeting receiving “no commitment at all” from the department to act on his request to reconsider the regulation.

Dombi promised DOL that he would be providing them with a membership survey, which NAHC is still working on completing, measuring how the rule is affecting home care providers.

The WHD, the agency with jurisdiction over the issue, has a slew of regulatory matters on its plate as is. If the agency did reopen this rulemaking, it would be hammered as Trump’s effort to deny hard-earned pay from a caregiver workforce that’s increasingly in demand.

Obama WHD officials I talked to are still concerned that this rule—a major priority of the prior administration—is one the agency will eventually get around to overturning, or perhaps stop enforcing. But the wave of DOL lawsuits in May accusing home care providers of FLSA violations suggests the Obama team is being too pessimistic.

CO: It appears that NLRB Member Mark Pearce (D) won’t get the chance to stick around for another five years when his term ends Aug. 27. Pearce and his allies have been lobbying to get him a third term and the White House even started the vetting process earlier this summer. But business lobbyists have pumped the brakes on that by urging Trump officials to show the former board chairman the door. They say Pearce went too far in favor of unions during his time as the board’s chairman. Many think Team Trump may decide to keep the seat open for the near future, just as the Obama administration did when Harry Johnson (R) left the board in 2015.

Being down one Democrat won’t likely have much of an impact on how the board rules in the various cases it takes up. The NLRB’s three Republicans can and likely will use their majority control to continue to peel back Obama-era precedent. But, after eight years on the board, Pearce is uniquely qualified to slow down that process.

“He knows where the bodies are buried,” one management-side attorney recently told me.

Several business lobbyists and lawyers told me they suspect the board’s Democrats had a hand in drumming up interest on Capitol Hill in some of the conflicts-of-interest questions that have dogged Member Bill Emanuel (R) and scuttled attempts to overhaul the joint employer liability test via case decisions. They also said there are certain things Pearce and Member Lauren McFerran (D) can do to try to slow case decisions, including by taking their time with dissenting opinions.

With Pearce on his way out, the next question is: What happens with the other Democrat-designated seat on the board? McFerran’s term expires in December 2019. That seat also has to be filled with a Democrat, or it could be kept open.

BP: This week’s Senate activity features Majority Leader Mitch McConnell marching onward in his mission to clear as many of the president’s nominees as possible this summer, with little regard for staffers’ vacation plans.

McConnell’s threat to cancel most of the August recess (which we’ll believe when we see) may be viewed as a positive development for the president’s nominees to head the Wage and Hour Division (Cheryl Stanton), Occupational Safety and Health Administration (Scott Mugno), and Bureau of Labor Statistics (William Beach). The three have been waiting for floor time to open up so that senators could debate and eventually confirm them to the Labor Department posts. Extra weeks in session this summer would seem to do the trick—if we weren’t about to blow up the whole process by tossing a Supreme Court selection into the mix, not to mention a potential EPA administrator nominee to replace Scott Pruitt.

I conducted an informal poll of business lobbyists who’ve been tracking the DOL noms in the hopes they can get onboard soon and start accelerating the administration’s labor agenda. Not a single person I heard back from is expecting to see votes on the trio before Labor Day, barring a long-shot deal between Chuck Schumer and Mitch to allow a group of nominees to be voted on as a package. These lobbyists have tried to work McConnell’s office for signals, and nobody’s heard a peep one way or the other.

Perhaps in this climate of logjams for non-judicial picks, some might be inclined to read no news as good news. Cling to prayers of Senate action on the labor team all you want. Here’s a safer bet: Don’t count on any more Senate-confirmed DOL agency heads this year at all. If you’re on the side of Mugno, Stanton, and Beach, you’d better hope the Rs maintain a Senate majority come November.

And speaking of that SCOTUS pick I alluded to earlier, we’ll have a vacancy on the D.C. Circuit if justice nominee Brett Kavanaugh is confirmed. That would mean yet another vital judicial opening that McConnell will surely treat as more important than the DOL positions.

To bring it all home, here’s the rumor tossed around during a recent conference call for business association reps: How about Trump considering tapping Alex Acosta to replace Kavanaugh on the second most important court in the land? I’m dismissing this as idle gossip, but that doesn’t mean the labor secretary wouldn’t covet this appointment as a pathway to the high court himself.

CO: Ben reported last week that Acting Wage and Hour Administrator Bryan Jarrett is up for a promotion. Jarrett was recently nominated to be the department’s assistant secretary for policy.

Here’s an interesting wrinkle in that story: Secretary Acosta originally wanted Office of Personnel Management Director Jeff Pon for the job. Pon last week told a group at an Equal Employment Opportunity Commission conference that he was offered and accepted the assistant secretary gig, but the White House tapped him for OPM chief before the DOL move was made public.

“He wanted me to be the assistant secretary for policy at labor and I said yes,” Pon told the crowd, referring to Acosta.

Pon said Acosta wanted him to help lead the department’s training and apprenticeships initiatives. The idea was for Pon to serve as a “Swiss army knife” to bring people from academic, labor, STEM, policy, and other backgrounds together to develop the administration’s new approach to what has been Acosta’s top priority since taking the reins at the Frances Perkins building.

Jarrett will come to the job with a different set of credentials than Pon, who held various human resources executive positions before being tapped to run OPM. Jarrett, the current acting wage and hour chief, practiced labor and employment law for six years before joining the administration. Does that mean the department’s policy priorities might also shift?

We’re punching out. Programming note: We’re taking a week off from Punching In while I wrap my teeth around a few Guinnesses on the Emerald isle. We’ll be back with a fresh edition of the column July 30.

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

See you back here next Monday.

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(Updated to reflect that McFerran's term ends in December 2019.)

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