Punching In: Tip Data Blues and Joint Employer Confusion

March 12, 2018, 10:30 AM

Monday morning musings for workplace watchers

Tip Pool Data Hijinks: A Possible Way Out? | This Week on “As the NLRB Turns” | Mike Lee and the EEOC

Ben Penn: Is Labor Secretary Alex Acosta ready to shed his image as arguably the most reserved Trump Cabinet member? Addressing House appropriators last week, he used his opening statement to make some news on wage-hour policy and tackle the tip pool controversy head on. And after a brief skirmish with a fired-up Rosa DeLauro, Acosta extended an olive branch to Democrats by pushing a rider to the 2018 budget bill that would prevent managers from skimming tips.

If Congress did its job and created a commonsense, bipartisan patch here, the DOL political leadership could avoid a major headache—justifying a regulatory action that would let restaurants keep workers’ gratuities.

But it’s hardly a safe assumption that the next spending bill will include this language. Even if it did, that still doesn’t answer what happened during White House-DOL deliberations that led to the tip pool rule getting proposed without a full quantitative analysis on how much money would switch hands from workers to bosses.

I’ve obtained a copy of the DOL’s final draft of the proposed rule, with edits by the White House Office of Information and Regulatory Affairs. This document doesn’t settle the mystery of any inter-agency deliberations in between the draft version and the proposal ultimately approved for release in the Federal Register, but it does make apparent that OIRA’s scrutiny was focused on the data analysis.

The draft included a line, deleted by OIRA, for instance, that stated, “The Department is unable to accurately predict how employers may respond to the proposed regulatory changes due to the absence of any empirical models in the literature.” Instead, the regulatory analysis discussion in the published proposal says that DOL lacks data on how customers of impacted businesses will respond to the rule.

“This seems to suggest that someone either at OIRA or elsewhere at the White House was aware that the statement that the department couldn’t do the analysis was false, and so had them take it out,” Sam Berger of the Center for American Progress told me. Berger had several political positions at the Obama White House and Office of Management and Budget (which houses OIRA).

Other sources I talked to were less sure that the revisions are revealing. The edits may raise suspicion, but drawing conclusions from them is tough.

Neither the final draft from DOL nor the ultimate proposed rule contained the quantitative analysis, which we reported in February was ordered scrubbed by political officials. We don’t know at exactly what stage of the process this occurred, and what OIRA’s reaction was to getting a major rule without a full estimate of its impact on workers. Typically, OIRA functions to prevent these types of issues from slipping through the cracks.

The DOL Office of the Inspector General is still looking into the DOL rulemaking process, and I’m told that the IG has access to details on the OIRA-DOL deliberations. Whatever Congress does on tip-pooling—or doesn’t do—the release of that OIG report to the public promises to be an uneasy day at the Frances Perkins Building.

Chris Opfer: Confused about what’s going on with the joint employer debate at the NLRB yet? Here’s where things stand today: The Obama board’s more expansive “indirect control” test for joint employment by affiliated businesses—established in the 2015 Browning-Ferris Industries case, and overturned for a brief moment—is once again the law of the land.

The board late last year reverted to the more business-friendly “direct employer” test via another case, Hy-Brand. In response to that move, an appeals court reviewing Browning-Ferris sent the BFI case back to the NLRB without ruling on it.

Then things really got tricky. Three board members—Chairman Marvin Kaplan (R), Lauren McFerran (D), and Mark Gaston Pearce (D)voided the Hy-Brand decision after the NLRB inspector general said member William Emanuel (R) should have recused himself from the case.

Now Hy-Brand wants the board to reverse its reversal. We reported late last week that the company asked the board to reconsider its ruling to scrap the original Hy-Brand decision. The company’s lawyers claim that Kaplan, McFerran, and Pearce violated federal law by putting Emanuel on the pay-no-mind list. The other members left Emanuel out of the Hy-Brand discussions the second time around, according to the company’s lawyers. They also say Pearce spilled the beans that a decision was coming to a group of lawyers at an American Bar Association event in Puerto Rico before the ruling became public.

Meanwhile, a federal appeals court in D.C. has asked Browning-Ferris to weigh in by today on whether the court should take back the case. If the appeals court does pick up the case, that could put NLRB General Counsel Peter Robb in the unique position of being asked to defend an Obama-era decision that the former management lawyer would probably like to see sent to the junkyard. The appeals panel already heard oral arguments in the case before deciding to send it back, so it’s possible the court would simply rule on that record.

Hy-Brand’s position in its case is interesting. The company lost in the decision in which the board overturned Browning-Ferris. The board said Hy-Brand was a joint employer of workers provided by a construction firm. So why ask the board to revive that decision?

Meanwhile, the high-profile McDonald’s joint employment case is still pending before the board, for now. Bloomberg Law’s Hassan Kanu will have more on that this week.

BP: Now for a few updates on DOL personnel, or lack thereof. Rumor has it that Arthur Rosenfeld is no longer the designated appointee to head the agency charged with investigating union finances, the Office of Labor-Management Standards.

During his visit with the House appropriators, Secretary Acosta said the agency isn’t paralyzed without a politically appointed OLMS director and hopes to have one installed soon. As recently as late 2017, Rosenfeld’s eventual assignment to direct OLMS—a slot that doesn’t require Senate confirmation—was seen as practically a sure thing. But circumstances appear to have changed for the veteran GOP labor lawyer who was general counsel of the National Labor Relations Board under George W. Bush.

A handful of sources suggest that DOL may still be searching for a new candidate, while Rosenfeld is sticking around for now as a counselor to the labor solicitor and could be in consideration for a different DOL job. If that’s true, it’s unclear what might have blown up the original plans. One theory bandied about from a few sources—Rosenfeld doesn’t possess the hard-charging anti-union philosophy that some on the right would have preferred for the next person guiding OLMS, which certain union watchdog groups rely on to produce their opposition research.

Recall that Democrats have accused OLMS under prior GOP administrations of inappropriately harassing the labor movement with thorough, targeted investigations of the same large unions that help turn out the vote for Democratic politicians.

But given Acosta’s reputation, it doesn’t seem he would want a political animal for this job. A well-respected lawyer would do just fine for him. For OLMS stakeholders, perhaps anyone with a pulse would suffice. The agency is now going on 14 months run by an acting career official, meaning the field staff can accomplish quite a bit but are likely awaiting clarity on top-level policy moves.

Elsewhere in the DOL musical chairs game, the Administrative Review Board is now operating at 2/5 capacity. Two more members, who were appointed under Barack Obama, have departed in recent weeks—Tanya Goldman, who resigned Feb. 16, and Cooper Brown, whose term expired March 3, a DOL spokesman confirmed.

The ARB flies below the radar considering it serves as the secretary’s legal voice in handing out consequential employment law decisions on a range of issues, such as whistleblowing and discrimination.

It’s unclear whether the secretary has anyone new in mind for the job. Given that he’s still trying to get his deputy secretary on board, the ARB judgeships might not be the top priority.

CO: We’ve talked quite a bit in this space about how the snail-like pace of the political confirmation process has put a kink in the administration’s plans to overhaul policy at the Labor Department and the NLRB. It’s safe to say the Equal Employment Opportunity Commission has also been affected by slow going on the Senate confirmation front.

The five-member commission currently has two open seats, as Republicans Janet Dhillon and Daniel Gade await Senate confirmation votes. Current Commissioner Chai Feldblum (D) was nominated for another five-year stint on the EEOC when her current term runs out in July, but she hasn’t seen a full Senate vote either. There has been much talk about packaging the three nominees into one voting session. But Bloomberg Law’s Tyrone Richardson hears that at least one lawmaker may be standing in the way of Feldblum’s second turn at the commission: Sen. Mike Lee (R-Utah).

Lee, chairman of the Senate Republican Steering Committee, publicly called for President Trump to withdraw the Feldblum nomination. He published an op-ed in at least a pair of conservative outlets criticizing her for “radical views on marriage and the appropriate use of government power.”

Specifically, Lee claims that Feldblum improperly puts sexual orientation and gender identity protections above religious freedom. The LGBT rights versus religious liberty debate is one that’s been playing out in the halls of Congress and reportedly the Oval Office. Given that Democrats will have only a minority role on the EEOC so long as there’s Republican control, however, some might wonder about why Lee has a bee in his bonnet. Maybe it’s because another four year-term would keep Feldblum at the commission into 2022, by which time there could be new blood in the White House.

Some of the chatter around Capitol Hill is that Lee has successfully worked the back channels to slow Feldblum’s confirmation. Whether that’s also delaying votes on Dhillon and Gade isn’t entirely clear. Gade has caught his own heat for his views on disability benefits and women in the military. A Lee spokeswoman told Tyrone that the lawmaker isn’t standing in the way of votes on the two Republican nominees.

EEOC watchers are also still waiting to see who Trump picks for the commission’s open general counsel spot.

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.comand bpenn@bloomberglaw.com or on Twitter: @ChrisOpfer and @BenjaminPenn.

Secretary Acosta heads back to Capitol Hill on Tuesday. He’ll join a quartet of Trump Cabinet members to talk infrastructure. It’s safe to figure that will also include talk of the job boost that could come with new spending for road, rail, and airport projects and some discussion of Davis-Bacon prevailing wage rates for those workers.

See you back here next Monday.

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

To contact the editors responsible for this story: Peggy Aulino at maulino@bloomberglaw.com; Terence Hyland at thyland@bloomberglaw.com

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