Punching In: How the White House Edited DOL Gig-Contractor Rule

Monday morning musings for workplace watchers

Contractor Rule Economics | NLRB Rulemaking Comments |OSHA Whistleblower Cases Drag On

Ben Penn: A draft of the Labor Department’s proposal on independent contractor status offers evidence that debate over the rule’s economic impacts may be just as fierce as discussion of its legality.

Much of the public discourse over DOL’s effort to make it easier for employers to classify workers as independent contractors under the Fair Labor Standards Act has centered on whether the agency has legal authority to issue the rule. On this point, blue-state attorneys general and Democratic lawmakers already have strongly insinuated the rule will face litigation if finalized.

But the White House regulatory office made a crucial change to DOL’s description of the rule’s anticipated economic effects that underscores its policy implications for workers and businesses.

The White House Office of Management and Budget provided Bloomberg Law with a copy of the proposed rule from Aug. 28, before OMB’s Office of Information and Regulatory Affairs edited it and approved it for release.

The draft version contained an economic analysis that said: “The Department anticipates a positive wage effect due to the expected increase in labor force activity, but did not attempt to quantify estimates of changes in earnings.”

That line was scrubbed from the proposed rule DOL published on Sept. 22. As a result, the department adopted a more neutral stance on whether the regulation would actually trigger a rise in workers’ wages.

The relevant section now reads: “Although the minimum wage and overtime pay requirements of the FLSA would no longer apply to workers who shift from employee status to independent contractor status, the Department anticipates an increase in labor force activity. That said, the Department does not attempt to quantify the magnitude of any increase in earnings as a result of increased labor force activity.”

In other words, in both versions DOL predicts the rule will create more independent contracting opportunities for Americans who’d otherwise be out of work; but only in the first draft did the department project that this will lead to an earnings boost that could offset losses other workers may experience when they’re converted to contractors and lose out on wage protections.

The takeaway: Career economists at OIRA appear to have been reluctant to sign off on DOL’s sunny forecast for workers’ wages, particularly because of murky available data.

“That removal following OIRA’s review is no surprise, given that a positive wage effect of the proposed rule can’t be supported,” said Heidi Shierholz, a former DOL chief economist during the Obama administration. “If anything, the available evidence goes in the opposite direction, with independent contractors earning less than similar employees.”

Shierholz’s current employer, the left-leaning think tank Economic Policy Institute, is among the outside groups that plan to fill in the data gap by submitting their own economic projections. Public comments are due in two weeks.

David Burton, a senior fellow in economic policy at the conservative Heritage Foundation, said he’ll also review the rule’s economic impact.

Burton said that while he hasn’t completed a thorough analysis, the proposal offers employers a more simplified process for worker status decisions and safe harbor from related litigation. That will reduce businesses’ administrative and legal costs, he said, and some of those savings will be transferred to workers’ pockets in the form of a raise.

Ian Kullgren: Monday was the deadline for the public to submit comments on a National Labor Relations Board rulemaking that would limit union access to workers’ contact information. It’s one of several NLRB moves that unions say threaten their ability to organize remote workplaces during the Covid-19 pandemic.

Workers’ personal email addresses and phone numbers would no longer be included on lists of eligible voter information that employers are legally required to give to unions before an election, according to the proposed rule.

The NLRB cited privacy concerns, writing that the proposed change “will better balance employee privacy interests against those supporting disclosure of this information.”

The AFL-CIO sees things differently. In comments submitted last week, the labor federation argued the proposal would give an unfair advantage to employers to communicate with undecided voters. Employers could still require all workers to attend anti-union meetings, the labor federation said, while unions would have a harder time communicating with workers directly.

“Because those who attend union meetings tend already to be union supporters, the employer’s advantage is magnified, since it can require all employees to attend meetings on working time, thus giving it ‘a great advantage in communicating with the undecided’ as compared to the union,” the federation wrote.

With much of the U.S. workforce working remotely, communicating with workers is a greater challenge.

“The Board’s proposal to eliminate telephone numbers and email addresses from the voter list at this particular moment in U.S. history—when, even before the pandemic, virtual work and the use of electronic forms of workplace communication had already become commonplace in many industries—thus flies in the face of the agency’s ‘responsibility to adapt the [National Labor Relations] Act to changing patterns of industrial life,’” the AFL-CIO said.

The NLRB has demonstrated skepticism toward mail-in union elections. It has stopped five such elections since late August, while allowing four to proceed, one of which was a vote to eject an existing union, Bloomberg Law’s Robert Iafolla reported.

In the five mail-in contests it halted, the board’s majority provided no details about its decision except to say that the employer’s request that it do so “raises substantial issues warranting review.”

The board’s reasoning seemed to shift after General Counsel Peter Robb issued a July 6 memo to regional offices detailing protocols for manual elections.

Bruce Rolfsen: Workers filing virus-related whistleblower complaints with the Occupational Safety and Health Administration are likely to find the agency won’t open full investigations, a worker advocacy group has found.

Of the 1,749 complaints OSHA had received as of Aug. 9, only 348, or 20%, were approved for a full investigation, the National Employment Law Project detailed in a new report. And of those cases, only 35 were resolved between the worker and employer.

It may be 2021 before OSHA resolves many of the cases of alleged employer retaliation during the pandemic. The DOL’s Office of the Inspector General said that, as of the end of March, OSHA took an average of 279 days to close a whistleblower investigation.

High caseloads for investigators are partially to blame, the watchdog found. The number of authorized whistleblower program staffers decreased from 126 in 2019 to 120 in 2020. Spending proposals for Fiscal 2021 from the House and Trump administration would authorize funding for roughly 10 additional staff members.

But the Senate has yet to offer a spending plan for OSHA, so additional resources depend on the outcome of the fiscal 2021 appropriations process.

Recent history: The Covid-19 complaint numbers are comparable to whistleblower case outcomes before the pandemic, OSHA data shows. Of the 2018 workplace safety or health retaliation complaints OSHA closed in fiscal year 2019, 1,459, or 72%, were dismissed by OSHA or withdrawn by the worker.

Of the remaining cases, 545 were settled and 14 were recommended for court action against an employer.

OSHA often dismisses whistleblower cases if they were filed after the 30-day deadline to notify the agency or involve situations not covered by the Occupational Safety and Health Act.

We’re punching out. Daily Labor Report subscribers, check in for updates during the week, and feel free to reach out to us. See you back here next Monday.