From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...
By Ben Penn
The Trump Labor Department may have a gift in store for mega-employers like Wal-Mart that could help them avoid multimillion-dollar wage lawsuits.
Prior to the Obama administration, the department’s Wage and Hour Division let companies voluntarily report minimum wage and overtime violations in exchange for a guarantee that workers couldn’t sue. After a recent uptick in employer-friendly announcements from Labor Secretary Alexander Acosta, the business community is hoping the DOL brings back the controversial self-reporting practice.
During the George W. Bush’s administration, a reporting company was allowed to submit a self-audit, and the WHD supervised the payment of back wages to employees without conducting a full government investigation. The key sweetener for employers—especially at large, multistate companies, which are more vulnerable to class actions—was that workers had to waive their rights to private litigation before accepting the checks.
Bringing self-reporting back would advance the new administration’s efforts to improve cooperation with employers by using a carrot instead of a stick. This would be another about-face from Obama’s DOL, which emphasized thorough, targeted workplace investigations, frequently assessing double damages to make workers whole.
“I don’t like the idea that it draws wage-hour resources away from what might be a more important violation that needs to be investigated,” Libby Hendrix, who retired in 2013 as a WHD assistant administrator, told Bloomberg BNA. “The upside, obviously, is people are getting money that they might not otherwise receive.”
Hendrix, a career official for more than 30 years, said she’s uneasy about transferring investigative authority to the hands of management attorneys who conduct the self-audits.
Wal-Mart Stores Inc. took full advantage of the voluntary compliance method in 2007, culminating in an agreement to pay $33 million to some 90,000 workers nationwide. The settlement, which involved unpaid time-and-a-half overtime wages, remains one of the largest in WHD history.
Tammy McCutchen, a WHD administrator in the early 2000s and now a Littler Mendelson attorney, is hopeful this tool will again become an option for businesses looking to avoid liability and for workers searching for faster wage recovery. Littler Mendelson represented Wal-Mart during the 2007 WHD deal.
“It’s good for everybody—you get the mistakes corrected, back wages paid, and you’re not wasting money on plaintiffs’ lawyers,” McCutchen told Bloomberg BNA. “There is a solid chance” this returns, she said. “I think there are a lot of people in the business community who really would like to see this come back,” she said.
Employers always have the option of paying workers any wages owed without involving the government. But unless they self-report to the WHD, the employees could still go to a plaintiffs’ attorney to seek a larger payday in court.
The division is fresh off a June 27 announcement that it is reviving another Bush administration compliance method favored by management: Issuing WHD opinion letters that respond to stakeholder questions on legal ambiguities. Those letters give employers a chance to use a good faith defense against wage and hour claims in court.
The department declined to comment on whether it will also reestablish the supervision of employer back wage payments. But for an agency that’s been placing a greater priority on compliance assistance, it may fit the bill to give businesses the government’s blessing to turn themselves in.
Self-reporting became an increasingly popular device for management attorneys toward the tail end of the Bush administration. Obama’s DOL adopted a wholly different perspective.
Companies were still welcome to self-report, but not with an assurance that WHD wouldn’t investigate. Employers rarely, if ever, did. The Obama White House’s position was that it wouldn’t abdicate its right to conduct a full, independent investigation after an employer came forward.
“That was definitely not the approach that we took and it’s not one that I would support taken,” Laura Fortman, an acting WHD administrator under Obama, told Bloomberg BNA. “The Wage and Hour Division is often the agency of last resort for these employees, and you need to make sure that you’re doing a thorough investigation and making sure that they receive all of the back wages that they are due.”
Those investigations often yielded liquidated damages, giving employees double the amount of back pay owed, and a third year of wages collected, rather than McCutchen’s preferred practice of two years.
The Obama WHD complemented enforcement with compliance assistance to teach employers about their legal responsibilities. But the management bar advised clients not to trust full cooperation with an agency prone to deep workplace audits.
“In the last eight years, I don’t think anybody in their right mind would’ve ever approached the Labor Department with the idea of turning itself in and then volunteering to do a back wage payment,” Jim Coleman, who co-chairs the wage-hour practice at management firm Costangy, told Bloomberg BNA.
Employers always have the option of correcting violations without involving the DOL, but workers could still seek a bigger payday in private court.
Under Acosta and his as-yet unnamed WHD administrator, the business community perception of the agency is on the mend.
That doesn’t mean all employers will be lining up to submit their audit reports for government approval.
Brett Bartlett, who used to urge management clients to self-report violations to the WHD under Bush, said some businesses will never surrender to the government regardless of the administration.
“It’s an anxiety-causing process because when you approach the Wage and Hour Division, you don’t really know what their reaction is going to be,” Bartlett, co-chair of the wage-and-hour litigation practice at Seyfarth Shaw, told Bloomberg BNA.
As they wait for signals from Acosta that this WHD program will reopen for business, Bartlett said some companies are already looking forward to the prospect of having this tool once again at their disposal.
If the Trump DOL does facilitate employer confessions, it will be supported by management as a win-win for workers and employers.
Yet others, particularly those who operated inside the agency under Obama, will have doubts. Count the former civil servant Hendrix among them.
Thinking back on the pre-Obama practice, she said, “People were getting back wages that were due back wages, even though Wage Hour had not done an investigation. That’s always an advantage, I guess.”
To contact the reporter on this story: Ben Penn in Washington at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)