Labor Department Shifts on Overtime, Opinion Letters

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By Chris Opfer

The Labor Department continued a steady change in policy direction June 27 when it asked the public to again weigh in on former President Barack Obama’s overtime rule and offered businesses and workers the chance to seek legal advice from federal wage enforcers.

The DOL sent a request for information on the overtime rule to the Office of Management and Budget, signaling that the department is ready to reconsider the pending regulation. The rule, which was expected to make some 4 million workers newly eligible for overtime pay, was put on hold by a federal judge last year.

The department also said it’s bringing back Wage and Hour Division opinion letters, through which employers and workers can ask the department to weigh in on the legal issues in a particular factual situation. Employers can then use those letters in court as a good-faith defense in federal minimum wage and overtime cases.

Expect Carrots, Not Sticks

The announcements come as Labor Secretary Alexander Acosta, who was nominated by President Donald Trump and confirmed by the Senate in late April, looks to put his own stamp on DOL policy. The department under Acosta is expected to take a more employer-friendly approach, including by reducing the regulatory burden for businesses and using incentives instead of enforcement to get them to comply with federal workplace laws.

“The department believes a vast majority of employers across the nation are responsible actors, fully committed to following worker protection laws,” Acosta told a Senate Appropriations subcommittee June 27. “The department has placed a priority on helping American employers understand and remain in compliance with worker protection laws.”

The overtime announcement is likely another nail in the coffin for the Obama administration rule, which would more than double the salary threshold (up to $47,000) under which workers are automatically eligible for time-and-a-half pay for all hours beyond 40 per week. The DOL under Acosta has already scrapped a separate rule that would have expanded disclosure requirements for employers that bring in lawyers to fight union election drives.

Opinion letters fell out of favor during the Obama administration, which instead issued broader administrator’s interpretations on wage-and-hour issues. The department recently announced that it had rescinded two of those interpretations—ones that dealt with joint employer liability and worker classification.

Overtime Redo

Advocates on both sides of the overtime debate said the request for additional public comment means the Labor Department is rethinking the rule. The public had an opportunity to weigh in on the rule during the notice and comment period before it was finalized.

“Redoing the work that has already been done to elicit public comment on the overtime rule allows them some leeway to flip-flop,” Jahan Sagafi, an attorney at Outten & Golden who represents workers in labor and employment cases, told Bloomberg BNA.

The Obama administration said when it rolled out the rule that it was an effort to fight wage stagnation and bolster workers’ paychecks without going through Congress. Critics of the rule have said it would force employers to cut jobs by driving up payroll costs.

Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas said when he issued an injunction to block the rule that the DOL focused too heavily on how much money workers make for overtime eligibility purposes rather than on the specific job duties that they perform.

Briefing Deadline Approaches

The DOL currently has until June 30 to file a brief in an appeal of Mazzant’s ruling. The appeals court has already granted the department’s requests for three separate extensions on that deadline.

“I think they probably have an idea of what they want to do with the rule and they are doing this request to bolster their record,” James Plunkett, a management-side attorney for Ogletree Deakins, told Bloomberg BNA.

Acosta signaled during a Senate confirmation hearing in March that he may be open to a small salary threshold increase. Business groups and Republican lawmakers have also said they’d like to see the DOL scrap a provision that would automatically raise the salary threshold based on inflation.

Sagafi’s firm recently sued Chipotle on behalf of workers at the fast-food restaurant chain, arguing that the Obama rule is already in effect. The workers say Mazzant’s ruling stopped the DOL from enforcing the rule but allows them to enforce it through the courts.

Opinion Letters Offer Shield

Critics call the opinion letters “get out of jail free” cards for businesses. Employer advocates told Bloomberg BNA they’re a valuable compliance tool.

“Opinion letters are really practical for businesses that want more help in complying,” Proskauer Rose LLP partner Allan Bloom told Bloomberg BNA. “Any time you can do that instead of going the punitive route, that’s a good thing.”

The good-faith defense shields employers that rely on the DOL’s interpretation of the federal wage-and-hour law from liability for unpaid minimum wages and overtime in some cases. In others, employers can use the defense to limit the amount of liquidated damages they can be forced to pay workers.

“Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” Acosta said in a statement announcing the move. “The U.S. Department of Labor is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs.”

Unlike the Obama-era administrator’s interpretations, the letters deal with specific fact patterns. But Sagafi told Bloomberg BNA that he’s more concerned about the actual legal interpretations that the DOL issues under Acosta, not the format in which they are issued.

“I think the substance is what makes the difference,” Sagafi said.

To contact the reporter on this story: Chris Opfer in New York at copfer@bna.com

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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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