Labor Dept. Pulls Guidance Ahead of New Investigation Protocols

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By Ben Penn

The Labor Department quietly updated its website in recent days to reflect revised policies on how investigators police workplaces for minimum wage and overtime violations, signifying a further retreat from the Obama administration’s approach.

The public links for three chapters in the DOL Wage and Hour Division’s Field Operations Handbook are now removed, replaced by the new text “revision coming soon.” The deleted links had provided an explanation of how staff should interpret the employer-employee relationship, including a pair of hot-button issues: joint employment and independent contractor misclassification.

Further, over the weekend the agency replaced a May 2014 fact sheet describing a broad interpretation of employment to determine whether workers are employees covered by federal wage and hour laws or independent contractors outside the scope of the law. The DOL posted in place of the fact sheet a 2008 version. Unlike the scrapped fact sheet, the 2008 guidance now on display does not include an Obama-era interpretation that “most workers are employees” and not independent contractors who are ineligible for time-and-a-half overtime and the minimum wage.

The website updates come nearly nine months after Labor Secretary Alexander Acosta withdrew two Obama-era interpretive memos—called administrator interpretations—on the same topics, but without replacing them with new policy statements. The tinkering with the field handbook and fact sheet signals the DOL is possibly taking steps to fill an information void for employers on how the administration will interpret the law.

“The Department is making updates to its website to reflect established Administration policy, and updates will be completed shortly,” a DOL spokesman told Bloomberg Law, in a statement. “There is no gap, given that investigators follow long established case law, and the withdrawal of administrative interpretations was announced nearly one year ago.”

Still, some businesses and management-side lawyers have been pushing for more comprehensive WHD guidance tailored to the ambiguities of how federal wage and hour law applies to workers in the gig economy. A more fulsome response from the department may not come until the Senate confirms a DOL Wage and Hour Division administrator. President Donald Trump’s pick for the post, Cheryl Stanton, has yet to receive a confirmation vote from the full Senate.

Former DOL Officials Disagree

The removal of the field guidance makes perfect sense because the deleted chapters included information that was no longer relevant once the administrator interpretations were withdrawn, Alex Passantino, an acting WHD chief in the George W. Bush administration, told Bloomberg Law.

But the DOL shouldn’t have taken down the investigative protocols until it was ready to replace them with an update, Patricia Smith, the solicitor of labor under former President Barack Obama, said.

“It’s really unfortunate that they say they’re committed to compliance assistance but they’re taking down information without putting up information to substitute for it,” Smith told Bloomberg Law. “So you don’t really know what their position is.”

Response to Rubio?

Some Republicans and business community members have grumbled that certain district and regional offices are continuing to enforce the law as they had under the previous guidance.

Critics said the Obama administration unfairly targeted businesses for sharing liability with affiliated companies for wage violations by taking an expanded approach to joint employment under the Fair Labor Standards Act. They also said investigators classified an overly broad number of workers as employees in an effort to target lower-wage businesses for independent contractor misclassification.

The website edits follow outreach from Sen. Marco Rubio (R-Fla.), who on Feb. 5 urged Labor Secretary Alexander Acosta to speed up his overhaul of the prior administration’s wage-hour enforcement tactics.

One of the removed field operations handbook chapters contained “interpretations regarding the employment relationship required for the Fair Labor Standards Act to apply,” according to a recovered copy of the document. It goes on to outline a list of factors for investigators to consider before deciding if a worker is an employee, including, “Does the alleged independent contractor have an independent economic or other interest in their work, other than increasing their own pay?”

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