Opinion Letters From DOL Could Help Employers ‘Get-Out-of-Jail Free’

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By Ben Penn

When businesses ask federal wage enforcers for specific legal advice from the Trump administration, they’re likely to get answers for the first time in eight years.

High-powered attorneys expect the Labor Department to revive opinion letters for their clients, a practice that critics say amounts to “get out of jail free” cards for employers facing minimum wage or overtime claims in court. The letters, a common compliance tool in the previous Republican administration, enable companies to present the documents before a judge or investigator as a “good faith” defense.

“It’s no secret that the opinion letter process largely serves the interest of employers; it gives them a legal defense if their practices comport with what the opinion letter says, even if the Department of Labor was wrong in what the opinion states,” Michael Hancock, who managed the Wage and Hour Division process for the final four years of George W. Bush’s term, told Bloomberg BNA. “It offers a serious and real significant defense to employers.”

A career attorney for Bush, Hancock went on to become a WHD political appointee under President Barack Obama. That’s when the division quickly terminated the opinion letters in favor of issuing broader interpretations intended to improve efficiency without draining resources.

Hancock, now representing plaintiffs at Cohen, Milstein, Sellers and Toll in New York, acknowledged it can be a challenge for workers’ attorneys to overcome an opinion letter that deems a business practice in compliance with the Fair Labor Standards Act.

Trade associations and large management law firms, such as Seyfarth Shaw, Littler Mendelson and Morgan Lewis, are preparing to dust off old strategies to submit questions to the WHD on behalf of their Fortune 500 clients.

Attorneys began projecting the return of opinion letters the moment Donald Trump won the election. They received a more solid assurance when labor secretary nominee Alexander Acosta praised the policy at his March 22 confirmation hearing, saying, “I see no reason why I would not encourage opinion letters” if confirmed.

One such lobbying group, the International Franchise Association—whose members include fast-food brands McDonald’s, Popeyes and Dunkin’ Donuts—plans to discuss formulating an opinion letter request on joint employment at a May 8 legal conference, Matthew Haller, a senior vice president at IFA, told Bloomberg BNA.

Defense for Any Employer

While the letters are most beneficial for the direct parties that request them, any other employer can cite the letter as a defense, provided its compensation practice aligns with the details the agency describes. In far rarer circumstances, employees or unions have received opinion letters as well.

“This is what’s so important and powerful about an opinion letter—that it provides an affirmative defense for any employer who can demonstrate that it reasonably relied on it,” David Fortney, an acting solicitor at George H.W. Bush’s DOL, told Bloomberg BNA. Fortney frequently sent letter requests when he went into private practice at Fortney & Scott LLC in Washington.

The moment such a policy switch were to become official, law firms will be ready to place their requests in front of an agency that quickly could become inundated.

“It is something that we are acutely focused on,” Brett Bartlett, co-chairman of Seyfarth Shaw LLP’s national wage-and-hour litigation practice group, told Bloomberg BNA. “We anticipate that there will be a flood of opinion letter requests made to the Wage and Hour Division.”

‘Squeaky Wheel Oiled’ at WHD

Lawyers who said they regularly fetched favorable opinions for employers in the Bush administration described a careful, multifaceted approach to success: Select the appropriate business, or consortium of companies, experiencing a gray area, such as assistant retail managers who may be exempt from time-and-half overtime eligibility; craft a fact-pattern devised to guarantee an opinion letter that finds the employer lawful; and, to ensure an expedient response, informally place the request in front of a WHD official at a private meeting before sending it in, and then followup repeatedly after the question is submitted.

“There is an element of the squeaky wheel getting oiled, which I would say was generally less about inside contacts and more about who was persistent in calling to find out where their letter was,” Paul DeCamp, who ran the WHD under George W. Bush, told Bloomberg BNA.

The pre-submission process is key, several attorneys said, because it ensures a lawyer abides by the timeless adage: Only ask questions when you already know the answer.

“In the past you could go to DOL and lay out a scenario for them and they would give you their informal view on how that situation might play out,” Christopher Parlo, who co-directs Morgan Lewis’ wage-and-hour practice, told Bloomberg BNA. “And if you didn’t believe that the result was one that would help your client or industry, you could choose not to ask for formal opinion. I thought that was a great process.”

Yet DeCamp, now a principal at management firm Jackson Lewis P.C. in Washington, cautioned that opinion letters aren’t always the best recourse for businesses because it sometimes takes a few years to get the WHD to respond. That’s why he said he’s waiting to see the division’s budget before recommending that clients submit questions.

Still, even with a staffing shortage, a delay can be avoided with active follow-up.

“Persistence is the key,” Lee Schreter, co-chair of Littler Mendelson’s wage-and-hour practice, told Bloomberg BNA. “Staying in touch with the folks who are responsible for the issuance of opinion letters and having constant touchpoints in my experience has been the way to get opinion letters through.”

First Letters May Come From 2009

If the WHD does restore the practice, the very first opinion letters might already be publicly accessible.

In January 2009, in the final week before Obama’s inauguration, acting WHD administrator Alexander Passantino signed a flurry of opinion letters in an attempt to empty out the backlog. But 18 of them dated Jan. 14-16—all still published on the DOL website—now contain asterisks denoting they were withdrawn because the letters were never actually mailed to requesters.

“Pretty soon after there is an administrator in place, I would expect to see those reformalized,” Bartlett, who is a partner at Seyfarth’s Atlanta office, said. “I think we’ll see those asterisks removed.”

In fact, Passantino, also a partner at Seyfarth in Washington, is said to be a leading contender to return to his old job at the WHD, sources recently told Bloomberg BNA.

The withdrawn letters clarify a chorus of scenarios, mostly to inform employers that the job duties of specific occupations—such as insurance fraud investigator, medical staffing consultant or homebuilding project supervisor—make them ineligible for overtime pay. But because they were never delivered, the letters with asterisks don’t present a viable legal defense unless the agency reissues them.

All opinion letters are published without naming the requesting party.

Overall, the WHD during the Bush administration produced an average of 28 FLSA opinion letters per year, including the 18 withdrawn letters in January 2009. The agency also issued several dozen letters in the 2000s clarifying questions on the Family and Medical Leave Act and Davis-Bacon Act, among other statutes.

New Issues Ripe for Review

Wage-and-hour practitioners cite a flurry of ambiguities in the modern workplace ripe for WHD review.

The gig economy and employee use of mobile technology to work outside the office present a host of new potential subjects that are considered long overdue for DOL clarity, attorneys said. The courts have yet to reconcile the New Deal-era FLSA with smartphone email apps, among other nontraditional work arrangements.

The burden for attorneys won’t be to find topics, but rather to narrow down the list to pick the most pressing opinion letter questions most likely to yield favorable and timely results.

“We’ve seen eight years of one approach, which is, we’re not going to tell you; we’ll let you know with what I call a gotcha attitude. I’m not sure that that ultimately promoted compliance,” Fortney said. “I’m sure they’ll get overloaded with requests because I think there’s a lot of pent up concerns.”

—With assistance from Chris Opfer

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

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

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