PUNCHING IN: Acosta Take Two, Chipotle OT Tinkering

Punching In

Monday morning musings for workplace watchers 

By Chris Opfer and Ben Penn


Snoozing Through Acosta? | Chipotle Overtime Experiment | Fiduciary Farewell?

Ben Penn: We learned yesterday afternoon that labor secretary nominee Alex Acosta’s confirmation hearing, originally scheduled for Wednesday, is now delayed one week to March 22. The stated reason is so that HELP Committee Chairman Sen. Lamar Alexander (R-Tenn.) can join President Donald Trump at a rally in Nashville on March 15. 

There were several delays for Andy Puzder’s hearing as well, ultimately leading to his withdrawal amid multiple controversies. This time I suspect there is no reason to feel conspiratorial about the true cause of the holdup. That said, just because Acosta is thrice-Senate-confirmed and not a CEO, maybe we’re prematurely looking past his confirmation process in front of the Senate HELP Committee. Capitol Hill reporter Tyrone Richardson caught up with HELP members after they met with Acosta last week, and observed a clear change of tone from the concerns voiced by folks from both parties about Puzder. This time, no one’s ready to express an opinion. Well, some of the senators just learned who Acosta is a few weeks ago and they’re still formulating a strategy for the hearing. In their defense, the Senate’s been a bit distracted by the health-care, tax reform and immigration debates. 

Case in point: Sen. Patty Murray (D-Wash.), the committee’s top Democrat, fresh out of her sitdown with Acosta, told Ty she’s still reviewing Acosta’s record. Several hours later, her office issued a press release declaring that she has “serious concerns” about whether he would stand up for workers in the face of pressure from an administration beholden to billionaires. 

My takeaway: If Acosta is properly doing his homework, then he’s reviewing all of Trump’s past statements that could be perceived as hostile to the DOL’s mission (i.e., “phony” jobs data, “wages are too high”). Acosta is known around town as a savvy attorney, so I’d be surprised if he’s not prepared to finesse (duck?) those questions from the Democrats out for blood.

The GOP HELP members are surely frustrated by the DOL Cabinet vacancy. They want someone to unwind the Obama-Perez agenda that they felt unfairly punished well-intentioned businesses, thwarting job creation through an unpredictable regulatory and enforcement landscape. Republicans will be looking for Acosta to commit that he’ll fall in line with the “compliance assistance” principles of Elaine Chao. 

Any further confirmation delays may be doing lawmakers on both sides of the aisle more harm than good. Vital decisions are pending – such as how to prioritize the budget and address overtime eligibility. That’s not to mention the tricky issue of persuading undocumented immigrants to participate in workplace investigations or even accept a back wage check

Thoughts on when Acosta will actually be sworn into office? Anyone else hoping to join Chris and me in starting the weekend the moment Chairman Lamar Alexander adjourns the hearing so we can focus on March Madness? Bounce comments our way: copfer@bna.com and bpenn@bna.com, or on Twitter: @ChrisOpfer and @BenjaminPenn. 

Chris Opfer: After lunch today, I’m fixing to wander down from Bloomberg Law’s NYC outpost to the federal courthouse for a little Chipotle action. The fast casual Mexican restaurant chain is being sued by a group of workers for unpaid overtime. Judge Andrew Carter will hear arguments about whether to certify a class of current and former Chipotle assistant managers who say they were improperly classified as exempt from federal and state overtime laws. The assistant managers – or as Chipotle calls them, “apprentices” – say the company incorrectly decided that they weren’t eligible for overtime pay because they performed managerial duties.

Ever since the Obama administration rolled out its proposal to make some 4 million workers newly eligible for overtime pay by doubling the salary threshold, we’ve been curious about how employers would respond. Now that the rule’s in limbo, we’ve been wondering how employers that already changed their pay policies would react. The Chipotle case may offer a glimpse, even though it’s not exactly related to the issues before Judge Carter. 

Justin Swartz, an attorney at Outten & Golden who is representing the workers, tells us Chipotle shifted assistant managers from salaried (somewhere below $40,000 a year) to hourly positions a few weeks before the new overtime rule was slated to go into effect late last year. That move was designed to better track workers’ hours and maybe save some money at the same time. Under the existing rule, workers who make more than about $23,700 (hourly or salary) could still be eligible for overtime pay if they don’t perform managerial tasks. The new rule would have made anyone earning less than about $47,500 a year automatically eligible for time-and-a-half pay for all hours worked beyond 40 a week. That means the assistant managers would have been eligible for overtime pay without having to consider their duties. 

We’ve heard some chatter elsewhere that the company also reduced the apprentices’ hourly rates so that their total pay would come out about the same after accounting for expected overtime work. What we know is that Chipotle flipped the assistant managers back to their original salaries, according to Swartz, after a federal judge in Texas put the OT rule on hold and Donald Trump was elected to the White House. Those moves are not at issue in the New York litigation, but we expect to hear more about them as the case continues.

BP: In other Labor Department news, the comment period on the proposed delay of the fiduciary rule closes Friday. DOL last Friday evening announced that it doesn’t intend to enforce the rule while officials decide what to do with it. The department has already received more than 5,200 comments and has posted 345 of them (more to come, of course). Bloomberg Law’s Sean Forbes recently reported that there’s already some disagreement among retirement investment advisers about what to do with the rule, which generally is designed to require them to act in their clients’ best interests. 

CO: Also on our Labor Department watch, the agency’s Office of Federal Contracts Compliance Programs was one of a variety of subagencies that got scorn from the employer community and Republicans during the Obama years. But for those expecting Team Trump to turn OFCCP on its head – or eliminate the office altogether – Orrick attorney Chris Wilkinson has a word of caution. 

“They’re going to be here to stay,” Wilkinson told a group of lawyers at the New York City Bar Association’s Employment Law Institute last Friday. Wilkinson, who served as the DOL’s associate solicitor for civil rights and labor-management, said he doesn’t see the Trump administration gutting the regulations that OFCCP enforces. He also doesn’t expect the OFCCP to be folded into the EEOC anytime soon, he said, despite calls for that move by the Heritage Foundation.

BP: We’re punching out. Daily Labor Report subscribers can check back in with us during the week for all things Acosta. We’ll also be watching to see whether Trump signs the resolution sitting on his desk that would kill the Fair Pay and Safe Workplaces contractor disclosure requirements. Our colleague Mr. Forbes will be tracking the public comments on the proposed fiduciary rule delay. Construction reporter Elliott Dube will be reporting on how the trade unions feel the administration’s actions thus far align with Trump’s campaign promises.

See you back here next Monday morning.