Punching In: Alex, Andy and the Joint Employer Debate


PUNCHING IN

Monday morning musings for workplace watchers 

By Chris Opfer and Ben Penn

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When Andy Met Alex | Bogarting Joint Employer? | DOL Litigation Leadership

Ben Penn: Tomorrow night an audience of franchise owners will get a glimpse of what could have been, when Andy Puzder delivers the primetime keynote address at the International Franchise Association annual meeting in Washington. The former burger magnate who withdrew as Trump’s first labor secretary nominee will take the stage a mere hours after Alex Acosta, who ultimately became secretary, addresses the crowd.  

The two men are being billed as the three-day event’s co-headliners. The juxtaposition of their speeches offers an irresistible chance to compare the style of the more reserved Acosta with that of the no-holds-barred Puzder. With businesses clamoring for Acosta to take aggressive actions to unwind the Obama labor agenda, will Puzder’s words make employers in attendance wistful? 

Perhaps the two men wouldn’t have run vastly different regimes, anyway.  After all, Acosta was believed to be in the pipeline to become deputy labor secretary or solicitor, had personal controversies not sunk Puzder’s nomination. 

Puzder’s private life may have cost him the support of a few Republican senators, but I’m told he’s been warmly received at private events for members of the U.S. Chamber of Commerce and National Restaurant Association. As a consolation prize of sorts, the service industry has a public sector advocate in Rob Green, who was appointed last week as the workplace policy director for House Workforce Committee Republicans. Green arrives from the National Council of Chain Restaurants, through which he’s known Puzder for about seven years. Green was eager to defend Puzder’s qualifications last winter, in the face of a coordinated attack by unions and other progressive groups.

Meanwhile, Acosta is scheduled to speak Tuesday about joint employment, naturally a topic of enormous interest to IFA members. This gives him a chance to elaborate on his next steps now that he’s withdrawn the previous administration’s guidance document on how DOL investigators should interpret employers’ joint liability for wage-and-hour violations. Will the secretary and his Wage and Hour Division administrator still find that in certain circumstances, a franchiser may share responsibility for ensuring that a franchisee has paid employees properly for all hours of work? Withdrawing an informal memo without providing a reason doesn’t answer that question. 

Chris Opfer: The House is also taking up the joint employer issue this week. The Education and the Workforce Committee will hold a hearing Wednesday on a bill by Rep. Bradley Byrne that would limit joint employer liability for affiliated businesses under federal labor and wage and hour laws. As Bloomberg Law’s Tyrone Richardson recently pointed out, the Alabama Republican’s measure now has 51 co-sponsors (two Democrats). The hearing means the committee could mark up the bill soon. Although the legislation has a strong shot at eventually passing in the House, it doesn’t appear that enough Dems would be willing to cross the aisle to get the 60 votes needed in the Senate.

So the courts are likely to get the next crack at the joint employer question. The D.C. Circuit could rule any day now in Browning-Ferris. The Democratic-majority board in that case said a business can be considered a joint employer of workers provided by another business if it exerts even indirect control over them. We’re also still waiting to see whether the Supreme Court takes up a case in which the Fourth Circuit said DirecTV is a joint employer of technicians who were hired by an intermediary.

That the House is poised to move Byrne’s bill is no small victory for the IFA, which has been pounding the Capitol Hill pavement on the joint employer issue since before the board’s Browning-Ferris decision in 2015. But George Gonos, a labor professor at SUNY Potsdam who filed an amicus brief in the case, says all of the focus on the impact on franchise businesses “is something of a smokescreen.” It takes the microscope off temp, staffing, and other contract work arrangements, like those actually at issue in the Browning-Ferris and DirecTV cases.

“I believe that both temp agency and franchised employment are joint employer situations,” Gonos told me via email. “But they’re different, and in general, the case for joint employment is easier to make for temp workers than for franchised workers. The temp industry is, as usual, keeping a low profile, and letting the franchise industry and ‘small business’ interests carry the ball.”

BP: We continue to scour court filings that name Secretary Acosta as a party, seeking more evidence of the newish DOL reversing positions from the Tom Perez era. Outside of the revised positions on the pair of high-profile regulations (overtime and fiduciary), the solicitor’s office still lacks a new identity. That’s because the department’s ongoing litigation against employers stems from Obama administration investigations that the regional and district offices were unable to settle. Telling signs of a new strategy would come from the national office pulling back particular cases that it no longer agrees are worth pursuing. Thus far, we haven’t found any, unless you count withdrawing the overtime rule appeal

A former DOL official told me word on the street is that the regulatory review process has consumed the national solicitor’s office, allowing the regional offices to proceed as if Obama were still in the oval. Is acting solicitor/chief of staff Nick Geale just treading water to avoid controversy while hoping for a White House nomination, or does agency headquarters simply not have enough time to weigh in and order a reversal on legal positions at the regional solicitor’s offices?

We’ve reported that Geale coveted the nomination for solicitor – the agency’s No. 3 position – but that Acosta has reached out to other attorneys about the job. And when Geale put on a second hat by becoming Acosta’s chief of staff last month, it could have been seen as hurting his chances for becoming solicitor. 

Geale’s behavior “frankly is consistent with a guy who is trying to have a storyline of, `I’m not pulling back new cases so the Democrats don’t go ballistic,’” the ex-DOL official said.

CO: Remember when candidate Trump called the national unemployment rate phony?  A lot has changed. The president and his surrogates – including Acosta – have been happy to point out lately that the unemployment rate is now near the lowest point in more than a decade. But campaigner Trump said jobless rates don’t tell the full tale because they don’t take into account the millions of unemployed people who simply stop looking for jobs. The labor force participation rate, which measures who’s actually looking for work, has been hovering around 63 percent for more than a year.

Trump’s campaign talk also raised questions – still out there – about what he would do with the Labor Department’s Bureau of Labor Statistics. The BLS tracks unemployment and labor force participation, along with a host of other stats designed to gauge the American workforce. 

Erica Groshen, who ran the BLS for four years during the Obama administration, said she’s worried that public confidence in the bureau and its data could erode. She didn’t specifically mention Trump – or Gary Cohn, who called the unemployment rate “fictitious” before taking a job as head of the National Economic Council. But Groshen did urge a crowd at a recent Cornell School of Industrial and Labor Relations to “champion” the BLS.

“If you use the data, then anytime someone impugns that data they’re impugning your work,” Groshen said. “It’s very easy to deflate the cheap shots, the sloppy work, and the nihilism that causes people to just dismiss statistics. You need to explain that this is work done by career civil servants that is not subject to political manipulation. It is state of the art work and the best information out there.”

BP: We’re punching out. Daily Labor Report subscribers can check in during the week for updates on government funding and Labor Department apprenticeship spending.

See you back here next Monday morning.

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