PUNCHING IN: All Eyes on These Labor Issues in 2018


Monday morning musings for workplace watchers 

By Chris Opfer and Ben Penn


SCOTUS Tunes In to Joint Employment | DOL ‘To Dos’ | Worker Classification Question

Chris Opfer: Anyone who’s been tracking the joint employer debate might be feeling a bit like Michael Corleone right now. Just when we thought we were out, the Supreme Court may pull us back in. The justices are scheduled to conference Friday on a slew of cases, including a Fourth Circuit decision on joint employment for federal wage and hour purposes. The conference comes less than three weeks after the National Labor Relations Board scrapped an expansive view of joint employment for collective bargaining purposes adopted by the board during the Obama administration.

The Fourth Circuit in 2016 found that DirecTV and a staffing company are joint employers of a group of satellite technicians who said they were stiffed on overtime pay. That decision was criticized by the business community – and their lawyers – who say the court focused too much on the relationship between the two companies, instead of DirecTV’s control over the workers. 

The NLRB’s recent decision to restrict joint employment liability in a different case resolves the issue (for now) under the National Labor Relations Act. Still, questions remain about liability for affiliated businesses under the Fair Labor Standards Act, the separate minimum wage and overtime statute. At least one business advocacy group already asked Labor Secretary Alexa Acosta to update a regulation on joint employment under that law. There’s also a mostly Republican bill pending in the Senate that would amend both the NLRA and the FLSA to restrict joint employer liability.

Ben Penn: We just wrapped up a tumultuous year on the labor and employment beat. But as the personnel shakeups of 2017 begin to translate into more policy shifts, the pace might even pick up in year two of Trump (at least in the executive branch).

As Bloomberg Law subscribers may have noticed, we’ve been publishing outlook reports previewing what to expect in 2018 on everything from immigration policy to Capitol Hill. Check out more of our prognostications, including my rundown of the Labor Department, here.

This being the season of lists, here are a few educated but not infallible predictions of what will happen this year at the DOL: 

  • Personnel vacancies will continue to hamper Labor Department. Secretary Alex Acosta has a solicitor and a few other Senate-confirmed aides, but it’s possible his picks for deputy labor secretary (Pat Pizzella) and Wage and Hour Division administrator (Cheryl Stanton) won’t be on the job until spring. The two are among the four DOL nominees awaiting White House renomination thanks to Senate inaction. The department was probably anticipating their arrival by the start of January. Acting officials will be forced to operate judiciously and without a true political imprint until the Senate finally confirms their successors. The holdup is good news for Obama DOL alums hoping to slow down the unraveling of their agenda and bad news for employer groups eager for political bodies to address their concerns faster. While Pizzella and Stanton should still be re-selected and sworn in within the next few months, this is an operational setback. Plus, a new leader for the Employment and Training Administration hasn’t even been nominated, so that agency may not be fully functioning until the second half of 2018 or later.

  • More apprenticeships. You thought Acosta focused on apprenticeships last year? Until the White House gives the DOL another policy priority, scaling up apprenticeships will be the secretary’s primary objective this year, too. The meetings of the task force on apprenticeship expansion and rollout of a proposal to streamline the registration system will give the DOL ample opportunities to highlight progress – and to avoid creating controversy in this safe political lane.        

  • Future of work addressed … kinda. The department will begin to lay out a non-apprenticeships affirmative agenda by promoting the release of the contingent worker survey this spring, measuring the size of the gig economy. Funds were set aside under Secretary Tom Perez to rescue the Bureau of Labor Statistics report from extinction. But it will be Acosta who gets to tout the results as evidence that the DOL is taking steps to address the issue of how workplace protection laws interact with the burgeoning sector of workers who lack the security of permanent employment (Uber drivers, Instacart shoppers, etc.). Still, the DOL has limited authority to enact change on this issue without Congress taking the lead. I wouldn’t count on this initiative amounting to more than a messaging campaign from the secretary’s bully pulpit.

  • More compliance assistance, less regulation. The arrival of the new labor solicitor and Senate-confirmed leaders at enforcement agencies will usher in more robust compliance assistance efforts, in some cases transferring resources that were previously used on aggressive enforcement. Solicitor O’Scannlain, once she gets accustomed to government service, will guide a more comprehensive regulatory review process, including a longer list of regs marked for removal. Look for the Wage and Hour Division to at least consider rescinding one or more Obama-era rules applying to federal contractors.

  • The newly proposed overtime salary threshold will be in the range of $37,000 per year. But it will not be finalized in 2018. 

CO: Here’s what my crystal ball is showing: Worker classification will continue to be the biggest issue in the labor and employment space in 2018. Acosta has already said he’d like to see Congress tackle the employee versus independent-contractor question. The trouble is that lawmakers from opposite sides aren’t exactly in Kumbaya mode. Partisan divides are likely to dominate Capitol Hill this year, and the upcoming midterm elections may slow legislative progress to a halt. In the meantime, it will continue to be up to the courts to draw the line between employees and contractors for labor relations, wage-and-hour, workplace safety, and other purposes.

For example, a federal judge in Connecticut is expected to decide soon just how much money tech company DXC Technology has to fork over to some 1,000 IT workers wrongly classified as exempt from federal and state overtime pay requirements. A jury ruled unanimously in favor of the workers two weeks ago. The company may very well be on the hook for extra, liquidated damages, in addition to back pay. That’s thanks to its status as a repeat offender. Computer Services Corp., DXC’s predecessor, paid $24 million to resolve a similar lawsuit in 2005.

“This result is an important reminder to companies to look honestly at their classification of workers, and adhere to the default rule that everyone gets overtime pay unless they clearly fit into a narrow exemption,” Jahan Sagafi, an attorney for Outten & Golden who represented the workers, told me last week.

BP: We’ve touched on some of the big-ticket items, but not the only important ones. Here are a few more DOL predictions that take us a bit deeper into the weeds:

  • Tip pool debate. The controversy over the proposal to reverse the Obama-era tip pool reg will get more intense and adversarial, pitting the restaurant industry against worker groups like ROC United. The WHD will address some of the worker concerns in the final rule but won’t complete this process until 2019.

  • Opinion letter-palooza. Within weeks of Cheryl Stanton assuming her post, the floodgates will open for the WHD to publish opinion letters that respond to management requests for legal clarity on specific wage-hour matters.

  • Union auditing office restored. The Office of Labor-Management Standards will likely revive the International Compliance Audit Program. That means resuming the auditing of national and international union headquarters for possible financial reporting violations. Faced with budget limitations, the OLMS won’t take on as powerful of an investigative role as it held in the last GOP administration.

  • ETA revs up. Even without a political leader, the ETA will begin at some point this year to prepare for a larger role than it already has in writing the apprenticeship proposal. With the White House about to go all in on an infrastructure package, ETA officials can begin teaming up with the Transportation Department in devising how to prep the nation’s workforce for the thousands of new jobs created by this bill. Who would pay for the training and will a bill actually become law this year? Those types of predictions are outside my paygrade.

Let me know what I missed and/or got wrong, and we may give you a shoutout in next week’s edition. 

CO: We’re punching out. Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us: copfer@bna.com and bpenn@bna.com, or on Twitter: @ChrisOpfer and @BenjaminPenn. Secretary Acosta is kicking off 2018 by lunching with President Trump and VP Pence. We'll let you know if we hear what's on the menu. Bloomberg Law’s Jacquie Lee will be covering the Los Angeles Times union vote on Thursday. Tyrone Richardson tells us the Senate HELP Committee may announce a replacement for Al Franken sometime this week. Madison Alder is tracking Trump administration turnover.

Happy New Year! See you back here next week.

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