Punching In: Hamburglaring a Joint Employment Decision

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By Chris Opfer and Ben Penn

Monday morning musings for workplace watchers

Happy Meal Deal |DOL Confessionals | New Minimum Wage Move?

Chris Opfer: Lawyers for McDonald’s, the National Labor Relations Board, and a group representing fast food workers will go before a judge Thursday to debate the merits of a settlement to close a super-sized labor case.

McDonald’s and the NLRB want an administrative law judge to approve the deal, which would compensate workers at McDonald’s franchisee restaurants who said they were retaliated against for participating in Fight For $15 demonstrations. But the agreement wouldn’t resolve the central legal question that we’ve all been following: Is McDonald’s a joint employer of workers at restaurants owned and operated by franchisees?

Attorneys for the Fast Food Workers Committee say NLRB General Counsel Peter Robb rushed out the settlement to make sure this question didn’t get answered. Robb is believed to favor a limited approach to joint employer liability. He may not want a judge supporting the wider joint employment standard adopted by the board in the Obama administration. The board’s current view of the issue has been clouded by ethics concerns in two cases setting, resetting, and setting again the legal standard for proving joint employment. Or is it resetting, setting, and resetting?

The folks at the golden arches and the federal labor board will tell Administrative Law Judge Lauren Esposito the settlement is reasonable, but the complete deal hasn’t been made public. That means we still don’t know how much cash Mickey D’s and its franchisees are willing to fork over to make this thing go away.

Ben Penn: This week marks the start of a critical test for what Labor Department political leaders hope will become a major shift in the enforcement regime.

The Wage and Hour Division’s six-month Payroll Audit Independent Determination (PAID) pilot initiative is scheduled to go live this week, along with the release of more detailed guidelines for potential participants, a DOL spokesman tells Punching In. Businesses can begin confessing to overtime and minimum wage violations, and if the DOL accepts them into the program, they can distribute the back pay to employees throughout the country.

The utilization level these next six months will determine whether self-reporting becomes a permanent feature of this administration or a footnote to mark a failed policy test.

Labor Secretary Alex Acosta and his Acting WHD Administrator Bryan Jarrettbelieve this is a clear win-win for workers (who get cash they never thought they would see, without the lengthy, costly litigation process) and businesses (who can sleep at night knowing they’ve come into compliance while reducing class action exposure).

It sounds nice in theory, except unless the WHD offers businesses strong reassurances when it publishes more specific parameters of PAID, the risks of participating might make it tough for this initiative to have the level of impact that leaders foresee. Management-side blogs are already with warning that an employer’s good-faith effort to turn itself in could backfire by opening up new liability.

The division surely has motivation to wash away those business fears and make PAID as inviting as possible. That’s because if the pilot does succeed, the benefactors extend beyond the workers and employers that Acosta and Jarrett cite. The DOL leaders themselves have much to gain.

The Wage and Hour Division always faces scrutiny into its annual wage recovery data. To prove that the Trump DOL can maximize limited enforcement resources—on par with or superior to the Obama WHD—it would be in their interest to run up the dollar totals recouped for employees. If multi-state corporations sign up to PAID, that can yield million-dollar agreements for workers, without the hassle of a full-blown investigation or lawsuit.

There’s nothing inherently nefarious about this proposition (although worker advocates and unions may disagree). This is just a reminder that Acosta and his team have skin in the game, too.

Check back in later this week, when I’ll be reporting on the reasons why attorneys from the management and plaintiff bars, in a rare moment of consensus, share their uncertainties about whether this program will truly provide a pathway to widespread compliance that the department envisions.

CO: This is the portion of our regular programming where I update you on the latest on the drama over at the labor board. Just when you think you have a grasp on all of the issues and players in the various games of Rochambeau going on inside and around the NLRB, new ones pop up just to make things a little more complicated.

Here’s what you need to know: There’s a new inspector general investigation and a new request that the inspector general be investigated.

IG David Berry is looking into claims that Member Mark Gaston Pearce (D) violated board rules by telling an American Bar Association group that a “big decision” was coming in the Hy-Brand joint employer case one day before the board surprised some folks by scrapping an earlier decision in that case. The claim is also part of the basis for a request that the NLRB reconsider the Hy-Brand decision.

It makes sense that Berry would at least open an investigation after being asked to do so, if for no other reason than to maintain an air of impartiality after recently finding that Member Bill Emanuel (R) violated ethics rules by participating in the Hy-Brand and Browning-Ferris cases. Although he’s not required to issue a report, I believe we will eventually see one. The questions are whether Pearce did in fact give folks any sort of heads up about the decision and whether those comments run afoul of agency disclosure restrictions.

Meanwhile, the National Right to Work Legal Defense Foundation wants an independent agency to look at Berry. The group says Berry included internal deliberative information about how the board decided Hy-Brand in his Emanuel report, which then became public when Berry’s report was leaked to the press. That one seems like more of a message to the inspector general that some folks on the conservative end of the advocacy spectrum are not exactly over the moon about his recent work.

BP: Last week a contingent of left-leaning nonprofit, union and plaintiff attorneys, Democratic Hill staffers, and former Wage and Hour Division leaders all gathered in Washington for a daylong gabfest to celebrate a significant birthday for the Fair Labor Standards Act.

The resounding takeaway: the 80-year-old FLSA is primed for a facelift.

For decades, we’ve seen members of both parties pitch various bills to update the statute. The unexpected passage of an omnibus rider on tips aside, there’s no reason to think Congress is ready to come to terms on a compromise to adjust federal wage-hour law to the 21st century economy.

But Mary Kay Henry, the influential president of the Service Employees International Union, offered an idea during her speech at the FLSA b-day bash that—while not immediately realistic—added a breath of fresh air to the conversation.

“We should give the United States Secretary of Laborin another administration [to guffaws]the authority to issue workplace standards orders that would standardize minimum wages, benefits powers across industries or occupations,” Henry said. “These workplace standards orders should be based on recommendations from panels that are made up of workers and employers and community partners.”

Henry was laying out her blueprint for how workers can win in the future, rather than formally advocating for tangible legislation. But sector-specific wage boards are a reality in New York and Seattle, in no small part due to SEIU-led mobilization. It would take a dominantly liberal congressional makeup for this idea to gain traction at the federal level.

Not so fast.

Who knows what’s in store in a post-Trump world, but history tells us political forces are likely to swing. Fixing the FLSA to give the secretary this broad wage standards power that has historically been reserved for Congress would open up the possibility of major setbacks for SEIU in a future GOP administration.

In other words, maybe there’s a reason we haven’t seen Democrats pushing wage standards orders as part of their FLSA 2.0 agenda.

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@bloomberglaw.com and bpenn@bloomberglaw.com or on Twitter: @ChrisOpfer and @BenjaminPenn.

NLRB Chairman Marvin Kaplan (R) has in his short time on the board made a habit of using footnotes to identify some of the legal issues he’d like to address in future cases. What does he have in mind? Bloomberg Law’s Lawrence Dube has that story this week. It’s also that time of the quarter again for unions to file disclosures to the feds about what they’ve been up to. Jaclyn Diaz has some insight on membership data and political spending.

See you back here next Monday.

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