Punching In: Joint Employment, Overtime, and SCOTUS Watch

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By Chris Opfer and Ben Penn

Monday morning musings for workplace watchers

Reckoning on Joint Employer Rule? | Labor Dept.'s Mystery Reg | Plus Side of NDAs in Harassment Deals?

Chris Opfer: We could hear from the Supreme Court on class action waivers as soon as today. Perhaps it’s just the fumes I inhaled on my bike ride in to the office, but something just feels like the justices want us to know this morning whether businesses can require workers to sign those waivers as part of a mandatory arbitration agreement. The court is set to rule on a trio of cases challenging class action waivers as unlawful restrictions on workers’ right to concerted activity under the National Labor Relations Act.

If you’re a pessimist and a labor reporter—ahem, Ben—you’re just hoping the justices don’t bless us with a Murphy Oil and a Janus decision on the same day. We’ll be watching the dockets. You can monitor Daily Labor Report and your email inbox for updates from the Bloomberg Law news team.

Meanwhile, the dust is still clearing from the National Labor Relations Board’s surprise decision to use the regulatory process to take on the joint employer question.

When will we see an actual proposed rule? What does this mean for Browning-Ferris Industries, Hy-Brand Industrial Contractors, and other cases already in the pipeline? Will the Twitter dustup among various board members that followed the announcement devolve into some sort of “Anchor Man” type street brawl? I understand McFerran is pretty handy with a trident.

Supporters of the worker-friendly Obama approach to joint employment—which was established in the 2015 Browning-Ferris decision and is still in place—offered insight into how they may attack the GOP-majority board’s attempts to change it. The board’s two Democrats and former Democratic member Sharon Block said they’re concerned that the majority has already decided how it will determine who’s a joint employer for unionization purposes. They’re not the only ones assuming the board will return to a previous standard requiring direct control of workers to be considered a joint employer. The board briefly reverted to that approach in Hy-Brand, but then scrapped the decision because of conflict questions related to member Bill Emanuel’s (R) participation in the case.

The Administrative Procedure Act requires government agencies to take the public’s temperature before issuing a new regulation. Aaron Saiger, who teaches administrative law at Fordham University, told me any hubbub over whether board Republicans already know what they’re going to do with joint employment isn’t likely to stop them from using the regulatory process to resolve the issue. As long as they give workers, unions, employers, and other interested parties a chance to weigh in and offer some sort of justification for why they do whatever they wind up doing.

“Agencies are allowed to have opinions before they engage in rulemaking,” Saiger said. “That’s the whole process. Having an opinion is OK, it just has to be a conditional opinion.”

I’ll have more on the joint employer regulation process here this morning.

Ben Penn: The Labor Department offered a vaguely-worded notice last week that a rule is in the pipeline to update the definition of “regular rate of pay” for overtime calculation. This unanticipated item in the administration’s unified regulatory agenda sparked a bit of theorizing among some of the nation’s most experienced wage-hour lawyers about what the rule will entail. Hint: Worker advocates won’t be fans of any of the possibilities.

I’d still like to learn more details on that question (fluctuating workweek revisions seem to be the most popular guess thus far), so send your thoughts. But I’m also sleuthing around on another mystery in the Wage and Hour Division’s agenda.

The agency added two previously unannounced WHD rulemakings—on rate of pay and hazardous occupations for teenagers. But I suspect there are more regulatory efforts in the works that the WHD isn’t ready to disclose.

I have it on good authority that the division has been burning the midnight oil on a flurry of simultaneous rules. The department is said to have been seeking emergency reg-writing help from offices that don’t otherwise work on WHD issues.

And what’s with the gap in regulatory identifier numbers between the teenage labor proposal (1235-AA22) and the regular rate rule (1235-AA24)? Perhaps it’s placeholder for a top secret AA23 rulemaking that is too controversial for the administration to tip its hand on—maybe something related to Davis Bacon or guestworker visas.

Then there’s the Trump 2.0 stab at rewriting the Obama-era rule to expand overtime pay access. Once forecast for an October delivery, the proposed rule is now estimated for a January 2019 release. And considering that the Senate seems to have all but forgotten Cheryl Stanton’s nomination for WHD chief, don’t be surprised if the next agenda in six months pushes that timeline back.

All of this serves as a reminder that the Obama administration’s efforts to extend time-and-a-half pay to 4 million more workers, in the face of fierce business opposition, remains on appeal by the Trump DOL before the Fifth Circuit. Labor Secretary Alex Acosta’s strategy to issue a more moderate salary threshold update to void the litigation and sink the Obama rule forever will only succeed if the WHD actually finishes its regulation before the clock runs out on this administration.

The WHD, a little subagency with a $228 million per year budget, only has so much rulemaking bandwidth. Imposing new, concurrent rules on limited staff only make it more difficult to beat the deadline. A President Warren in 2021, for instance, would relish the chance to revive the $47,476 per year overtime exemption level.

CO: Nondisclosure agreements accompanying sexual misconduct settlements have been under fire in the #MeToo movement for protecting serial harassers. Lawmakers around the country are pushing legislation to prohibit such agreements, including in California . A measure winding its way through the Golden State legislature would end arbitration pledges that force employees to take job harassment cases to private judges and would ban businesses from requiring workers to sign nondisclosure agreements stemming from those disputes.

Many management lawyers have long defended NDAs as useful tools to resolve harassment claims and protect the privacy of everyone involved, especially for cases that never actually get to a judge or jury. Even some plaintiffs’ lawyers aren’t sure they want an all-out ban.

California civil rights attorney Lauren Teukolsky recently represented a dishwasher at a luxury resort in Los Angeles who said she was fired for rejecting her boss’s advances. Teukolsky said the $250,000 settlement she obtained for the woman was the first in her career that didn’t include a nondisclosure agreement. But that doesn’t mean she wants the state to ban those deals.

“I think it’s important for my clients to be able to decide whether they’re willing to sign an NDA in exchange for more settlement money,” Teukolsky told me.

Bernard Alexander, a California trial lawyer who recently won a $10 million discrimination case against Office Depot, told me he’s torn over the issue. Although nondisclosure agreements often make it easier to resolve cases without going to trial, Alexander said there are “societal benefits” of making settlements public.

“Harvey Weinstein is a perfect example,” Alexander said.

BP: Next up, a health-care rule that happens to fit under the DOL’s employee benefits portfolio.

Tomorrow, I’ll be reporting with our Bloomberg Law’s Madison Alder on how the association health plan rule’s accelerated timeline (it could be published any day now) aligns with Republicans’ hopes—er, maybe prayers—to preserve control of both congressional chambers this fall.

There’s plenty to debate about the rule’s ability to create more affordable coverage opportunities for small business employees versus its potential to devastate the Obamacare markets and offer skimpy new alternatives. Let’s put the policy arguments aside and look at this rule’s political potency on the campaign trail.

A source close to the administration tells me the White House is timing the final release of this rule for early June to give Republican Senate and House members something to run on as the election cycle heats up this fall. Other Washington sources closely tracking this rulemaking say the sense of urgency is more about a rush to fix a broken health-care system.

Those factors aren’t mutually exclusive.

Some GOP candidates are already eagerly anticipating the final regulation release as their teams tailor talking points around the brand new Obamacare escape plan coming their way, according to the same source close to the administration.

Will tying a technical regulation to the midterms actually gain traction in the run-up to November? Read our story tomorrow to find out.

CO: Time for a quick update on the Equal Employment Opportunity Commission’s sexual harassment guidance. It appears to have taken a powder somewhere on the trip from the EEOC to the White House Office of Management and Budget. We hear that the guidance is now making a pit stop at the Justice Department.

Insiders think the OMB is probably going to hang on to the guidance until Congress confirms EEOC Republican nominees Janet Dhillon and Daniel Gade, so the new commissioners can put their stamp of approval on it. Given the pace at which the Senate has been voting on nonjudicial nominees, I wouldn’t hold my breath.

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.

See you back here next Monday.

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