Wage-Hour Enforcement Erratic With No Trump Appointment Yet

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By Ben Penn

A shortage of Trump Labor Department officials may be muddling wage enforcement in parts of the country.

The White House has yet to nominate an administrator for DOL’s Wage and Hour Division, and Labor Secretary Alexander Acosta hasn’t designated a political adviser to work with the WHD’s career leaders. Absent new policy instructions, field investigators are mostly enforcing minimum wage, overtime, and family leave laws by following policies in place before President Donald Trump was inaugurated.

But wage and hour attorneys say some local offices appear to be changing their attitude toward employers on their own volition, based on an assumption that the agency will eventually become more business-friendly. Examples include investigators withdrawing questions on joint employer relationships, no longer assessing double damages on top of back pay owed, and an observation of fewer new workplace audits overall.

“I think that there are indications of more balance,” Alfred Robinson, an acting WHD administrator for President George W. Bush, told Bloomberg BNA. “I’ve seen offices that maybe pushed liquidated damages or things of that nature” beforehand “and are not so adamant about it” this year.

The agency continues to enforce the law, but “I read the tea leaves as suggesting that hopefully some reason is coming into some of the enforcement practices,” said Robinson, who is now the co-chairman of the wage-and-hour practice at management firm Ogletree Deakins.

The White House is expected to tap Cheryl Stanton, executive director of the South Carolina Department of Employment and Workforce, to run the WHD, sources recently told Bloomberg BNA. However, final approval from the White House and the Senate could drag the process into 2018.

Once political personnel show up to the WHD, the agency is certain to re-evaluate its enforcement policies. Business groups criticized the Obama administration’s approach as overly punitive. Worker advocates felt the WHD was smart to target employers of low-wage workers who are victims of “wage theft.”

But at this stage, sources with knowledge of the process told Bloomberg BNA they’re not aware of any instructions from DOL headquarters to change course out in the field.

“The Wage and Hour Division continues, as it always has, to deliver on its mission to promote and achieve compliance with labor standards to protect and enhance the welfare of the nation’s workforce,” the department told Bloomberg BNA in a statement. The DOL said it “remains committed to enforcing the law fully and fairly.”

‘Left to Their Own Devices’

The WHD will always be challenged to get all 1,000 investigators on the same page. But the lack of leadership at the national office could make it more difficult to ensure that the division is speaking with one voice.

“Until there’s political leadership in place below the secretary, I think we’re going to see wage-and-hour on automatic pilot, and one of the consequences of that is that some of the district offices are left to their own devices,” Michael Hancock, a longtime former WHD official, told Bloomberg BNA.

“Some district offices operate business as usual, others may be putting their foot down on the throttle, and others may be pulling back a little bit, given the signals that they received indirectly about the direction of this administration,” added Hancock, who left the agency in 2015.

Now a plaintiffs’ attorney at Cohen, Milstein, Sellers & Toll, Hancock said his remarks were based on his decades of past experience inside the agency, and not on 2017 developments.

Wage-and-hour practice leaders from nine of the largest law firms defending employers in Labor Department investigations spoke with Bloomberg BNA about the current situation at the WHD. Collectively, these attorneys have represented such Fortune 500 companies as Walmart, Wells Fargo, Comcast, and MetLife when faced with allegations of overtime or minimum wage violations.

Attitudes Vary

Most of the local offices are said to be carrying on with Obama WHD head David Weil’s data-driven strategies that were intended to make vulnerable workers whole on lost wages. But that varies by investigation and part of the country.

Some businesses are seeing the agency take a more neutral enforcement disposition this year, according to interviews with attorneys representing employers under investigation by the WHD.

Clients across the nation “have sensed certainly less new activity by the government,” including “Department of Labor wage-and-hour activity,” Christopher Parlo, who co-directs Morgan Lewis’ wage-hour practice group, told Bloomberg BNA. But he said this reduction has been offset by state enforcement actions.

By contrast, a few other management lawyers reported instances of escalated aggression from investigators who may be sensing time is running out on the prior administration’s policies.

In a few cases, WHD investigators have been “hyper aggressive with timelines” when requesting documents as part of an investigation, Salvador Simao, chairman of the national wage-and-hour practice at management firm FordHarrison, told Bloomberg BNA. “I think it’s just, ‘do as much as you can before the new administration comes in.’”

Lost Interest in Joint Employment

In the prior administration, the agency significantly upped the share of cases in which it would pursue liquidated damages for employees. The division also prioritized ensuring compliance in what Weil called “fissured” industries in which the direct employer is alleged to share responsibility for payroll conditions with an affiliated company higher up the chain.

Since Trump took office, the closest the WHD has received to new policy came last week, when Acosta withdrew two informal guidance memos issued by Weil. Those guidance documents were intended to clarify how the law and court cases require the agency to interpret joint employment and employee classification.

But even before the interpretations were pulled, investigators appeared to have been voluntarily retreating on the issue of joint employment.

Brett Bartlett, co-chairman of Seyfarth Shaw LLP’s national wage-and-hour litigation practice group, observed an interesting development for a handful of his clients faced with pre-election investigations that carried over to the Trump administration.

“Investigators had made overtures that they would be looking deeply at joint employment issues, and those inquiries became more quiet as the year turned and virtually disappeared in terms of the questions around joint employment after inauguration,” Bartlett, who is a partner at Seyfarth’s Atlanta office, told Bloomberg BNA.

Too Soon for Change

Acosta and his skeleton crew of political aides have been preoccupied with regulatory and other macro-level issues that tap into White House initiatives, such as revisions to guestworker visas and apprenticeship programs.

But when a WHD chief assumes office, it’s unclear whether the field offices will have already received new guidance on how to conduct investigations. The nearly 100 local WHD offices scattered across the nation are expected by and large to carry on with Weil’s priorities for now.

“I haven’t seen any major changes, but so far I just don’t think the folks at DOL have been there long enough,” said Tammy McCutchen, a Bush administration WHD administrator who now defends employers at Littler Mendelson. “I think they are continuing to do what they’ve been directed to do previously.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Chris Opfer at copfer@bna.com

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