The OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by experts John C. Fox and Candee Chambers. In today’s edition they discuss:
- Acosta defended The White House’s proposed budget cuts, stating the USDOL will do “more with less”
- Acosta claimed proposed merger of OFCCP with EEOC will not lessen enforcement, but rather change the location
- USDOL continued to withdraw the Obama legacy of worker protections
Wednesday, June 7, 2017: Acosta Asserted USDOL Will Do “More with Less”
Appearing on Capitol Hill for the first time since The White House released on May 23, 2017 its FY2018 Budget for the USDOL (See OFCCP Week in Review for May 30, 2017), U.S. Secretary of Labor Alexander Acosta defended The White House’s proposed 21% reduction in the USDOL’s next year’s Budget by saying “We are going to do more with less and we are going to focus the Department of Labor on its core mission by making smart investments that work.” (FYI: The Department is currently in FY2017 and will begin FY2018 on October 1, 2017).
Appearing before the House Appropriations Labor, Health and Human Services, Education and Related Agencies Subcommittee, The Secretary also repeatedly emphasized in his prepared testimony and in his spontaneous answers to Subcommittee Member questions his desire to “streamline” and to eliminate programs not being “effective” based on what he described as the Department’s “rigorous analysis of available” program data. Supporters of OFCCP shuddered at those statements as OFCCP has reported in each of FY2015 and FY2016 the worst enforcement results in the 50 year plus history of the agency.
Subcommittee Democrats were unbridled in their criticism of and skepticism at The Secretary’s comments and brought out the sharp differences in political philosophy dividing Democrats and Republicans, and the country: “You are really deconstructing the administrative state,” accused Rep. Barbara Lee (D-CA). Apart from his “streamlining” and “efficiency” defense of the large proposed cuts to USDOL’s FY2018 Budget request, The Secretary repeated his commonly stated refrain about his mission: “I am extremely focused on jobs, jobs, that is a very clear priority…” The White House and The Secretary believe that reducing regulatory oversight and enforcement burdens will increase job creation, which they believe is paramount with over 91 million Americans between the ages of 18-65 still out of work.
For their part, Republicans were less vocal, but supportive of the Secretary’s budget plans to reduce federal government spending. The Congress, of course, has the last say on budget matters, concluding in The US. Senate. As the old adage in Washington goes on budget matters: “The House proposes and the Senate disposes.” The House Appropriations Committee is expected to release its proposed FY2018 budget in coming weeks. That budget proposal will be an important signal whether Republicans and Democrats are going to dig in and make the FY2018 Budget a major referendum on the “Bigger government” vs “Smaller government” issue about which Democrats and Republicans so strongly disagree or whether they will come together in a bi-partisan effort and “cut the baby in half.”
Wednesday, June 7, 2017: Acosta Claimed Proposed Merger of OFCCP with EEOC Will Not Lessen Enforcement…Just Change the Location
Appearing before the House Appropriations Labor, Health and Human Services, Education and Related Agencies Subcommittee (see related article, above), Secretary of Labor Alexander Acosta responded to criticism by Subcommittee Democrats by asserting that “The budget shows that it actually doesn’t reduce enforcement,” even while achieving cost-savings. A number of prominent employer groups, including the U.S. Chamber of Commerce, oppose the merger for this very reason fearing, among other things, that OFCCP could become a much more formidable enforcement agency under the EEOC’s leadership. (The EEOC’s recently launched and fledgling “systemic discrimination” program—which is OFCCP’s claim to fame—has in just a few short years at the end of the Obama Administration, for example, dwarfed OFCCP’s enforcement results many times over.)
The Secretary’s testimony was also twice illuminating. First, he made clear the merger was not his idea and second explained that he understood The White House’s merger proposal to be a technical streamlining idea and that it did NOT include a reduction in the scope of Executive Order 11246. Responding to a question from Rep. Katherine Clark (D-MA) whether the merged OFCCP would still retain audit authority, The Secretary responded: “Yes. My understanding of the proposal is that it’s a streamlining proposal and not a change-of-nature proposal. And that is something that will have to be addressed when there is legislation that unifies these.”
The coming (in the next 4 weeks) House of Representatives proposed FY2018 Budget will be a key document in the ongoing “merger or not” debate. If the House’s proposed budget does not propose merger, The White House’s merger effort will have failed (since the merger admittedly requires Congressional approval). If the House FY2018 Budget supports the merger, however, (as it likely will) the “game will be afoot” and supporters and critics will then suddenly (and frantically) re-double their efforts as the budget bill winds its way further through the Halls of Congress leading eventually to The President’s desk for signature. NOTE: Because of the long-running lack of bi-partisan agreement over the federal budget, Democrats and Republicans have not been able to agree upon a budget bill “on time” to start the new Fiscal Year except on one occasion in the last decade. As a result, it is highly likely that bipartisan agreement will again elude Capitol Hill in the coming four months leading up to the start of Fiscal Year 2018 on October 1, 2017. If so, the inevitable threat to shut down the government and then pass into law a “Continuing Resolution” (continuing the prior year’s budget in effect pending agreement on new funding levels) will ensue in the 6 to 9 months after the start of the new Fiscal Year. If so, such a development would likely leave the merger in doubt and in limbo until the 3-6 months just prior to the proposed merger date of October 1, 2018. This could well be a long and agonizing year of “wait and see.”
Wednesday, June 7, 2017: USDOL Continued to Withdraw the Obama Legacy of Worker Protections the Business Community Thought Overzealous and Wrongly Perpetrated by Administrative Interpretations Which Sought to Change Federal Law
Piece by piece, building block by building block, the new emerging USDOL under Secretary Acosta is piecemeal taking the USDOL back to administrative positions long in place before the Obama Administration took office. The latest two roll-backs came by way of a one-paragraph (3 sentence) perfunctory USDOL Press Release summarily withdrawing, without explanation, two so-called “Administrator Interpretations” (“AIs”) of the federal Fair Labor Standards Act the Obama Wage-Hour Division (”WHD”) created amid controversy to replace the WHD’s longstanding previous reliance on WHD Administrator Opinions. The two AIs in question which are now withdrawn in their entireties are the:
- “The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who Are Misclassified as Independent Contractors” Administrator’s Interpretation No. 2015-1 (the “Independent Contractor” AI), and
- “Joint employment under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act” Administrator’s Interpretation No. 2016-1 (the “Joint-Employment” AI).
Until the Obama administration stopped the practice, WHD Administrator Opinions were individualized legal opinions which answered specific questions employers had about “close call” or vague WHD regulations and requirements. Employers prized them both because the opinions operated to limit the contrary assertions of WHD investigators in the field who otherwise were free to try to leverage close call or vaguely drafted Wage-Hour Rules during investigations and because they were useful in the federal courts to offer as a defense to private party or USDOL claims of violation of the FLSA.
The Obama Administration AIs, on the other hand, were broad general “White Paper” treatises which purported to interpret the current state of Wage-Hour law as to hot-button enforcement topics. Employers found the AIs controversial, though, because they believed the AIs misstated the law in an effort to both stretch the current state of the law and to cause federal courts to defer to these interpretations in lieu of the WHD formally publishing Rules through the regulatory process replete with Notice to the Public and Comment. Amid the ever-present tension and upheaval in Washington D.C., there is now emerging among employers a surprising and well-received sense of a return to “normalcy” and stability in employment law and an end to surprise “administrative legislation.”
Labor Secretary Acosta has not yet announced whether his coming Wage-Hour Administrator will resurrect the issuance of WHD Administrator Opinions (probably yes). Regardless, however, of what the WHD does, the federal courts will continue to read the Fair Labor Standards Act and its implementing Rules and will give “deference” to the interpretations contained in those Rules unless the Rule is “plainly” wrong in light of the “plain language” of the FLSA.
THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.
Reminder: If you have specific OFCCP compliance questions and/or concerns or wish to offer suggestions about future topics for the OFCCP Week In Review, please contact your membership representative at (866) 268-6206 (for DirectEmployers Association Members), or email Candee at email@example.com with your ideas.