Trump Proposes a $2.5 Billion Cut to the Dept. of Labor’s Budget and to Eliminate Funding for Labor Initiatives and the Chemical Safety Board

By Kara M. Maciel and Eric J. Conn

The Trump Administration submitted a blueprint budget for 2018 to Congress proposing $2.5 Billion in cuts to the U.S. Department of Labor’s (“DOL”) operating budget.  The President’s proposed budget expressly calls for reduced funding for grant programs, job Budget 1training programs for seniors and disadvantaged youth, and support for international labor efforts.  It also proposes to entirely defund and eliminate the U.S. Chemical Safety and Hazard Investigation Board (“CSB”) – an independent, federal, non-enforcement agency that investigates chemical accidents at fixed facilities.  The budget plan also purports to shift more funding responsibility to the states with labor related programs.  Finally, although less explicit, the budget blueprint appears to deliver on promises from Trump’s campaign trail that rulemaking and regulatory enforcement efforts under the myriad laws and regulations enforced by the sub-agencies, such as the Wage and Hour Division and OSHA would be slashed.

These proposed budget cuts at DOL and other agencies are all part of a plan to offset the White House’s intent to increase defense and security spending by $54 billion.  Overall, Trump requested $1.065 Trillion in total discretionary spending, with $603 billion going to Defense.

The proposal would shrink DOL’s budget to $9.6 Billion – down 21% from the $12.2 Billion budget for 2017. Trump’s planned reductions announced on March 16, 2017 – while not really surprising in the context of his view toward federal spending on non-defense agencies – would have a seismic impact Continue reading

Trump Picks Fast Food Restaurant CEO Andrew Puzder as Labor Secretary: Seismic Shift Is Anticipated in Agency’s Rulemaking and Enforcement

By: Andrew J. Sommer

President-elect Donald Trump has chosen Andrew Puzder as his Secretary of Labor, according to Trump’s transition team. Puzder is the CEO of CKE Holdings, the parent company of Carl’s Jr. and Hardee’s, and has been a vocal critic of the Obama Labor Department’s overtime regulations and efforts to increase the federal minimum wage. As labor secretary, Puzder will oversee the federal apparatus that investigates violations of minimum wage, overtime and workplace safety laws and regulations.

An increase in the federal minimum wage and an expansion in overtime eligibility have been priorities for the outgoing Secretary of Labor Thomas Perez. On Perez’s watch, the DOL has issued new overtime regulations increasing the minimum salary threshold level in order to qualify an employee as exempt from overtime. Puzder has denounced this new overtime rule, the status of which is presently uncertain after a Texas federal court temporarily blocked the rule from taking effect. The U.S. Court of Appeals for the Fifth Circuit has just granted the DOL’s request to expedite its appeal from the preliminary injunction order. The appeal is unlikely to be decided before Donald Trump is inaugurated as the next president on January 20, 2017.

Accordingly, under Puzder’s leadership, the DOL could very well withdraw the pending appeal before a decision is issued by the Fifth Circuit and otherwise not support the new overtime rule. Even if the overtime rule eventually takes effect, Puzder’s arsenal will include the authority to engage in rulemaking to roll back or modify the overtime rule, consistent with the notice and comment process under the federal Administrative Procedures Act. In an op-ed piece earlier this year in Forbes, Puzder said that the overtime regulation will “add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere.” He expressed the opinion that this cost cutting would result in reduced opportunities, bonuses, benefits and promotions.

Other immediate measures that Puzder could take to shift or reverse the direction of the DOL would be to modify interpretive guidance issued under the Obama Administration. For instance, Puzder will likely modify an administrative interpretation by the DOL’s Wage and Hour Division regarding the joint employer doctrine. Under Obama, the DOL has cracked down on employee misclassification and been vocal about its belief that most workers should be treated as employees, insinuating that in a majority of cases, it would hold employers accountable for the specific obligations of an employer-employee relationship. The Wage and Hour Division has offered an administrative interpretation under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act that broadened the definition of joint employment. Under that doctrine, two employers may be responsible for the violations of each other because of how they jointly use the same employees or because of the control an employer exercises over the employees of an intermediary employer such as a contractor or staffing agency.

Puzder’s authority to impact regulatory and enforcement actions will extend to the DOL’s administration of guest worker programs, allowing foreign nationals to immigrate to the United States and work on a temporary basis, as well as the DOL’s coordination with the Department of Homeland Security over the enforcement of immigration laws in the workplace. It is uncertain what will happen under a Labor Secretary Puzder, whose past immigration stance is at odds with the President Elect’s. In an op-ed piece Puzder authored in The Wall Street Journal last year, he counseled Republican presidential candidates to come up with a vision of how to deal with immigration, including the 11 million undocumented workers already in the country. He supported a “path to legal status” that would be “short of citizenship” so long as the undocumented pass a background check, pay a fine and learn English, among other measures.

Ultimately, employers may benefit most from Puzder’s authority to reallocate agency resources away from agency enforcement actions for labor law violations. Under Obama, the Wage and Hour Division has been very active in enforcing labor laws and investigating industries and workplaces with a history of labor law violations. Puzder could slow down enforcement and conduct fewer investigations. The first few months of a Puzder Labor Department may be telling as we continue to read the tea leaves to assess how employers will be affected by the change in administration.

Whistleblower Retaliation Article Published in BLR’s HR Daily Advisor and Upcoming Webinar

whistleblower-articleBLR recently published a two piece article in the HR Daily Advisor by Kara Maciel and Daniel Deacon, of Conn Maciel Carey’s national Labor & Employment Law Practice Group, regarding government agencies increased focus on whistleblowers and retaliation, and how employers can avoid whistleblower and retaliation complaints from their employees.

Over the past year, there have been significant changes in both the Equal Employment Opportunity Commission (“EEOC”) and Occupational Safety and Health Administration (“OSHA”) that make it easier for employees to demonstrate that an employer acted with retaliatory intent.  Given this increased focus on retaliation, it is prudent for employers to take steps to avoid whistleblower and retaliation complaints from their employees, and ensure that they have adequate workplace policies and complaint systems to address retaliation complaints before an employee complaint lands before the EEOC or OSHA.

Part 1 of the article, titled “Preventing Whistleblowers in the Workplace: EEOC Expands the Rights of Whistleblowers,” focuses on how the EEOC has modified the standard it uses to evaluate retaliation claims, and has become more aggressive in its whistleblower enforcement efforts. Continue reading

States and Businesses Seek Injunction to Prevent DOL Overtime Rule From Taking Effect on December 1

gavelBy:  Kara M. Maciel and Dan Deacon

On September 20, 2016, business groups and states filed two lawsuits in the U.S. District Court for the Eastern District of Texas challenging President Obama’s new overtime rule that is set to take effect December 1, 2016 .   Twenty-one states banded together to challenge the U.S. Department of Labor’s (“DOL”) new overtime exemption rule in States of Nevada et al. v. United States Department of Labor et al, Case No. 1:16-cv-004070., and the U.S. Chamber of Commerce, leading a coalition of 50 national and Texas business groups, filed a similar lawsuit in Plano Chamber of Commerce et al. v. Thomas Perez et al. Case No. 4:16-cv-00732.  The two lawsuits argue that DOL unconstitutionally overstepped its authority to establish a federal minimum salary level to qualify for the Fair Labor Standards Act’s (“FLSA”) white collar exemption and violated the Administrative Procedure Act (“APA”).

The New Rule & its Impact on Employers

The long awaited controversial rule was released in May 2016 to the disdain of employers, as we’ve explained in prior blog posts.  The most significant change in the final rule is the new $47,476.00 minimum threshold salary required to qualify as an exempt employee, representing more than a 100% increase from the present level and a huge financial undertaking for employers.  All employers throughout Continue reading