It took only 5.5 years, but the Obama Administration has finally filled the position of the DOL’s Wage and Hour Administrator. Past nominees never made it through the confirmation process, but due to a compromise on the filibuster rule and other political factors, yesterday the Senate confirmed the nomination of David Weil to be the new Wage and Hour Administrator.
With this appointment, and for the first time since the President was first elected, the seats for all top DOL executives dealing with wage and hour matters are now filled, i.e., the Secretary of Labor, the Solicitor of Labor, and the Wage and Hour Administrator. The Wage and Hour Administrator oversees the division of the Department of Labor responsible for enforcing the Fair Labor Standards Act, the Family and Medical Leave Act, the Service Contract and Davis Bacon Acts, and various laws dealing with migrant farmworkers and immigrants. With this latest appointment, the President is clear as to the direction he wishes for the Department of Labor to take; the Administration is to focus on enforcement. In fact, “enforcement” may be an understatement; the direction given is more along the lines of “aggressive enforcement.” In other words: “Take no hostages!”
Each of these appointments have been given to officials with strong enforcement backgrounds. Secretary Perez came out of the Civil Rights Division of the Justice Department, and prior to that made his mark as an aggressive enforcer of Maryland’s wage and hour laws as its Secretary of Labor, Licensing and Regulation. Similarly, Solicitor Patricia Smith had a reputation for aggressive and punitive enforcement actions in her prior role as the State of New York’s Commissioner of Labor and Chief of its Labor Bureau. As with Secretary Perez, she focused much of her attention on employees misclassified as contractors.
The latest appointee is similarly inclined, but has asserted his views from his role as an academic and as a non-attorney. From his academic podium, he has advocated for more vigorous enforcement actions against employers, with a focus on lower paid jobs and employers in fissured industries (i.e., franchises, those which use staffing companies and subcontractors, and the like). Targeted industries, according to Administrator Weil, include: janitorial, construction, grocers, landscapers, restaurants, home health care, hospitality, moving, retail and agriculture. He also believes that what he terms to be the “top employer” in the hierarchy of fissured relationships, should be held liable for the wrongs of the lower level employers, and thereby allow actions to be brought against groups of alleged employers in singular cases. Further, and as has been also advocated by the Solicitor, the new Administrator also believes that full liquidated damages should be assessed for any FLSA violations claimed in the course of DOL investigations, even though the statute only mandates liquidated damages in the context of actual lawsuits.
The President has echoed some of these initiatives by recently advocating changes to the white collar exemption regulations through a reexamination of the duties tests currently used, as well as the salary level test. These initiatives are designed to make more employees eligible for overtime compensation than under the current regulations.
These appointments and trends almost appear to be blanket indictments on employers. In fact, the DOL estimates that 70% of employers are somehow violating the FLSA, and that too many, in the words of the DOL, have a “‘catch me if you can’ attitude.” These views appear extreme and questionable. To the contrary, employers have been frustrated at the Division’s 2010 decision to no longer provide Administrator Opinions which provide employers with compliance advice as to wage and hour matters. In a recent GAO report, the GAO was also critical of the Division’s lack of transparency and systematic means for obtaining compliance over recent years.
In light of this, and while compliance with the law should always be endorsed, there are means for obtaining compliance through more cooperative and instructive means, as opposed to purely punitive and adversarial means. That is to say, carrots sometimes work, but sticks are also needed at times. It is hoped that the Administration will endeavor to obtain better compliance by using both techniques, but there has been little indication that in the foreseeable future the DOL will resist just using its stick. Unfortunately, this only suggests that employers should view the DOL with suspect, and in the meantime be even more vigilant in auditing their pay practices and employee classifications, and documenting their good faith efforts to comply with the nuances inherent in the FLSA.