Donald Trump and the Republicans in Congress love to refer to regulations as “job crushing.” When Trump spoke recently at the Conservative Political Action Conference he not only said that companies can’t hire because of regulations, but he also said that “we’re going to put the regulation industry out of work and out of business.” Trump has already taken steps to make it much harder for government agencies to do their jobs. When he came into office, he imposed a hiring freeze, and he issued an executive order decreeing that the cost of all new regulations issued by each department or agency for fiscal year 2017 can’t be greater than zero regardless of the benefits to be gained from the regulations. Now, Trump has proposed a budget that would dramatically slash the budgets of most federal agencies. Government “regulators” do a great deal of important work to help sand some of the harshest edges off of our capitalist economy. I’ll leave it to others to talk about the importance of environmental and food safety regulations, but workers desperately need a vigilant Occupational Safety and Health Administration (OSHA) to protect them from injuries and chemical exposure on the job. To take just one example, in the last days of the Obama Administration, OSHA issued citations to a manufacturing company after two workers suffered severe hand injuries within ten days due to the company’s failure to install proper safety guards on its machines. While the consequences of inadequate wage and hour regulation are less dramatic, a recent Tenth Circuit case illustrates why there is such a pressing need for the government to monitor workplaces.
The New Rule
In May 2016, the Department of Labor, under the direction of President Obama, issued a final rule updating the overtime provisions of the Fair Labor Standards Act. The Department raised the minimum annual salary for employees exempt from overtime pay from $23,660 to $47,476. The Department set December 1, 2016 as the effective date for the new rule, implementation of which would have affected over 4 million employees.
Underlying the new overtime rule is the desire to protect workers from being over-worked and under-paid. As the United Food and Commercial Workers union stated in 2015, the previous threshold of $23,660 is below the poverty line, and reflects only one salary threshold increase since 1975. As long as employers could classify their workers as “managers,” they could avoid paying them overtime. The new rule would have required employers to either raise the salaries of low-level managers to meet the $47,476 threshold, or reclassify them as hourly employees entitled to overtime pay. It was intended to encourage employers to spread employment, and hire multiple workers to perform a job rather than forcing a single worker to work 70 hours a week. Critics argue the rule would hurt small businesses and reduce jobs.
As many employers were making changes to come into compliance with the new rule by the approaching December 1 deadline, a federal judge in Texas ordered a preliminary injunction barring nationwide enforcement of the rule. A number of private business groups and 21 states had challenged the rule as an overreach of executive power. The district judge agreed, claiming Congress, not the Department of Labor, should be responsible for making changes to the minimum salary requirement.
We still have a lot to learn about Alex Acosta, Donald Trump’s new nominee for Labor Secretary, but one case he ruled on during his brief stint at the National Labor Relations Board suggests that, not surprisingly for a Trump appointee, he is likely to favor employers over workers when faced with a close question. In Alexandria Clinic, P.A., a 2003 case, Acosta, joined by two other Republican Board members, overruled a twenty-four year old precedent to uphold the firings of 22 licensed practical nurses who were fired for striking at the health care clinic where they worked.
The National Labor Relations Act provides that unions must give health care institutions at least ten days’ notice before striking, and the notice must state “the date and time” the strike will commence. The Act further provides that an employee loses her status as an employee if she strikes “within” the notice period. In this case, the union provided ten days’ notice of its intent to strike on September 10 at 8 a.m. After the notice went out, the nurses decided that it would be less disruptive for patients if they struck at 11:45 a.m., instead of 8 a.m., and so they decided to begin their strike at 11:45. The employer was well-prepared to weather the strike, as it had temporary nurses standing by to replace the nurses as soon as they went out. There was no finding that any patient was harmed as a result of the strike.
Yesterday, shift leaders at Carl’s Jr. filed a complaint on behalf of themselves and those similarly situated alleging various antitrust violations by Carl’s Jr. Restaurants and CKE, of which Andrew Puzder is CEO. The complaint was filed in California Superior Court.
The complaint is based on a “no hire” policy extending to all CKE franchises, under which franchisees must agree not to hire or seek to hire anyone who works as a shift leader or any higher position at a CKE restaurant or has worked at a CKE restaurant in the prior two years. The policy might not be a problem if all the workers were employed by CKE, but “CKE and Puzder have gone out their way” to stress that the franchises are not part of a single entity that hires and fires workers (thereby avoiding some federal and state labor protections). According to the complaint, the effect of the “no hire” policy has been to “suppress the wages of the restaurant-based managers” and “worsen[ ] working conditions” by diminishing competition between the restaurants.
The complaint was filed just as Puzder’s confirmation hearing was rescheduled for the fourth time to Feb. 16. A spokesman for Puzder said that the delays were “prompted by Puzder’s need to divest financial holdings that the Office of Government Ethics judged a conflict of interest.” If confirmed, Puzder would have to sell his stake in the fast-food companies, which are valued at 10-50 million dollars.
Sharon Block served in the Obama Administration as the Principal Deputy Assistant Secretary for Policy at the Department of Labor and Senior Counselor to the Secretary of Labor. In February, she will become the Executive Director of Harvard University’s Labor and Worklife Program. Chris Lu served in the Obama administration as the Deputy Secretary of Labor, and is now a Senior Fellow at the University of Virginia Miller Center. This post originally appeared in The Huffington Post.
As former political appointees in the Obama administration’s Labor Department, we can think of few areas where we are in agreement with Donald Trump. In fact, we have fundamental differences with him about how to build an economy that works for everyone.
Yet, we share his belief that government needs to do more to lift up American workers. If the new president is interested in delivering on his promise of creating jobs and growing wages for workers, there’s an executive order already in place that he should support.
Every year, the federal government spends hundreds of billions of dollars on procurement contracts. By some estimates, one quarter of all American workers are employed by a federal contractor — that’s millions of families whose livelihoods are connected to the federal procurement system.
In 2014, Barack Obama signed an executive order called “Fair Pay and Safe Workplaces” that was premised on two fundamental principles: doing business with the federal government is a privilege, not a right; and taxpayer money should only go to companies that are abiding by the laws that protect American workers. Under the Obama executive order, the federal government would give contracts only to companies that pay their workers the wages they’ve earned, protect the health and safety of employees, and prohibit discriminatory practices.
I reported on Saturday that at the very moment Donald Trump was at the Capitol delivering his Inaugural Address promising a better life for the working class, a staffer was inside the Department of Labor taking information off the DOL website. The first to go was a report on efforts to promote LGBT inclusion in the workplace. After a furor on social media about the deletion of the report, it was briefly restored to the site, but now it is gone again.
Other things have also disappeared. For example, if one searches “Paid Leave DOL” on Google, or on the DOL site, one gets the following:
President Trump’s first afternoon in office was short on major developments for labor rights. The big news was that shortly after noon, a U.S. Department of Labor webpage about LGBT rights suddenly disappeared from the government’s website. You can read the deleted report here.
Now, a Google search on the DOL.gov site for LGBT produces the following item on the list of search results:
But clicking on the link produces this:
The other labor news from the new Trump Administration comes from his Inaugural Address. In dark tones, he hit on his populist campaign themes about the decline of American manufacturing and American jobs. The annotated transcript of his address is on the New York Times website.