United States: If At First You Don't Succeed . . . Nominate A New Secretary Of Labor

Last Updated: March 31 2017
Article by James J. Plunkett

On March 22, 2017, the Senate Health, Education, Labor and Pensions (HELP) Committee conducted Secretary of Labor nominee Alex Acosta's confirmation hearing. Acosta was nominated on February 16 after President Trump's first choice for Secretary of Labor—former restaurant CEO Andy Puzder—withdrew his nomination. If confirmed, Acosta will be the first Hispanic cabinet-level member of the new administration.

We've previously discussed Acosta's bona fides, which include positions as a member of the National Labor Relations Board (NLRB), chief of the civil rights division at the Department of Justice, as well as the U.S. Attorney for the Southern District of Florida. Although some Senators pressed Acosta during the hearing about a few specific situations he encountered while in these roles, most of the questioning focused on his views of current labor and employment issues. Of course, most of these issues are critically important to employers and include matters such as the overtime regulation, the Occupational Safety and Health Administration's (OSHA) silica rule, OFCCP's over reliance on statistical analyses, visa work programs, and job training. Three issues of particular importance to employers jumped out:

1. Overtime Regulation

Acosta was questioned several times about the U.S. Department of Labor's (DOL) overtime rule, which a federal judge in the Eastern District of Texas enjoined on November 22, 2016. On its way out the door, the previous administration filed an appeal of this injunction, and Acosta was noncommittal when asked whether he would continue to pursue this appeal or instead drop the case. However, Acosta did note that he had concerns with the dramatic increase in the salary basis threshold (from roughly $23,000 to roughly $47,000) and questioned whether this was appropriate for certain parts of the county and whether it potentially violated federal law.

2. Joint Employer

Towards the end of the hearing, Senator Alexander (R-TN) questioned Acosta about whether a direct or indirect control standard should be used to determine whether a particular company is an employer of certain workers. This question was clearly referencing the NLRB's 2015 decision in BFI which upended decades of precedent in establishing an indirect or reserved control standard. Significantly, through various sub-regulatory initiatives, the previous administration's DOL made clear that it would scrutinize potential joint employer relationships and single them out for enforcement. It is, therefore, an important question for a Labor Secretary nominee. Acosta responded by favoring the direct control standard, calling the indirect control standard the "nontraditional approach." 

3. Opinion Letters

It was clear that Acosta is committed to returning to the process of issuing Opinion Letters—a long-standing practice that the previous administration scrapped in favor of sweeping Administrator's Interpretations. Opinion Letters offer a way for employers to anonymously—and in good faith—seek assistance from the DOL's Wage and Hour Division when confronted with difficult questions as to the application of federal wage and hour law. This is good news, as the Opinion Letter process offers employers a more proactive and cooperative relationship with the DOL, in contrast to what many considered to be an over-emphasis on enforcement in the previous administration.

What Happens Next?

The timing for Acosta's consideration in the HELP Committee and eventual vote on the Senate floor is unknown at this time. Even if Acosta is confirmed, and he only needs a simple majority of votes in the Senate, individuals will need to be nominated and confirmed to lead the various DOL offices, such as the Wage and Hour Division and OSHA. This likely means a period of continued legal uncertainty for employers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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