OFCCP Week in Review: November 6, 2017

The OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by John C. Fox, Candee Chambers and I. In today’s edition, we discuss:

• DOJ appealed permanent injunction on Overtime Rule
• Federal Paid Leave Bill proposed with state pre-emption
• Draft Strategic Plan released by USDOL

Monday, October 30, 2017: DOJ Appealed Permanent Injunction on Overtime Rule

The Department of Justice, on behalf of the Department of Labor, filed a notice to appeal a permanent injunction against the Obama administration’s overtime rule. The appeal did not detail the administration’s legal reasoning. It is widely assumed that Secretary Acosta wishes to appeal ONLY that portion of the lower court’s injunction which seemed to have struck down the right of the USDOL Wage-Hour Division to set a salary level for exemption from overtime for Executives. Secretary Acosta is on record of having agreed with the Court’s judgment that the precise salary level the Obama Administration had proposed was far too high. Indeed, USDOL has sought comment from the public as to what the proper salary level should be to trigger the Executive exemption from overtime.Finalized in 2016, the rule doubled to $47,476 the salary threshold under which virtually all workers are guaranteed time-and-a-half pay if they work more than 40 hours in a given week. It never took effect though, because a federal judge issued a preliminary injunction against it. In August, that same judge made the injunction permanent.

Summary of the Litigation by the DOL can be found here.

Thursday, November 2, 2017: Federal Paid Leave Bill Proposed with State Pre-emption

Three Republican members of the House of Representatives proposed a federal paid leave bill that would exempt employers from state and local paid leave laws if they give workers scheduling flexibility and a certain number of days off. The Workflex in the 21st Century Act, introduced by Rep. Mimi Walters, R-Calif., and co-sponsored by Reps. Elise Stefanik, R-N.Y., and Cathy McMorris Rodgers, R-Wash., requires businesses to offer one of six flexible scheduling options to qualify for the federal alternative, which calls for between 12 and 20 days of “compensable leave.”

The bill, which amends the Employee Retirement Income Security Act, sets leave minimums based on the size of an employer and an employee’s length of service.

The Society for Human Resources Management President and CEO Hank Jackson, whose group worked on the bill, said in a statement that it, “addresses employers’ concerns over navigating a myriad of complex and confusing state and local paid leave mandates while answering employees’ call for flexibility on the job.”

SHRM has released an Infographic as well as Q&A which outlines the requirements of the bill.

Friday, November 3, 2017: Draft Strategic Plan Released by USDOL

The United States Department of Labor released a Draft Strategic Plan for FY2018-2022, including as to sub- agencies. The Draft Strategic Plan emphasizes new job creation in America and was released to coincide with the USDOL Bureau of Labor Statistics history-making announcements on Friday about the surging US economy:Unemployment in the United States has dropped to its lowest level since 2000 (down to 4.1%),

• The “participation rate” of Americans working in the United States has risen to its highest level, also since 2000 (63.1% from 62%),
• Worker productivity has increased to 3% per annum for the first time in 8 years (from the low 2s) which low productivity labor economists credited as having suppressed wage increases and which caused Wall Street pundits to predict the new productivity burst in the US foreshadowed both coming interest rate increases and wage increases next year, and
• Employers have created 1.5 million new jobs since January 20, 2017

USDOL Secretary R. Alexander Acosta released his 38-page draft USDOL “Fiscal Years 2018-2022 Strategic Plan” starting with these words emphasizing job growth:

“The Department of Labor presents the Strategic Plan for Fiscal Years 2018-2022 reflecting President Trump’s top priorities: jobs, more jobs and even more jobs.”

The Secretary’s Message preceding the Strategic Plan noted pointedly that America was facing a “Skills Gap” with “more than six million job seekers and more than six million job openings in our nation”. “Yet, we have a ‘skills gap’ – the difference between skills job creators need and the skills job seekers offer, leaving too many jobs open.”

There are five things noteworthy about the USDOL Draft Strategic Plan:

1. With no other political appointee yet confirmed by the US Senate to work at USDOL other than Secretary Acosta, the Strategic Plan reports a continuation of Obama-era programs and strategies since Team Trump has not yet arrived to run the day-to-day operations of the Department, other than that the day to day operations have been restricted by the intervention of the federal courts which struck down as either unconstitutional or unlawful numerous Executive Orders and Rules President Obama and his two Labor Secretaries had issued;
2. There is no mention in the Strategic Plan about the large-scale downsizing (~20%) of USDOL (along with most other federal Executive Branch agencies) President Trump and OMB Director Rick Mulvaney have ordered to begin to occur this calendar year and conclude by October 1, 2018 (in time to start FY2019 with the new slimmed-down federal Executive Branch the President envisions);
3. There are three Strategic Objectives in the Strategic Plan:

• “Strategic Goal 1: Supporting the Ability of All Americans to Find Good Jobs” (ETA, VETS & ODEP, among other sub-agencies, fit here)
• “Strategic Goal 2: Safe Jobs and Fair Workplaces for All Americans” (OFCCP, OSHA and WHD, among other sub-agencies, fit here)
• “Strategic Goal 3: Promote Strong Workers’ Compensation and Benefits Programs” (ETA’s Unemployment Insurance mission fits here)

4. For those of you unfamiliar with the above-referenced acronyms, you will be delighted to know that the last page of the Strategic Plan (p.38) is a one-page list of all of the acronyms of agencies and programs at USDOL.

5. The Strategic Plan for OFCCP for the next four years is reported at pp. 19-20 of the USDOL Strategic Plan and identifies two wholly unremarkable “Strategic Objectives”:

• The first Strategic Objective signifies a continuity with the policies and objectives of the Obama OFCCP with “[m]any of OFCCP’s strategies, initiatives, and activities” for Fiscal Years 2018 through 2011 drawn from recommendations in the September 2016 Government Accountability Office (GAO) Report: EQUAL EMPLOYMENT OPPORTUNITY Strengthening Oversight Could Improve Federal Contractor Nondiscrimination Compliance (see OFCCP Week in Review: September 26, 2016)

“Strong Enforcement and Emphasizing High-Impact Projects” 

While emphasizing the virtues of voluntary compliance and compliance assistance, OFCCP explains this seemingly important strategic objective in a single sentence: “OFCCP will also emphasize systemic and high-impact cases to leverage the deterrence value”.

OFCCP does not define “high-impact,” but the agency is nonetheless making reference to the Obama OFCCP strategy of auditing fewer contractors while trying to find larger systemic cases by way of “deep dig” investigations into contractor data which “grind fine and slow”, creating both 3-4 year long audit runways and a “winners and losers” market composed of those few Government Contractors in audit in great distress, while the remaining 99% of Government Contractors which are not in audit wonder what all the fuss is about.

• The second Strategic Objective is vintage Republican Party policy:

“Expand Compliance Assistance and Stakeholder Engagement”

The mainstay of every Republican Administration is an increase in OFCCP hours spent providing “technical assistance” to the Government Contractor community. However, it may have escaped the attention of Secretary Acosta’s executive team that half of OFCCP’s technical assistance promise, as stated in the Strategic Plan for OFCCP, relates to controversial initiatives taken right out of the Obama OFCCP playbook and which are antithetical to the interests of Government Contractors:

“OFCCP strategically engages stakeholders to educate and empower workers to make informed decisions about exercising their employment rights. OFCCP outreach strategy emphasizes increased community engagement and establishing meaningful relationships with stakeholders to reach workers most at risk of experiencing workplace discrimination. These stakeholders include community-based organizations, advocacy groups, employee resource groups, job placement providers, unions, and state and local government and intragovernmental agencies.”

Secretary Acosta gave no indication as to why he was publishing a “Draft” Strategic Plan rather than a Final Plan.

Special Note: The sudden and unexpected surge in US worker productivity, an economic indicator very important to increased wages and higher standards of living, has now unleashed in Washington D.C. renewed debate about the size of the federal government and whether it should be further shrunk since many economic pundits credit the rise in productivity with the current ongoing reduction in federal regulations. OFCCP, and its budget and enforcement program, is caught up with many other agencies in that larger debate now unfolding with special intensity following BLS’ Friday jobs and productivity reports.

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 Jennifer at [email protected] with your ideas.

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