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Punching In: What Marty Walsh Didn’t Say About Gig-Worker Status

May 3, 2021, 10:29 AM

Monday morning musings for workplace watchers

Walsh’s Gig Worker Challenge | Abruzzo’s Agenda | OSHA Staffing

Ben Penn: Labor Secretary Marty Walsh‘s declaration that gig workers should be employees “in a lot of cases” rippled through the stock market, but left unsaid was how the U.S. Labor Department could translate that position into enforceable policy.

Walsh could broadly interpret federal wage law to cover as many workers as possible. Doing so would imperil the business models of Uber Technologies Inc., Instacart, and other digital platform companies that consider their workers independent contractors rather than employees who are eligible for minimum wage and overtime pay.

DOL took this view during the Obama administration, when the official spearheading that approach was wage-hour chief David Weil. A day before Walsh waded into the gig-worker debate in offhand remarks to Reuters, Bloomberg Law reported that Weil awaits final clearance to be nominated for a second stint heading the Wage and Hour Division.

So how could the Biden administration handle independent contractor status under the Fair Labor Standards Act? We asked Weil just that, back in October.

“It’s going to become either do we go back to what is this broad statement of employment that the FLSA provides and act accordingly, or is there a need ... to clarify this and create this ABC standard?” Weil said, referring to the rigid three-part test underpinning laws in California and Massachusetts. “If you wanted to do that in the federal space, then you have to amend the FLSA.”

Weil, who’s become an outspoken critic of gig-economy workforce practices, said he thought DOL would have plenty of leeway to reclassify independent contractors as employees under existing statute. But by insisting that going the ABC-test route would necessitate legislation, Weil might have been acknowledging that DOL would have a tougher time against a gig company in court unless Congress were to solidify the department’s authority with new law.

Some worker advocates are urging DOL to not wait for Congress to interpret current law as permitting an ABC standard, which forbids an employer from treating a worker as an independent contractor unless the worker does work that’s outside the company’s usual course of business.

While Congress is nowhere close to updating the FLSA, Walsh faces added pressure from the left to take prompt action after California voters in November approved Proposition 22, a ballot measure bankrolled by gig-economy powers that exempts app-based rideshare and delivery companies from the state law that codified the ABC test. Gig giants are trying to export that carveout strategy to other states.

App-based drivers take part in a caravan protest outside City Hall in Los Angeles in October 2020 during the campaign over Proposition 22.
Photographer: Frederic J. Brown/AFP via Getty Images

There’s a familiar playbook if Walsh wanted to target the gig business model without invoking an ABC standard.

DOL could re-issue Weil’s 2015 guidance, which held that most workers are employees under the FLSA. To give that informal letter more juice in the courts, it could advance it as an interpretive regulation via the public notice-and-comment process.

That’s what the Trump administration did in its Uber-backed independent contractor rule, which the Biden DOL is now moving to withdraw.

Robert Iafolla: Jennifer Abruzzo said one of her first actions if confirmed as National Labor Relations Board general counsel would be to meet with career personnel to identify which regional offices most urgently need staffing up.

During her nomination hearing last week, Abruzzo said she was “extremely troubled” to learn about the plummeting personnel levels, “particularly in the field offices, where over 90 percent of the agency’s work is performed.”

That view stands in contrast to the approach apparently taken by former General Counsel Peter Robb, who offered buyouts to career staffers and left a majority of regional offices with top-level leadership vacancies.

The NLRB suffered a net loss of 131 regional personnel during fiscal years 2018 and 2019—even as it failed to spend nearly $9 million in appropriated funds, according to a recent government watchdog report.

Overall, Abruzzo gave few clues about what other issues will top her agenda, if confirmed.

She mentioned bolstering agency outreach, which seems to dovetail with Acting General Counsel Peter Sung Ohr’s efforts to boost public engagement.

But she didn’t specify where she would direct development of NLRB case law. Using their unreviewable discretion, NLRB general counsels can select which cases to prosecute and advance legal theories that ask the board to change how it interprets the law, potentially wiping out precedents and establishing new ones.

New general counsels signal such goals in their mandatory submission memos, which instruct regional staffers to send cases with certain highlighted legal issues to headquarters—with an eye toward potentially serving as vehicles to change the law.

The timing of when Abruzzo, if confirmed, would deliver such a memo may depend on how much input she’d seek from agency staffers. Robb published his memo two weeks into his term. Richard Griffin, Robb’s Obama-era predecessor, waited nearly four months to issue his.

A big variable for Abruzzo’s agenda would be whether the Senate will pass the Protecting the Right to Organize Act, a broad reworking of federal labor law.

The PRO Act would take some issues off the table, such as codifying more worker-friendly NLRB rulings on worker access to company email and smaller bargaining units that were overturned during the Trump administration.

Interpreting a new law also would likely consume a significant amount of Abruzzo’s bandwidth. That would include crafting guidance for how agency lawyers should read the law and legal strategy for cases that apply it, said Michael Green, a law professor and director of Texas A&M University’s Workplace Law Program.

Jennifer Abruzzo is shown during her April 29 confirmation hearing.
Photographer: Al Drago/Bloomberg

Regardless of what’s on her legal agenda, her short-term focus probably should center on rebuilding agency staffing, said Kenneth Dau-Schmidt, a labor and employment law professor at Indiana University.

Also Read: NLRB Punts on Challenge to Top Lawyer, Deferring to Courts

Fatima Hussein: The Occupational Safety and Health Administration is using funding from the American Rescue Plan to hire more than 160 new personnel, including inspectors and compliance officers, to boost its pandemic response.

But Walsh told House appropriators April 28 that OSHA needs greater resources, doubling down on the White House’s preliminary request for DOL funding to rise by 14% in fiscal 2022.

Walsh said the loss of “hundreds of health and safety inspectors during the last administration” put workplace safety progress “at risk.”

The administration’s request includes $2.1 billion for DOL’s worker protection agencies. That funding, the secretary said, “will allow us to hire and deploy staff to prevent injury, illness, and death on the job, recover back wages and address misclassification, respond to whistleblower complaints, help retirees get their benefits, and address pay inequities.”

Employers already are facing an increase in inspections through OSHA’s new national emphasis program, which focuses enforcement on businesses that place the largest number of workers at “serious risk” of contracting Covid-19. OSHA promised 1,600 additional work-site visits.

Its enforcement demands could rise if its Covid-19 emergency temporary standard, now under review at the White House regulatory office, is released.

Robert G. Chadwick Jr., a Texas workplace safety attorney with Seltzer, Chadwick, Soefje & Ladik, said 160 new hires heralds a “return of OSHA back to the days of the Obama administration, looking at enforcement as a tool to protect workers rather than to educate and be cooperative with employers.”

Chadwick anticipates a short-term uptick in inspections in the poultry, meatpacking, health-care and retail sectors, but said he doubted whether a consistent elevated level of inspections was possible without greater resources.

Abby Ferri, senior risk control consultant at Arthur J. Gallagher & Co., called the new hiring a “good PR move, since they’ll be busy when the emergency temporary standard is finalized.”

She added, however, that “because they churn through people so quickly, who get burned out from studying fatalities and serious injuries, and because most of what OSHA does is reactive, I don’t see this as having a huge impact.”

We’re punching out. Daily Labor Report subscribers, please check in for updates during the week, and feel free to reach out to us.

To contact the reporters on this story: Ben Penn in Washington at bpenn@bloomberglaw.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com; Fatima Hussein in Washington at fhussein@bloombergenvironment.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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