The Trump administration will release rewritten versions of two major Obama-era labor rules early next year, administration officials say: The 40 hour-a-week overtime pay rule and a rule determining when corporations can be held legally liable for workplace violations by their franchisees.
The changes would undo much of Obama’s legacy on labor law. Both are eagerly awaited by business groups. The administration has added both to its fall regulatory agenda, setting the likely announcement sometime by March.
The new rules will cap two years in which the Trump administration has systematically torn down much Obama’s work to make federal rules and regulations more union-friendly. Most of what Obama did involved reinterpreting existing rules rather than shepherding new laws through Congress, meaning that the Trump administration just needed to re-re-interpret them.
“Much of President Obama’s legacy was written in sand. Instead of pursuing bipartisan legislation and working with congress, his administration ruled via regulation knowing that congressmen and senators would never go along,” said F. Vincent Vernuccio, senior fellow at the free-market Mackinac Center. “Obama’s labor rules are the perfect example of this end run around congress.”
The reliance on administrative action, rather than legislative, cuts both ways — the Trump administration has used rulemaking extensively, too, to pursue its aims. But business groups argue the Trump administration is being more methodical and precise about following that process to the letter and that, accordingly, its efforts are likely to prove more lasting.
“Anything done through a rulemaking, generally speaking, can be undone,” said Patrick Hedren, vice president for labor policy at the National Association of Manufacturers. “That applies to anything done in the Obama administration or the Trump administration.”
He added: “That said, when agencies do a good job of talking with the public and taking input from all sides, all sectors, then they do a better job in the final rule. Then it becomes much tougher as practical matter for a future administration to say it wants to go in a different direction.”
Labor Secretary Alexander Acosta formally announced earlier this year that his department would revisit the Obama administration’s expansion of the number of workers covered by the federal overtime rule. The prior administration said the rule covered any employee who makes up to $47,000 annually, more than twice the level under previous administrations.
Obama’s version of the rule was struck down by a Texas court in 2016. To ensure it remains down, a new version will come out in January or February, according to administration sources speaking anonymously. The new rule will set the cut-off level below Obama’s $47,000 level, although it is unclear where exactly the new level will be set. Acosta has told Congress that while the Obama administration put it too high, the old level of $23,000 had not kept pace with the economy and an increase is merited.
The National Employment Law Project’s Executive Director Christine Owens said the administration was fixing something that wasn’t broken by “weakening the overtime pay protections the Obama administration adopted, despite the number of employers who have successfully implemented the increases without adverse effects.” Owens said the administration is “relentlessly marching toward repealing safeguards designed to protect the rights of workers.”
Also planned for early next year, according to administration sources, is a new department rule on when one company can be declared a “joint employer” with another and therefore be held legally liable for any workplace violations by it. For decades the standard required “direct control” of the other company’s policies, as in a contractor-subcontractor relationship. The Obama administration expanded this to the much vaguer “indirect control,” a move that alarmed business groups, particularly franchisors.
The new rule will restore “direct control” as the standard, hobbling efforts by unions to organize big franchisors like McDonald’s by targeting the corporate headquarters rather than individual restaurants.
The Trump administration has targeted even obscure changes by the previous administration. The Occupational Health and Safety Administration quietly withdrew a rule last year that allowed union representatives to accompany agency officials during inspections of non-union workplaces. Federal law allows OSHA inspectors to have worker representatives to accompany them during inspections. Dubbed the “walk around” rule, it was originally restricted to employees at the workplace being inspected, but the Obama administration changed that in 2013, a standard the withdrawal restores.
Trump has also made extensive use of the Congressional Review Act to nullify actions by the previous administration, such as a 2015 Obama administration rule that forced bidders on federal contracts to disclose whether they had ever been charged with labor violations. Business groups labeled it a “blacklisting” rule, since it could allow a union to undermine a company’s chances at winning a bid just by filing a complaint.
In July, the Labor Department rescinded the prior administration’s ‘persuader rule,’ which forced lawyers to publicly divulge any contracts with businesses to advise on labor issues. Prior to the Obama administration, lawyers only had to report the contracts if they directly spoke with workers. Merely advising management on the law wasn’t a trigger. Making it one was believe to push many out of the advice business altogether.
The department also scrapped last year an Occupational Health and Safety Administration practice that used a weighted counting system to tally the number of inspection cases. The policy held that if one inspection took longer than others to complete, it counted for more. The policy was meant to encourage more in-depth investigations by OSHA, rather than having its people focus on closing as many cases as quickly as possible.
In May, President Trump signed a trio of executive orders that prohibited federal employees from spending more than a quarter of their total paid time doing union business and from filing grievances against government or lobbying it while on official time. The orders also prohibited free use of federal property while on official time and required any federal employee that used it to remain properly licensed and qualified for their official job.
“We’re very happy with the way the administration has gone about its work. They’ve been very methodical,” NAM’s Hedren said.
