Steven Senne/AP Photo
President Biden’s Department of Labor will be able to restore some wages to tipped workers that Trump’s department has proposed to take away.
This story is part of the Prospect’s series on how the next president can make progress without new legislation. Read all of our Day One Agenda articles here.
In its last dying days, the Trump administration is busily at work depriving American workers of rights they previously held. Civil servants are threatened with having their jobs reclassified so Trump can fire them, a threat that encompasses nearly 90 percent of employees at the Office of Management and Budget. Environmental rules that protected those toiling at hazardous work sites have been placed on the chopping block. And workers who receive the tipped-worker minimum wage of $2.13 an hour (or slightly higher in states with their own tipped-worker laws) when they’re actually waiting tables, but the regular federal minimum wage of $7.25 (or the state minimum when it’s higher) when they’re not (as when they’re in the kitchen folding napkins, say), are now threatened by a newly proposed Department of Labor rule. Under that rule, their pay when not engaged in tipped work would spiral down to $2.13 or the state tipped-worker minimum.
These lame-duck cruelties, should these rule changes be finalized before Trump decamps for Mar-a-Lago, could be reversed by the next Congress. Under the terms of the Congressional Review Act, Congress has the authority to roll back such changes during the first 60 days of its next session. Should the Republicans retain control of the Senate, however, such reversals aren’t likely.
The Deeper Poverty for Restaurant Workers rule is currently under review by OMB political appointees, not the endangered civil servants. But it originated in Trump’s lame-duck Department of Labor. “My understanding,” says one DOL insider, “is that [Labor Secretary Eugene] Scalia has been relying on political appointees from the department’s Wage and Hour Division, the department’s solicitor’s office, and the secretary’s office, with most career appointees frozen out of the process.”
This stands to reason, since the Wage and Hour Division’s civil servants did the work—researching tipped workers’ incomes, refining a proposal entitling them to more than the $2.13 when not doing tipped work, soliciting public comments on that rule, and then finalizing and publicizing it—to establish the rule that Trump’s appointed minions are now endeavoring to strike down.
Should the Trumpians promulgate their rule change and Mitch McConnell have the power to block its repeal, it will become the task of the Biden DOL to reinstate the original or even improve it. In the Obama administration, David Weil (author of The Fissured Workplace, the seminal analysis of the decay of employment relations) headed up the department’s Wage and Hour Division (WHD). In response to the Prospect’s questions, he laid out how such rules get formulated (or, if need be, reformulated).
“In my day,” Weil recalled, “we had a working team from the WHD and Solicitor’s staff (both political and career) who would work on this kind of thing, often with representation from key people in the Secretary’s senior staff, and for bigger regulations, the policy office and chief economist. But we always had a WHD-Solicitor team as the core.” With such a team in place, Biden can do more than restore Obama-era rules.
Biden has an ambitious labor agenda, highlighted most dramatically by raising the federal minimum to $15 over several years. Even though many rank-and-file Republicans have voted for ballot measures raising their state’s minimum wage (as voters did in Florida last month to $15), it’s hardly likely that 60 votes could be found in the Senate for such a raise. Even $10 an hour might not pass muster with McConnell.
Despite that, when Congress passed the Service Contract Act, enabling presidents to set rules for how companies with federal contracts treat their workers, they opened the door to a parallel regime of labor law, covering employees of companies building drones for the Pentagon and mopping floors for the Social Security office in Bismarck, North Dakota. Those labor laws are set by the employer’s funder—the president, through executive orders.
Barack Obama signed several such orders, including one granting contract workers paid sick leave, and another raising the minimum wage for such workers and indexing it to inflation; it now stands at $11. While those remain in place, Trump scrapped others. These include an Obama-instituted ban on worker arbitration agreements as a condition of employment; a condition that bids could be rejected based on a contractor’s record of labor law violations; and a worker retention rule, requiring a contractor who replaces the previous contractor on an ongoing project to keep, or if need be rehire, the previous contractor’s employees.
Biden proposed to go further than Obama in setting worker-friendly requirements for federal contractors.
Biden, on his campaign’s website, proposed to go further than Obama in setting worker-friendly requirements for federal contractors. He proposed “a multi-year federal debarment for all employers who illegally oppose unions,” vowing that contracts would go exclusively to employers who sign neutrality agreements with workers seeking to unionize. Biden also promised to raise the minimum wage for contract employees to $15, and require it come with accompanying benefits. In essence, a good chunk of what the Democrats promised to include in their labor law reform bill, which will go nowhere in Mitch McConnell’s Senate and won’t get 60 votes even if the Democrats prevail in Georgia, will be enacted on a smaller scale for federal contract workers through Biden’s orders. (Heidi Shierholz covered this for the Prospect in greater depth.)
Weil notes that Biden’s Division could aggressively monitor and enforce such orders by paying particular attention to contractors who label their workers as contractors themselves, rather than employees who’d be covered by those orders. Many construction workers don’t receive the prevailing wages set by the Davis-Bacon Act, which covers such workers on federal projects, precisely because they’re misclassified.
Through carefully targeted employer monitoring—not just on federal contracts but all manner of work—Obama’s WHD became the most effective in decades when it came to detecting and remedying employers’ abuse of workers. “We focused on particular industries” where wage theft, unpaid overtime, and other abuses were particularly prevalent,” Weil says. In previous administrations, the Division’s inspectors simply responded to worker complaints. Under Obama, that changed. “More than 50 percent of our investigations, more than double the figure in previous administrations, were done on a proactive basis,” Weil says. He cites a study published by the American Economic Association showing that, when the Labor Department began issuing press releases detailing the penalties assessed on employers who violated safety standards at their workplaces, other companies in those industries responded by conforming their practices to the Labor Department’s rules.
Under Trump, what had been normal WHD business—targeting violators, setting clear standards, issuing and publicizing penalties—has largely disappeared. Weil expects Biden’s WHD will not only renew such practices but have as its first priority working with another Labor Department division, the Occupational Safety and Health Administration (OSHA), to set clear safety standards for employers of frontline workers and penalize employers who violate them. In the near term, Biden’s OSHA can implement a temporary emergency standard for workplaces during the pandemic, something that Trump’s OSHA has deliberately chosen not to do. After considerable study, Obama’s OSHA came close to finalizing a rule requiring employers to provide data on injury rates. Under Biden, that rule will likely be issued.
Obama’s Labor Department also issued a guidance saying that most people in work relations are employees, no matter how the employer may classify or misclassify them. The guidance was based on Supreme Court rulings that said the 1938 Fair Labor Standards Act (FLSA), the act that first established a federal minimum wage, has the broadest definition of “employment” in any law or, indeed, almost any usage. Employment, the law says, means “to suffer or permit work,” so that, say, children working alongside their parents would be legally employees and come under the law’s protections.
Based on the Court’s interpretations of the FLSA, says Weil, the guidance the department issued in 2015 said that “most people in work relations are employees.” That standard structured WHD’s assessments of employers’ claims that their workers were independent contractors, and it informed the practices of many state labor departments, too. As Weil sees it, narrowing this definition of employment would require Congress to amend the FLSA. Biden could actually increase the department’s ability to crack down on misclassification by turning its Obama-era guidance into an administrative interpretation, which would give the department more power to go after the wage theft endemic to employers who insist their workers are independent contractors.
In the near term, Biden’s OSHA can implement a temporary emergency standard for workplaces during the pandemic.
Of course, the six conservative Supreme Court justices might well decide that previous interpretations of the FLSA erred in setting so broad a definition for employment. Plus, after spending $200 million on a ballot measure they devised, Uber, Lyft, and their cohorts bamboozled California voters last month into legalizing the mass misclassification of drivers that keeps their companies afloat. It will likely require a heavily pro-labor Congress and a different Supreme Court to keep this practice from condemning millions of workers to economic marginality.
Near the end of his tenure, Obama’s Labor Department also expanded the requirement for employers to pay overtime wage rates to salaried employees working more than 40 hours a week who make up to $51,000 a year. Previously, employers could legally withhold overtime pay to any such employees who made more than $24,000. The new rule was blocked from taking effect by a right-wing federal judge in Texas. Under Trump, the eligibility threshold was scaled back from $51,000 to $36,000. Biden’s department could raise it back to its Obama level or higher. But whether the conservative federal bench would permit such promiscuous payment for midlevel managers’ long hours on the job is questionable at best.
The federal judiciary and a recalcitrant Senate notwithstanding, there’s still a great deal that President Biden and his Labor Department can do to ease the burdens on American workers. “Biden has to translate these ideas and proposals into what they mean for people’s lives and households,” Weil says. “That’s what made Biden’s campaign message so appealing. That’s got to be what the Democrats articulate and make operational.”
