12.15.2010 0

The Wage and Hour Division: We Can Help Prolong the Recession

By David McFadden –

Since approximately day two of his administration, President Obama has boasted about what he has done since “day one.” Actually, day one was relatively harmless. It was only a half day, and Obama spent it delivering another vapid speech, having a long lunch, and reviewing a boring parade. But on day ten, January 29th, 2009, he began his project of giving employers additional reasons not to hire American workers. On that day he proudly signed the Lilly Ledbetter Fair Pay Act, which allows employees more time to sue employers for alleged pay discrimination.

And from that beginning, the project of exacerbating unemployment and prolonging the recession has been carried out on a broad front of initiatives. The government has borrowed capital and diverted it to less productive uses under the guise of stimuli. Complex new mandates and penalties regarding employee health insurance have been imposed on employers. Further uncertainty has been created by thousands of pages of impending financial legislation and rules and by the possibilities that new energy taxes will be imposed and that President Bush’s tax cuts will soon expire.

The Department of Labor’s Wage and Hour Division (WHD) has pitched in and done its part. Under the direction of Deputy Administrator Nancy J. Leppink, a stereotypically narrow and humorless bureaucrat, the WHD has taken an adversarial approach to employers. The WHD has hired 250 field investigators to police employers and expects to hire 90 more with funds allocated in the Department of Labor’s fiscal year 2011 budget. At a “stakeholder forum” in May, Leppink said she couldn’t understand why the WHD should, as it had in the past, give a break to employers who come forward and acknowledge past violations.

In March the WHD announced that it was ending its longstanding practice of issuing opinion letters responding to questions from employers about how labor laws apply to their situations. The questions frequently concerned whether a type of job would be classified as exempt from the overtime requirements of the Fair Labor Standards Act (FLSA). Rather than responding in opinion letters to employers’ questions about their specific situations, the WHD now issues “administrator interpretations” setting forth general interpretations of laws and regulations. The WHD claims that issuing administrator interpretations instead of opinion letters “will be a much more efficient and productive use of resources,” but so far it has only issued three of them.

While the WHD has ended its service of providing employers with opinions on the classification of their employees, it is preparing to issue regulations requiring employers to render opinions on that subject to the WHD. Next month a notice of proposed rulemaking is expected to be issued on rules under which”[a]ny employers that seek to exclude workers from the FLSA’s coverage will be required to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to WHD enforcement personnel who might request it.” This shift is consistent with the adversarial objective the WHD acknowledged in its Congressional Budget Justification: “WHD’s regulatory initiatives will be undertaken with an objective of determining where there are opportunities to shift the burden of compliance to the employer. . . .”

And so the businesses that the administration would like to induce into hiring people become the enemy if they do. On the bright side, however, the WHD has adopted a cheerful new slogan, “We Can Help.” They surely can, but if only they wouldn’t.

Mr. McFadden was a former Bush Administration official at the U.S. Department of Labor.

Copyright © 2008-2017 Americans for Limited Government