Today’s Labor Updates:

Obama Will Seek Broad Expansion of Overtime Pay

Chad oil workers end strike after Chinese employers raise pay

Disciplining an injured employee for violating a safety rule

 

Obama Will Seek Broad Expansion of Overtime Pay

By MICHAEL D. SHEAR and STEVEN GREENHOUSE

MARCH 11, 2014

WASHINGTON — President Obama this week will seek to force American businesses to pay more overtime to millions of workers, the latest move by his administration to confront corporations that have had soaring profits even as wages have stagnated.

On Thursday, the president will direct the Labor Department to revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as “executive or professional” employees to avoid paying them overtime, according to White House officials briefed on the announcement.

Mr. Obama’s decision to use his executive authority to change the nation’s overtime rules is likely to be seen as a challenge to Republicans in Congress, who have already blocked most of the president’s economic agenda and have said they intend to fight his proposal to raise the federal minimum wage to $10.10 per hour from $7.25.

In 2004, business groups persuaded President George W. Bush’s administration to allow them greater latitude on exempting salaried white-collar workers from overtime pay, even as organized labor objected.

Conservatives criticized Mr. Obama’s impending action. “There’s no such thing as a free lunch,” said Daniel Mitchell, a senior fellow with the Cato Institute, who warned that employers might cut pay or use fewer workers. “If they push through something to make a certain class of workers more expensive, something will happen to adjust.”

Marc Freedman, the executive director of labor law policy for the U.S. Chamber of Commerce, said the nation’s overtime regulations “affect a very wide cross section of employers and our members.”

“I expect this is an area we will be very much engaged in,” Mr. Freedman said.

Mr. Obama’s authority to act comes from his ability as president to revise the rules that carry out the Fair Labor Standards Act, which Congress originally passed in 1938. Mr. Bush and previous presidents used similar tactics at times to work around opponents in Congress.

The proposed new regulations would increase the number of people who qualify for overtime and continue Mr. Obama’s fight against what he says is a crisis of economic inequality in the country. Changes to the regulations will be subject to public comment before final approval by the Labor Department, and it is possible that strong opposition could cause Mr. Obama to scale back his proposal.

Cecilia Muñoz, the director of the White House Domestic Policy Council, said the effort was part of Mr. Obama’s pledge to help workers thrive. “We need to fix the system so folks working hard are getting compensated fairly,” she said on Tuesday evening. “That’s why we are jump-starting this effort.”

The overtime action by Mr. Obama is part of a broader election-year effort by the White House to try to convince voters that Democrats are looking out for the middle class. White House officials hope the focus on lifting workers’ pay will translate into support for Democratic congressional candidates this fall.

Since the mid-1980s, corporate profits have soared, reaching a post-World War II record as a share of economic output. The profits of the companies in the Standard & Poor’s 500 have doubled since the recession ended in June 2009, but wages have stagnated for a vast majority of workers in the same period. Recently, workers’ wages fell close to an all-time low as a share of the economy.

In 2012, the share of the gross domestic income that went to workers fell to 42.6 percent, the lowest on record.

Under current federal regulations, workers who are deemed executive, administrative or professional employees can be denied overtime pay under a so-called white-collar exemption.

Under the new rules that Mr. Obama is seeking, fewer salaried employees could be blocked from receiving overtime, a move that would potentially shift billions of dollars’ worth of corporate income into the pockets of workers. Currently, employers are prohibited from denying time-and-a-half overtime pay to any salaried worker who makes less than $455 per week. Mr. Obama’s directive would significantly increase that salary level.

In addition, Mr. Obama will try to change rules that allow employers to define which workers are exempt from receiving overtime based on the kind of work they perform. Under current rules, if an employer declares that an employee’s primary responsibility is executive, such as overseeing a cleanup crew, then that worker can be exempted from overtime.

White House officials said those rules were sometimes abused by employers in an attempt to avoid paying overtime. The new rules could require that employees perform a minimum percentage of “executive” work before they can be exempted from qualifying for overtime pay.

“Under current rules, it literally means that you can spend 95 percent of the time sweeping floors and stocking shelves, and if you’re responsible for supervising people 5 percent of the time, you can then be considered executive and be exempt,” said Ross Eisenbrey, a vice president of the Economic Policy Institute, a liberal research organization in Washington.

Jared Bernstein, the former chief economic adviser to Vice President Joseph R. Biden Jr., and the former executive director of the White House Task Force on the Middle Class, embraced Mr. Obama’s move.

“I think the intent of the rule change is to make sure that people working overtime are fairly treated,” he said. “I think a potential side effect is that you may see more hiring in order to avoid overtime costs, which would be an awfully good thing right about now.”

Mr. Bernstein, now a senior fellow at the Center for Budget and Policy Priorities, a liberal research group, and Mr. Eisenbrey wrote a paper last year urging the administration to raise the salary threshold for overtime to $984 a week. Their study estimated that in any given week, five million workers earning more than the current threshold of $455 a week and less than $1,000 a week are likely to be exempted from overtime. President Bush raised the threshold to $455 in 2004.

Mr. Bernstein said, “Remember, inflation has eroded this threshold a great deal over the years, so it’s hard to see why it’s unfair to make that adjustment.”

White House officials said that in California an employer cannot deny overtime pay to a salaried worker who makes less than $640 a week. In New York, the threshold is $600 a week. Under recently passed laws, the California threshold is set to rise to $800 per week in 2016, and the New York threshold to $675.

If the changes to the overtime regulations are made, it will fall to the Labor Department’s wage and hour administrator to put them into effect. That position has been vacant since Mr. Obama took office. David Weil, a professor at the Boston University School of Management, is the latest nominee for the post. He is awaiting confirmation. 

 

Chad oil workers end strike after Chinese employers raise pay

Tue, Mar 18 2014

N’DJAMENA, March 18 (Reuters) – Workers in Chad’s oil exploration sector have ended a strike after securing a 20 percent wage increase and better conditions from their Chinese employers, a union leader said on Tuesday.

The eight-day strike by 1,500 workers, which ended on Monday, did not affect the Central African country’s 120,000 barrel per day (bpd) output or operations at its 20,000 bpd refinery.

Union leader Lagmet Harge told Reuters that a deal had been reached late last week with the Great Wall Drilling Corporation – a subsidiary of China National Petroleum Corporation (CNPC) – and with oil services firm China National Logging Corporation.

“Our two employers have agreed to raise our salaries by 20 percent. They also accepted to improve conditions,”  “These decisions are contained in minutes signed on Friday between the parties following mediation by the petroleum ministry,” he said.  The strike was the second this year in Chad by employees at the two Chinese firms.

The workers are at sites in the Bongor Basin and the Logone region near the southern border with Cameroon.  Landlocked Chad began exporting oil in 2003 when it completed a 1,000 km pipeline to the Atlantic coast via Cameroon. Oil major ExxonMobil and CNPC are active in the country’s oil sector.

 

Disciplining an injured employee for violating a safety rule

Arent Fox LLP Mark S. Dreux and Matt Thorne USA

March 17 2014

Disciplining employees for violating safety and health rules is a critical component of any good safety and health program. OSHA’s recent policy on employee discipline for violating safety and health rules undercuts the use of such discipline and encourages employees to consider possible claims for retaliation. This policy states that employers should only enforce “legitimate safety and health rules” and sets forth a series of possible claims for employees challenging the discipline to consider. The claims provided include: (1) whether the discipline was proportional to the infraction, (2) whether it was consistently applied to other employees and (3) whether it was based on a vague rule.

Background – Caught Between a Rock and a Hard Place

Section 11(c) of the OSH Act prohibits employers from retaliating against employees for asserting their right to report workplace injuries/illnesses. Therefore, if an employee is injured while breaking a safety rule, any form of subsequent discipline could be viewed as a retaliatory act under this provision, meant to discourage future reporting. This exact scenario was highlighted in OSHA’s 2012 Whistleblower Memo as one that may violate 11(c) and should therefore be viewed with scrutiny: “[i]n a third situation, an employee reports an injury, and the employer imposes discipline on the ground that the injury resulted from the violation of a safety rule by the employee.” OSHA also notes that a claim for discrimination is present where the discipline is disproportionate to the nature of the safety rule violation or the cited safety rule is vague as written.

In this regard, OSHA has inserted itself into employers’ discipline policies, warning of the potential 11(c) violations described above, yet simultaneously encouraging employers to “maintain and enforce legitimate workplace safety rules in order to eliminate or reduce workplace hazards and prevent injuries from occurring in the first place.” Indeed, employers are still permitted to take adverse action against an employee where it is “predicated upon nondiscriminatory grounds.” 29 C.F.R. § 1977.6(a).

As a result, when an employee is injured in the course of violating a safety rule, employers find themselves in a precarious position – if the employer enforces its safety program, as OSHA encourages, it simultaneously exposes itself to potential 11(c) liability.

Effective Employer Response – Knowing the Questions OSHA Will Ask

The key to successfully combating 11(c) claims is a good first response that gets ahead of OSHA’s investigation and effectively conveys that the contested discipline lacked discriminatory intent; i.e., the fact that the employee reported his injury had nothing to do with his discipline. The best way to accomplish this is to provide OSHA with written documentation (e.g., a termination report or letter) that the employee was justifiably terminated solely for violating a safety rule. Employers can also do this by preemptively addressing the questions OSHA has instructed their investigators to ask during their investigation:

Does the employer consistently impose equivalent discipline against employees who violate the safety rule in the absence of an injury? I.e., How is the safety rule enforced in situations that do not involve injury?

Does the employer monitor for compliance with the safety rule in the absence of an injury?

Is the language of the cited safety rule that was violated reasonable so as not to be too vague? E.g., “employees must work carefully.”

Each of these questions is specifically designed to reveal whether the employer used a safety rule violation as a pretext to discriminate against an injured employee.

Employers may also want to consider other ways to demonstrate that the employee’s injury was irrelevant to the decision to impose discipline. For example, in cases of termination, an employer may point to the fact that other employees who have been injured still retained their jobs. An employer may also point to provisions of its written safety program that require employees to immediately report injuries/accidents to their supervisor. This can serve as circumstantial evidence that the employer encourages a culture of reporting injuries.

Conclusion

We have seen these types of discrimination claims grow with greater frequency in the past year, and expect to them to continue to grow. Employers can certainly expect OSHA to devote a corresponding increase in resources to investigate them – the OSHA FY 2014 budget request included a proposed increase of $5.9 million and 47 additional full-time employees for the agency’s whistleblower protection programs.

Regardless, employers should not be deterred from imposing employee discipline (where warranted) for fear of a looming 11(c) whistleblower claim. As long as the employer is adequately prepared to address the questions above, it can create an effective response that may lead OSHA to conclude the employee’s complaint is without merit.