Acosta Unsure About Using Pay Level for Overtime Eligibility.

From Daily Labor Report  By Chris Opfer

The man tapped to run the Labor Department isn’t sure the agency should be using workers’ pay levels to determine if they’re automatically eligible for overtime compensation.

An Obama administration rule to make some 4 million workers newly eligible for overtime pay—by doubling the salary threshold for automatic eligibility to $47,500—is on hold, pending federal litigation in Texas. Although the rule has sparked a debate over where to set the salary threshold, labor secretary nominee Alexander Acosta noted that the judge in that case has raised questions about whether the DOL should instead focus on the actual duties workers perform.

“One of the questions that’s in litigation is does a dollar threshold supersede the duties test and, as a result, is it not in accordance with the law,” Acosta told a Senate panel during his March 22 confirmation hearing. “I mention that because I think the authority of the secretary to address this is a separate question from what the correct amount is.”

The comments came as the DOL is still deciding whether to continue to litigate the case in Texas. The agency is expected to eventually issue a new overtime rule, possibly with a smaller salary threshold increase. But a court ruling limiting the DOL’s ability to consider pay levels might throw a wrench in that plan.

Business groups and mostly Republican lawmakers have criticized the Obama administration rule, saying it would cause employers to switch workers from salaried to hourly positions, eliminate low-level management opportunities and slash jobs to meet rising payroll costs. Democrats and worker advocates argue the new requirements are needed to keep up with inflation and would help bolster paychecks in an era of wage stagnation.

Neither side has challenged the DOL’s general authority to tinker with a salary test. Acosta himself suggested that he would be open to increasing the salary threshold to account for cost-of-living increases over the past decade.

“I was encouraged that” Acosta “recognized that such a large adjustment in the threshold—doubling it—was a dramatic increase and that he recognized the costs to nonprofits,” Sen. Lamar Alexander (R-Tenn.), chairman of the Health, Education, Labor and Pensions Committee, told Bloomberg BNA after the hearing. “My hope is that he would propose a sensible regulation that would substitute for the poor one that was written last year.”

Decision Sparks Uncertainty

The Fair Labor Standards Act generally requires employers to pay workers time-and-a-half wages for all hours worked beyond 40 per week. The law also delegates to the labor secretary the power to determine which workers should be removed from overtime requirements under the law’s white collar exemption for workers in “bona fide executive, administrative, or professional” (EAP) positions.

The overtime standards created in 2004 by President George W. Bush’s administration allow employers to exempt workers who make more than $23,500 annually and perform certain managerial duties. When the DOL rolled out the new rule in 2015, then-Labor Secretary Thomas Perez said doubling the threshold was the easiest way to put more money in workers’ pockets and avoid some of the uncertainty that comes with the “duties test.”

Federal district court Judge Amos Mazzant raised some eyebrows on both sides of the overtime debate last year when he issued an injunction halting the rule just months before it was slated to take effect ( Nevada v. DOL, E.D. Tex., No. 4:16-cv-00731, motion granted 11/22/16). Congress made clear that it expected the DOL to focus on job duties in crafting the white-collar exemption, Mazzant said.

“Nothing in the EAP exemption indicates that Congress intended the Department to define and delimit with respect to a minimum salary level,” Mazzant wrote. However, he later clarified that position in a footnote, which some observers have read to mean that Mazzant’s real gripe was with the size of the threshold increase.

“The Court is not making a general statement on the lawfulness of the salary-level test for the EAP exemption,” Mazzant said. “The Court is evaluating only the salary-level test as amended under the Department’s Final Rule.”

Next Steps

It’s not clear whether Mazzant will address the specific question when he rules on a motion for summary judgment brought by a group of states and business groups challenging the rule.

In the meantime, the DOL might make the issue moot by dropping its defense of the rule. That’s unless Mazzant approves the Texas AFL-CIO’s request to intervene.

Heidi Shierholz was the DOL’s chief economist during the time the Obama administration crafted the rule. Acosta’s comments about the department’s authority “demonstrate real radicalism or a lack of understanding about how the Fair Labor Standards Act works,” she said.

“What we heard over and over again as we were crafting this rule is that businesses don’t like the duties test,” Shierholz, now a policy director for the Economic Policy Institute, told Bloomberg BNA March 22. “This would put all of the eggs in the duties test basket, which would lead to more litigation and more workers being misclassified as exempt.”

Paul DeCamp, who started running the DOL’s Wage and Hour Division a year after the Bush administration overtime rule took effect, told Bloomberg BNA March 22 that Mazzant’s position is “pretty clear.” Now a management-side attorney at Jackson Lewis, DeCamp said he would advise employers facing overtime lawsuits to challenge any rule that includes a salary threshold if Mazzant’s ruling stands.

“The precedent is going to at least create some concern about any rules going forward that are premised on a salary requirement,” DeCamp said.

To contact the reporter on this story: Chris Opfer in New York at copfer@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

U.S. Supreme Court Strikes Down Appointment of Former NLRB Acting General Counsel.

Littler Mendelson PC – Erik Hult

USA March 22 2017

On March 21, 2017, the U.S. Supreme Court affirmed the D.C. Circuit’s holding that Lafe Solomon, who was appointed by former President Barack Obama to serve as acting general counsel to the NLRB in June 2010 when the prior general counsel resigned his position, was prohibited by the Federal Vacancies Reform Act (FVRA) from continuing to serve in that role following his January 5, 2011 nomination to the general counsel position. The decision in NLRB v. SW General does not invalidate all NLRB decisions issued during Solomon’s tenure, and it is not comparable in scope to the Court’s 2014 decision in Noel Canning. Rather, the Court’s holding applies only to unfair labor practice complaints issued between January 5, 2011 and November 4, 2013 by Solomon or pursuant to his authorization, and only if the employer timely raised a challenge to Solomon’s appointment under the FVRA.

Background on the FVRA

Article II of the U.S. Constitution requires that the President obtain “the Advice and Consent of the Senate” before appointing “Officers of the United States.” The NLRB general counsel is one such position in that it requires Presidential appointment and Senate confirmation (a “PAS office”). The Federal Vacancies Reform Act of 1998 provides the President with the authority to appoint acting officers to temporarily carry out the duties of a vacant PAS position. The current version of the FVRA permits three categories of government officials to perform acting service in a vacant office, including “first assistants” to the open office, an individual who already serves in a PAS office, and a person who has served in a senior position in that agency.

However, the FVRA also makes certain individuals ineligible for acting service. Subsection (b)(1) states: “Notwithstanding subsection (a)(1), a person may not serve as an acting officer for an office under this section” if the President nominates him for the vacant PAS office and, during the 365-day period preceding the vacancy, the individual “did not serve in the position of first assistant” to that office or “served in the position of first assistant to the office of such officer for less than 90 days.”

Lafe Solomon’s Tenure

In June 2010, NLRB General Counsel Ronald Meisburg vacated his position and President Obama appointed Lafe Solomon to become the NLRB’s acting general counsel. On January 5, 2011, Obama nominated Solomon to become the NLRB’s general counsel on a permanent basis. The Senate did not take action on Solomon’s nomination and returned it to the President when the legislative session expired. The President re-submitted Solomon’s name for consideration in May 2013, but later withdrew it and nominated Richard F. Griffin, Jr. Griffin was confirmed as general counsel of the NLRB in October 2013. Thus, from June 2010 through Griffin’s confirmation, Solomon served as the NLRB’s acting general counsel.

The matter before the Supreme Court in SW General arose in January 2013, when an NLRB regional director, exercising authority on Solomon’s behalf, issued a complaint against respondent SW General, Inc. The employer sought review in the D.C. Circuit arguing that the complaint was invalid because, under subsection (b)(1) of the FVRA, Solomon could not perform the duties of general counsel to the NLRB after having been nominated to fill that position. On appeal, the D.C. Circuit agreed with the employer’s FVRA objection and ruled that Solomon had become ineligible to continue serving as acting general counsel as of January 5, 2011, the date on which the President nominated him as general counsel.

The Supreme Court affirmed the D.C. Circuit’s decision and held that subsection (b)(1) of the FVRA prevents a person who has been nominated to fill a vacant PAS office from performing the duties of that office in an acting capacity. In support of this conclusion, the Court held that the plain language of the FVRA provides that subsection (b)(1) applies to any “person,” which has an expansive meaning and applies to all of the FVRA.

Implications of the Court’s Decision

In its opinion, the D.C. Circuit noted that it addressed the FVRA objections because the company raised the issue in its exceptions to the administrative law judge’s (ALJ) decision and that its decision did not automatically render all of Solomon’s actions as acting general counsel void ab initio, or “from the beginning.” The court expressed “doubt that an employer that failed to timely raise an FVRA objection will enjoy the same success” or that its decision would “retroactively undermine a host of NLRB decisions” because it would only apply to litigants who raised the FVRA argument before the Board.

Thus, the Supreme Court’s decision in SW General is narrow and does not invalidate all of Solomon’s actions as acting general counsel. Rather, only those cases in which FVRA defenses were timely raised before the Board in response to unfair labor practice complaints issued between January 5, 2011 and November 4, 2013 are potentially “voidable.” Furthermore, after he was confirmed, current NLRB General Counsel Griffin utilized a provision of the FVRA to ratify actions that Solomon authorized, so Solomon’s actions in those cases where a timely FVRA challenge was raised may have been effectively corrected by Griffin.

Employers alleged to have committed unfair labor practices in complaints issued between January 5, 2011 and November 4, 2013, should raise an FVRA defense if possible, assuming the matter has not already been decided by the Board. However, the Supreme Court’s decision does not invalidate all Board actions in unfair labor practice proceedings during Solomon’s tenure, nor does the case permit employers to retroactively challenge Board actions under Solomon’s tenure if an FVRA defense was not timely raised and preserved.