If U.S. businesses had any thoughts that a change in leadership at the Department of Labor would mean a change in the aggressive tactics employed under Secretary Hilda Solis, they were probably mistaken.
A little more than three months into the tenure of Thomas Perez, the department’s agenda has in many areas continued on the path set by Solis. Perez in a recent speech to the AFL-CIO’s convention ticked off the areas in which he vowed the Labor Department would remain aggressive.
The Labor Department’s road to put securities brokers under the same fiduciary rules as investment advisers has been bumpy.
The pushback against the change reached new heights last week when the House approved a bill to delay implementing the standard. Although it’s unlikely the Senate will follow suit, and President Obama has promised to veto it, it remains to see how the Labor Department will proceed.
ESOPs and employee benefits
As part of its enforcement tactics, DOL has brought a number of actions against Employee Stock Ownership Plansand has sought total repayment of about $100 million.
Most recently, the department sued California Pacific Bank, alleging the San Francisco institution mismanaged the assets of its plan. The suit asks that $1.4 million be paid back.
When Perez addressed the AFL-CIO convention earlier this year, one area he emphasized was cracking down on workplace fraud, especially the misclassification of workers as contract employees.
“We expand opportunity when we combat the unfair, illegal practice of misclassifying employers as independent contractors. Some people call the practice ‘misclassification.’ I call it what it is: workplace fraud,” Perez said in his speech. “Workplace fraud has three victims: the worker, of course; the employers who do the right thing but find themselves undermined by an unlevel playing field; and the government, which gets cheated out of unpaid taxes.”
Worker’s rights and wage/hour matters
Enforcement in this area has included extending minimum wage and overtime protections to home health care workers. The final rule, which affects 2 million workers, was finalized in September. The broadening of the Fair Labor Standard Act came after the U.S. Supreme Court had ruled the workers exempt from the protections.
“The intent is to protect more workers,” Disbrow said. “But it affects a lot of small and midsize businesses.” In the end, Disbrow said, the additional wages will be passed directly to consumers using home health care workers.
Comment period for new regulations
When new regulations are proposed, the law calls for a period of public comment before rules are published and then finalized. This allows interested parties – employers, unions, lawmakers and anyone else – to study the proposals and weigh in on their possible effects.
There have been complaints that the 60-day comment periods for various proposals under Solis, and now Perez, have been inadequate. For instance, in 2011, under public and congressional pressure, the department extended the comment period for proposed changes to the Fair Labor Standards Act. Even the addition of 30 days drew fire from some lawmakers.