Obama nominee bad for business

Nominated by President Obama, Professor David Weil stands ready, if ultimately confirmed by the full Senate, to take the helm as administrator of the Wage Hour Division of the U.S. Department of Labor. In practical terms, the Wage Hour administrator is the head honcho in charge of interpreting and enforcing the federal Fair Labor Standards Act. The FLSA and its companion regulations encompass both the minimum wage and overtime rules, as well as the myriad exemptions from those wage and hour requirements. 

Notwithstanding his academic title, Weil is more partisan than scholar; he has openly endorsed aggressively coercive union tactics, including advocating the use of regulatory agencies to advance union campaigns. See, e.g., “A Strategic Choice Framework for Union Decision Making,” WorkingUSA: The Journal of Labor and Society, 342-43 (2005). The Wall Street Journal is, accordingly, justifiably impolite in its description of Weil as “a life-long, left-wing academic with labor-union sympathies, no private-sector experience or legal training, and limited management experience.” Political Diary: “Who Is David Weil?,” December 12, 2013.

{mosads}Weil’s willingness to subordinate fact to partisan results is well established. He has been repeatedly commissioned to author reports for the Department of Labor. His 2012 report entitled Improving Workplace Conditions Through Strategic Enforcementis a critical document because it outlines Weil’s game plan for the Wage Hour Division. The only way to prepare for the coming attacks is to study that game plan:

• Under Weil, agency success will be defined quantitatively: that is, success = more Department of Labor lawsuits. Concomitantly, the budget President Obama recently submitted to Congress proposes an unprecedented jump in funding for the Wage-Hour Division, with funds earmarked for strategic enforcement activities.

• Under Weil, the Department of Labor will subordinate the merits to serve union agendas. Weil’s Strategic Enforcement study laments the decline of union representation and encourages an active partnership between regulatory agencies and unions. Put bluntly, a union need only ask to trigger an investigation. 

• Under Weil, the emphasis will be on accountability for the sins of others. His study concludes that the phenomenon of “fissured industries”—his term for business plans that include outsourcing—necessitates holding companies responsible for the violations of other employers with which they do business, regardless of existing legal rules. He urges regulators to “act on webs or networks of employers, not on single, fixed organizations.” In short, Weil appreciates the cost of far-reaching investigations and litigation, and proposes to use that cost to shakedown the convenient rather than prosecute the guilty.

• Under Weil, the law no longer counts; rather, as sheriff, Weil proposes to ignore the law to pursue his personal agenda. While couched in academic jargon, his own words reveal an intention to ignore the laws passed by Congress in making those shakedowns: “[t]he direct, two-party relationship assumed in federal and state legislation and embodied in traditional approaches to enforcement no longer describes the employment situation on the ground.” Enforcing Labour Standards in Fissured Workplaces: The US Experience, D. Weil, The Economic and Labour Relations Review, Vol. 22 No. 2, pp. 33–54.

• Under Weil, the approach is that of trophy hunter: target industries and then target the biggest and best companies in those industries. In short, enforcement efforts will have nothing to do with whether a company has violated the Fair Labor Standards Act but only with its success. Weil misdescribes this—in terms only Orwell could admire—as a desire “to bring systemic compliance to an entire industry rather than on an employer-by-employer basis.” Strategic Enforcement at 26.

Confirmed or not, employers should prepare for the full implementation of the plans and initiatives outlined in Weil’s Strategic Enforcement report. These include, among other things, “top down” enforcement in targeted industries; an expanded definition of “employer” under the FLSA; more aggressive litigation; enhanced penalties and sanctions; use of the media and public opinion as pressure tactics; and responsiveness to union requests.

It is time for employers to audit their FLSA compliance and build their counter-strategy. 

Though it will only get worse under Weil, the department is already implementing Weil’s “strategic” (his most-overused word) plan. For example, it has demanded that an employer not merely correct identified violations but also promise the Department that it will require its suppliers to comply with the Fair Labor Standards Act, monitor their compliance, and report back to the Department on its audits of those suppliers. Similarly, in another investigation, the Department did not question the company’s compliance but demanded—via subpoena—that the company identify every entity with which it had done business and every entity with which it planned to do business. This was not—the Department’s lawyers avowed—a fishing expedition because Weil’s report justified such tactics for any corporation that was a brand name in a fissured industry.

Orwellian is overused; Weilesque is poised for its own distinctive run.

Smith is a member of the Strategic Campaign Team, a part of DLA Piper’s Global Employment practice, which provides high-level, strategic counseling to companies facing national and global union strategic campaigns.