By Allen Smith, J.D.
July 20, 2021 - SHRM
A July 15 Senate hearing with Department of Labor (DOL) Wage and Hour Administrator nominee David Weil hinted at how he might, if confirmed, respond to potential worker misclassification or wage theft by franchisors.
The hearing also included testimony from National Labor Relations Board (NLRB) member nominees Gwynne Wilcox and David Prouty, who defended their ability to serve neutrally despite previously working for unions.
Past Administrator Experience
Senate Health, Education, Labor and Pensions Committee Chair Patty Murray, D-Wash., noted that Weil had previously served as the Wage and Hour administrator from 2014 to 2017.
"Under his leadership, the division significantly increased its efforts to enforce wage and hour laws," she said. "While leading the agency, he also worked to expand access to overtime pay by issuing a rule to dramatically increase overtime eligibility to 12 million workers, to close loopholes by issuing guidance aimed at stopping employers from misclassifying workers in order to pay them less and to crack down on bad actors, including federal contractors who were not paying prevailing wages."
However, Ranking Member Richard Burr, R-N.C., told Weil, "You received no Republican support the last time you were nominated, and I think it was for a good reason. You engaged in such partisan overreach that the courts stepped in to stop your badly constructed overtime rule." Burr predicted that if Weil served as administrator again, Weil would lead an "anti-employer agenda aimed at bringing more businesses under the thumb of bureaucrats in Washington."
Weil has advocated for rules that make it more difficult for businesses to classify workers as independent contractors and avoid joint-employer liability for wage and hour violations.
Sen. Roger Marshall, R-Kan., said, "I would just assume you don't like franchises and you think that they're a bad model. You've described them as a form of outsourcing. I just want to know how specifically is franchising a form of outsourcing? If you had your way, would you abolish the franchise model?"
Weil responded that he didn't have an inherent antagonism toward franchising. Some franchising might not involve joint employers, for example.
But, he said, other forms of franchising were problematic and resulted in unlawful worker misclassification.
ABC Test
The DOL currently evaluates employment relationships under a multifactor economic realities test. Some states, such as California, Illinois, Massachusetts and New Jersey, apply a more-stringent worker-classification standard known as the "ABC test." Under the ABC test, the following factors must be met for a worker to be properly classified as an independent contractor:
Although Weil has called for a stricter federal test that would render most gig workers employees, Sen. Lisa Murkowski, R-Alaska, noted Weil "has been quoted [as saying] that the only way to implement an ABC-style test for determining whether a worker is an independent contractor is through legislation, not regulation."
Weil agreed that the quote Murkowski cited was accurate. Under federal law, the economic realities test applies instead, he added.
Congress is currently considering the Protecting the Right to Organize (PRO) Act, which, if passed, would adopt a federal ABC test.
Wage Theft
Sen. Tina Smith, D-Minn., quoted the Economic Policy Institute as saying that U.S. citizens lose three times more in wage theft「ndercounting their hours, refusing to pay overtime or otherwise shortchanging their paychecks》han they do in robberies.
"The victims of wage theft are disproportionately low-wage workers," including women and workers of color, she said. She asked Weil how he would address this problem.
"Unfortunately, wage theft is far too common in the economy," he said. "It tends to be concentrated in certain industries."
Weil promised to reduce wage theft through enforcement and education.
NLRB Nominees
Murkowski asked Wilcox and Prouty to describe how they could be neutral members of the NLRB, given their work history.
"I started working at the NLRB, which really gave me the experience of working as a neutral," said Wilcox, who, if confirmed, would be the first Black woman to serve on the board.
She also noted that as a union lawyer, she represented a large union that had hundreds of employees. "In that capacity, I have defended and represented the union with regard to a myriad of employee issues," she said.
Prouty said, "I've learned to work with and benefited from the outlooks of many excellent management lawyers, just as I expect I will do with my Republican colleagues on the board."