Nearly a decade of relatively lax regulatory activity, including enforcement, and a generally employer-friendly federal executive branch has ended. Regardless of one’s political affiliation, employers should brace themselves for a more active and employee-friendly federal government. This should come as no surprise to employers, since the Obama Administration garnered significant support from organized labor, and the President has made clear his intention for his Administration to work hard to protect the interests of American workers. That time has arrived.

Evidence that the Administration, now more than two years into its first term, is moving in the direction of a pro-employee agenda may be found in the recent actions of several, important federal administrative agencies.

U.S. Department of Labor – Wage and Hour Division

Beginning this year, the Wage and Hour Division of the U.S. Department of Labor, the agency that administers and enforces the Fair Labor Standards Act of 1938, modified its past practice of issuing private letter rulings at the request of private parties. Instead, the agency has returned to a much earlier practice of “Administrative Interpretations” of the law that not only address a specific issue that may have been presented to it by a private party, but also sets out the broader principles and states the agency’s interpretation of the statute and its enforcement posture.

In Administrative Interpretation No. 2010 – 1, issued on March 24, 2010, Deputy Administrator, Nancy J. Leppink withdrew a previous private letter ruling issued under the Bush Administration that found that mortgage loan officers were exempt from the overtime compensation provisions of the Fair Labor Standards Act. Taking a fresh look at the question, the Wage and Hour Division now holds that the primary duty of mortgage loan officers is sales and not “non-manual work directly related to the management or general business operation of the employer or the employer’s customers.”

The issue here is whether the mortgage loan officers were engaged primarily in sales activities. The administrative exemption is not available to employees whose primary duty is sales or production. The Wage and Hour Administration under the Bush Administration in an Opinion Letter issued on September 8, 2006 had concluded that they were exempt employees. As a result, the earlier opinion of the Wage and Hour Division no longer is in effect, and employers who employ mortgage loan officers no longer should consider them to be exempt.

In Administrative Interpretation 2010 – 2, issued on June 16, 2010, Deputy Administrator Leppink addressed section 203(o) of the Fair Labor Standards Act of 1938 (FLSA), which defines the term “clothes” for purposes of determining whether the time to don and doff those items is “compensable time” under the statute. This Administrative Interpretation reverses the position taken in two prior Opinion Letters issued in 2002 and 2007 by the Bush Administration, which reversed previous Opinion Letters dating back to 1997.

Under the FLSA, certain preliminary and postliminary activities are not considered compensable time if the practice is one that exists under a collective-bargaining agreement or a union-management environment. Court opinions interpreting section 203(o) vary, but a number of the courts of appeals had held that certain protective gear qualified as “clothes” under the statute. The Department of Labor’s position now is that protective gear does not count as “clothes” under section 203(o).

The National Labor Relations Board

President Obama’s appointment of former SEIU attorney Craig Becker drew much criticism from the management sector, but member Becker now sits on the Board and is part of what looks to be a three-member pro-union majority. While this may rile Conservatives and some employers, it should be remembered that, by historical convention, the President has always appointed a majority of Board members who share his philosophy and that of his party.

Although Member Becker has not had the opportunity to sit on many panels or issue opinions of far-reaching significance yet, this could change as a result of the U.S. Supreme Court’s decision in New Process Steel LP v. NLRB (June 17, 2010), in which the Court held that a two-member Board lacked authority under the statute to issue decisions in unfair labor practice and representation cases. The Board had been operating with less than its full complement of members since December 2007 when then Chairman Battista’s term expired.

Following its past practice, the Board delegated its duties to the remaining members. However, the Board later was reduced in size to three members, through term expirations, and that left only two members. The Courts of Appeals differed in their rulings on whether the Board could legally function with only two members. The Supreme Court resolved that question holding that it could not. This means that some 600 decisions issued by the Board in the past 27 months must be decided by the current Board.

It is perhaps too soon to tell whether the Obama Board will reverse precedents of the Bush Board, or even moderately employer-friendly Clinton Board, but it is clear that the NLRB appears to be more active and through its reports and public statements is poised to become more aggressive in several areas. Just last week, the NLRB’s outgoing General Counsel, Ronald Meisburg, issued a memo addressing the subject of class waivers in arbitration pacts. This would be somewhat unremarkable, except that the guidance to the field instructs investigators to review carefully unfair labor practice charges involving individual arbitration agreements. This advice memorandum harkens back to an earlier time when the Board focused on whether the National Labor Relations Act should be applied to employment cases involving individual employees. Many nonunionized employers have arbitration programs that require the resolution of any employment dispute. This initiative by the Board could signal a broader effort to extend the application of the act.

Occupational Safety and Health Administration

The U.S. Occupational Safety and Health Administration (OSHA) has announced new regulatory initiatives that will target serious and repeat offenders. On June 18, 2010, the agency launched its severe violators enforcement program. OSHA had published for comments in April 2010 a directive on this program, which will target “employers who willfully and repeatedly endanger workers by exposing them to serious hazards.” The criteria for selection of such employers are set out in the 31-page directive. Employers who have been cited by OSHA for two or more willful or repeat violations or failure-to-abate notices will be eligible for enhanced follow-up inspections, mandatory corporate awareness programs, and enhanced settlement provisions (i.e., stronger terms and penalties). Also, OSHA is seeking to increase certain “gravity based” fines. Currently, the fine for a serious violation is $1,100.

Office of Federal Contract Compliance Programs (“OFCCP”)

This agency, which administers Executive Order No. 11246 and others relating to the obligations of equal employment opportunity and affirmative action obligations of federal government contractors and subcontractors, has announced several initiatives. In a new approach, the Administration is tying government contracting to union rights awareness.

President Obama issued Executive Order 13496, which takes effect on June 21, 2010, and requires all contractors to inform employees of their rights under the National Labor Relations Act. The Department of Labor will require all such government contractors to post on their premises a poster informing employees of their rights. OFCCP is preparing a directive to its field offices to ensure that its inspectors physically inspect contractor establishments in order to verify the presence of the required work place posters and to ensure that those employers’ contracts include the prescribed language.

The Employee Free Choice Act (EFCA), H.R. 1409, once believed to be a centerpiece of the Obama administration’s labor agenda, may have stalled in Congress, but the legislation continues to move forward in Committee. It is doubtful that one of the most controversial provisions of EFCA, the mandatory interest arbitration provision, would be included in any final legislation, but the card-check procedure remains alive.

Essentially, that procedure would return to the days of the original Wagner Act (a.k.a. the National Labor Relations Act), passed in 1935, which allows the NLRB to certify a union by a variety of means. Secret ballot elections were added to the law in the Taft-Hartley amendments of 1947, namely to address abuses, including intimidation by unions that affected employees’ free choice. Other countries, including, most notably, Canada, have long adhered to a process similar to the card check procedure.

While the labor bill may never come to fruition, it appears that the Obama Administration has found other ways of moving forward its pro-labor agenda. Executive Order 13496, a change in direction at the NLRB, and new Administrative Interpretations by the Department of Labor may prove to be the Administration’s new approach – and one that does not require congressional action.

Larkin Hoffman’s employment law attorneys are experienced in a wide variety of labor and employment issues. Please contact us if you require assistance with any of your labor and employment needs.