Obama acts to shore up employee protections
Changes aim to expand overtime pay, benefifits for American workers.
With little fanfare, the Obama administration has been pursuing an aggressive campaign to restore protections for workers that have been eroded by business activism, conservative governance and the evolution of the economy in recent decades.
In the last two months alone, the administration has introduced a series of regulatory changes. Among them: a rule that would make millions more Americans eligible for extra overtime pay, and guidelines suggesting that many employers are misclassifying workers as contractors and therefore depriving them of basic workplace protections. That is an issue central to the growth of so-called gig economy companies like Uber.
A little more than a week ago, a federal appeals panel affirmed an earlier regulation granting nearly 2 mil-
lion previously exempted home care workers minimum wage and overtime protections. And on Thursday, President Barack Obama’s appointees to the National Labor Relations Board pushed through an important ruling that makes it easier for employees of contractors and franchises to bargain collectively with the corporations that have sway over their operations.
“These moves constitute the most impressive and, in my view, laudable attempt to update labor and employment law in many decades,” said Benjamin Sachs, a professor at Harvard Law School and a former assistant general counsel for the Service Employees International Union. The goal, he said, is to “keep pace with changes in the structure of the labor market and the way work is organized.”
In one sense, Obama foreshadowed these efforts as a candidate in 2008, when he suggested that, if elected, he would aim to be a Democratic version of Ronald Reagan. “Reagan changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not,” he told a newspaper editorial board in Nevada. “He put us on a fundamentally different path because the country was ready for it.”
Once in office, Obama delivered on that implied promise in a few critical ways, particularly his signature health care legislation. But throughout much of his first term, he disappointed supporters with his inability to pursue a larger progressive agenda and with what they saw as an insufficient focus on the balance of power between workers and their employers.
Labor unions complained that he failed to throw his energy behind a measure that would have made it easier for workers to organize by requir- ing employers to recognize a union once a majority of workers had signed cards, rather than allowing employers to insist on a secret ballot election.
Liberals criticized the pace at which Obama put judges on the federal bench, including the U.S. Circuit Court of Appeals for the District of Columbia, which has enormous influence over federal regulations. And they complained that he failed to move quickly in placing appointees at agencies like the National Labor Relations Board, which went without two of its three Democratic members until well into the second year of his presidency.
“They were very weak on getting people into their positions in the first term,” said Lawrence Mishel, president of the Economic Policy Institute, a left-leaning research and advocacy group. “They lost many years of potential fruitful activity.” After spending several months in 2011 on a failed effort to negotiate a deficit-cutting “grand bargain” with the new House Republican majority, however, Obama did an apparent about-face, deciding that he would use every tool available to enact what he considered to be a bold pro-worker agenda on his own.
“Perhaps the most substantively important speech of the Obama presidency was the Osawatomie speech in 2011,” said Dan Pfeiffer, a former communications director and senior adviser to the president, referring to a speech that December in Kansas. “It was a set of marching orders to the entire government that increasing income inequality and declining economic mobility are the key challenge of our time.”
Since he has not been able to advance legislation through the Republican-controlled Congress, Obama has failed to achieve a number of important goals, most notably raising the federal minimum wage. And many of the recent actions could be undone by a future administration.
At the same time, the economic and political forces pushing in the other direction have proved extremely difficult to overcome. From 1979 until 2009, the hourly wage for the typical worker grew about 10 percent after adjusting for inflation, falling far behind the increase in productivity, a measure that wages once closely tracked. After the Great Recession, the median wage fell for a few years and then made up little ground through 2014.
Liberals and union supporters, while applauding Obama’s record in the narrow realm of labor rights, complain that he has undercut workers with his efforts to promote global trade agreements and balanced budgets.
“As long as the budget deal the administration negotiated continues to restrict domestic discretionary spending,” the Labor Department’s ability to enforce the laws guaranteeing workers a minimum wage and overtime pay “and fight misclassification will be severely limited,” Ross Eisenbrey, a researcher at the Economic Policy Institute who was one of the architects of the overtime regulation, said in an email.
Still, there is little doubt that the Obama administration has become more ambitious in pursuing worker rights during the president’s second term.
In many cases, the administration and its appointees have understood themselves to be not merely updating laws and regulations to reflect current economic realities, but also explicitly undoing what they considered to be efforts of Republican administrations to put workers at a disadvantage.
“The overtime provision was intended in no small measure to correct a regulation from the Bush era that took leverage from workers and gave it to employers — by design,” said Labor Secretary Thomas E. Perez. “We were restoring what was a time-honored economic and social compact, which is that as we have productivity and profitability in this country, that is shared between business and workers.”
The ruling from Aug. 27 by the labor board, which changed the standard for when a corporation may be designated a joint employer of workers hired by its contractors and franchisees, followed a similar logic.
For decades before the mid-1980s, the NLRB considered a corporation to be a joint employer, and therefore liable for violations of workers’ rights, as long as it enjoyed a fair amount of control over working conditions at facilities run or staffed by a contractor or franchisee. It didn’t really matter whether the control was hands-on or armslength.
In 1984, the Reagan-era NLRB began to sharply tighten the standard. On Thursday, voting 3-2 along partisan lines, the board tossed out the Reagan era rule, arguing that it was essentially returning to what had existed before.
Taken together with other key regulatory actions and executive orders — an NLRB rule that effectively sped up the process for holding elections on whether to form a union and Obama’s order raising the minimum wage for federal contractors to $10.10 — the effect has been to significantly alter the tilt of federal law.