Obama’s Nanny State for Employers

Obama’s employment law agenda consists of laying siege to employers’ management rights.

In a prior post, I summarized the one-sided rulings of the National Labor Relations Board under President Obama, which are seemingly designed to bolster the declining ranks of organized labor in the private sector. Obama’s aggressive anti-employer agenda extends to other agencies having jurisdiction over the employment relationship: the Department of Labor, the Equal Employment Opportunity Commission, and the Occupational Safety and Health Administration. Unlike the NLRB’s pro-union orientation, however, some of the notable policy initiatives of these other agencies are calculated solely to impose unreasonable restrictions on employers—command and control for its own sake.

In a free society, the government limits businesses’ inherent “management rights” only to the extent necessary to remedy a real problem, and federal regulation is reserved for national problems within the limited jurisdiction of the federal government.  Obama’s goal, in contrast, appears to be to micromanage employers just to satisfy progressives’ meddlesome urge to wield the levers of power. Hiring, firing, and supervising employees are core prerogatives of businesses, typically regulated, if at all, at the state level.  Under Obama, bureaucrats in Washington, D.C. have claimed dominion over aspects of the employment relationship that were previously considered to be outside the purview of federal regulation. That the power grab by Obama’s administrative agencies extends to such routine aspects of the employment relationship makes the bureaucratic overreach all the more objectionable.

Take workplace drug testing as an example. It is in the interest of both employers and employees to maintain a drug-free workplace, to reduce the risk of accidents and injuries caused by an impaired worker. One employee under the influence of drugs or alcohol can jeopardize the safety of numerous co-workers, and the public. Moreover, employers have the right to ensure that employees are fit for duty while “on the clock.”  Accordingly, many employers require pre-employment drug testing of applicants, as well as random or “reasonable suspicion” testing of current employees to ensure a drug-free workplace. Regulation of drug testing was generally a matter of state law. Prior to the Obama administration, it was common practice for employers to drug test employees involved in work-related accidents causing property damage (such as a forklift collision) or personal injury requiring medical treatment.

In recently-issued regulations nominally addressing the reporting of occupational injuries and illnesses (29 CFR Part 1904), Obama’s OSHA has called this longstanding practice into question.  Section 1904.35(b)(1)(iv) of OSHA’s new regulations characterizes mandatory drug testing triggered by a workplace accident as an “adverse employment action” and suggests that an employer engaging in once-routine blanket post-accident testing would be guilty of actionable “retaliation.” The “preamble” to OSHA’s final rule states that “To strike the appropriate balance here, drug testing policies should limit post-incident testing to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.” (Emphasis added.)

The whole point of mandatory post-accident drug testing is that—absent testing—it is often impossible to determine the “cause” of a workplace accident. In a warehouse, for example, there will seldom be a third-party eyewitness to an accident, and the account of the employee involved in the accident is obviously self-serving.  To require that the employer have “proof” supporting a “likelihood” (more than a reasonable suspicion?) that the employee was impaired in order to order post-accident testing is tantamount to banning such testing altogether in many cases. This is a radical, and unjustified, change in the law, unnecessarily restricting the right of private-sector employers to operate their businesses in a prudent and efficient manner.

Another way that employers can protect the safety of employees and customers—and recruit the most qualified candidates—is to hire only applicants without a criminal record.  Screening applicants in this manner has long been considered a human resources “best practice,” and most employment applications require applicants to disclose prior criminal convictions. Checking applicants’ background to avoid inadvertently hiring convicted criminals protects employers from “negligent hiring” claims in the unfortunate event that an employee with a criminal record harmed a customer or co-worker.

Under Obama, however, the EEOC has been on a crusade to prohibit employers from inquiring into applicants’ criminal records. And, unlike OSHA’s overreaching opposition to post-accident drug testing, which at least was the subject of formal rulemaking, the EEOC has conducted its crusade through informal “enforcement guidances” and other administrative shortcuts. Having a criminal record does not entitle one to a “protected class” status under Title VII of the Civil Rights Act of 1964. As a matter of federal law, employers have always had the right to refuse to hire job applicants due to a prior criminal conviction.

Under an extravagant application of the “disparate impact” theory recognized in the questionable case Griggs v. Duke Power Co. (1971), however, Obama’s EEOC contends that employers who require disclosure of criminal convictions on employment applications, or who conduct criminal background checks as part of pre-employment screening, may violate the law because African-Americans and Hispanics are arrested, convicted, and incarcerated at a higher rate than their representation in the general population. According to the EEOC, refusing to hire convicted criminals can have a “disparate impact” on blacks and Hispanics, and violate Title VII even in the absence of discriminatory intent by the employer.

The EEOC maintains that a facially-neutral policy, applied uniformly to all job applicants, concerning a subject that is not protected by federal law, can subject an employer to liability solely because of statistical disparities within the criminal justice system. Furthermore, in the EEOC’s view, employers must have a “business necessity”—a justification for the practice sufficient to persuade the EEOC or a federal court—to justify hiring practices that were unchallenged prior to the Obama administration. This is an absurd interpretation of Title VII, and a gross overreaching by a federal agency, used to bully employers to refrain from screening out convicted criminals. (Other agencies in Obama’s administration have similarly used the dubious “disparate impact” theory to micromanage the discipline of public school students and even to hector local law enforcement over traffic stops.)

Under Obama, the DOL (like the NLRB) has embarked on a campaign to regulate “independent contractors” as if they were employees subject to various federal laws, including the Fair Labor Standards Act, which requires the payment of overtime if workers exceed 40 hours a week.  Using an informal guidance denominated an “Administrator’s Interpretation,” rather than formal rulemaking, the DOL under Secretary Thomas Perez has adopted what some critics have called “the most expansive definition of ‘employee’ possible.” The DOL’s guidance makes it harder to classify workers as independent contractors, and increases the risk for businesses in industries (such as construction, janitorial services, and truck driving) where the use of independent contractors is common.

Businesses and workers use different relationships—contract worker; independent contractor; full-time, part-time, and casual employee—for a variety of reasons having to do with time commitments, exclusivity (and the lack thereof), skill, autonomy, industry customs, and the preferences of the parties. The legal standards for determining “employee” status have historically been inscrutable and frequently difficult to apply. Absent gross misclassification, regulators should usually defer to the parties’ mutual agreement.  Intruding into arrangements satisfactory to the parties involved amounts to a needless and high-handed power grab by federal bureaucrats.

The DOL is also (again, like the NLRB) using an informal “guidance” to alter the legal standard for “joint employer” liability under the FLSA—in effect disregarding the corporate form to hold one company responsible for the acts of another.  In an complex economy, businesses will often have close working relationships with one another, such as between hotel owners and management companies, staffing agencies and customers, construction companies and subcontractors, growers and farm labor contractors, and so forth. Nevertheless, it is a fundamental principle of corporate law that separately-owned businesses be treated as distinct legal entities unless the “corporate veil” is disregarded—an appropriately difficult evidentiary hurdle. The DOL’s “joint employer” guidance seeks to short-cut the legal differences between businesses having a close working relationship, allowing FLSA and other claims to be pursued against the deepest pocket, regardless who was the actual employer.

My final example is the DOL’s pending overtime regulations under the FLSA. Unlike the initiatives discussed above, enforcing the FLSA—a New Deal-era statute—is a legitimate and longstanding responsibility of the DOL. And, to be fair, the DOL has made the changes via formal rulemaking, rather than taking the administrative shortcut of issuing an informal “guidance.” What makes the new regulations noteworthy, however, is that they significantly depart from a comprehensive, well-received overhaul undertaken in 2004 under President George W. Bush.  Controversially, the DOL’s new regulations more than double the earnings threshold for “exempt” status (with automatic future increases every three years tied to cost-of-living indices). The “exempt” earnings threshold is important because employees deemed to be “exempt” may be paid a fixed salary instead of an hourly rate, do not receive overtime if they work more than 40 hours a week, and are permitted to enjoy a more flexible work schedule because they are not limited to a structured 9-to-5 work day.

Under the current guidelines, many “exempt” employees cherish the ability to juggle their work schedule to accommodate child-rearing duties, run personal errands, and deal with family emergencies.  The DOL’s regulations, if they go into effect on December 1 as planned, will greatly reduce the number of employees who qualify as “exempt,” stripping them of a flexible work schedule while simultaneously imposing substantial compliance costs on employers. The DOL’s overtime regulations are so controversial that opponents in Congress are attempting to delay implementation by six months, and several lawsuits are pending.  Once again, Obama’s DOL is seeking to disrupt established personnel practices by needlessly modifying existing rules to satisfy Progressives’ eternal quest for more centralized control.

The Obama administration has attempted to expand the “nanny state” into every nook and cranny in the American economy, including the workplace. It is no accident that Obama’s Secretary of Labor, Thomas Perez, is a liberal activist admiringly described by the Leftwing publication Mother Jones as “one of the administration’s most stalwart progressives.” His conservative critics call him “the Obama administration’s most radical and relentless ideologue” and “possibly the most dangerous person in the administration right now.” In an administration that scholars have rated as one of the most lawless in U.S. history, that’s truly a damning indictment.

Reader Discussion

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on October 10, 2016 at 11:48:08 am

You are too kind.

This is not the "Nanny State."

"Nanny" would infer primary concern for the welfare of someone else's dependent.

Here the primary concern is one of control of the terms of dependency.

This is the "Managerial State."

The Managers in the Managerial State are continuously contesting the Managers of enterprises, great and small, for control of the relationships that provide significance (and sustenance) to the positions of managers. [See, James Burnham]

The Managerial State is composed of those relationships (largely personal) within the Administrative State that exercise and implement the authority of the latter. That implementation of authority is *not* for the "Nanny" care of dependents, it is for *control* of the terms of dependency; for which there may not be many better sinecures.

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Image of R Richard Schweitzer
R Richard Schweitzer
on October 10, 2016 at 15:53:39 pm

As usual, Richard is correct. These agencies pretend to fret about workers being required to submit to drug tests, convicted felons not getting hired, and employees not earning overtime, but their real objective is to expand their power. James Burnham and Sam Francis anticipated the Obama administration's usurpation of employers' management rights.

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Image of Mark Pulliam
Mark Pulliam
on October 10, 2016 at 20:49:26 pm

I second the comment on the right-ness of R. Richard's remarks.

I think for both this essay and the earlier one by McGinnis (substantive Due process) the question that may prove the most illuminating is, again as Richard is fond of saying, "What ARE the functions of government?" or "What is the proper sphere of government; how far ought it to reach into our lives?"

I have, in the past, asserted that the transformation of a civic good into a public good effectively imposes *obligations* upon those not necessarily in agreement with, or even party to the issue at hand. I will not only repeat that assertion BUT will take it further.

Such a State intervention via positive Law or judicial determination has the capacity (perhaps, intention?) of transforming a "natural right" (see Devin Watkins comments to McGinnis' essay) into positive rights. How is this done?
When the State determines that rights, both traditional and newly defined / created are subject to "rational basis" (or any type of scrutiny), the State is, in effect, saying that these *rights* are not inviolate, that they are subject to judicial determinations AND modifications.

Let us take life, liberty and happiness (well let's skip happiness). Per natural rights theory, the right to life is inviolate. Yet, we hear some determine that simply because one ( an unborn child) cannot assert certain rights in court, it is therefore stripped of any protections for its life. "Roe v. Wade essentially found that am unborn fetus does not have the right not to be killed because it is not a “person” with rights it can assert in a court. That goes back to the common law as set forth by Edward Coke in his Institutes in the 1600s"

And the effect of this reasoning is precisely what????? Let us take this argument on its face. The unborn is unable to assert his rights in court, he cannot speak and none will speak for him. Neither can my 19 month old grandson, although clearly some would speak for him. The issue here is not whether it is proper to defend my grandson's right or if there is a substantial difference between born and unborn. The issue is that the State is now FREE to determine the status of a right to life heretofore considered to be a natural right. The state performs this feat of diminishing a *natural right* via positive law (either Legislation or Judicial determination). Can it truly be said that the right to life is still a *natural right*?

Let us take religion as another example. Religious freedom may be said to be derived from the right of conscience, i.e., that humans are possessed of a mind, a conscience that ought not to be trifled with lightly.
Yet, we now find that judicial determinations by SCOTUS (and other inferior Courts) are "testing" whether the "religious belief" is sincerely held (How the hell do you know if it is sincerely held or not, BTW), if it is rational, etc. etc. And we see that what follows are numerous pieces of legislation, purporting to *protect* religious belief / expression, that have cabined the very same expression the statute is putatively protecting. Today, one must seek protection in the "positive law" rather than the Constituent Law simply because we have allowed jurists to perform a "(ir)rational" basis test AND to "balance" the (newly created) *rights* of one segment of the community against the traditional and time honored *natural* rights of another segment.

Thus, we see heretofore *natural* rights devolving into positive rights via State action.

This is, of course, made possible by the failure of the people to RESTRICT THE STATE TO ITS PROPER LIMITS. The further the State intrudes, the greater the likelihood that natural rights will be reduced to positive rights and therefore subject to the whims of the Legislature and the Judiciary.

Radical? Perhaps, but that is precisely what is happening today. And all those who are cpmfortable with the State *creating* new rights ought to remember that each new *right* creates a consequent obligation. It is these new obligations that are prone to collisions with those traditional rights previously respected and deemed (near) inviolate. These "collisions" are then employed as a means for the State to further intrude into the lives of ordinary citizens who may rightly question "Hey, what happened to MY natural rights."

And as the author of this essay (and Richard, of course) have demonstrated, further interventions are NOT DONE with the best of motives.

One does grow weary of all this posturing for rights, especially *rights* that are predicated solely upon the modern day conception of INDIVIDUAL liberties without recourse to the obligations to the community at large and the resultant effect upon "natural rights."

So maybe, the Legal Positivists had it right, after all - or maybe they were simply better strategists.
What the heel do i know, after all, I am just a traditionalist.

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Image of gabe
on October 11, 2016 at 09:42:55 am

Here is another one. A few days ago, Obama issued an executive order to force any business contracting to the US government to provide 7 days of sick leave per year, with roll-over. This came out of the blue.

My firm does some business with the government and some commercial. All of my employees will be effected. But since we have no cost plus contracts, we cannot sustain the additional cost of adding two sick days from our 5 and we cannot afford the cost of rolling them over.

Therefore, we will have to redesign our entire paid time off program, taking away holidays and vacation in order to meet this directive. My employees are going to throw a fit.

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Image of Henry
on October 11, 2016 at 10:12:23 am

We need to lower our sights and raise our aim.

The problem is the over regulation of the law abiding while ignoring the law breaking.

IE a law abiding business faces higher costs and paperwork due to Obamacare, workers compensation, and the requirement to pay and withhold taxes on its' employees. But at the same time faces competition from a company that employs illegal immigrants and pays cash. The law abiding business faces enforcement, but cannot get the government to shut down his cash paying illegal competition. (ie landscaping, construction, restaurants, nail salons)

Right now we have a situation where we have the regs but enforce them only on the law abiding., thus the law breaker has an advantage over the law follower.

It's as if we only gave speeding tickets to motorists who pull over, but ignored the ones who run away.

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Boca Condo King
on October 11, 2016 at 11:02:36 am

Maybe one of the goals of Obama's over-regulation of legal employment is to encourage businesses to hire illegal aliens, so more of them will come into the country. That would be consistent with their promulgation of rules limiting employers' ability to ask about a prospective employee about his or her legal eligibility for work - basically, obstructing an employer's efforts to comply with the law.

Nothing surprises me about the Obama administration or the permanent federal bureaucracy. And I'm no longer surprised by the docility of the electorate, or the idiocy of the form taken by much of whatever opposition exists (see, e.g., the current Republican presidential nominee).

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Image of djf
on October 11, 2016 at 12:17:01 pm

This bit of "Gabe" has been saved to hard drive (and back up). It is an encapsulation of issues similar to those gel-caps of slow release medication with lots of bits of differing impacts.

With a general revulsion to "Labor Law " (apologies to Mark Pulliam given his years of professional commitment), it - Labor Law - is entirely appropriate to the broader points and questions in Gabe's response.


"When the **State** determines that rights, both traditional and newly defined / created are subject to “rational basis” (or any type of scrutiny), the **State** is, in effect, saying that these *rights* are not inviolate, that they are subject to judicial determinations AND modifications." [** added]

Let's keep in mind that a (or :the") state is simply an embodiment of authority. Authority is implemented and exercised by - motivated human beings. What happens is the result of human action; not simply from the existence of the power of authority.

Gabe asks:

"Such a State intervention via positive Law or judicial determination has the capacity (perhaps, intention?) of transforming a “natural right” (see Devin Watkins comments to McGinnis’ essay) into positive rights. HOW IS THIS DONE?" [Emphasis added]

An example of "HOW" may be found in:

George Mason University
Legal Studies Research Paper Series
LS 15-43
"Yakus and the Administrative State"

Which visitors here may recall is the examination of the Yakus Case by James R. Conde and Michael S. Greve made available in PDF by professor Greve on this site.

Gabe observes:

"Thus, we see heretofore *natural* rights devolving into positive rights via **State action.** [**added]

"This is, of course, made possible by the failure of the people to RESTRICT THE **STATE** TO ITS PROPER LIMITS. The further the State intrudes, the greater the likelihood that natural rights will be reduced to positive rights and therefore subject to the whims of the Legislature and the Judiciary." [**added]

That is "short hand," of course, for the **USE** of the authority of the state for particular objectives determined by the motivations of particular humans.

There are modalities, but the methodology is consistent: to establish obligations using the coercive powers of the authority embodied in the state. That is the character of "Positive Law;" to establish (even impose) obligations, which may require conduct or impose constraints.

All "rights" exist by reason of concomitant obligations, which we humans observe in accord with variances of circumstances. The "Natural Rights" exist by reason of the obligations "naturally" (motivationally) recognized accepted and performed by a sufficiency of humans to a sufficient degree of commonality. The motivations have been identified as morals.

Issues arise in the imposition by the motivations of some of obligations upon the motivations of others - especially to those points of morals.

Forget the "money," follow the motivations.

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R Richard Schweitzer
on October 11, 2016 at 14:56:19 pm

Individual liberty and business freedom are two sides of the same coin. The freedom to conduct business affairs is fundamental to a free and prosperous society. The current Obama DOL and EEOC are adding gasoline to a fire that has been building for years. Think about how the government has made every business owner their unpaid servant. Start with payroll tax collection and associated FICA matching. Why is confiscating a workers tax money and remitting to the government the employers role? In addition the FICA amounts matched by the employers must be included in the cost of doing business and gets built in to the cost of their products. Thus it is a hidden tax on the consuming public. It also reduces the money available to be paid to workers in wages.

Then comes health insurance. We all know the disaster of Obamacare, but if we had a truly free market for workers, companies would offer health insurance as an incentive to attract the best workers. No, now we have it by government fiat.

As for social polices like maternity leave or sick leave or hiring rules like Title VII rules (race, creed color, etc… ) the list of agenda items for social engineering is endless. As pointed out in the article it is all about government power but also about buying votes for the progressive political machine.

In all cases the government simply puts a gun at the head of employers and says “Do this or else” and they could care less about the costs or impact for employers. Finally, in an open borders world we are giving companies ever more reason to flee to low cost counties to make their products. And we wonder why the USA workforce participation rate is so abysmal? The DOL is truly committed to “death by a thousand cuts” for American businesses.

More HR related articles.

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Image of James
on October 11, 2016 at 15:53:39 pm

Yep, just what the nation needs.

More citizens denied work based on criminal records or violation of nanny state dictates on what you can buy and grow and ingest, rather than employment being dependent on work performance in a workplace that has solid quality measures on work flow and tasks to eliminate almost all injury and hazard. Cutting corners and sacrificing worker health and safety is good for profits and profits are what drive gdp growth, not the incomes of consumers.

And flexible hours are ideal for those who hate their family and are happy to work 70 hours a week, working at all hours of the day, sleeping irregularly, and never having enough income to care for family needs. After all, the key to higher gdp growth is higher profits and lower and lower income consumers be eroding wages and incomes over decade spans.

The growth in gdp can be produced by more welfare to workers, like the EITC, SNAP, and SSDI, housing vouchers, homeless shelters, shower facilities near illegal tent cities. Consumer spending should not be constrained by labor income, but should be increased by government welfare in the form of tax cuts that give tax refunds to workers paying no taxes.

When Reagan was president, the number of government workers over all increased, while that number has decreased while Obama has been president for about a difference of two million fewer government workers after 8 years than if Reagan policies were in effect. That two million fewer government workers has been fantactic at helping hold down wages and boosting business profits to record highs, thus making gdp growth fantastic. Right?

After all, isn't the key to a better economy found in reducing the size of the labor force and cutting worker incomes? That's why the radical policy change of Obama to increase worker incomes thus cutting welfare costs are such bad policy, right?

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Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.