Department of Labor - Horton Management Law

In a move few saw coming, President-elect Donald Trump announced Friday that his Secretary of Labor nominee is Republican Representative Lori Chavez-DeRemer of Oregon. Chavez-DeRemer is a politician with a track record of siding with both labor and business interests.

Chavez-DeRemer’s nomination has sparked significant attention due to her co-sponsorship of the Protecting the Right to Organize (PRO) Act—a bill that would dramatically expand labor rights and weaken right-to-work laws in nearly 30 states. Her cross-aisle appeal, exemplified by support from Teamsters President Sean O’Brien and prominent Democrats like Senator Patty Murray, stands in stark contrast to Trump’s historically pro-business labor agenda.

A Bipartisan (?) Pick with Union Support

Teamsters leader Sean O’Brien lauded the choice for Secretary of Labor nominee. He noted Trump’s outreach to his union last year and framed Chavez-DeRemer as a unifying figure for workers and businesses. “Now let’s grow wages and improve working conditions nationwide,” O’Brien said, signaling optimism about the nominee’s potential impact.

Chavez-DeRemer, a former mayor of Happy Valley, Oregon, and entrepreneur in the healthcare field, lost her reelection bid earlier this month but left Congress with a distinct reputation. As one of the few GOP members to align with progressive labor goals, her nomination has already garnered praise from unions, including the National Education Association and the American Federation of Teachers.

Reaction from Conservatives

The announcement has provoked backlash from influential conservative groups. Americans for Prosperity, a staunchly pro-business organization, criticized the nomination, arguing it betrays Trump’s previous labor policies and risks alienating his base.

“Trump’s record on labor policy was so strong, and he didn’t flip on a single labor issue yet still improved with union voters,” said AFP’s Akash Chougule. “He completely undid that and undermined his own agenda and movement by picking a teachers union hack for Labor. Senate GOP should reject this nomination.”

Chavez-DeRemer’s pro-labor stance—embodied in her support for legislation like the Public Service Freedom to Negotiate Act—has drawn ire from right-to-work advocates who view her as out of step with Republican orthodoxy.

Immediate Challenges for the Department of Labor

If confirmed, Chavez-DeRemer will face several pressing issues at the Department of Labor. Among the most urgent is the long-awaited update to the Fair Labor Standards Act (FLSA) salary exemption test. The Biden administration proposed increasing the salary threshold for exempt employees—potentially expanding overtime eligibility for millions of workers. A federal court recently struck down the rule, and the new administration will have to decide whether to appeal or walk away from the rule. Business groups have expressed concern over the financial burden of such changes, while labor advocates argue that the update is long overdue to ensure fair pay for workers.

Chavez-DeRemer will also have to address broader labor market challenges, including:

Modernizing worker classifications to reflect the evolving gig economy, a contentious issue that pits tech companies against labor advocates.
Reevaluating federal regulations on independent contractors and joint employers, key concerns for both unions and businesses.
Enforcing compliance with labor standards while balancing business concerns about regulatory overreach.

Her ability to navigate these challenges will define the department’s trajectory under the new administration and could influence how workers and businesses view Trump’s labor policies moving forward.

What This Means for Trump’s Labor Agenda

This nomination signals a potential shift in Trump’s labor policy approach. While his first term focused on deregulation and business-friendly initiatives under Labor Secretaries Alexander Acosta and Eugene Scalia, Chavez-DeRemer’s selection could open the door to more balanced policies aimed at addressing worker concerns.

Her ability to navigate confirmation in a polarized Senate remains uncertain. However, her potential bipartisan appeal, bolstered by endorsements from unions and some Democrats, positions her as a viable, albeit controversial, choice to lead the Department of Labor.

A Nominee with a Unique Profile

Chavez-DeRemer’s nomination follows a line of Trump labor secretaries with diverse backgrounds, but her record stands apart. A Latina entrepreneur and former mayor, she combines business experience with a legislative focus on worker rights—a combination that may redefine the Labor Department’s priorities under Trump’s second administration.

Whether this move represents a new chapter in Trump’s labor policy or a temporary departure from his traditional approach, one thing is certain: Lori Chavez-DeRemer’s nomination has set the stage for a heated confirmation battle and a possible recalibration of how the federal government balances labor and business interests.

Just One Part of the Equation

Even if Chavez-DeRemer is confirmed to head the U.S. DOL, the administration will be more business-friendly. Her views are not shared with other Republicans in Congress, making pro-union or worker amendments to federal law unlikely. Plus, the National Labor Relations Board has more direct control over much of the field of employer-union relations. Through other appointments, President Trump is still likely to effect significant rollbacks from pro-labor interpretations of the National Labor Relations Act that have stifled employers during the Biden administration.

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Cuomo’s Take on Tip Credits

Governor Cuomo’s announcement strongly suggests a belief that New York should eliminate tip credits.

“At the end of day, this is a question of basic fairness. In New York, we believe in a fair day’s pay for a fair day’s work and that all workers deserve to be treated with dignity and respect,” Governor Cuomo said. “There should be no exception to that fairness and decency. I have directed the Department of Labor to ensure that no workers are more susceptible to exploitation because they rely on tips to survive. I look forward to reviewing the findings of these hearings.”

The press release from the Governor’s office offered that more than 70% of all tipped workers in New York are women. It cited a 2014 study by the Restaurant Opportunities Center asserting that “Workers in states that require the full minimum wage be paid to tipped employees experience half the rate of sexual harassment compared to workers in states that pay lower wages to tipped employees.” The Governor’s release also indicated that “studies have shown that African-American workers are often tipped less than their white counterparts.”

New York Hearings on Tip Credits

New York Commissioner of Labor Roberta Reardon has released a schedule of seven “Hearings on Subminimum Wage” throughout the State. The first one will take place March 12, 2018 in Syracuse. The others will be in Buffalo, Long Island, Watertown, Albany, and New York City.

According to the DOL’s website:

Oral presentations may be strictly limited to 3 minutes each. Priority in seating and speaking will be given to those who preregistered. Seating and speaking order for those who do not preregister will be handled on a first-come, first-served basis as determined by event staff. Written testimony must be submitted to: hearing@labor.ny.gov before July 1, 2018.

At the Federal Level

Meanwhile, the U.S. Department of Labor is planning to rescind Obama-era restrictions on employers that pay a direct cash wage of at least the full federal minimum wage and do not claim a tip credit against their minimum wage obligations. The agency published a Notice of Proposed Rulemaking on December 5, 2017, seeking to amend the 2011 rule. The already controversial topic has escalated recently upon reports that the U.S. DOL did not make public its economic analysis regarding the proposed changes to the tip pool rules. On February 5, 2018, the Office of Inspector General of the U.S. DOL initiated an audit of this rulemaking process.

The federal rule change would permit back-of-the-house workers to share in the pooled tips of employees who interact directly with customers. Critics oppose the measure in that it might reduce employee compensation by allowing management to personally participate in tip pools.

At least within the hospitality industry (restaurants and hotels), New York has its own rules regarding tip pooling. In most cases, those requirements would likely make the proposed change to the federal rules irrelevant in New York. Most employers must abide both the state and federal regulations. And it does not appear that the New York tip pooling rules are under reconsideration at this time.

Potential Impact on New York Employers

New York employers who currently rely on tip credits to satisfy a portion of the State’s minimum wage should anticipate paying a higher percentage (perhaps 100%) of the minimum wage in cash by the end of 2018. The State might impose separate rules for those in the hospitality industry and others where employees regularly receive tips.

Losing tip credits may force employers to adjust their prices or other components of their business models. For example, some employers have announced express “no tipping” policies. This allows them to increase what they charge customers without increasing the customers’ overall cost. Employers can then use the additional revenues to pay the minimum wages.

Tag: Department of Labor

Trump Surprises with Proposed Secretary of Labor Nominee