Tammy McCutchen, Former Administrator of the Wage and Hour Division and Littler Shareholder, Comments on the Abolishment of the Employment Standards Administration at the U.S. Department of Labor

The Employment Standards Administration (or “ESA” in DOL-speak) is not well-known outside the Beltway and the community of wage and hour practitioners. ESA is an umbrella organization responsible for management and oversight of four subordinate agencies:

  • The Wage and Hour Division (“WHD”)
  • The Office of Federal Contract Compliance Programs (“OFCCP”)
  • The Office of Labor-Management Standards (“OLMS”), and
  • The Office of Workers' Compensation Programs (“OWCP”)

The Assistant Secretary of ESA and the Administrator of the Wage and Hour Division are both positions whose incumbents must be nominated by the President and confirmed by the Senate. The Directors of the OFCCP, OLMS and OWCP are appointed by the Secretary of Labor.

On July 8, 2009, Acting Assistant Secretary of ESA, Shelby Hallmark, announced that the ESA will be abolished in November, with the leaders of the four agencies – WHD, OFCCP, OLMS and OWCP reporting directly to the Secretary of Labor.

This reorganization was most recently advocated in a book endorsed by Senator Kennedy (D-MA) and the AFL-CIO, Wage Theft in America, by Kim Bobo, and reflects the Obama Administration’s emphasis on increased enforcement of federal wage and hour laws.

I also view the reorganization as a long-overdue and sensible development. This change eliminates an entire layer of bureaucracy within the Department of Labor. The new Wage and Hour Administrator will no longer need to seek approval for policy and enforcement decisions from the ESA Assistant Secretary and should have greater access directly to the Secretary of Labor. As a result, the Wage and Hour Division, and its new Administrator, should have greater visibility, gravitas and independence within the DOL. In a July 8 Memorandum to all ESA employees, Acting ESA Assistant Secretary Hallmark (who also serves as Director of the OWCP) stated that the reorganization will result in “streamlined organizational structure” that will “significantly improve policy decision-making with respect to the four individual programs, enhancing the Department’s responsiveness in enforcing key worker protection laws.” In short, the leaders of the four agencies currently under the ESA umbrella will be able to operate more independently and should be able to make decisions more quickly.

Many questions remain regarding the implementation of this decision remain unanswered. Most importantly, what will happen to the employees currently working within the ESA organization? Many of the job functions of ESA employees (human resources, budget, government accountability reporting) are duplicated in the four subordinate agencies. Thus, in the private sector, the reorganization would present an opportunity to reduce headcount in this difficult economy. In the federal government, that seems less likely to happen. In fact, Acting Assistant Secretary Hallmark has already stated that the vast majority of ESA employees will see little impact, other than the elimination of the ESA organizational title. According to Hallmark, ESA employees will either continue to perform the same functions in new organizations or will be eligible for priority consideration for DOL vacancies.

DOL watchers also are speculating whether DOL could be contemplating phasing out the ESA jobs and replacing them with additional enforcement positions within the Wage and Hour Division and/or the OFCCP (the OLMS, which is responsible for financial oversight of unions, is unlikely to see an increase in FTE during this administration). In this way, DOL could increase enforcement resources, without increasing total FTEs or requiring a budget increase. Employers may be weary of a more independent WHD Administrator and increased resources for enforcement. However, Secretary Solis has already made it very clear that increased wage-hour enforcement is on its way – with or without this reorganization.

Three other question remain unanswered, though likely of little interest outside the Beltway:

What are they going to do with all that ESA stationary?
Will the new Wage and Hour Administrator get a pay raise?
Who will be moving into the ESA Assistant Secretary’s office with its private bathroom?

Tammy McCutchen
Shareholder, Washington D.C.
Former Administrator, Wage and Hour Division, U.S. Department of Labor (2001-2004)

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.