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State AGs’ authority is by no means limited to their more traditional jurisdictions - consumer protection, privacy, and antitrust - as several recent actions by state AGs in the labor and employment arena clearly demonstrate. In the penultimate episode of season 3, Chris Allen and Keturah Taylor consider recent efforts by Democratic AGs to help protect workers’ access to overtime pay and an enforcement action in DC related to a company’s misclassification of its workforce.

TRANSCRIPT

Keturah Taylor

Welcome to the third season of State AG Pulse. In this season, we’re selecting one story every week from the state AG news. Over the next  minutes, we’ll take a quick dive into that story to analyze the impact of AGs as regulators and consumer protection guardians and provide tips to help your business work successfully with state AGs.

Chris Allen

My name is Chris Allen. I am a partner in Cozen O’Connor’s  state AG practice, and today I am excited to be joined by my colleague Keturah Taylor, an associate in the state AG practice. Keturah, how are you today?

Keturah Taylor

I’m great, Chris. Great to be back on the podcast.

Chris Allen

In the past several episodes, we’ve talked about some consumer protection issues, some data privacy issues, some antitrust issues, but today we are going to talk about state AGs when it comes to labor and employment. And I don’t think a lot of people think about state AGs in this area, but it is one of the many other areas that state AGs can take, and do take, action with respect to. And so Keturah, I understand we have not one but two stories this week that reflect that. So how about you walk us through the first one?

Keturah Taylor

Sure. And to echo what you mentioned, AGs are quite active in the labor space so our lack of prior coverage certainly is not due to any lack of their activity here. They wear many hats. So one of our stories this week is a multistate coalition of  Democratic attorneys general who sent a comment letter to the US Department of Labor. They’re writing in support of a proposed rulemaking that would update rules governing certain overtime pay exemptions. So there’s a category of employees that are executive, administrative, or professional, referred to as EAP, that are exempt from overtime requirements under certain labor laws. So the Department of Labor occasionally issues rulemakings that would change the salary levels for which overtime pay is no longer required. So the Democratic AGs here are very supportive. They emphasize that these proposed changes will expand overtime protections for millions of workers and reduce the potential misclassification of non-EAP employees as being overtime-exempt.

Chris Allen

Employee classification, minimum wage, labor standards, these are areas that both the states and the federal government share jurisdiction over.

Keturah Taylor

Absolutely. And different coalitions of AGs weigh in at different times, I would say nearly every time that a significant rulemaking like this is under consideration. So as they pointed out in this recent letter, back in , under the prior administration, the Department of Labor had significantly decreased those salary thresholds, leading to more than  million employees no longer being protected from the exemption. So undoubtedly AGs weighed at that time as well.

Chris Allen

And you mentioned the AGs themselves say that employee misclassification is a big reason they got into this. And I think that flows nicely into the second story we pinged, which is, that is direct state action. Well, I say state, it’s really the District of Columbia, and whether DC is or should be a state is a fight for another time. But what did AG Schwalb get into this week?

Keturah Taylor

Yes, DC Attorney General Schwalb is addressing misclassification of a different variety as well. So this week he reached a settlement with a firm called / Vision that does economic policy research and advocacy, so a very DC business here. They were resolving allegations that the firm had violated wage and hour laws by classifying its entire workforce as independent contractors rather than as employees. So AG Schwalb viewed that as depriving those  employees of overtime wages, sick leave, and other benefits and protections that they should have received and that are not afforded to contractors.

Chris Allen

And that’s really interesting that it’s a Beltway bandit company because usually you see this, I’ve seen this in fast food, I’ve seen this in retail, but this is a really interesting target. AG Schwalb came into our offices when he was running for Attorney General and said that one of the things he took really, really seriously was how difficult it is to make and work in the District of Columbia. And so he’s been very active in, I know, for example, housing. And so to see him moving on to things like this, like minimum wage and employee misclassification, I think is indicative of his priorities as well as the priorities of a lot of other AGs.

Keturah Taylor

Yeah. I would say that he’s certainly carried through on those stated priorities, even just in the wage and hour arena, because we’ve seen a number of settlements come out of his office over the last  months or so that relate to wage and hour issues in all types of industries. So you’re right that this is the first kind of classically Beltway company we’ve seen on the other end of one of these settlements, but we’ve seen him settle with pet care companies or retailers and restaurants. So he doesn’t seem to be sparing any particular industry from this type of scrutiny.

Chris Allen

Yeah. And it is not only misclassification, but it’s also things like tip theft, failure to pay sick leave, failure to pay minimum wage, those are other issues that he’s taken action on. And he’s not the only one too. I mean, AGs are also wading into other areas, there, workplace discrimination and hostile work environments. Our colleague Stephen Cobb, who was on last week, wrote an article talking about the investigations launched by New York AG Tish James and California Rob Bonta into the NFL following allegations of workplace discrimination in a hostile work environment. And that, of course, came on the heels of former Washington D.C. AG investigation of the Washington Commanders over workplace discrimination and harassment in there, which as a Cowboys fan, I do not find workplace discrimination funny, but I do find bad things happening to the Commanders funny, although maybe without Dan Schneider, I’m less like that. I’m just kidding. Harassment is bad no matter who it happens to.

Keturah Taylor

It certainly is interesting to see AGs wading into that professional sports world, which I think is not somewhere that they’ve historically found themselves bringing enforcement actions or investigations-

Chris Allen

Correct.

Keturah Taylor

… Into the arena of discrimination and harassment, which I think have traditionally been housed more in private litigation brought by the impacted plaintiffs. It’ll certainly be interesting to see where those investigations lead.

Chris Allen

Yeah. And it’s indicative of their creativity and their reach, right? And when you and I were preparing for this podcast, you brought up the really interesting example of no-poaches and how AGs have gotten involved in that, and that fundamentally is an employee fairness issue too, right?

Keturah Taylor

Absolutely. So no-poach agreements have been kind of in the crosshairs of AG investigations for quite a few years now. It started with, I believe it was Washington AG Ferguson who was bringing no-poach actions left and right early in the fast food industry starting maybe four or five years ago. But AGs across the country have jumped on board trying to eliminate these no-poach agreements, particularly between lower-wage workers and in industries like that. What’s been interesting is that after a few years of what appeared to be across-the-board success by AGs in putting an end to these types of agreements is that we might be reaching a point where target companies are starting to push back and doing so successfully.

I know that just this week, the Illinois Supreme Court is hearing oral arguments in a case, in a no-poach case that the AG’s office brought, and that is against a number of staffing agencies facing an enforcement action by the AG’s office over some alleged no-poach agreements relating to temporary workers. And those defendants are actually challenging whether the Illinois antitrust statute actually reaches the labor market and whether the attorney general actually has the authority to bring this action in the first case. So it’ll certainly be interesting to see how the court rules on that. Hopefully, we’ll get a ruling in perhaps early next year, but we might be testing the limits of where these no-poach enforcement actions can reach.

Chris Allen

Yeah, and it’s interesting because that is yet another example of how creative AGs have been using their antitrust authority and expanding it to address new challenges or what they perceive to be new challenges. And as inflation has racked the economy, I think AGs generally speaking on both sides of the aisle are very cognizant of the challenges of making a living wage. AGs being involved in labor and employment goes back to there were employee misclassification task forces set up by New York and New Jersey  years ago.

I know Massachusetts under the last several AGs has been very active here. Minnesota Attorney General Ellison has been active here, even though his is an interesting case because Minnesota has both a Civil Rights Commission, or Human Rights Commission, I think it’s called, as well as the AG’s office, and I think you have that in other states. So it’s an example of AGs sometimes are able to bring these on their own, sometimes acting as counsel, or in coordination with their own state agencies. But again, it is something that I don’t think companies think about AGs when they think about this. They think of the NLRB, they think of OSHA, they think of private litigation like you talked about, but maybe not this.

Keturah Taylor

Yeah. So whether they’re bringing them under their state wage and hour laws, or their antitrust authority, I think will continue seeing AGs being incredibly active in the labor space, including weighing in on federal regulations and rulemaking.

Chris Allen

Yeah. I couldn’t agree more. So a little jaunt in deviation from our normal consumer protection and antitrust stuff, but a fascinating conversation. Thank you so much, Keturah. I really, really enjoyed this. I enjoyed hearing your insights. Everybody else thank you for joining us. This has been Season  of State AG Pulse. I’m Chris Allen, that was Keturah Taylor, and we look forward to you joining us next week. In the meantime, take care. Stay safe.

Keturah Taylor

You’ve been listening to State AG Pulse, brought to you by Cozen O’Connor’s State AG Group and the State AG Report. Please leave us a five-star rating and of course, tune in again next week.