In an unprecedented and controversial move, the White House has launched a new program at the Department of Labor which will refer workers who have complaints about their bosses to a toll free number at the American Bar Association, where they can get a lawyer to work on their case on a contingency fee basis.

More than 40,000 workers annually contact the Department of Labor with complaints about their bosses. But Labor can’t get to all of them, an estimated 10%, because of budget constraints, the White House says. So the White House has instead launched a program for “unresolved complainants” with the ABA. Workers will now be provided a toll-free number that connects them with ABA lawyers nationwide who are experienced in things like alleged workplace abuses of minimum wage, overtime and family medical leave laws. 

The White House in a statement says this is “a new effort between the federal government and private bar to assist complainants” who may need help with “worker rights.” In a statement, the ABA calls this new alliance “unprecedented.” 

But will this create more lawsuits against companies? Will it stymie job creation at the very companies the President says he needs to help lower the high unemployment rate, including small businesses? Will this new program simply make it easier for lawyers to get business they may have garnered anyway? 

And since Vice President Joe Biden says the lawyers will be working on a contingency fee basis, and not pro bono, doesn't that pretty much guarantee that the lawyers will be more apt to earn those fees via lawsuits against businesses? 

Moreover, will the government set up an ABA referral service at Labor for small businesses and employers who are having trouble with miscreant employees or are being harassed by frivolous lawsuits filed by troublemaking workers? 

Small businesses may have cause for further concern, given the controversial, allegedly anti-business history of the officials the Obama administration has nominated to oversee these new programs. 

The White House has also enlisted the ABA to launch a toll-free hotline number at the Department of Housing and Urban Development to help homeowners with foreclosure issues, as well as a separate ABA toll free number to help veterans at the Department of Veterans Affairs, too. An ABA release notes that its new toll-free line at the Labor Dept. will help workers who may be part-time or independent contractors in the agricultural, construction, or hotel industries. 

Already, the Department of Labor has more attorneys than any other department besides the Department of Justice, sources note. 

In a video briefing on the White House’s website, Vice President Joseph Biden says that this new ABA government program is part of his Middle Class Initiative. The Vice President noted that  “it’s not enough to say that everyone has the same legal rights” or “has equal access to justice.” The Vice President also noted that in an estimated one half of all civil cases, one party has no legal representation, and that the economic crisis has created “more unrepresented litigants.” 

The Vice President says: “We’re taking steps to help workers stand up for their rights in the workplace.” And though the lawyers are not doing the work pro bono, Biden says workers don’t have to fear paying for that lawyer, because “most all” of the fees will be “contingency on the back end.” 

But how will the Department of Labor’s Wage and Hour Division know if the ABA is actually accepting these referrals or if the cases are being resolved by the private bar? In a fact sheet, the ABA says it “will provide the Wage and Hour Division with aggregate information about the numbers of referrals accepted and the outcome of those cases.” Whether the government will need more federal workers to fact check and police this ABA program remains to be seen. 

Also at issue is whether the ABA will only refer its own members, or lawyers who are not members of the ABA. Government watchdog groups are also making note that this new ABA program is of a piece with past initiatives run by government officials whom the administration has nominated to high level positions in the Labor Department

The White House nominated M. Patricia Smith to be the Labor Department’s Solicitor General, the third highest official at the department and the person with the final word on all legal advice in the agency. 

The White House had nominated Lorelei Boylan to be the Administrator of the Department’s Wage and Hour Division, the division responsible for enforcing minimum wage and overtime laws among others. But Boylan subsequently withdrew her nomination in the fall of 2009, citing family issues. Her withdrawal came after a hailstorm of protest from Republicans in Congress, largely due to her history working for the New York State Labor Dept. 

Working under former New York governor Eliot Spitzer, Smith and Boylan are former officials in the New York State Department of Labor, where Smith served as Commissioner and Boylan as Director of Strategic Enforcement in the Labor Standards Division.

While there, Smith devised the heavily criticized “Wage Watch.” Initiative, then run by Boylan’s division, which came under fire from local businesses as providing government cover to unions seeking a foot in the door to organize. The program basically enlisted private entities to act as labor market watchdogs over businesses in “formal partnerships” with the state. 

The enlisted groups were given a targeted geographic zone to police, after having gone through state training. They were also given a designated state worker to deliver “referrals” of violations of wage and hour laws.  

Smith said this when she announced the New York Wage Watch program: “We are enforcing the law as creatively and aggressively as we can, but the government cannot do it alone. We need concerned members of the public to help raise awareness about wage theft, to educate workers and employers about the law, and to help serve as a bridge between our agency and workers who might be unlikely to come to us on their own.” 

But union activists and community organizers were deputized in the program, giving a way for unions to target unorganized companies, and businesses cried foul, arguing that union activists could cook up false labor violations in order to strong arm businesses into unionizing, says James Sherk of the Heritage Foundation. 

A union local at that time also wrote down its plan to use wage watch in “all of our organizing campaigns,” reports Sherk. New York state business associations voiced their concerns in a letter to Smith in February 2009. 

The letter writers, the Retail Council of New York State, the Empire State Restaurant & Tavern Association, the New York State Restaurant Association, the Food Industry Alliance, and the New York Association of Convenience Stores, feared raw knuckle union organizing tactics coming under cover of the “wage watch” program. 

The letter writers said: “We wonder how such an effort can create an atmosphere of anything other than vigilantism where every honest employer will have a legitimate concern for the preservation of his or her rights as a taxpaying business owner in the state of New York. 

They added that the "image painted by" the department "is of a posse of activists, duly deputized by the weighty imprimatur of the department, demanding access to any employer in the state whom they have chosen either at random, by will, or by prejudice.” 

The letter writers added: “We are troubled that groups so empowered would be guided less by objectivity than agenda. Some, we fear, would mistake their status as Watch groups for an all-access pass to the records of any business they may choose to ‘watch.’ And we harbor the legitimate concern that participants may take advantage of their new status by staging publicly-funded press events created to embarrass without cause any employer whom they choose.” 

As Americans for Limited Government noted: “Imagine the pressure that a small employer would feel when confronted with a skilled union organizer who walks in, flashes a copy of his government-granted ‘formal partnership,’ and then proceeds to casually mention that he need not take a look at the employer’s books if he gets help convincing employees to join the union.” 

Smith's confirmation was then delayed for about a year after Sen. Michael B. Enzi (Wyo.), ranking Republican on the Senate Health, Education and Labor Committee, stopped Smith's nomination due to alleged inaccuracies in her confirmation testimony regarding the program. The Dept. of Labor didn’t return calls for comment. 

Smith had apparently played down the program, testifying that the idea for "Wage Watch" and the development of the program came from within her department and not from outside groups, which wasn’t true, Heritage's Sherk notes. 

Smith also presented the program as merely a pilot project that her office had not decided to expand, also not true, Sherk says. 

Heritage'sSherk reports: “Documents delivered to the Senate show that unions were heavily involved in developing 'Wage Watch.' It was their idea from the beginning. And the program was hardly a ‘pilot.’ At the time of her hearing the New York Department of Labor planned to expand the program throughout the state, even though Smith told Senators otherwise.”

The Labor Department didn’t return calls for comment. 

After these testimony errors were addressed, Smith was finally confirmed in February 2010. 

And on December 2, 2010, President Obama announced his intention to nominate Leon Rodriguez to fill the void left by Boylan, the position of Administrator of the Wage and Hour Division [WHD] of the Department of Labor. 

Rodriguez had served as Deputy Assistant Attorney General and Chief of Staff in the Civil Rights Division at the Department of Justice under Attorney General Eric Holder, where Rodriguez was embroiled in controversy. 

Rodriguez was allegedly caught up in the wrongful dismissal of a case that can be called nothing but outrageous, a voter intimidation enforcement case involving the New Black Panther Party which had placed supposed "Security" patrols at polling places in Philadelphia on election day in 2008. 

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The U.S. Commission on Civil Rights and Congress probed the issue, but met with stonewalling of subpoenas and requests for information from Justice’s Civil Rights Division. 

Heritage Foundation's Hans von Spakovsky writes that the Commission released an Interim Report, after it “investigated this matter for more than 18 months. The biggest hallmark of that investigation was the Commission's discovery of a deep-seated hostility in the Division to race-neutral enforcement of the Voting Rights Act and the implementation by political appointees of a policy strongly discouraging (if not outright prohibiting) the enforcement of voting rights laws against minority defendants, no matter how egregious the violation.” 

Heritage’s von Spakovsky also noted: “But the Commission's investigation was also frustrated by the unlawful refusal of the Civil Rights Division to turn over information and documentation to the Commission. This despite the Division's statutory obligation to ‘cooperate fully’ in the investigation, as well as its lawless refusal to comply with subpoenas issued by the Commission. The Commission's Report castigates the Division for its actions, including its assertion of vague, unjustified and non-existent privileges.” 

Heritage’s von Spakovsky also noted: “Given the months of exchanges between the Division and the Commission and the national attention that generated front-page news stories in the Washington Times and belatedly the Washington Post, it is difficult to imagine that the Assistant Attorney General's chief of staff, Leon Rodriguez, had no involvement in directing the Division's unprofessional, unethical and illegal refusal to comply with the Commission's attempt to investigate this matter.”

Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007.
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.