Outlook 2018: Trump Labor Dept. Looks to Move Agenda Forward in Year Two

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By Ben Penn

The Labor Department’s commitment to apprenticeships and reconsidering Obama-era regulations is clear. Beyond that, the agency begins the second year of Trump’s White House without much of a policy identity.

Labor Secretary Alexander Acosta starts 2018 still waiting for most of his top officials to be confirmed. In their absence, he’s operated the department with a deliberate, cautious style, while creating a bit of uncertainty for both employers and workers about the next steps.

“The entire effort of the leadership team at the Labor Department consists of either delaying, tweaking, or undoing Obama agenda items, and even that list is surprisingly short,” Seth Harris, deputy and acting labor secretary under President Barack Obama, told Bloomberg Law. “Going into 2018, we haven’t gotten any indication of where Secretary Acosta’s focus is going to be outside of a narrow realm of the workforce development space.”

The regulatory review of 2017 will continue to occupy considerable space in the department’s overall plans in 2018. The DOL is still trying to undo or revise a series of worker-friendly rules finalized at the end of the Obama administration, including moves to extend overtime pay to more workers and to protect retirement savers from conflicted advice. The business community has staunchly opposed those regulations and others, arguing they were too burdensome and would lead to job losses.

Once a deputy secretary, enforcement agency heads, and other senior personnel have landed at the Frances Perkins Building, likely over the next few months, the department’s longer-term policy direction may become more clear. Just before adjourning for the holidays, the Senate did confirm Kate O’Scannlain for solicitor, Preston Rutledge as assistant secretary of the Employee Benefits Security Administration, and Katherine McGuire to lead the DOL’s congressional and intergovernmental affairs unit. But other crucial vacancies, such as deputy secretary, remain unfilled and will require the White House to renominate candidates.

“They will be able to more confidently address questions of what are the department’s enforcement positions, what is the guidance that we want to provide to employers and employees as to the ways we want to enforce the rules that are on the books, and how do we move forward with the regulatory items on the agenda,” Gregory Jacob, a DOL solicitor under President George W. Bush, told Bloomberg Law. “Without having a political head in place, it’s hard to move expeditiously on those things.”

New personnel may also want to address employer griping that the department’s field offices have been running on autopilot, somewhat rudderless, without clear directions from the national office, said Jacob, now a partner at management-side firm O’Melveny & Myers in Washington.

Aside from the DOL’s mine safety branch, all remaining subagencies were run in 2017 by acting officials, some of whom are senior career civil servants. Even the politically appointed acting heads are seen as caretakers, unlikely to make major decisions or advance initiatives.

Employers Win Out?

Much of Acosta’s initial seven months atop the department entailed forging relationships with key stakeholders in the employer and labor communities. Business lobbyists and management lawyers pivoted from expectations of aggressive, pro-employer moves from President Donald Trump’s now-withdrawn initial labor secretary pick, former fast-food executive Andrew Puzder.

The controversy-averse Acosta, with a background as a government lawyer and law school dean, has brought a decidedly judicious approach grounded in the rule of law. Business advocates are still encouraged that the department is gradually shifting to place greater weight on their perspective and to rely more on the carrot than the stick to ensure compliance with the laws it enforces.

“Acosta’s regulatory philosophy I think is very consistent with the kind of approach the business community would like to see,” David French, who heads government relations at the National Retail Federation, told Bloomberg Law.

Once the secretary’s choices for various agency heads below him arrive, employers might see concrete evidence that the Obama regime is no more.

“I think we would anticipate that all of the agencies will be more mindful of ways to improve employment, ways to improve compliance with the law, rather than creating new and arbitrary interpretation of the law,” French, a vocal critic of the prior administration’s labor policies, said.

Worker advocates and Democrats have tended to blame Trump, not the secretary, for the DOL’s moves to unwind the Obama agenda. Among other things, they’ve fought the recent proposal to remove a 2011 rule asserting that tips are the property of employees. The Democrats have been selective about criticizing Acosta directly. But that could change if the department moves toward an overly conciliatory approach to businesses this year.

“My fear is always that a focus on compliance assistance could be used to offset enforcement,” Raj Nayak, research director at the National Employment Law Project, told Bloomberg Law. “Good compliance assistance is important, but can’t replace actual law enforcement entirely.”

Nayak held a range of political positions over seven years in the Obama DOL.

New Solicitor

A recurring management complaint of the prior administration was that the DOL used the threat of excessive penalties as leverage to force well-intentioned businesses to settle cases rather than incur the additional legal costs of litigation.

Acosta’s incoming solicitor Kate O’Scannlain already gave strong signals to employers that she would bring a new attitude as the agency’s top prosecutor. O’Scannlain, who represents employers at Kirkland & Ellis, said at her November confirmation hearing that she believes most businesses want to do right by their workers.

“In my experience, the vast majority of employers seek to comply with the law,” she said.

Her words were welcomed by an employer community hopeful for a new chief legal officer at the DOL who doesn’t treat businesses with a presumption of guilt.

“This is not to say the department should take a softball approach,” Jacob said. “If the department has a meritorious case, the department should go in, guns blazing. But it should also take a realistic view of whether this is a case on the merits or if this is a shakedown.”

More Than Apprenticeship

The secretary has used the bully pulpit to call on more businesses, trade groups, and unions to design apprenticeship programs that train workers for the job skills companies are demanding.

This has been by far the top DOL policy item emanating from the White House. Job training is a relatively safe terrain for the secretary to navigate politically because of its bipartisan support.

With the publication this spring of the Bureau of Labor Statistics’ revived contingent worker survey, Acosta will have an opportunity to add the gig or sharing economy to his list of talking points.

At an October event on the future of work, he started framing his message. Acosta said it’s Congress’ role to update the laws to ensure that they reflect modern workplace realities.

“Government has an obligation to keep pace and to re-examine the rules that regulate the employer-employee relationships that have an impact on the ability of individuals to work in a modern system,” the secretary said.

Whether his message extends beyond the podium and into policies that are implemented—or withdrawn—next year, remains an open question. The extent to which the department fulfills its mission under Acosta’s watch will determine how the worker advocacy community reacts in the coming year.

“The Labor Department’s mission and responsibility is to elevate and protect the interests of workers—both in its policymaking and in its enforcement of laws that protect wages, retirement savings, and working conditions,” Christine Owens, NELP’s executive director, told Bloomberg Law. “NELP is a part of a robust group of advocates who are watching the DOL closely to note when it strays from its legal authority and mission, and who are ready to draw attention to those situations and challenge them as appropriate.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com

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