Punching In: Funding, Fiduciary Fights

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By Chris Opfer and Ben Penn

Fishing for Funding Favors | Fiduciary for SCOTUS? | From the Desk of Peter Robb

Chris Opfer: The federal government’s current funding is set to run dry on Friday. If the past is prologue, expect lawmakers to run right up against that deadline and maybe pass another short-term funding patch or two before sending a bill to President Donald Trump’s desk to keep Uncle Sam open for business the rest of the fiscal year. Congress has yet to decide what to do with Dreamers, undocumented immigrants who came to the country at a young age, and lawmakers are still tussling with Trump over money to freshen up railways in New York and New Jersey.

Meanwhile, members and interest groups are renewing a long-practiced tradition on Capitol Hill: trying to load up the spending bill with all kinds of goodies that have little or nothing to do with government spending.

Once again, critics of the Obama administration’s approach to joint employer liability are angling to get language to address the issue into the next spending bill. This time, the language is based on a bill passed in the House that would limit joint employer liability under labor and wage and hour laws.

The move isn’t likely to bear fruit. That’s because spending bills still need 60 votes in the Senate. As in recent years, expect lots of talk about all kinds of policy riders in the run-up to a spending deal. Then watch for them to mostly fall by the wayside as lawmakers scramble to get enough Democrats on board to move the legislation.

Groups like the Chamber of Commerce, the International Franchise Association, and Associated Builders and Contractors also want the Labor Department to update a pending rule to expand association health plans. They’re asking DOL to make clear that participating in those plans—which allow businesses to join together to offer health benefits for workers—won’t make companies liable as employers of each other’s workers.

The question is whether that ask is within the scope of the department’s proposed rule or if making the change would require restarting the notice-and-comment rulemaking process.

We’ll also be watching to see what, if anything, lawmakers do in response to calls from Labor Secretary Alex Acosta to address some of the tip pool rule drama in the funding legislation.

Ben Penn: If Congress does somehow pass a rider to ban tip skimming, then that would clear the decks for Secretary Acosta to focus on his latest regulatory conundrum—whether to appeal the Fifth Circuit’s decision to strike down the fiduciary rule.

We’ve played the “read the tea leaves on what Acosta will do with x Obama rule” game with mixed results over the past year. The next steps on the fiduciary rule may present the most challenging round yet.

At first glance, there are instructive lessons from looking at the department’s decision last year to appeal a court decision that stopped the overtime rule, which was neck-and-neck with fiduciary for the crown of Obama DOL’s highest-profile regulation.

Acosta challenged the overtime decision in part because the judge’s reasoning risked handcuffing the agency from ever setting a new overtime salary threshold in the future, a scenario that made folks on both sides of the aisle nervous. To simply walk away from the matter would’ve helped bury an Obama-era rule that the secretary opposed. But it also would have risked alienating stakeholders from both parties, while in the process creating bad optics for a department committed to protecting workers’ paychecks.

On the fiduciary rule front, it seems reasonable to think the secretary would have an easier time giving us the silent treatment and leaving his name out of the docket. He can now defer to the Securities and Exchange Commission, which unlike in the Obama administration, is already involved in creating a Trump 2.0 version of the rule.

A final thought on the fiduciary rule, which was heralded by many on the left for its ambitious attempt to ensure financial advisers are keeping retirement savers’ best interests at heart. Before the Thursday decision, this regulation had survived multiple other court challenges and had already partially taken effect. If there was any major DOL rule from the Obama days that had a fighter’s chance of remaining substantially intact, it was this one.

It’s not over yet, and the Supreme Court may have the final say. But the news of that decision had to have crushed many of the conflict-of-interest rulemakers who were keeping their fingers crossed that even in a White House committed to deregulation they just might sneak the fiduciary rule past the goalie.

The business lobby’s litigation strategy has now led to court decisions that stop four major DOL rules issued in 2016: Fair Pay Safe Workplaces, overtime, persuader, and fiduciary. In the event the executive branch flips again in 2020, it’s not too early to ask the question: will fear of judiciary intervention lead to a more moderate Labor Department rulemaking strategy from the next Democratic administration?

CO: The NLRB recently put out data that sheds a little light on the legal issues before the agency. General Counsel Peter Robb’s office shared some insights into the numbers when a representative for Robb was in Puerto Rico last month to meet with an American Bar Association group. In case you’re wondering, yes that’s the same event at which board member Mark Gaston Pearce (D) allegedly gave some folks a heads-up that a big joint employment decision was on the way.

Robb also spent some of his time on the island talking with labor lawyers about what’s going on inside the agency, according to a memo from the board’s top attorney that was recently made public. The 27-page recap is chock-full of information, but two statistics jump out.

Employee handbooks and general workplace rules are still getting a lot of attention. Shortly after he joined the board last year, Robb asked regional directors to submit cases involving certain issues to the advice division for input on how to proceed. The issues identified included several that the Republican-majority NLRB and its GOP-appointed general counsel are likely to give another look. A little more than half of the 37 cases referred so far concern questions about whether workplace policies that are seemingly neutral may impinge on workers’ concerted activities under federal labor law.

We don’t know how many of those cases were kicked to advice before the board updated its approach to the issue in the Boeing case late last year. It’s safe to say the new standard will continue to raise questions about how employers oversee their workplaces.

The board hasn’t yet reopened any cases as a result of its change of heart on micro-units. The NLRB last year junked an Obama-era decision that paved the way for smaller groups of workers within a larger workforce to unionize. Some expected the move to spark new fights about the size of existing collective bargaining units. Robb said no cases have been reopened as a result of the decision. Still, more wrangling could be on the way. Robb said formal and informal talks about revisiting micro-unit issues have happened in 83 cases across the country.

BP: Just when I was starting to think that nobody remembered Pat Pizzella’s name, Trump’s legislative affairs director Marc Short gave the MIA deputy labor secretary nominee a plug under the spotlight of the White House press briefing Friday.

To illustrate his message that Senate Democrats are “weaponizing” the confirmation process by obstructing the president’s personnel picks, Short used Pizzella as his prime example. He noted that Pizzella was nominated last June, and still awaits a Senate floor vote 269 days later (now it’s 272). That’s because Chuck Schumer is committed to requiring a cloture vote on Pizzella, which triggers 30 hours of debate that Mitch McConnell apparently doesn’t have space to schedule.

Short made the point that Pizzella was confirmed to a different DOL post by voice vote in the George W. Bush administration, meaning some of the same Democrats who didn’t take issue with Pat in the aughts, interestingly find him objectionable when Trump selected him. And Short could’ve gone further, but oddly didn’t, by pointing out that President Obama nominated Pizzella to a job at the Federal Labor Relations Authority.

The more understandable omission from the legislative affairs chief’s speech was when he avoided bringing up Pizzella’s ties to Jack Abramoff and history of lobbying to exempt the Marianas Islands from federal wage protections.

There was one other fact missing from that press briefing Friday. The Senate obstruction doesn’t explain why the White House has yet to nominate someone to lead the DOL office charged with implementing apprenticeship rules that are administration’s top workforce policy priority. Nor has the White House named anyone to head the DOL’s policy office or the Equal Employment Opportunity Commission’s general counsel.

We’re punching out. Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us: copfer@bloomberglaw.comand bpenn@bloomberglaw.com or on Twitter: @ChrisOpfer and @BenjaminPenn.

See you back here next Monday.

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