What’s Next at Labor Department After Acosta Confirmation?

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By Ben Penn

Alexander Acosta’s confirmation ends a nearly 100-day void atop the Labor Department but won’t necessarily yield swift policy direction on the tall stack of regulatory, budgetary and strategic issues waiting on his desk.

Outside stakeholders and inside agency career officers have bemoaned the lengthy state of paralysis at the DOL without a labor secretary and with little direction from the White House. Acosta’s final approval from the Senate April 27 may only temporarily relieve the heartburn induced by inaction. The filling of senior DOL slots could be slowed by a crowded Senate calendar.

Acosta’s confirmation “is a very important step forward, and I’m sure he’s going to do a great job, but these things do take time,” Diana Furchtgott-Roth, who served on President Donald Trump’s DOL transition team but hasn’t advised Acosta, told Bloomberg BNA.

The new labor secretary, his advisers and career staff must immediately begin review on time-sensitive decisions on the DOL’s fiduciary and overtime rules, budget proposal and response to a White House order to reorganize. But it’s unclear how much progress Acosta can make in the early going without Senate-confirmed personnel by his side.

Acosta and the White House are said to have been actively conducting interviews in recent weeks to quickly announce senior DOL official positions. A jammed legislative calendar and a long summer recess, however, could prevent some top-ranking subcabinet officers from receiving a hearing until late this year or into 2018.

“They need to pick and finalize the deputy secretary, solicitor and assistant secretaries, and then once they do that, they can start moving forward with the policies that President Trump laid out in his campaign, which is rolling back some of these regulations,” said Furchtgott-Roth, a past Republican DOL chief economist who is now a senior fellow at the free-market-oriented Manhattan Institute.

Acosta is known as a thorough legal scholar, reluctant to act until he’s examined an issue from all sides. That could mean slow movement.

“I think that Alex is going to be very cautious. I don’t think that he’s going to come in there and the next day start moving the furniture around,” John Irving, a former senior DOL official, told Bloomberg BNA. “He’s an exceptional lawyer, he’s a thoughtful guy, he’s careful, he’s balanced, he’s reasonable.”

Irving now represents employers as of counsel at Kirkland & Ellis in Washington. Acosta worked for Irving in the 1990s as a Kirkland & Ellis associate.

Hard Deadlines

Some matters face hard deadlines that won’t permit Acosta to wait for assistant secretary nominations. First up: A part of the fiduciary rule, which tightens conflict-of-interest restrictions on retirement investment brokers, is scheduled to take effect June 9. In accordance with a Trump memo, the agency is in the midst of reviewing how to implement the full regulation.

If the secretary wishes to delay the June 9 date, as the financial services sector will urge him, he would need to send the Office of Management and Budget a new rulemaking within days after being sworn in.

The overtime rule that doubles the salary threshold for time-and-a-half pay eligibility was already blocked by a judge last year, triggering an appeal by the Obama administration Justice Department. But Trump’s DOJ has three times delayed filing a brief on that appeal to allow for a new secretary’s instructions.

Acosta faces a June 30 deadline to file a brief in that case. He may decide whether to defend the controversial regulation in court instead of waiting for a confirmed Wage and Hour Division administrator.

“He is going to have to weigh in with the Justice Department and because he’s a very high-level lawyer, maybe read the briefs himself and decide if he wants to urge the Justice Department to take a different position,” Seth Harris, an acting labor secretary under Obama, told Bloomberg BNA. “So that’s going to be right away.”

Further, Trump’s budget blueprint called for slashing the DOL funding by 21 percent without specifying where most of that $2.6 billion reduction would come from or how subagencies should be prioritized. The White House is expected to publish a more detailed budget proposal in May, leaving Acosta precious little time to influence the process.

“He will be able to affect the budget proposal at the margins, but at the end of the day, he is going to be in a tight box when it comes to the budget,” said Harris, now an attorney in Washington.

Names Floated for Jobs

The department already has an acting political solicitor in Nicholas Geale who is seen as a valuable asset in reviewing the Obama administration regulatory agenda. It’s possible Acosta could grow impatient with the Senate calendar and insert other acting political appointees, such as at the WHD and Employee Benefits Security Administration. If he were to to proceed in that fashion, those appointees are expected to be more like-minded than the career acting leaders he inherits.

“After his confirmation, the business community hopes he gets a very quick start on policy changes without waiting to fill all of the subcabinet positions,” Tammy McCutchen, a former WHD administrator under President George W. Bush, told Bloomberg BNA.

Names previously floated to round out Acosta’s team include Patrick Pizzella (deputy secretary), Alexander Passantino (WHD), Scott Mugno (Occupational Safety and Health Administration), Molly Conway (Office of Federal Contractor Compliance Programs) and Geale (moving from acting to permanent solicitor).

Low-Hanging Fruit

Other areas, such as determining an appropriate balance between enforcement and compliance assistance, could take longer for clarity under the secretary.

But outside the big-ticket fiduciary and overtime regulations, there are other priorities subject to review under the president’s call to ease burdens on businesses to enable hiring.

A review of the overtime regulation may lead to a new rulemaking, which requires a complicated and time-consuming process. The business community will also ask for the instant reversal of subregulatory actions under Obama’s labor secretary, Thomas Perez.

“Do they jump into” overtime, “or do they try to knock off some of this low-hanging fruit and go after internal guidance documents, enforcement memos, administrator’s interpretations, reinstate the opinion letter process and get some quick victories there?” James Plunkett, senior government relations counsel at Ogletree Deakins in Washington, told Bloomberg BNA. “If it were me, I think I’d try to look at making some of those quick immediate changes before diving into bigger-picture things.”

The WHD’s interpretation documents clarifying an expansive definition of joint employer and independent contractor under the Fair Labor Standards Act will be a target for removal.

Open-Door Policy

Acosta, through his time running the DOJ’s Civil Rights Division, brings a reputation for having an open-door policy to labor and employer interest groups. The early days of his term will likely include meetings with many stakeholders in the advocacy and think tank arenas, as well as with members of Congress from both parties.

Vicki Shabo, vice president at the National Partnership for Women and Families, told Bloomberg BNA she’ll seek a meeting with Acosta, possibly with a coalition of worker advocacy groups. She would want to impress upon Acosta grave concerns about actions from the White House that could limit worker protections.

“If the administration is successful in the drastic cut to DOL’s budget that it’s proposed, I would be very worried about implementation, enforcement, investigations, really across the board with respect to wages, working conditions, workplace fairness,” Shabo said.

Rep. Mark Takano (D-Calif.), the top Democrat on the House subcommittee that oversees DOL worker protections, told Bloomberg BNA he plans to ask Acosta to undo the damage that’s already been done in Trump’s first 100 days in office.

“What do I hope to pursue with” Acosta? “I have a beef already with the first 100 days,” Takano said. “Mr. Secretary, do you have any ability to go to this president and get him to reconsider the things he’s already done?”

Trump has already signed legislation, via the Congressional Review Act, to kill the Fair Pay and Safe Workplaces rule, which would’ve required companies to report past labor violations when bidding on federal contracts. He also blocked an OSHA workplace injury reporting regulation.

Strategic Vision

Another open question is exactly how Secretary Acosta will look to define his strategic vision.

Acosta may have a role in selling the White House’s infrastructure, immigration and trade plans—Trump initiatives that intersect with the DOL’s portfolio.

“President Trump is clearly working to be the blue-collar president, and he is going to push for treating all workers fairly and creating jobs,” Vincent Vernuccio, director of labor policy at the Mackinac Center and a former DOL transition official, told Bloomberg BNA. “So we’ll see what form that takes in a Trump-Acosta Department of Labor.”

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

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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