From Fiduciary Rule to Overtime: What to Expect from Trump Labor Nominee Acosta

March 22, 2017

By the time President Donald Trump’s first nominee for labor secretary withdrew from consideration, there was little doubt where he stood on the big issues facing the department.

In contrast, his replacement, Alexander Acosta, heads into his hearing Wednesday with far more experience in government, but comparatively opaque views on key matters he’ll face at the Labor Department — including choices that could reshape conditions for millions of U.S. workers and stoke conflicts within Trump’s base.

Now the dean of Florida International University’s law school, Acosta served under George W. Bush as a member of the National Labor Relations Board before moving to the Justice Department. During his eight months at the labor board, Acosta sided frequently with management, including in a controversial 2003 decision that found it was legal for a clinic to fire nurses because they started a strike four hours later than they had said they would.

But he hasn’t weighed in publicly on recent policy moves, such as overtime expansion, which Trump’s withdrawn nominee, CKE Restaurants Inc. Chief Executive Officer Andrew Puzder, inveighed against in op-eds and on television.

“I think the jury is out on who he is,” former Deputy Secretary of Labor Chris Lu, who was appointed by Barack Obama, said of Acosta.

Lu is one of 20 former Labor Department officials who discussed Acosta, nearly all of whom said they expect him to bring a conservative approach more in line with Bush’s Labor chief Elaine Chao than her Obama-appointed successors. But none are certain what he’ll prioritize, or how he’ll navigate some thorny issues awaiting him at the Labor Department.

“Acosta, who is as traditional a conservative Republican as there is, will be caught in this back-and-forth between the populist Trump and the anti-regulatory, business-friendly Trump,” said former acting labor secretary Seth Harris, who served under Obama.

Jettisoning Obama

If Acosta is confirmed, among his most immediate decisions will be how to handle the Obama regulations that business groups have sued to stop, from stricter Occupational Safety and Health Administration standards for cancer-causing silica dust to expanded disclosure requirements for “union-busting” consultants.

Republicans are also trying to undo recent Obama regulations, including a requirement that federal contractors disclose alleged labor law violations, via the Congressional Review Act.

“Most members of the employer community cannot wait for the Department of Labor to jettison everything that happened in the last eight years,” said Paul DeCamp, a management attorney who ran the agency’s Wage and Hour Division under Bush.

Acosta was a management-side attorney and a clerk for Supreme Court Justice Samuel Alito before being tapped by Bush for the labor board.

Trump’s Labor Department has already released a proposed rule delaying Obama’s “fiduciary rule” requiring financial advisers to act in their clients’ best interests, which was slated to be implemented April 10. That delay, a potential prelude to repeal, was blasted by Democrats like Senator Elizabeth Warren, a member of the Health, Education, Labor & Pensions committee that is questioning Acosta on Wednesday.

Acosta’s most challenging and revealing early decision, former Labor officials say, may be how he approaches Obama’s new overtime rule, which would extend coverage to millions of additional white-collar workers by doubling the salary threshold under which even employees designated as managers are owed time-and-a-half pay. Business groups have sued to stop the rule, and candidate Trump cited it as an example of burdensome regulation.

In Trump’s first week in office, the Justice Department asked an appeals court for additional time to consider its position on the rule, which is currently blocked by a preliminary injunction issued in November by a federal judge in Texas.

While the Trump Administration could simply cease defending the rule, that might not resolve the case because the court can grant the Texas AFL-CIO’s request to argue for the rule itself. Also, the language of the district court ruling goes so far that, unless it’s overruled, some management attorneys say the legality of the Bush Administration’s overtime rules could also be called into question.

Exempt Employees

A satisfactory resolution for the Trump Administration is likely to ultimately require a new round of formal rule-making, during which Acosta will get competing advice from fellow Republicans. Some will urge him to lower the salary threshold and also shift the rules in a more pro-management direction by re-writing the definitions of exempt employees’ duties; others, to simply rescind Obama’s changes and go back to the existing rules set in 2004; others, to place the salary threshold at some intermediate point in between Bush’s old salary threshold and Obama’s.

A new rule lowering the overtime threshold would itself be vulnerable to legal challenge, said former Obama Wage and Hour Division administrator David Weil, and politically volatile with Trump’s working class supporters. “This is a direct test of how serious are you about really remembering those folks who’ve been forgotten by the labor market,” said Weil, a Boston University business school professor who spearheaded the new rule at the Labor Department.

Enforcement Shifts

Along with overtime, said Harris, tensions between Trump’s populist rhetoric and pro-business side will play out over the guest worker programs that the Labor Department jointly administers, and is tasked with preventing from undermining wage standards. Acosta has taken a very different tone in the past than Trump, decrying the abuses he saw some undocumented immigrants experience when he was a federal prosecutor, and calling for comprehensive immigration reform.

Labor Department veterans expect that under Acosta, as in past Republican administrations, enforcement agencies will take a less punitive approach to companies, with a shift in emphasis towards working cooperatively. “They’ll definitely be moving more to compliance assistance, helping employers be safe, helping employers be successful,” said Ed Foulke, who ran OSHA under Bush and now represents companies as an attorney. “I don’t think you’ll see the really nasty press releases.”

Opinion Letter

Among the consequential, under-the-radar changes Acosta could make in enforcement would be reviving the “opinion letter” program, which provided companies individualized legal advice that they could use in court to defend themselves against subsequent lawsuits.

Republicans say the program provided clarity that helped improve compliance and avoid litigation; Obama officials, who ended the program in his first term, say it amounted to “Get out of jail free” cards. Acosta is also widely expected to quickly revoke or rewrite the Obama-era “Administrator’s Interpretation” letters that proffered a more progressive view of when workers count as employees rather than contractors, and when companies count as ” joint employers” of sub-contracted staff.

Whatever Acosta wants to do will be complicated by Trump’s proposal for massive budget cuts, including a $2.6 billion reduction at Labor. “Being secretary of a department that is 21 percent less funded is a pretty significant change in his job description, and I would want to know what assurances he has about his ability to influence what that budget is going to look like,” said Sharon Block, who served in the department under Obama.

One area where Republicans have historically focused more of the department’s enforcement resources is at the Office of Labor-Management Standards, which oversees the extensive reporting and disclosure requirements covering unions’ finances and operations. Congressional Republicans in recent years have also urged OLMS to start subjecting to review more non-traditional labor activist groups that aren’t bargaining collectively, like the Restaurant Opportunities Centers United.

“If it talks like a union, acts like a union, it should file like a union,” said former Trump transition team member Vinnie Vernuccio, who directs labor policy for the Mackinac Center for Public Policy.

Topics Legislation

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