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Biden Labor Agenda Chugs Along as Senate Falters on Nominees (1)

June 10, 2022, 9:00 AMUpdated: June 10, 2022, 8:20 PM

High-profile Senate defeats for two of President Joe Biden’s picks for top US Labor Department posts haven’t stopped those agencies from making substantive moves on progressive regulatory actions—in fact, they’re quickly proceeding.

The US Senate failed to confirm Lisa Gomez to serve as head of the department’s Employee Benefits Security Administration June 8, after Republican Senator Lisa Murkowski (Alaska) switched her stance following two “yes” votes in committee. Though the vote is likely a temporary setback, it follows the defeat of David Weil, Biden’s nominee for the Labor Department’s Wage and Hour Division, earlier this year.

Still, the Labor Department’s employee benefits and wage-focused agencies are cruising forward with rulemakings on the inclusion of environmental, social, and governmental factors in retirement investing, worker classification, and other proposals.

ESG Delays

Gomez is no stranger to setbacks in the confirmation process. Her first committee vote was delayed by Republican opposition to a proposed employee benefits agency rule easing restrictions on do-good retirement investing—one of several regulations the agency is moving ahead on, regardless of the leadership vacancy.

“That’s the frustration that industry is having with this process,” said Chantel Sheaks, vice president of retirement policy at the US Chamber of Commerce. “You’re holding against someone something they had nothing to do with instead of the people who are accountable.”

EBSA has lacked Senate-confirmed leadership since Trump-appointed Assistant Secretary Preston Rutledge stepped down to join the private sector in May 2020. Under the Biden administration, acting heads have led the agency through a flurry of rules and revised enforcement priorities.

Acting heads aren’t held accountable to Congress the same way Senate-confirmed appointees are, Sheaks added. To the extent that lawmakers are unhappy with EBSA’s work, she said Congress could confirm Gomez’s nomination and then grill her on it themselves.

“Just because there’s not a political appointee there doesn’t mean the agency will stop working, but the career staffers doing that work won’t be hauled before Congress to answer for it,” she said.

The agency has come under fire and is facing at least one lawsuit over its strongly worded guidance warning 401(k) plan decisionmakers to steer clear of cryptocurrency investments. Guidance on cryptocurrency, cybersecurity, and missing benefit plan participants have all informed the department’s enforcement priorities.

“It seems like informal guidance is very effective, financially feasible, and will sometimes stand up as much as any regulation would in court,” said Susan Rees, a benefits attorney at The Wagner Law Group LLC and a former division chief at EBSA’s Office of Regulations and Interpretations.

Regulatory Momentum

Gomez’s quasi-defeat comes just weeks after the Senate rejected Weil. That failed vote was slightly different from Gomez’s because it was the result of a months-long lobbying campaign against him, and three moderate Senate Democrats ultimately voted to oppose his nomination.

But that hasn’t slowed down the wage division’s rulemaking agenda under Jessica Looman, a former executive director of the Minnesota building trades coalition who has been leading the agency in an acting capacity since June 2021.

On Looman’s watch, the agency rolled back the Trump DOL’s joint employer and independent contractor rule last year, and launched new regulations on calculating prevailing wages, as well as overtime eligibility.

The agency also announced a pair of public listening sessions to seek input on a new independent contractor rule later this month.

WHD also scheduled an “invite only” forum with labor and worker advocacy stakeholders Friday afternoon, according to an email reviewed by Bloomberg Law. In response to a request for comment as to why these forums weren’t publicly disclosed, a DOL spokesperson said: “The Department has been engaging on this topic since the beginning of this Administration.”

“Both the Secretary and senior leaders in the Department have met with industry and worker advocates alike,” the DOL spokesperson said. “Now, we are continuing that engagement and have scheduled forums for the public to provide input.”

That momentum could be stymied now that there’s no longer a pending nominee for the WHD administrator position, due to limits under the Federal Vacancies Reform Act. That law limits how long non-Senate confirmed officials can lead an agency in an “acting capacity” to 210 days after a vacancy begins.

Because the administration had been confident that Weil would be confirmed by the Senate, there wasn’t a clear back-up in place for when his vote failed, meaning the clock has been running since Weil withdrew from consideration in April.

White House spokesperson Alexandra LaManna said in a statement that the administration is “actively working to put forward another well-qualified nominee for this important position.” The Labor Department declined to comment on a potential nominee.

Still, if the administration chooses Looman to fill the position permanently, the FVRA also prevents acting officials from serving in positions for which they’re nominated, meaning the administration would have to find another official to serve as acting chief until the Senate confirms her.

The president also has the option to do nothing. If Biden doesn’t nominate anyone else to the position, Labor Secretary Marty Walsh would be able to delegate some or most of the duties of administrator to Looman, allowing her to still lead the agency.

But oversight advocates have warned that the absence of Senate-confirmed leadership could leave the agency in a legal gray area, and attorneys say having a Senate-approved head does make a difference.

“I think it gives them more authority,” said Michael Lotito, co-chair of Littler Mendelson P.C.'s Workplace Policy Institute. “But, given the partisan nature of what’s been happening over the last several years, I can certainly understand why an agency will want to proceed even though it’s difficult for them to get their preferred individual as the head of the particular department.”

Senate Stumble

Murkowski voted against Gomez’s nomination because she believes the employee benefits agency is “focused on trying to exclude oil and gas opportunities in pension funds,” she said Thursday. It’s a stance Murkowski views as “problematic.”

The Alaska lawmaker said she voted to move Gomez’s nomination out of the Senate Health, Education, Labor and Pensions Committee “because I wasn’t there at the committee to ask the questions, and the beautiful thing about having the chance to have some time after a committee vote and before a floor vote is so that you can do more due diligence, and that’s what I did.”

When asked about whether Senate Democrats were expecting her to vote “yes” on Gomez on the floor, Murkowski said “one should never assume anything about another person’s vote, should they?”

Murkowski declined to say whether Senate Majority Leader Charles Schumer (D-N.Y.) or other Senate leaders checked in with her before the floor vote. Senate Majority Whip Richard Durbin (D-Ill.) said Thursday that Murkowski had been expected to vote in favor of Gomez.

Gomez still stands a chance of being confirmed soon, since Schumer changed his vote at the last minute in order to make it easier for him to stage another floor vote. Vice President Kamala Harris would have been required to break the tie, which she couldn’t do June 8 because she was in California, according to her public schedule.

Senate HELP Chair Patty Murray (D-Wash.) said there wasn’t an expectation that Harris would be on Capitol Hill to break the tie. Murray predicted the Senate will confirm Gomez.

“We’ll get it back, it’ll happen,” Murray said.

(Editor’s Note: Gomez is co-chair of the Board of Senior Editors for Bloomberg Law’s Employee Benefits Law treatise.)

(Updated with additional reporting and comments from the DOL.)

With assistance from Zach C. Cohen

To contact the reporters on this story: Paige Smith in Washington at psmith@bloomberglaw.com; Austin R. Ramsey in Washington at aramsey@bloombergindustry.com; Rebecca Rainey in Washington at rrainey@bloombergindustry.com

To contact the editors responsible for this story: Genevieve Douglas at gdouglas@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com