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DOL Watchdog’s Exit Creates Crucial Virus Oversight Vacancy

June 3, 2020, 8:16 PM

The surprise announcement of the Labor Department inspector general’s impending retirement creates a leadership vacancy at a moment when Congress is placing high expectations on the watchdog to conduct independent oversight of the unemployment insurance system and other virus-response efforts.

DOL Inspector General Scott Dahl caught department leaders by surprise by announcing Tuesday that he will retire on June 21 after seven years on the job, three senior DOL officials told Bloomberg Law. Dahl, who was nominated by former President Barack Obama, notified Labor Secretary Eugene Scalia on Tuesday of his decision, before a statement was released, one of the sources said.

The 57-year-old watchdog’s statement said his decision was “long in the works” and was made “for entirely personal reasons.” He said he was not “told or asked to resign.” The announcement follows the Trump administration pushing out or firing of several agency watchdogs in recent weeks, a trend that has drawn protests from Democratic lawmakers and good-government groups.

Now, the White House and Scalia must find a successor to lead the Office of Inspector General while its investigators conduct multiple new audits of the DOL’s response to the Covid-19 pandemic, including efforts to police unemployment insurance fraud and review occupational safety enforcement. The position requires Senate confirmation, though an acting leader could be installed immediately, and some Democrats already are calling for a replacement who will be committed to independent oversight.

‘Certainly a Concern’

Some former department officials raised concern about the timing of Dahl’s exit. The inspector general, who recently has criticized elements of the department’s pandemic response, has deep knowledge of DOL’s programs, and his departure creates a big hole at the IG’s office as it faces pressure to ensure that efforts to help U.S. workers recover from the economic crisis are effective, they said.

“The Trump administration has shown a blatant disregard for the role of independent IGs in executive agencies,” said David Weil, who was head of the DOL’s Wage and Hour Division under Obama. “There has never been a more important time to have experienced, independent, and responsible IGs who take seriously the need for agencies to fulfill their statutory duties.”

“This is certainly a concern for questions arising around the adequacy of the DOL response to Covid-19 in regards to worker safety and health, implementation of the FFCRA and CARES requirements, and its ongoing record of pushing through regulations that relax worker protections,” he added, referring to two major virus-response laws.

The $2.2 trillion CARES Act gave the IG’s office $26 million to conduct audits of how various DOL subagencies are responding to the pandemic, and to work with state workforce agencies to root out fraudulent claims for jobless benefits. Dahl’s successor will be tasked with evaluating how the federal and state governments are serving the public during the pandemic, said Jane Oates, who ran the DOL’s Employment and Training Administration under Obama.

“I’m very disappointed to hear that he’s leaving,” said Oates, who was frequently the subject of IG audits over her response to the Great Recession. “This is somebody who would’ve done a really good job of audits. It’s not just information that points to a problem; it points to a solution because it tells you what states are doing wrong.”

The expansion of unemployment insurance benefits to respond to the wave of unemployment triggered by the coronavirus also has increased the potential for criminal impostor schemes, with a number of scams already having been uncovered. The IG is working with law enforcement and states to ensure taxpayer dollars are only paying benefits for eligible laid-off workers.

One former DOL leader during the Trump administration said the internal watchdog office shouldn’t have difficulty maintaining tough scrutiny of department actions after Dahl departs.

“While leadership transitions always pose challenges, I would expect that oversight on Labor’s coronavirus response will continue to be a top priority for OIG,” said Jonathan Berry, who stepped down in April as head of the DOL’s policy office.

Successor Unknown

It wasn’t clear who would replace Dahl. A career deputy inspector general could be made acting IG on an interim basis before President Donald Trump nominates a permanent replacement.

“The Inspector General is a Presidential Appointee with Senate confirmation and announcements on nominees will come from the White House,” a DOL spokeswoman said in a statement, adding that the DOL “is working thoroughly to curb fraud, waste, and abuse during the implementation of laws connected to COVID-19.”

A pair of House Democrats warned the White House not to follow its recent blueprint by replacing Dahl with a political appointee from elsewhere in the agency, as it did when it sacked the State Department’s IG last month.

“The Department of Labor is currently overseeing the largest expansion of unemployment benefits in American history and is tasked with enforcing OSHA protections,” said House Oversight and Reform Committee Chair Carolyn B. Maloney (D-N.Y.) and Subcommittee on Government Operations Chair Gerry Connolly (D-Va.), in a joint statement. “This demands an independent Inspector General, not a political appointee who will be subject to pressure and undue influence from the White House.”

Dahl’s announcement came a day after he told a congressional panel during a public briefing that he was surprised that DOL’s Occupational Safety and Health Administration had issued only one workplace safety citation related to Covid-19 as of May 27.

His office also publicly clashed with DOL leadership last week over an interpretation of a critical provision in virus-relief law that extended unemployment insurance to freelancers and others not typically eligible for jobless benefits.

An assistant IG wrote in a memo that the department’s guidance encouraging states to pay jobless benefits to gig-economy workers without requiring earnings documentation has made the new benefits program “highly vulnerable” to fraud. This rift with DOL leaders led Dahl’s office to recommend the department consult Congress.

The White House didn’t comment when asked to respond. A spokesman for the IG declined to comment beyond what was included in Dahl’s statement Tuesday.

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

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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