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Harder-Charging Patrick Pizzella Takes Labor Reins From Acosta (1)

July 12, 2019, 2:33 PM

Labor Secretary Alexander Acosta’s exit paves the way for longtime GOP government official and management ally Patrick Pizzella to become acting labor secretary.

Pizzella, who has been Acosta’s deputy since 2018 and is a former lobbying partner of disgraced business lobbyist Jack Abramoff, is seen by associates on Capitol Hill as a harder-charging advocate for industry interests and more inclined than the cautious Acosta to rapidly reverse Obama-era policies that favored certain workers and unions.

“I think we will see a quicker pace of change, and I am more confident that the Wage and Hour Division will complete its work on the overtime exemption, regular rate, and joint employment regulations,” said Tammy McCutchen, a former GOP Wage and Hour chief and current attorney for businesses. She’s referring to a trio of recently issued proposed rules that are a high priority for businesses. The rules would clarify who’s eligible for overtime pay, what types of compensation qualify for overtime time-and-a-half wages, and would narrow corporations’ shared liability with affiliated businesses for pay violations.

Acosta, a veteran government lawyer who faced criticism for stalling business-favored policies by diving into the weeds on the department’s legal matters, now passes the baton to Pizzella to lead a sprawling agency with a $12 billion budget. The Labor Department is responsible for overseeing job training programs, auditing labor union finances, enforcing worker pay and safety laws, and combating forced labor. Pizzella was a senior DOL official for nearly all eight years of the George W. Bush presidency.

Pizzella arrives at a critical juncture for the Labor Department, which is trying to finalize a number of regulatory initiatives before the end of President Donald Trump’s first term. The Trump administration and business community lobbyists want those agenda items finished by early next year, so that they’re harder to undo if a Democrat unseats Trump in 2020.

When he was first sworn in as deputy at the Labor Department in 2018, Pizzella’s longtime allies in employer circles grew optimistic about a change in tone at the agency. They held out hope that his arrival would bring relaxed enforcement strategies, especially given that some investigators continue to interpret current law under what they see as the more punitive approach of the Obama administration.

“I think it would be important for Pat to send a signal that there is a new sheriff in town and enforcement needs to be well balanced with voluntary compliance efforts, in terms of helping employers comply with the law,” Randy Johnson, who heads government affairs at management firm Seyfarth Shaw in Washington, said last year. Johnson has known Pizzella for years, including throughout Johnson’s 20-year tenure heading labor policy at the U.S. Chamber of Commerce.

With Pizzella’s role limited as Acosta’s No. 2, the department has been reluctant to sign off on a series of more aggressive policies advocated for by groups such as the National Right to Work Foundation that push for limiting unions’ rights. It remains an open question whether Pizzella will now be able to greenlight these initiatives, such as reviving a George W. Bush-era office that audited international labor union finances.

What happens next “is partly going to be based on the fact we’re heading into the heavy political season,” said David Weil, a DOL agency head under Obama who is now dean and professor of the Heller School for Social Policy and Management at Brandeis University. “Are they going to come out with bold new policies that are going to be on the face anti-worker? I don’t think so at this point. But just moving forward with the initiatives that they have taken is bad news.”

The president will be courting union votes for his re-election campaign, potentially hampering Pizzella’s ability to carry out policies that could be perceived as harassing the labor movement.

Other sources were pleased with Pizzella’s appointment, noting that he has decades of experience in government service. As deputy for the past year he has been mostly relegated to operations, without a significant policy portfolio.

The White House has yet to announce if Pizzella or another internal DOL official will be tapped as the nominee to become permanent labor secretary.

“Based on how cabinet picks have gone so far ... my money would be on a nominee from outside of the Department, perhaps someone with strong support from the business community and who shares the President’s commitment to a deregulatory agenda,” emailed Paul DeCamp, a former Republican Labor Department agency head who now represents businesses. “Given the timing relative to the 2020 election, the identity of the next Secretary takes on its full significance only if the President wins reelection.”

FLRA Dissents, Ties to Abramoff

Pizzella cemented his pro-management reputation during his most recent pre-DOL position as a member of the Federal Labor Relations Authority. He was Obama’s pick to serve as the three-member board’s sole GOP representative. This meant he consistently wrote dissents that sided with federal sector management when the panel’s two Democrats issued majority decisions in favor of unions.

Zachary Henige, who worked for Pizzella as the FLRA’s deputy solicitor, recalled attending a training with numerous management representatives in the crowd. “They raised their hands and thanked Member Pizzella for his dissents,” Henige, now an attorney for unions with Kalijarvi, Chuzi, Newman & Fitch in Washington, said in 2018. “So it wouldn’t surprise me if the management-side folks moving forward will continue to enjoy what Deputy Secretary Pizzella will do.”

Democrats and worker advocates have gone further in their criticism of Pizzella. Prior to his confirmation, they called attention to Pizzella’s work for notorious lobbyist Jack Abramoff in the 1990s. The Senate wound up narrowly confirming Pizzella in April 2018 on a 50-48 party-line vote.

Pizzella cut his teeth working for Abramoff in the 1990s. Abramoff was the subject of one of the largest congressional lobbying scandals in recent history and was sentenced to federal prison after pleading guilty to fraud, tax evasion, and conspiracy to bribe public officials.

Pizzella was never suspected of or charged with any crimes related to the investigation or to his work with Abramoff.

Pizzella worked at the law firm Preston Gates on the Abramoff lobbying team. The team worked on behalf of the Commonwealth of the Northern Mariana Islands to oppose the extension of federal labor and immigration laws to the U.S. territory, according to government filings and a former colleague of the two who spoke on condition of anonymity in a 2017 interview.

“He has a lengthy and well-documented history as a highly-paid lobbyist who advocated to perpetuate conditions for workers in the Northern Mariana Islands that were nothing short of indentured servitude,” Judy Conti, government affairs director at the National Employment Law Project, said in 2018.

The CNMI came under congressional scrutiny in 1998, and investigations later revealed that manufacturers there were making goods labeled “Made in the USA” while skirting quotas and labor and minimum wage laws. Human rights groups alleged that foreign laborers were subject to sweatshop conditions, often as indentured servants, and were forced into the sex-tourism industry.

Less White House Tension?

The regulatory and policy progress has been slowed by unfilled seats in a number of key leadership positions, initially due to nominees caught in a Senate confirmation stalemate. But more recently, agency heads and other senior officials have been fleeing the department, as the secretary has chosen to empower a small policy office to usurp the responsibilities traditionally reserved for political and senior career officials at various DOL subagencies. Seven permanent or acting department agency heads have departed since April 2018, two DOL nominees withdrew from Senate consideration, and the new secretary will soon be searching for the department’s third chief of staff this year.

Still, the DOL has quieted some of the criticism by moving long-awaited proposed regulations to update overtime pay requirements and limit shared legal responsibility for affiliated companies. The department is also working on a new apprenticeship program that’s the centerpiece of the Trump administration’s job training agenda.

The department released a proposed rule in June to implement the president’s call for an expansion of the nation’s apprenticeship system, but not without tension between the White House and Secretary Acosta. The secretary and his aides sparred with White House officials over whether to include the construction industry in this proposal, a battle Acosta had won for the moment when the proposed rule excluded construction.

Policy disputes with the White House have proven perhaps a greater source of tension for Acosta this year than his role in Epstein’s prosecution.

When Mick Mulvaney arrived to the West Wing in January as Trump’s acting chief of staff, he instituted a formalized system for settling regulatory policy disputes between White House assistants and Acosta’s top aides. The disagreements were elevated to Mulvaney for a final decision, which almost always led to Acosta’s team losing.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com ; Josh Eidelson in San Francisco at jeidelson@bloomberg.net

To contact the editors responsible for this story: Terence Hyland at thyland@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com