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Labor Chief Scalia Reins in Review Board, Earning Mixed Reviews

Feb. 27, 2020, 7:34 PM

Labor Secretary Eugene Scalia’s newfound authority to overturn rulings from the department’s legal-review panel gives attorneys an extra avenue to dispute decisions, but it could expose the labor chief to criticism that he’s politicizing the process and increasing opportunities for lobbying.

Scalia announced last week, in his first secretary’s order since assuming control of the Labor Department five months ago, that he will review opinions issued by the department’s Administrative Review Board. The five-member panel handles a wide range of labor and employment cases.

The review board hears appeals from parties that disagree with a decision from one of the department’s administrative law judges. The cases usually involve employer-employee disputes, but DOL subagencies can also be on either side of an appeal. The board’s rulings, which frequently pertain to consequential cases involving whistleblower protection and allegations of discrimination by federal contractors, serve as the department’s final decision on the matter, which parties can then appeal to the federal courts.

The board’s five members are appointed by the secretary to serve as his voice in the appeals process. Since the panel’s creation in 1996, the labor secretary has never had the capability, until now, to overrule the board or issue a decision of his or her own.

Scalia, by expanding his oversight of internal judicial decisions and carving out authority to have the final say, delivered his strongest message to date that he will be personally accountable as secretary for all legal and enforcement actions taken by the sprawling, 15,000-employee agency. Nearly five months into Scalia’s tenure, outside attorneys say they’re beginning to observe a culture change at the department toward a political leadership that is committed to transparent, uniform enforcement.

The veteran management-side labor and employment litigator first outlined his focus on personal accountability and enforcement consistency during a speech before the Federalist Society convention in November.

Some lawyers who have represented clients before the review board said they were intrigued by the prospect of appealing unfavorable decisions to Scalia, while others said they were troubled that the secretary effectively upended 24 years of review-board protocol.

“The idea that this is an impartial, quasi-judicial panel is blown to smithereens because the secretary, if he gets lobbied by one party or the other, can simply overturn what the board has decided,” said Seth Harris, who advised then-Labor Secretary Robert Reich when the review board was created.

‘Exceptional Importance’

Scalia’s order outlined a process for the secretary to step in to review cases of “exceptional importance"—either after a party petitions to appeal a decision or after the secretary personally exercises authority to review a decision at their “sole discretion.”

“The option of secretarial review is a means of ... ensuring accountability and oversight for the Department as a whole,” a DOL spokeswoman said in a prepared statement when asked about criticism that the order could invite lobbying. “In the event the Secretary does decide to review an ARB decision, he will do so in full accordance with the laws governing how the Department decides administrative appeals.”

Prior to the review board’s establishment, labor secretaries personally issued all adjudications. Reich and his team believed that was an inefficient use of a labor chief’s time. They also wanted to transfer that power to a judicial panel so cases wouldn’t be judged purely through a political lens, said Harris, who went on to become deputy and acting labor secretary under President Barack Obama. Similar administrative boards exist inside agencies throughout the government, including at Health and Human Services and the Social Security Administration.

The DOL spokeswoman noted in her statement that the secretary will “as a general matter” determine which cases warrant review in consultation with the review board, whose members will screen attorney petitions for the secretary. But the order also permits the secretary to direct the board to refer any case to the secretary’s desk for review, regardless of whether a party has exercised the formal petition process.

Scalia’s order was issued several weeks after the U.S. Court of Appeals for the Eighth Circuit remanded a review board decision, concluding the panel applied the wrong discrimination standard in a case involving a locomotive engineer. The review board concluded that the engineer was unlawfully retaliated against by a railroad company when he was suspended after he reported an allegation of improper conduct on the part of a co-worker.

The labor secretary now joins the heads of some other government agencies who also retain discretionary review power over their agency’s adjudication panel decisions, including at the departments of Justice and Education.

No ‘Rogue’ Decisions

David Fortney, a former acting labor solicitor during the George H.W. Bush administration who now advises employers in cases before the review board, said he’s not sure how often he’d go about petitioning the secretary to appeal a decision. But he said Scalia’s order is a promising development.

“This says to me that Scalia is personally going to ensure that these decisions made by the ARB in fact comport with the principles—both rule of law and the president’s executive orders,” Fortney said. “I think that, on its face, it sounds modest—it’s not. It is terribly important because every major program that the Labor Department administers and enforces largely goes through the ARB, and this will ensure that there aren’t rogue decisions.”

The secretary’s review process may influence cases even without their intervention because the panel will “have its own institutional interest in not wanting to be reversed or modified by the secretary,” Fortney added.

Review board members serve four-year terms, which can be extended or terminated at the secretary’s pleasure. The panelists aren’t categorized by political party, but previous secretaries tended to select individuals for board posts who were generally aligned with the administration, former DOL officials said.

The panel has two vacancies, giving Scalia additional opportunities to put a stamp on the process. The three current members were all appointed by his predecessors, Alexander Acosta and Patrick Pizzella

Go to Court? Or Petition the Secretary?

Before Scalia gave himself the new authority, employers receiving review board decisions against them were likely to immediately appeal to district court, alleging an Administrative Procedure Act violation, said Christopher Wilkinson, an attorney who represents employers as a partner at Orrick in Washington.

The secretary’s order gives clients “an extra step before running to the court to file an APA action, which can in a limited manner be another avenue to get a favorable decision,” said Wilkinson, a former DOL associate solicitor. “But if I was advising a client, I would give them a very small chance of winning at that level, and just tell them to start drafting their district court papers.”

Anuj Desai, a former review board member appointed by Obama Labor Secretary Thomas Perez, described as “very plausible” the concern of political influence and lobbying Harris cited. However, “if anything untoward happens in the procedures within the agency,” that just provides the party the secretary rules against with grounds for an appeal to the private courts, said Desai, now a law professor at the University of Wisconsin-Madison.

Desai predicted that scenarios in which a secretary will intervene will more likely involve important legal matters in which the review board is split and the majority decides in a manner with which the secretary disagrees.

Regardless of when secretarial review takes place, it’s comforting to know that Scalia or a future secretary will provide a “backstop,” if necessary, Fortney said.

“The order is clearly styled in that the vast majority of the ARB decisions will not be reviewed by the secretary, nor should they be,” he said. “For my clients’ sake, I hope we never have to take advantage of it, but it’s there.”

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

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com

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