Mulvaney Tightens Grip on Labor Chief After Trump Allies Grumble

President Donald Trump‘s acting chief of staff, Mick Mulvaney, has seized power over the Labor Department’s rulemaking process out of frustration with the pace of deregulation under Labor Secretary Alexander Acosta, according to current and former department officials and other people who communicate with the administration.

Upon arriving at the West Wing in January, Mulvaney instituted a formalized system for settling regulatory policy and timeline disputes between White House assistants and Acosta’s top aides, said people with direct knowledge of the process.

Conflicts are elevated to Mulvaney for a final decision, said one official with direct knowledge. Acosta and his staff have been losing these decisions so often that they’ve stopped bothering to appeal, said current and former DOL officials.

This has led to an acceleration of previously languishing rules on overtime pay, job training, and workplace safety that businesses have sought during the first two years of Trump’s administration. The White House intervention also signals more contentious regulations—such as rules to bolster union oversight or restrict workers from taking medical leave—could now be in the pipeline at a department that appears less likely to embody its secretary’s risk-averse style for the remainder of Trump’s presidency.

“Acosta wasn’t really interested in getting those rules done until Mick Mulvaney started taking over, and then everything started moving at the department because Mulvaney doesn’t mess around,” a former Trump administration official said, referring to deregulatory actions across DOL. “When Mulvaney took over, they started scrambling to try to make up for lost time.”

The Labor Department “declines to comment on internal administration processes,” an agency spokesperson said in a statement.

Acosta Under the Gun

Mulvaney’s keen interest in labor policy comes at a time when the secretary’s position in Trump’s orbit is weakened by rekindled public outrage over a decade-old plea deal Acosta reached, as a South Florida federal prosecutor, with billionaire and accused sex-trafficker Jeffrey Epstein.

A federal judge recently ruled that Acosta and others broke the law by keeping Epstein’s accusers—including girls as young as 13—in the dark about the 13-month prison deal that allowed Epstein to escape prosecution for federal sex-trafficking offenses. The Justice Department’s Office of Professional Responsibility has also launched an investigation.

But the real source of the Mulvaney-Acosta tension was complaints, relayed to Mulvaney by White House aides shortly after he became acting chief of staff, that Acosta and his advisers were slow-walking rules and misleading the White House about the agency’s progress towards meeting the president’s repeated promise to remove “job-killing” regulations.

Mulvaney inserted himself as an arbiter at a lower-profile Cabinet agency, despite already juggling numerous other responsibilities. Those include advising Trump as he defends himself from Democratic subpoenas and calls for his impeachment in the aftermath of the Mueller report; maintaining order at a White House amid the early stages of the 2020 re-election campaign; and continuing to direct the Office of Management and Budget.

The Labor Department’s discord played out publicly May 14 when the DOL announced that Acosta’s chief of staff and most loyal aide, Nicholas Geale, would resign May 31. The White House budget office, under Mulvaney’s leadership, conducted a probe that uncovered claims Geale was abusive to staff and misled the White House on deregulation.

To be sure, Acosta has delivered on big-ticket White House priorities such as taking steps to improve America’s job training system and the expedited completion of a regulation designed to boost small-business health plans. But even the health plan rule is now in jeopardy after a federal judge invalidated it in March, limiting the potency of the president’s argument to voters that he was creating a less costly alternative to the private market under the Affordable Care Act.

“The Department of Labor was the second most deregulatory agency in the administration in FY18, accounting for $3.28 billion in deregulatory impact of $23 billion savings administration-wide,” the DOL spokesman said.

The $3.3 billion total includes rules that haven’t taken effect due to court rulings.

Empowering Sherk

Until Mulvaney’s arrival in the West Wing, Acosta—buoyed by an alliance with Trump’s daughter and senior adviser, Ivanka Trump, on workforce development efforts—fended off politically risky regulatory ideas pitched by presidential aides, Bloomberg Law reported in August.

Mulvaney was the principal architect of Trump’s deregulatory agenda in the administration’s first two years. His elevation to the president’s most senior adviser came with the authority to ensure all agencies were enforcing this initiative.

At about the same time White House staffers were telling Mulvaney about missed deadlines at DOL and unfulfilled promises from leadership, the management bar was circulating a draft letter to Acosta, outlining employers’ concerns with the speed of regulations, sources involved in the process said. The criticism highlighted the necessity for the agency to finalize major rules expeditiously to protect them from repeal if Democrats take over the White House in 2021.

They were gearing up to go public, or at least to use the threat of such as leverage on the White House and a labor secretary known to strongly prefer keeping his name out of the headlines, one of the letter drafters said. A White House representative requested that the authors hold off on sending it, the source said. Within a few weeks, the first in a series of rules that businesses wanted went public.

Under Mulvaney’s direction, three White House assistants now attend regular meetings with DOL officials in which rulemaking debates are hashed out and if necessary, elevated, the current and former Labor Department officials and others familiar said.

One is James Sherk, a labor and employment adviser at the White House Domestic Policy Council who was losing policy battles with Acosta at earlier stages in the administration. Sherk entered the administration after a decade as a labor economist at the Heritage Foundation, where he forged a bond with corporate lobbyists by crusading against union rights and minimum wage hikes.

He is joined in the room by Rosario Palmieri, a senior counselor to the White House regulatory chief, and Jennifer Dickey, who handles labor issues for the White House counsel’s office. Palmieri cut his teeth criticizing Obama-era workplace policies as vice president for labor policy at the prominent industry group the National Association of Manufacturers.

Wage Rules Rescued

A 25-day period earlier this year represented the clearest manifestation so far of Mulvaney’s system at work. A single DOL subagency with a miniscule-by-federal-government-standards $230 million annual budget released major proposed rules on March 7, March 28, and April 1.

The three Wage and Hour Division proposals—all labeled deregulatory actions—are among the highest-ranked labor rulemaking priorities for employers this year, according to lobbyists for business groups.

The first would expand overtime pay coverage to some 1 million Americans, or about one-fourth as many workers who would’ve received time-and-a-half wage eligibility under the Obama DOL’s version of the regulation.

The second proposal clarifies when employers can exclude worker benefits from the “regular rate” that is multiplied by 1.5 to set the overtime pay level for hours beyond 40 in a week. Once finalized, this initiative would shield businesses from costly litigation alleging they shorted workers’ paychecks.

Finally the WHD proposed April 1 to narrow the joint employment liability for franchises, staffing firms, and other employers. This would make it significantly tougher for a worker at a McDonald’s franchise, for instance, to sue the corporation, rather than just the franchisee, for unpaid wages.

“The next thing you know, boom: Overtime, regular rate, joint employer,” an industry association lobbyist recalled with delight.

Regulation Agenda Clues

The administration’s semiannual regulatory calendar published May 22 revealed the department plans to initiate more deregulatory moves that conservatives and businesses had been pining for—previously to no avail—since Acosta took control of the agency in spring 2017.

A proposal implementing Trump’s 2017 executive order to streamline and expand the federal apprenticeship system is estimated for release next month and is under final review at the White House.

There were several additional deregulatory actions and other previously unannounced plans posted to the rulemaking slate, including a proposal to give employers more flexibility in how they compensate workers; a request for input on modifying the Family and Medical Leave Act; a regulation that would modernize quality control of the federal-state unemployment insurance system; and an update to how unions are audited.

Department-Wide Progress

The White House and DOL didn’t address questions on whether Mulvaney’s intervention at DOL is responsible for the rulemaking expansion, but several of the topics intersect with Sherk’s history of pro-management policy recommendations.

Mulvaney, who once owned a local chain of franchised Mexican restaurants and has met regularly with industry lobbyists and CEOs since joining the administration, is now receiving praise from trade groups for grabbing the reins.

“I believe that Mulvaney’'s background and greater interest in domestic policy issues was instrumental in getting activity occurring at DOL; the events would prove that to be true,” Roger King, senior employment counsel at HR Policy Association, said. HR Policy is a Washington trade group with board member seats filled with executives from Boeing, American Express, AT&T, and other Fortune 500 companies.