Punching In: Mr. Scalia Goes to the Labor Department

Monday morning musings for workplace watchers

What to Expect from Gene |Congress Comes Up for Air | AB-5 to the Big Apple?

Ben Penn: Hopefully somebody remembered to clear the dust and give a nice shine to the labor secretary’s office over the weekend. After a 10-week closure, the chambers will be re-opened for new head honcho of the Frances Perkins Building this week.

Gene Scalia’s swearing in is scheduled for today at 2. This allows us to switch gears and focus on what’s in store for the remaining 15-plus guaranteed months of this administration. Is that enough time for Scalia to carve out his own agenda, including new initiatives that likely would require a second Trump term for them to be implemented and enforced? Or will he be more focused on the timely completion and legal endurance of the regulatory agenda already in the pipeline?

That will be an ongoing debate for Labor Department leadership heading into an election year. Looming decisions about how to allocate staff and other resources will at least partially depend on who occupies the Oval Office in Jan. 20, 2021.

I’ll be previewing the Labor Secretary Scalia term in more detail later this week. But for now, here are a few points to consider.

Scalia is viewed on both sides of the aisle as a thoughtful and well-versed labor and employment practitioner. After a prior stint at DOL and decades representing big companies on labor matters, he’s surely accumulated ideas on how he’d like to improve the workplace policy landscape and the department’s bureaucracy. But some of the major rulemakings such as overtime, joint employment, and apprenticeship, all could be subjected to legal challenges over the next year. Scalia’s best shot at achieving a legacy may be to flex his administrative law chops by helping his team defend these rules in court so that they stand the test of time.

None of this is to suggest that Scalia has signed up to be a yes man for this administration. Those who know Scalia say he wouldn’t have sacrificed his seven-figure Gibson Dunn salary just to be Trump’s figurehead who will deliver on all of Mick Mulvaney’s desires.

One source close to the situation says White House labor policy adviser James Sherk will have a tough time pushing Scalia around, and that more likely, it will be Scalia doing the bulldozing. Sherk has been empowered this year by Trump’s acting Chief of Staff Mulvaney to pressure DOL into advancing a faster-paced, more aggressive deregulatory agenda. He had a close ally in that effort with acting Labor Secretary Pat Pizzella.

Scalia is unlikely to try to disrupt that chemistry. But if Sherk or anyone else at the White House pushes a policy move that Scalia doesn’t think aligns with the agency’s mission or isn’t legally defensible, things could get testy.

We all should be on the lookout for one possible first of order of business for Scalia as secretary. The DOL will be releasing as soon as today a proposed rule on tip pooling that immediately will test the secretary’s ethics pledge to recuse himself from cases in which he has possible conflict of interest. Scalia represented the Wynn Las Vegas in a legal challenge to an earlier and distinct iteration of this rule from the Obama administration.

Jaclyn Diaz: What a week—for so many reasons. There was plenty going on in Capitol Hill impacting labor and employment even in the middle of the impeachment controversy. Here’s a rundown of what happened.

• Despite Democratic and union grumbling, the Senate HELP Committee approved Scalia as labor secretary Sept. 24 and the full Senate gave its OK Sept. 26.
• Legislation that would make sweeping changes to federal labor law advanced out of the House Education and Labor Committee on Sept. 25 to move closer to a floor vote likely before the end of the year, maybe even as soon as Congress returns from its two-week recess. The committee approved the Protecting the Right to Organize Act (H.R. 2474) in a 26 to 21 vote.
• House Democrats are working to re-introduce the Payroll Fraud Prevention Act, which would penalize companies that wrongly classify their workers as independent contractors rather than employees.
• And finally, the Senate Appropriations Committee approved funding for the Equal Employment Opportunity Commission. Included in that bill is a request that the agency provide information on the processing of charges in the past five fiscal years. If enacted, the agency would have to report back to the committee within 30 days.

Even with all of the craziness last week (or maybe because of it), Congress decided to continue with its scheduled two-week recess, ignoring calls by some members to stay in D.C. Lawmakers return Oct. 15. While Congress is out, I’ll dive into the recent effort by unions and lawmakers to push a collection of bills targeting climate change. The New Democrats released a list of 12 bills—seven of which are bipartisan—that they believe will offer workable solutions. Those proposals have the support of unions such as the Utility Workers of America. Some lawmakers told me there’s been a sea change on union and Congressional support for climate change legislation.

Chris Opfer: Wednesday marks Week Two of life under AB-5 in California. The sky hasn’t yet fallen in the Golden State, after Gov. Gavin Newsom (D) signed the law making it a lot tougher for companies to classify workers as independent contractors instead of employees. Management lawyers bemoaning the end of the world as they know it are turning their attention to the courts. Judges soon will likely see cases involving Uber Technologies Inc. and other gig employers ready to argue that their workers still meet the more strict “ABC” test for contractor classification.

It appears New York could be the next laboratory for workplace democracy. Gov. Andrew Cuomo (D) recently told Crain’s New York that he wants to update state law to make more workers traditional employees, with the wage-hour, unionizing, workers’ compensation, and unemployment insurance benefits that come with that status. The state is stepping up efforts to retrieve back payroll taxes from companies that misclassify workers as contractors. Meanwhile, worker advocates have formed a coalition to urge lawmakers in Albany to get on the stick and start moving legislation similar to AB-5.

Cuomo recently said the news that California was moving to reshape the rules of worker classification game got his “competitive juices flowing.” Other states are already ahead in the race to make “ABC” the law of their land. Lawmakers in Washington and Oregon introduced similar legislation earlier this year.

We’re punching out. Before we do, here’s a friendly reminder that today is the deadline for many employers to send worker pay data to the Equal Employment Opportunity Commission. The EEOC as of Sept. 27 was still awaiting data from about half of the employers required to submit it.

Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us: copfer@bloomberglaw.com, bpenn@bloomberglaw.com, and jdiaz@bloomberglaw.com or on Twitter: @ChrisOpfer, @BenjaminPenn, and @jaclynmdiaz.

See you back here next Monday.

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