Monday morning musings for workplace watchers
Wage and Hour Clock Ticking | Crypto Exaggeration
Rebecca Rainey: Now that David Weil has officially withdrawn from consideration as the U.S. Labor Department’s Wage and Hour chief, Jessica Looman, the acting head of the division, faces a countdown to how much longer she can serve in that position … at least sort of.
Under the Federal Vacancy Reform Act, officials are only permitted to serve in an “acting position” for 210 days after a vacancy begins. Because Weil withdrew his candidacy on April 7—subsequent to a failed U.S. Senate vote to advance his nomination—the 210-day timer restarted.
Those inside and outside the administration say they’ve heard crickets about who, and if, anyone will be picked next. There’s not a clear Weil-esque option within the labor world who would be an obvious candidate.
“Like a lot of us, I haven’t heard any particular names get floated for the next nominee,” said Paul DeCamp, a Wage and Hour administrator during the George W. Bush administration. “I would not be surprised if the administration opts to proceed with Jessica Looman. She’s been in the role since day one in terms of running the Wage and Hour Division in this administration. She knows how the agency works at this point. She knows the key personnel at the career ranks and she probably is better situated to get things done now than somebody coming in fresh would be.”
But even if President Joe Biden doesn’t nominate anyone else to the position, Labor Secretary
That’s an issue that oversight advocates chided the Trump administration for, arguing that it acts as an end-run around the Senate’s check on presidential appointees. And doing so treads into a potential legal gray area, said Liz Hempowicz, director of public policy at the Project On Government Oversight.
“That’s the one thing that gets a little bit complicated around this stuff is when it’s not clear if an authority is delegable or not,” Hempowicz explained. “If you do ultimately run afoul of what a court decides the right lines are, then they can invalidate and actually have an obligation to invalidate any policy that was created under a non-delegable authority, if there’s a legal challenge to it.”
Biden could formally nominate Looman to serve as administrator. But that path would be particularly tricky, because the president would have to find another official to serve as “acting” leader until the Senate confirms her. The FVRA prevents “acting” officials from serving in positions for which they’re nominated.
While the administration was “disappointed by the vote” on Weil, a DOL spokesperson said in a statement, “We are confident in Jessica Looman’s continued leadership of the Wage and Hour Division and look forward to continuing to work with the White House and Senate to confirm an administrator for the division.”
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Austin R. Ramsey: Exaggerated advertising and lax regulations were behind highly critical cryptocurrency guidance the DOL issued last month, according to a top employee benefits enforcement official.
Cryptocurrencies such as bitcoin and ethereum aren’t completely banned from 401(k) investment menus under the new guidance, but plan officials should be “very careful” exposing workplace investors to them, said Tim Hauser, chief operating officer for the Employee Benefits Security Administration.
Speaking to the American Bar Association’s Joint Committee on Employee Benefits last week, Hauser said Labor Department health and retirement benefits regulators felt they had a responsibility to “warn people” about the “special dangers” volatile digital currencies and non-fungible tokens could pose to unsuspecting 401(k) investors.
“There’s kind of a breathless quality to a lot of the marketing of these investments,” Hauser said. “They’re offered as innovative investments that offer a unique possibility of outsized profits. I think it’s very hard for folks to separate the hype from the fact right now.”
Hauser pointed to survey data suggesting many retail investors don’t fully understand what they’re putting their money behind when they invest in cryptocurrencies.
About one in three crypto investors know little to nothing about digital currencies or the blockchain technologies that support them, according to 2021 survey data by Cardify.ai—a Drop Technologies Inc.-owned market research platform.
More than half of all U.S.-based investors entered the market in the last year, found Grayscale Investments LLC, a digital currency asset manager.
Few, if any, U.S. defined-contribution retirement plans offer participants vetted crypto menu items. Most retirement plan participants jumping on the digital coin bandwagon do so through brokerage windows, which give investors access to a broader range of unchecked funds and securities through their workplace plan.
Low-cost 401(k)-provider ForUsAll Inc. partnered wih Coinbase Global Inc. to offer an in-plan brokerage window that allows employee investors to transfer up to 5% of their nest eggs directly into more than 50 different cryptocurrencies.
Although brokerage window arrangements are usually mostly unregulated, the DOL guidance said plans that offer them could face investigations if their participants use them to invest in cryptocurrency.
That’s led to unrest among plan sponsors who say the department is silently rewriting the rules on brokerage windows, suggesting that fiduciaries who have strict legal obligations to act in the best interest of plan participants will have to monitor all of the investments participants can access.
“We haven’t imposed that kind of obligation,” Hauser said. “It’s much more about giving clear notice that fiduciaries need to be very careful. They need to make sure they’re looking out for plan participants.”
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