Punching In: Who’s on First at the Labor Department?

Monday morning musings for workplace watchers

Life After Geale| ‘Attorney-Client’ Relationship | Safety, Gig Work Questions

Ben Penn: Only a mile and change separates the Frances Perkins Building from the White House. When it comes to philosophy on certain workplace policies, the two buildings are at least a few ultra-marathons apart.

A sign of whether that gap within the administration will be bridged might come any day now when Labor Secretary Alexander Acosta names a replacement for his embattled outgoing DOL Chief of Staff Nick Geale.

Don’t be shocked to see Acosta initially point to one of the internal candidates we reported on last week, but just as an acting chief of staff. It’s the permanent choice for Acosta’s new lieutenant/counselor/bodyguard/enforcer that could spark the fireworks.

There’s going to be a business community push to convince the White House to take the lead in this hire—or at least to block any Acosta pick who resembles Geale—several sources familiar with the plans tell me. The way outsiders see it, White House involvement would ensure a more forceful pro-management figure is installed in the secretary’s suite. Any James Sherk clones shopping their resumes around town?

Here are the candidates for Acosta’s new top adviser:

• Molly Conway: the current deputy chief of staff AND acting head of the Employment and Training Administration was described by a source close to Acosta as “probably” the leading contender. Others are less sure, saying she’s been searching for an exit route out of Perkins for weeks now. If Acosta wants someone he trusts and who already has a broad familiarity with the building, Conway is the pick. But she’s also sympatico with Geale, which could raise questions inside the White House.
• Alison Kilmartin: If the name is new to you, you’re not alone. The former West Virginia Orrick attorney has become a regular presence inside the Perkins Building since arriving last August. She’s seized a level of influence with the secretary that surpasses what we’d normally see from a subagency chief of staff. If Conway were to leave the administration or get rejected by the White House, my money’s on Kilmartin to be next in line. Then again, the White House could take umbrage with anyone who is already tight with the secretary.
• Jon Berry: Many of the same reasons for Kilmartin’s candidacy apply to Berry. The key difference is the Columbia Law grad already has his hands full running the DOL policy shop. He is said to be valued by Acosta and considered by some to be nearly as important in the secretary’s inner circle as Geale. Acosta has previously given top aides dual appointments, so we can’t count Berry out for a concurrent policy office and chief of staff role.
• Pedro Allende: The secretary’s counselor has more recently been heading up DOL personnel appointments. His name has been circulated as a darkhorse pick.
• Wild Card: The White House could bring in someone from Capitol Hill or the DC trade group scene to prevent a Geale repeat. For someone to be foisted on Acosta is unlikely in my book, considering there’s typically a negotiation to settle Cabinet-level chief of staff hiring disagreements, and Acosta is well-regarded by President Trump. If an outsider with an aggressive anti-union background or an existing White House staffer in that same hardliner mold were to assume the chief of staff vacancy against Acosta’s will, one probably wouldn’t be wrong to suspect the secretary will soon be joining Geale on his way out the DOL revolving door.

Chris Opfer: Geale’s departure could also change the role of the department’s top lawyer. Labor Solicitor Kate O’Scannlain has been relegated to secondary player status in favor of other political appointees like Geale, Conway, and Berry in her first 17 months or so on the job, sources tell me.

“The solicitor’s office is being backbenched in favor of the secretary’s own staff and the front offices are then relying on legal advice from them instead of the solicitor’s office,” a former DOL attorney told me. “They would either not come to us at all,” the attorney said, “or they wouldn’t use our advice.”

The solicitor traditionally serves as a check on regulatory and other moves, gauging the legal feasibility and litigation risk. The office is also responsible for enforcing a wide range of labor and employment laws in the courts.

Geale, who early in the administration was both chief of staff and acting solicitor, is said to have lobbied for the top prosecutor job before O’Scannlain was nominated. O’Scannlain, meanwhile, was a relative unknown in labor and employment circles. Her nomination surprised many because her experience as a Kirkland & Eliis partner was largely in corporate transactions rather than the courtroom.

O’Scannlain and Geale have tangled over how to handle litigation involving wage and hour enforcement and federal contractor pay discrimination, among other issues, according to sources. That’s created uncertainty inside the department and among lawyers for businesses involved in those cases about who’s calling the shots. It’s also fostered an interesting dynamic in which political officials wind up wearing both the lawyer and client hats.

“It’s bad form,” a former solicitor’s office lawyer told me. “You just don’t want to give yourself legal advice.”

Multiple former department attorneys told me O’Scannlain contributed to the situation by bringing a “law firm mentality” to the department. She sees the solicitor’s role as providing legal advice to clients—the decisionmakers in various DOL policy offices—to inform their decisions, not telling them what to do.

Jaclyn Diaz: On top of the staff upheaval plaguing the secretary’s closest advisors, the agency is still without a congressional liaison even as Democrats on Capitol Hill are holding the agency’s feet to the fire using frequent letters to the agency as kindling.

A recent letter signed by 23 Senate Democrats, including six presidential candidates, demanded Acosta answer for workplace inspection declines at the Occupational Safety and Health Administration. OSHA, by the way, is still without a permanent leader and as of this week doesn’t have someone waiting to be confirmed for the job.

OSHA investigated 100 more cases of worker fatalities or “catastrophes” in 2018 than in the previous year, according to a report from the National Employment Law Project. The lawmakers said that uptick in serious accidents sign that OSHA needs to increase the quality and frequency of inspections and fill some 40 vacancies in enforcement staff positions. They gave Acosta until May 24 to explain any changes in inspection criteria and disclose any meetings OSHA staff has held with the business community and worker advocates.

The Wage and Hour Division’s April 29 opinion letter on the classification of workers in the gig economy is also raising Democrats’ ire.

WHD officials told an unnamed gig economy company that its workers are not “employees” under the Fair Labor Standards Act. They also said the department will use a six-factor test in determining when a worker with the “virtual marketplace company” is an independent contractor or an employee.

Rep. Rosa DeLauro (D-Conn.), chairwoman of the House Labor Appropriations subcommittee, and Sen. Sherrod Brown (D-Ohio), ranking member of the Committee Banking, Housing, and Urban Affairs, wrote Acosta calling the opinion letter “unfortunate.” They also requested more information on the unnamed company’s letter and the reason why DOL chose this particular opinion letter request.

DeLauro and Brown said it seemed like the DOL was using the opinion letter, which is usually limited to a specific fact pattern, to make broader policy statement on worker classification.

Acosta previously has argued that policy changes should be done through regulations rather than subregulatory actions like administrative interpretations. That’s the whole reason the department did away with AIs.

Acosta expressed to Chris a while back that the department would tackle worker classification via regulation after joint employment. There’s no sign of that happening anytime soon, at least through regulatory means.

We’re punching out. 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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