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Scalia Enters as Labor Chief to Solidify Trump Agenda

Oct. 1, 2019, 10:00 AM

Eugene Scalia‘s ascension to labor secretary relatively late in President Donald Trump‘s first term—with a full regulatory slate awaiting completion—means the veteran labor lawyer will have limited bandwidth to develop a workplace policy agenda of his own.

Scalia is tasked with putting the finishing touches on a slew of rulemakings that were established long before Trump in July announced him as the pick to helm the Labor Department. The goal is to get those agenda items finalized and in effect before the 2020 election. However, a Trump win at the ballot box would then give Scalia more time to carve out some of his own priorities during a second term.

The former Gibson Dunn partner and Labor Department solicitor, who was sworn in as labor secretary Sept. 30, has an opportunity to define a legacy by focusing on successfully defending the agency’s big-ticket rulemakings, such as on overtime pay, joint employment, and apprenticeship, that await possible lawsuits. Scalia enters the post with a high-level pedigree in administrative law, having successfully sued on behalf of business groups to block Obama era rulemakings.

“I think a key priority is getting these active rulemakings finished and defending them against whatever litigation may arise,” said Glenn Spencer, senior vice president of the employment policy division at the U.S. Chamber of Commerce. “Obviously his legal background and knowledge of the department will be helpful in that regard.”

The White House and business community have urged the DOL to swiftly finalize rules to allow time for the administration to defend them in court before a new president were to occupy the White House in 2021.

The heavy lifting required to carry out Trump’s regulatory agenda won’t preclude Scalia from advancing at least a select few new policy ideas. That includes issuing new enforcement directives and opinion letters that would be likely designed to aid employers in complying with the law.

Scalia’s term as labor secretary features his transition from veteran labor and employment law practitioner to the more political and public-facing role as the president’s chief workplace official. Workers and businesses are now searching for signs of what direction Scalia takes the department in the 15 guaranteed months left in this administration.

Worker advocates who’ve criticized a business-friendly approach to labor policy throughout Trump’s presidency are predicting more of the same from Scalia. They opposed his nomination due to his history as a private attorney siding with corporations against their employees.

“I think we should all be preparing for an aggressive, continued rollback of these fundamental worker protection regulations and I have no doubt that this will result in a lot of guidance memos that will do workers no favors,” said Celine McNicholas, government affairs director at the left-leaning think tank Economic Policy Institute.

Thorough, Fairminded, Forceful

Through his one-year stint as the agency’s chief legal officer from 2002 to 2003, Scalia earned a reputation as a thorough and fairminded leader when making legal and policy decisions. He surprised some of his career subordinates by enforcing the law more aggressively than they expected when compared with other GOP solicitors who hailed from the management bar.

Former DOL attorneys said Scalia had deep respect for the agency’s worker protection mission and legal precedents, without being hellbent on executing the George W. Bush administration’s agenda.

“He was very analytical. He judged cases on the merits,” said Judy Kramer, a former career deputy solicitor under Scalia. “Maybe I’m naive, but I didn’t feel like there was a political agenda to pull back on the enforcement of any of our laws.”

But as labor secretary, Scalia sheds the role of solicitor, which involves advising the secretary and other officials on how to stay in legal compliance. As head of the department, Scalia—who past colleagues describe as very conservative—has ultimate authority over which rules, policies, and litigating positions to carve out, provided they align with the White House.

That may include advancing a variety of new policies, whether it’s on pensions, wage-and-hour, or union financial oversight, that Scalia would attempt to persuade the White House to undertake.

“He has very high standards, so he certainly is going to put the staff through their paces. He’s going to make sure that he gets the information that he wants to make the best recommendations ultimately to the president about what the administration’s policy should be,” said Victoria Lipnic, a current GOP member of the Equal Employment Opportunity Commission who served alongside Scalia when he was DOL solicitor. “Once he has a certain path, he’ll be I think pretty strong and forceful on what he thinks are the best recommendations to make to the president and the administration.”

Regulatory Balance

How Scalia balances the remainder of this administration between pre-existing rulemakings and new shorter-term subregulatory matters will be one of the defining qualities of the coming year in Trump labor policy.

He was confirmed by the Senate Sept. 26 only two days after the department issued a highly anticipated final rule to raise the annual salary threshold below which workers qualify for overtime pay to about $35,600. Worker advocates have threatened to mount a legal challenge alleging the rule is arbitrary and capricious under the Administrative Procedure Act. They want the department to revive an Obama-era rule which would have more significantly expanded worker eligibility for overtime pay.

If such a suit is brought, Scalia would be uniquely qualified to lend a hand in this consequential legal proceeding, both from his years as an administrative and labor law attorney and his time as solicitor crafting the agency’s last update to overtime pay.

The potential overtime lawsuit and litigation over other DOL regulations in the pipeline could present a challenge for Scalia to determine “how to bring that strength of his to bear” on the litigation without focusing so intently that he’s not able to address the numerous other responsibilities of a labor secretary, said Michael Eastman, a senior vice president at the employer association the Center for Workplace Compliance.

New Policies

Business advocates and management attorneys who have spent years discussing workplace matters with Scalia envision a range of possible guidance documents and other policy initiatives that he could embark on in addition to the regulatory agenda.

“Gene recognizes that a very important part of the department’s mission is ensuring employers understand how to apply the law properly,” said the Chamber’s Spencer. “I think you will get more opinion letters, I think you will get more guidance on the department’s regulations.”

The process of giving employers more incentives to comply with federal labor and employment laws, rather than relying on the threat of punishment, was already underway from former Labor Secretary Alexander Acosta and acting chief Patrick Pizzella. But Acosta’s controversy-averse, deliberate style generated some employer complaints that the Trump DOL was continuing to enforce without scaling back Obama-era tactics.

“I think that Secretary Scalia would be very aware of those criticisms” about Acosta, “and I don’t think that’s necessarily his style,” Eastman said. “I think that he will probably just have, especially given where we are in the cycle, perhaps a greater sense of urgency to getting some of these priorities accomplished.”

The suite of potential Scalia policies could include business community wishlist items like issuing more advisory opinions on employee benefits, revising the agency’s enforcement manuals, launching more audits of international unions, and releasing a new memo to limit the situations in which the Wage and Hour Division assesses double damages against employers who shortchange their workers.

New Scalia policy changes might fit under a single unifying theme: a different interpretation of what constitutes fair Labor Department enforcement.

“If you’re a medium-to-small employer, you don’t have a chance against the Department of Labor. I think that Gene will bring that philosophy to the department,” said Randy Johnson, who chairs the government relations and policy group at management-side firm Seyfarth Shaw in Washington. “Given the power the Department of Labor has, it needs to be careful about the kinds of cases it brings, because employers can be bludgeoned into settlements by the department.”

This could manifest in a memo requiring more national office oversight of major cases to guarantee the agency’s litigation resources are responsibly deployed, Johnson said.

Whether such a memo and many other potential Scalia policies ever see the light of day comes back to the question of time management and reading the tea leaves on the 2020 presidential campaign.

“What I’ve been trying to figure out, frankly, since I heard that Gene was getting the nod is whether this is in some way an indication of how he sees the 2020 election going,” said Paul DeCamp, a former Republican DOL official who worked under Scalia at Gibson Dunn. “Does he look at this as, I have a year-and-a-half to get it done or am I laying the groundwork for the next five-and-a-half years?”

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

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com