Labor Secretary Alexander Acosta told a congressional panel Wednesday that the Trump administration was right to roll back several Obama administration efforts to expand workforce protection laws.
Acosta said the regulatory efforts, which covered overtime rules, retirement investment advice, corporate legal liability, and disclosure requirements by lawyers who practice labor law were overreaches that hurt the economy.
Acosta told the House Education and the Workforce Committee that the Obama-era changes may have been well-intended, noting for example that the overtime rule was last revised in 2004 and an update was called for. “The way the rule was changed, however, created a shock to the system,” he said.
The Trump administration’s work was applaud by committee Republicans, who agreed with Acosta’s appraisal, and slammed by Democrats, who argued the administration was eroding workplace protections.
“This administration has consistently sided with business interests instead of workers and worker advocates, and I find that troubling,” said Rep. Mark Takano, D-Calif.
Much of the hearing focused on the overtime rule. Federal law says employees must be paid time-and-a-half once they work more than 40 hours in a week. However, businesses may exempt workers from the requirement if their duties are “managerial” in nature and they reach a certain salary threshold.
Last year, the Labor Department announced that that threshold, previously $23,000 annually, would rise to more than $47,000 and would be updated every three years to reflect wage growth. The administration’s rule change would have meant that 4 million more workers would be eligible for overtime.
A federal judge rejected the rule late last year. Takano pressed Acosta on why his department chose not to appeal the court’s decision. The secretary replied that his department did appeal on the question of whether it had the authority to set a salary threshold, but added that he agreed with the court that the $47,000 figure was far too high. The administration is revising the rule.
Acosta similarly backed the administration on its suspension of the Obama administration’s fiduciary rule, which would have imposed a new legal standard requiring investment advisers to act in their clients’ best interests. The department is revising that rule as well and will publish its version “soon.”
He also defended the administration’s decision to rescind a rule expanding the “joint employer” rule, when one company is liable for workplace violations by another. The Obama administration changed the standard from when one business had “direct control” over another’s workforce to the much vaguer “indirect control.” Business groups have strenuously objected, arguing the new standard is not clear.
“The joint employer guidance, for example, had a substantial effect on the franchise model and small business owners across this nation, yet this informal guidance was issued without any public process,” Acosta said.
An Obama rule that expanded the circumstances when lawyers must disclose when they have done consultant work on labor matters for employers is also being revised by the administration. Previously, disclosure was required only if the lawyers spoke to employees. The Obama administration expanded it to include virtually all consulting, a requirement that was widely seen as likely to get many lawyers to stop consulting altogether.
“Among others, the American Bar Association opposed this rule based on its concerns that the rule improperly infringed on attorney-client privilege,” Acosta noted.
Committee Chairwoman Virginia Foxx, R-N.C., welcomed the department’s efforts. “This committee spent the early part of this year advancing resolutions under the Congressional Review Act to clean up the mess from the Obama administration and deliver regulatory relief for hardworking men and women,” she said.
