HR pros split on Eugene Scalia as DOL chief pick

President Donald Trump's decision to nominate Eugene Scalia as the new labor secretary is driving wide rifts among HR and benefits professionals, with some praising his industry knowledge as a boon to businesses; others decried the choice, saying he'd hurt the American worker.

Scalia, a prominent Washington lawyer with the firm Gibson Dunn and son of the late Supreme Court Justice Antonin Scalia, “has led a life of great success in the legal and labor field and is highly respected not only as a lawyer, but as a lawyer with great experience working with labor and everyone else,” Trump said via a tweet late Thursday.

Industry insiders and legal minds on Friday agreed, noting his strong policy and institutional expertise. Outgoing Labor Secretary Alex Acosta resigned effective Friday after having been caught up in controversy surrounding his handling of a plea deal involving financier Jeffrey Epstein.

“The nomination of Gene Scalia to lead the Department of Labor means that all constituencies — employers, workers, unions, benefit plans and more — will gain from having a secretary with a deep understanding of both the policy side of the house, meaning the various laws that the department enforces, and operations, meaning how the various agencies within the department function,” says Paul DeCamp, a member of the law firm Epstein Becker Green, where he specializes in the firm’s employment, labor and workforce management practice. He previously worked with Scalia at Gibson Dunn.

Scalia knows first-hand how ambiguous legal standards and uneven enforcement can create problems for workers and businesses throughout the country, which gives him an appreciation for how policies can impact industry, DeCamp says.

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“Gene is equally comfortable grappling with an esoteric question of legal doctrine and thinking through the practical implications of how to communicate compliance requirements and to achieve compliance in the workplace,” he adds.

One way to read Scalia’s willingness to accept the position now is that he may be making a calculated bet about the outcome of the 2020 election and seeing a likelihood of additional time to advance the agenda, DeCamp says.

“But even if the current administration exits the building after one term, there is a lot of progress that Gene can still make,” he says. “Time is getting short to commence new regulatory initiatives, if that window hasn’t closed already. But at the subregulatory level, there is an enormous amount of good that the department can do with respect to issuing guidance documents clarifying for the public many ambiguous requirements within the department’s statutes and regulations.”

Should Trump win a reelection in 2020, and Scalia remains at the DOL’s helm, there could be many regulatory ripple effects, DeCamp adds.

“For starters, a second term would make substantial rulemaking possible in many different areas,” he says. “It would be for Gene, in conjunction with the White House, to sort out what the department’s regulatory priorities may be in a second term, but Gene would have the ability to accomplish some very big things with that much time.”

Industry leaders like the Society for Human Resource Management’s President and CEO, Johnny C. Taylor, Jr., were hopeful a permanent figure would replace Acosta following his resignation, and hope the partnership and open dialogue between the industry and the DOL would continue.

“Scalia possesses valuable experience with employee benefits and the Labor Department and we look forward to continuing to work with him and his staff at the DOL on the full slate of important benefits issues,” adds Jason Hammersla, vice president of communications for the American Benefits Council.

But some say Scalia would be a bad choice for the American worker.

Following Trump’s announcement, Senate Majority Leader Chuck Schumer tweeted Trump “is missing an opportunity to nominate a fighter for workers, like a union member, to be America’s next Labor Secretary. Instead, he has again chosen someone who has proven to put corporate interests over those of worker rights.”

Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, said in a statement Friday that Scalia "has spent his career fighting for the interests of financial firms, corporate executives, and shareholders rather than the interests of working people."

"He actually argued in court against the 'fiduciary' rule, the Department of Labor rule that would have simply required retirement advisers to work in the best interest of their clients — outlawing common practices such as financial advisers steering retirement savers toward investments that provide a good commission, but a lower rate of return," Shierholz noted. "This is another fox-guarding-the-hen house selection that defines the Trump cabinet."

While at Gibson Dunn, Scalia worked as the lead attorney who helped kill the Department of Labor’s fiduciary rule — an Obama-era stipulation requiring financial advisers to protect their clients needs above their own. The rule died in the U.S. Court of Appeals 5th Circuit last year.

In 2006, Scalia also represented retail giant Walmart in a Maryland court case challenging the state’s law requiring businesses to spend more on employee benefits. The law required companies with more than 10,000 employees to spend 8% of their payroll on healthcare. “This law is highly discriminatory. This was intended and crafted to affect just one company,” Scalia told the Associated Press during the case.

Previously, Scalia served as solicitor of the Department of Labor and as the agency's principal legal officer. He also has served at the Department of Justice as a special assistant to the Attorney General.

Gibson Dunn declined to comment on Trump’s nomination of Scalia.