What Acosta's labor nomination means for the retirement industry
President Donald Trump on Thursday announced Alexander Acosta as his new pick to head the Department of Labor, less than a day after Andrew Puzder, Trump's embattled labor secretary nominee, withdrew his nomination for the position.
Acosta is no stranger to the executive branch of government. He was appointed by President George W. Bush to the National Labor Relations Board in 2002. After that, he served as assistant attorney general for the Civil Rights Division of the Department of Justice. More recently, he was the U.S. attorney for Southern District of Florida.
Acosta has worked with labor issues before in the Washington, D.C. office of Kirkland & Ellis, where he specialized in employment and labor issues. He also taught classes on employment law, disability-based discrimination law and civil rights law at the George Mason University School of Law.
What isn't clear is how Acosta's nomination will affect the retirement industry, which has been waiting for the Trump administration to either delay or repeal the Department of Labor’s fiduciary rule.
Most believe that Puzder’s withdrawal is only a temporary setback for guidance on the fiduciary rule.
Joel Wood, senior vice president for government relations at The Council of Insurance Agents & Brokers, says that he doesn’t believe Puzder’s withdrawal will affect the Republican agenda as it pertains to the fiduciary rule, which was set to go into effect on April 10 unless the Trump administration issued an order for delay.
On Feb. 3, President Trump signed a memorandum directing the acting DOL Secretary to review the fiduciary rule to make sure it would not hinder retirement plan participants from being able to access the financial advice they need to make the best decisions about their savings. If the DOL found in its review that the fiduciary rule was incompatible with the new administration’s priorities, it “shall publish for notice and comment a proposed rule rescinding or revising the rule, as appropriate and as consistent with law.”
At the beginning of his memo, Trump stated that “one of the priorities of my administration is to empower Americans to make their own financial decisions, to facilitate their ability to save for retirement and build the individual wealth necessary to afford typical lifetime expenses, such as buying a home and paying for college, and to withstand unexpected financial emergencies.”
Wood says Trump’s Feb. 3 memorandum to the acting DOL secretary was a “very strong signal. There is near-universal Republican antipathy toward the regulations and a pretty good bit of Democratic concerns that have been expressed in the last couple of years,” he says. “Even though these regulations are aimed at investment advisers and not commercial insurance more broadly, we share every concern that has been lodged about them politically, substantively and legally.”
Wood adds that he believes there’s a “very strong chance” the fiduciary rule will be ultimately withdrawn. “It’s hard for me to imagine the President selecting a Labor Secretary who doesn’t feel the same about these regulations.”
Scott Sinder, outside counsel and chief legal officer for CIAB, adds that he expects the DOL to issue a notice Friday or Monday “proposing to delay the fiduciary rule compliance date by 180 days.”
He added that the proposal is at the Office of Management and Budget for review and that meetings are scheduled this week with interested parties to discuss it.
Puzder, the CEO of CKE Restaurants Inc., the parent company of Hardee’s and Carl’s Jr., was already facing an uphill battle toward confirmation because he admitted last week that he had employed an illegal housekeeper and not paid taxes on her. He also was facing allegations of spousal abuse, stemming from a 1990 episode of The Oprah Winfrey Show in which his ex-wife appeared and discussed her domestic abuse at the hands of Puzder. She later recanted her allegations.
In a written statement Puzder said that, “after careful consideration and discussions with my family, I am withdrawing my nomination for Secretary of Labor. I am honored to have been considered by President Donald Trump to lead the Department of Labor and put America’s workers and businesses back on a path to sustainable prosperity.”
He added that while he won’t be serving in the administration, he fully supports the President and “his highly qualified team.”
Puzder’s confirmation hearing was expected to take place Feb. 16, after several previous delays.
Senate Democratic Leader Chuck Schumer said Wednesday that, “no matter how you cut it, there is no worse pick for labor secretary than Andrew Puzder, and I’m encouraged my Republican colleagues are starting to agree. He does not belong anywhere near the Labor Department, let alone at the head of it. Puzder’s disdain for the American worker, the very people he would be responsible for protecting, is second to none.”