Labor Secretary Thomas Perez touted in his Thursday exit memo workplace policies put into place during his tenure – namely the fiduciary and overtime pay rules (which are both under assault) – and urged the incoming Trump administration and new Congress to support other Labor initiatives championed by the Obama administration. Meanwhile, the National Association for Fixed Annuities said Friday that it was moving forward on an appeal after a federal court denied its bid to block the fiduciary rule.
First and foremost, Perez said in his memo, Congress must increase the federal minimum wage, a measure that fast-food executive and attorney Andrew Puzder, named as President-elect Donald Trump’s nominee to be the next Labor chief, does not support. The current minimum wage of $7.25, Perez said, “is simply not enough to sustain an individual, not to mention a family; too many Americans work 40 or 50 hours each week and still need help from their local food pantry.”
Congress, Perez continued, “has repeatedly failed to respond to President Obama’s call to action” to increase the minimum wage. “It’s time for them to stop their obstruction.”
A Texas federal judge issued a preliminary injunction in late November barring the DOL from implementing and enforcing its proposed new overtime rules, which were scheduled to become effective Dec. 1. The dispute is pending now in the U.S. Court of Appeals for the Fifth Circuit.
Perez called the fiduciary rule, which seeks to mitigate conflicts of interest in the retirement advice market, “a historic step to protect the savings of America’s workers.” Puzder hasn’t taken a stance on the rule.
Members of the Trump transition team and Republican lawmakers have vowed to curtail or repeal the fiduciary rule, two federal courts have recently blocked attempts by the insurance industry to halt it. The U.S. Court of Appeals for the D.C. Circuit last month refused a request from the NAFA to block the rule from taking effect in April. But NAFA is moving forward on its appeal in the D.C. Circuit.
NAFA Executive Director Chip Anderson told NAFA members in a recent email that the annuity group “disagrees and is deeply disappointed” in the D.C. Circuit’s order denying NAFA’s request for an injunction pending appeal. “The court gave no real rationale for its decision. We are exploring all opportunities for further judicial review and look forward to a full briefing on the merits.”
Pamela Heinrich, NAFA’s general counsel, said Friday that NAFA “should receive a briefing schedule later this month from the court, which will give us a better timing of the appeals process.”
Anderson added that NAFA remains “very hopeful the new administration will repeal this anti-consumer regulation, and we continue to work with our contacts on [Capitol] Hill to effect that outcome.”
Judge Barbara M.G. Lynn heard oral arguments on Nov. 17 in the case against DOL’s rule filed by nine plaintiffs in the U.S. District Court for the Northern District of Texas. She has yet to render a decision in the case, which was filed by the U.S. Chamber of Commerce, along with other plaintiffs including the Securities Industry and Financial Markets Association and the Financial Services Institute.
Perez stated in his exit memo that “laws and regulations are only as good as the will to resources devoted to enforcing them,” stating “the next administration and Congress must adequately fund DOL’s enforcement agencies to ensure they have the tools necessary to make sure workers are receiving the wages they are owed, that they are kept safe and healthy at work, and that their retirement savings are protected.”
Don Trone, founder and CEO of 3Ethos, has maintained that while DOL’s rule “remains on the books, it’s going to require funding and enforcement support. If funding and support is withheld, the rules will begin to slip into the background.”
Lack of enforcement “is one way the fiduciary rule could be watered down, if that is the desire of the administration,” said Barbara Roper, director of investor protection for the Consumer Federation of America, on Thursday.
“Fortunately, we are not entirely dependent on government enforcement, since there is a private right of action” under the Employee Retirement Income Security Act and through the fiduciary rule’s best interest contract exemption. “That gives companies an incentive to comply even if the government doesn’t fulfill its responsibilities in this area. Also, failure to enforce, while damaging in the short run, would be less harmful in the long run than an outright repeal.”
Trump “campaigned as a populist and promised to make Washington work for ‘the forgotten man,’” added Roper. “Secretary Perez has done precisely that during his tenure at the DOL. The fiduciary rule is just one part of that legacy, and we hope it will survive in a Trump administration.”