On Saturday, former Secretary of Labor Thomas Perez was elected chairman of the Democratic National Committee. Many portray Perez as the moderate pick compared to his top challenger, Rep. Keith Ellison, D-Minn., who is considered part of the Bernie Sanders wing of the Democratic Party.
But one look at Perez's track record at the Department of Labor shows he is anything but moderate. His political preferences guided his regulatory agenda, rather than fulfilling the agency's mission as set forth by Congress. In the process, Perez imposed a whopping $49 billion in regulatory costs and 56 million paperwork burden hours.
Perhaps the worst offender was the new overtime regulation, which, starting in December 2016, would have dramatically increased the salary threshold for overtime eligible employees from $23,660 to $47,476. Employers who could not afford the increase faced wrenching decisions about curtailing employee hours, layoffs, and other possible budget cuts. All across the country, the news media started reporting on businesses, nonprofits, and schools that found themselves in that terrible predicament.
With so much at stake for so many Americans, what legal basis did Perez have for this new mandate? None. The rule was so far out of bounds that an Obama-appointed judge intervened. On Nov. 22, 2016, Judge Amos Mazzant of the Eastern Texas U.S. District Court, issued a nationwide preliminary injunction against the Department of Labor's overtime rule.
Congress intended that salaried employees who perform administrative, executive or professional duties should be exempt from overtime pay. But by making the salary level the litmus test for whether an employee is exempt from overtime pay, the agency “exceeds its delegated authority and ignores Congress's intent by raising the minimum salary level such that it supplants the duties test,” the judge explained. “If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change,” the judge admonished. The case remains pending in court.
Another Perez regulatory action struck down by courts was the “blacklisting rule.” In October 2016, the U.S. District Court in Texas said the Labor Department regulations implementing an Obama executive order “compel government contractors to 'publicly condemn' themselves by stating that they violated one or more labor or employment laws.”
Perez's blacklisting rule would have instituted new burdensome reporting requirements on federal contractors. The rule required contractors who bid on federal contracts in excess of $500,000 to report alleged and actual labor violations from the last three years. Reported violations of any federal labor statute could be used to block a company's bid. This means the rule would have forced federal contractors to “publicly condemn” themselves over allegations of labor violations, not actual ones.
Worse, the government did not provide enough data on the rule to calculate any benefits deriving from the red tape. But the costs of the blacklisting rule were known and huge: an estimated cost of $458,352,949 to contractors and $15,772,150 imposed on the government in just the first year.
One last Perez rule that could not pass legal muster was his persuader rule. This rule, again, imposed onerous reporting and public disclosure requirements, this time on employers that contract with labor relations consultants for advice on how to respond to union organizing campaigns.
On Dec. 12, 2016, the federal Northern District Court of Texas permanently struck down the persuader rule. Without court intervention, small to mid-size employers would have had borne the brunt of harm. Smaller-sized companies are less likely to employ inside counsel to guide them through the regulatory maze of labor relations law. The persuader rule would have limited employers' access to labor lawyers, which many firms already claimed they would refuse to supply their services if it triggered the persuader rule's reporting requirements.
The judge determined that the persuader rule exceeded the department's power under the Labor Management Reporting Disclosure Act “by effectively eliminating the statute's advice exemption contrary to the plain text of section 203 (c) of the law.” It also impinges on employers' First Amendment rights to consult and hire attorneys.
Perez's record as labor secretary was one of overreach and drowning job creators in red tape. If Democrats think they are getting a political moderate who can transform the image of the Democratic Party to the party of economic opportunity and job creation, they may find themselves sorely disappointed.
Originally posted to Washington Examiner.