In the midst of a chaotic week, Congress and the Trump administration found time to quietly attack important worker protections and undermine the rules and regulations that make our economy fairer for working people and their families. Yesterday, the House passed legislation that makes our economy more susceptible to financial crises in the future, exposes consumers and investors to heightened risk of abuse in their dealings with the financial sector and rolls back the “fiduciary rule,” which requires financial advisers to act in the best interest of their clients. On Wednesday, Secretary of Labor Acosta testified in support of President Trump’s budget request for fiscal year 2018 that slashes funding for the agency that protects workers’ wages and health and safety by 20 percent. And in a symbolic anti-worker move, the Trump administration also withdrew Department of Labor guidance designed to help employers understand their obligations under the law.
Today, the Department of Labor regulation known as the “fiduciary rule” was officially implemented. So, all financial advisers are finally, technically required to act in the best interest of clients saving for retirement. This is a huge win for savers but, while the rule’s fiduciary standard is now in effect, it comes with a couple of catches. Important compliance provisions built into the rule’s exemptions have been delayed until January 1, 2018. DOL has made it clear that it will not enforce the rule until then, either. Until the rule has been fully implemented and is being fully enforced, retirement savers will keep losing money to unscrupulous financial advisers.
Secretary Acosta defends Trump’s proposed budget cuts to DOL
On Wednesday, Secretary Acosta testified before the House Committee on Appropriations, Labor, Health and Human Services, Education, and Related Agencies Subcommittee, where he defended President Trump’s proposed cuts to job training programs as well as the administration of unemployment insurance systems. Secretary Acosta also announced that DOL will open a request for information regarding the updated overtime rule. The DOL does not need more information about the rule, having carefully studied the badly outdated rule for more than two years. This is simply the first step towards weakening or killing the rule.
House voted to roll back protections for consumers and retirement savers
Yesterday, the Republican majority in the House passed the Financial CHOICE Act. If it were to be passed by the Senate and become law, this bill would make future financial crises more likely and more damaging. It would strip away protections against American households being swindled again by the worst actors in the financial sector. It would lead to a less transparent and less democratically accountable Federal Reserve, and would mandate the Fed follow policy rules that would predictably lead to higher unemployment and less ability to fight deep recessions. And it would roll back the fiduciary rule, which was finally implemented today. It’s hard to imagine a bill that could do more broad-based damage to the future economic security of America’s working families.
Guidance documents withdrawn
Lastly, the Trump DOL withdrew guidance clarifying the joint employment standard and worker misclassification. The Administrator’s Interpretations (AI) issued by the Obama administration simply reviewed existing law on joint employment and the classification of workers as independent contractors, providing guidance intended to help employers understand in clear terms their responsibilities under the law. These documents were nothing more than compliance assistance tools. DOL’s withdrawal of these AIs in no way changes the law or employers’ obligations under worker protection statutes. So, while the withdrawal has no legal significance, it is a clear statement that the Trump administration does not value increasing compliance with labor standards.
The Perkins Project Policy Watch will continue to track the Trump administration and Congress and provide information on how their actions impact on our nation’s workers.