All the information below comes from Politico, which is a paid service CUE subscribes to on behalf of our members. This morning, they published a great summary of the initial impact of the fiduciary rule in their Morning Shift newsletter which we are sharing here.
The Obama Labor Department’s fiduciary rule — which requires that broker dealers consider only their client’s best interest (and not commissions or fees) when providing retirement advice — will take partial effect today; the rest takes effect in January. Here’s the breakdown:
What takes effect today:
— The rule’s broadened definition of fiduciary and investment advice.
— Components of the “best interest” contract exemption, which outlines certain conditions under which broker dealers may continue to receive fees and commissions. The provisions that take effect today require that broker dealers provide advice in their client’s best interest; receive compensation that is reasonable; and do not provide misleading information.
What takes effect in January:
— All remaining components of the “best interest” contract exemptions.
— Companies that provide advice to IRA holders will need to sign a contract with their clients declaring that they are acting in the clients’ best interest.
Implementation of the fiduciary rule was never a slam dunk under the new president — and its future still remains a bit murky. In April, the Labor Department delayed the regulation’s effective date in response to a White House a memorandum. Labor Secretary Alexander Acosta eventually decided that there was no legal justification for delaying the rule further, and outlined his reasoning in a May 22 Wall Street Journal op-ed . But Acosta also indicated that he would review the regulation.
Earlier this week, the Labor Department sent a proposed request for information on the rule to the White House Office of Management and Budget. Meanwhile, congressional Republicans haven’t given up their efforts to block the measure. On Thursday lawmakers in the House and Senate introduced legislation to halt the fiduciary rule, and the House passed the CHOICE Act, a repeal of the 2010 Dodd-Frank financial reform bill that also included a provision to repeal the fiduciary rule.
This past week was the one where the expected Trump labor reforms finally started to become tangible. On June 7, the Department of Labor announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors. Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. While this pullback on joint employer guidance is good news, it does not reverse the NLRB’s ruling in the Browning-Ferris case.
Secretary of Labor Acosta also announced that fter a thorough review of the U.S. Department of Labor’s foreign worker visa programs, DOL would undertake actions to increase protections of American workers while more aggressively confronting entities committing visa program fraud and abuse.
“Entities who engage in visa program fraud and abuse are breaking our laws and are harming American workers, negatively affecting Americans’ ability to provide for themselves and their families. We will enforce vigorously those laws, including heightened use of criminal referrals,” said Secretary Acosta. “The U.S. Department of Labor will focus on preventing visa program abuse and take every available legal action against those who abuse these programs.”
Congress also got into the act Representatives Phil Roe (R-Tenn.) and Peter Roskam (R-Ill.) introduced legislation today to repeal the Obama administration’s fiduciary rule.
The rule requires broker dealers to consider only their client’s best interest — and not fees or commissions — when providing retirement advice. Although part of the regulation will take effect Friday, the Labor Department sent a request for information about the rule earlier this week.
Acosta also looked to be preparing to begin the process of changing the policy on Overtime issued by the Obama administration, and is currently injuncted.
At a hearing, Acosta stated that the Department plans to file a request for information (RFI) “probably in the next two to three weeks” in which it will seek information in connection with the overtime rule and its salary level. Secretary Acosta noted that it is a “problem” when the dollar amount of the salary level is not updated “because life gets a lot more expensive.” He also testified that the manner in which the final salary level of $47,476 per year “was done created a shock to the system.”
In a note from the Chamber of Commerce provided by LLAC member Clyde Jacobs, In other Wage and Hour Division news, we learned that Cheryl Stanton is the leading candidate to be nominated for the position of Wage and Hour Administrator. Stanton is currently executive director of the South Carolina Department of Employment and Workforce, and previously served in the George W. Bush White House, the National Labor Relations Board, and the Equal Employment Opportunity Commission. She has also been a shareholder for Ogletree Deakins.
There also news on many other fronts, including a decision from the 6th Circuit Court over whether the NLRA allows employers to require employees give up their rights to litigate or arbitrate class action suits, more labor law reform initiatives from the Republicans, concerns from both business and labor regarding the proposed EEOC/OFCCP merger, and proposals from Presiedent Trump to boost infrastructure spending in some unexpected ways and increase job training efforts for workers despite reducing the funding for such efforts in the 2018 proposed budget.
This trend of providing both a carrot and a stick to labor unions and the American worker continued in Cincinnati when President Donald Trump reiterated his commitment to the American worker during an infrastructure speech in Cincinnati, Ohio Wednesday, as reported by the Daily Caller.
“As long as I am president, America’s labor leaders will always find an open door at the White House,” the president said to chorus of applause during his speech along the banks of the Ohio River.
“It’s time to recapture our legacy as a nation of builders and to create new lanes of travel and discovery and we’re going to see all the way into the future,” Trump said. “And the future is going to be bright.”
The president acknowledged three labor leaders present at his speech in Cincinnati, including Sean McGarvey, president of North America’s Building Trades Unions (NABTU), Eric Dean, president of the United Iron Workers and Terry O’Sullivan, president of the Laborers’ International Union of North America.
RESCINDING PERSUADER: The Labor Department is proposing to rescind the persuader rule, according to an unpublished notice in the Federal Register. The rule, which increased disclosure requirements for the hiring of union-busting consultants and attorneys, never took effect because a court issued a permanent injunction against it in November. The proposal will be published in the Federal Register June 12 and will be open to public comment for 60 days, according to Politico.
Today’s labor policy feels a little bit like the old “flying wedge” play from the early days of football when players played with no helmets and very little protective padding.
Interesting times ahead, and plenty of interesting topics for the Fall 2017 Conference at the JW Marriott in Indianapolis. Registration for Indianapolis will open on Monday, June 19.
Sen. Elizabeth Warren (D-Mass.) will oppose Alexander Acosta’s nomination for Labor secretary.
In a statement, Warren said that “American workers deserve a Secretary of Labor who will make a straightforward commitment to fight for basic safety in the workplace, to ensure fair wages, and to protect families’ retirement funds — commitments Mr. Acosta refused to make.” Warren added that “if he won’t make those commitments while the cameras are on, he certainly won’t be a strong advocate for workers when the lights are off.”
Warren’s opposition came after she grilled Acosta last week at his confirmation hearing about whether he would support the Obama Labor Department’s fiduciary and silica rules. The fiduciary rule requires broker dealers to consider only their client’s best interest when providing retirement advice and the silica rule drastically lowers workers’ exposure limit to silica dust. Acosta declined to say whether he would uphold the regulations, citing the White House’s directive to review agency regulations.
The Senate HELP Committee will vote on Acosta’s nomination Thursday.
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