By Jerri-Lynn Scofield, a former securities attorney and derivatives trader. She is currently writing a book about textile artisans.

Last week, business lobbyists led by the International Franchise Association (IFA) successfully blocked the confirmation of David Weil as head of the Labor Department’s wage and hour division.

Weil’s Breach: His previous performance in the same role in 2014 and 2017. Per the Hill, Business lobby beats Biden Labor candidate in Senate:

Weil, who served in the payroll department in the Obama administration from 2014 to 2017, issued rules that reclassified independent contractors as employees and sought to hold companies accountable for the labor practices of franchisees during his tenure.

“FIFA thanks [Democratic] senator [Kyrsten] Movie, [Joe] Manchin and[Mark] Kelly and all 50 Republicans support franchises and workers across the country by voting against the nomination David Weir tonight,” IFA President and CEO Matthew Haller said in a statement.

The Senate rejection, the first of all potential candidates for Biden, represents a serious setback for expanding labor rights, the same week that Amazon workers successfully unionized for the first time.

I have to laugh at Politico for describing the trio as “moderate” Democrats, Moderate Democrats lose Biden’s first nomination vote:

On Wednesday night, three moderate Senate Democrats unexpectedly voted against advancing his nomination, undermining President Joe Biden’s labor agenda in the process, throwing a heavy weight on David Weil’s leadership in labor. The campaign in the ministry’s wage and hour division dealt a fatal blow.

The IFA and other business interests, including the National Restaurant Association and the National Wholesale Distributors Association, have focused their lobbying efforts on the three, The Hill reported. especially:

Business groups are particularly concerned about measures to hold franchisees such as McDonald’s and 7-Eleven accountable for their actions, as well as rules that reclassify independent contractors as employees so they can unionize.

Weil, now dean of the Heller School of Social Policy and Management at Brandeis University, has long complained that the franchise model allows corporate giants to evade responsibility and has been a fierce critic of gig companies such as Uber and Lyft.

The Wall Street Journal fleshed out Weil’s White House Labor candidate David Weir blocked in Senate::

During his tenure at the Labor Department, Mr. Weir issued guidance stating that employees whose employers are contractors or franchisees of other large businesses can claim to be employed by their immediate employers and larger companies. That means companies such as fast-food chains could be held liable for labor violations committed by franchisees of individual restaurants. That has led to an increase in lawsuits against franchisees, Mr. Haller said.

Mr. Weil also issued guidelines stating that many gig workers should be considered employees rather than independent contractors, enabling them to receive minimum wage protections, workers’ compensation, unemployment insurance and other benefits.

Both guidelines were eventually withdrawn by the Republican Trump administration.

Under Mr Weir, the Labour Department also issued a rule expanding the number of workers eligible for overtime pay. The rule was overturned in court in 2017.

Unsurprisingly, labor interest groups slammed last week’s vote. According to the magazine:

Bill Samuel, director of government affairs at the AFL-CIO, called Mr Weir “very qualified” and blamed opposition to his nomination on his “excellent record of doing the exact job for which he was nominated”. He added: “Enforcement of fair labour practices does not make David Weir anti-business, it makes him pro-worker.”

However, as The Wall Street Journal points out, those problems haven’t gone away. Only now, a Biden administration must find someone else to lead the Labor Department’s wage and hour division. Confirmation of another nominee appears unlikely until November’s midterm election results further complicate the situation. The Wall Street Journal states:

However, even without Mr. Weil running the payroll and hours department, those issues could resurface in a Biden administration.

The department is working on a new rule that expands overtime protections, expected to be released next month. Last year, it also repealed the Trump administration’s “joint employer” rule, which made it harder for employees to argue that they were employed by both a contractor and the company that employs the contractor.

Biden’s other key moves

However, on other key economic issues, including antitrust and securities law, the Biden administration, with support from Congress, has stepped up (see my two recent articles on antitrust: WSJ: House justice boss asks DOJ to investigate Amazon’s possible criminal obstruction of Congress and Federal judge rejects Facebook’s motion to dismiss, allowing FTC Antitrust litigation continues and discovery begins). In the area of ??securities law, see these two recent Yves articles: SEC Probes Morgan Stanley, Goldman Sachs, and Other Large Firms for Possible Block Trading Abuse .; and The SEC will bring down the massive boom in the private equity industry).

While this trend has so far not extended to the broader agenda of the Department of Justice (DoJ) under Attorney General Merrick Garland, his approach has so far been disappointing (see AG Merrick Garland outlines priorities for corporate crime prosecution),

Still, Biden’s more aggressive line on antitrust and securities law is in stark contrast to the line pursued the last time Democrats took office, when the norm was to announce intentions to get tough and then not follow through (as I as written in these articles) then post, see The Obamamometer’s Toxic Legacy: Lawless Rules; SEC fiddles with system burnout: Insider trading enforcement as securities law theater). Lawyears openly mocked the joke department. So far, Garland seems to have taken a page from that old playbook and talked about a great game, but didn’t follow through with particularly aggressive execution.

bottom line

Time appears to be running out for a Biden administration to implement any major economic policy reforms. In particular, with rising fuel prices and the prospect of looming shortages of food and other essentials — not to mention the ongoing pandemic and Ukraine crisis — Democrats will be slaughtered in the upcoming midterm elections. They would at least lose their tiny House and Senate majorities — possibly decisively. That means political gridlock will ensue, with Democrats retaining the White House and Republicans once again taking control of both houses of Congress.

So the enforcement agenda will become even more important as it will be the arena where Democrats will still set the agenda and potentially achieve meaningful results. Of course, these could be blocked or overturned by business-friendly judges. I have full confidence in the Federal Trade Commission under Chairman Lena Khan and the Securities and Exchange Commission under Chairman Gary Gensler. Nominees for the FTC, DoJ, and SEC have been confirmed, and the new Congress will not be able to decide on those appointments—without resignation.

But the jury is still out on what Garland’s Justice Department intends to do on any expanded enforcement agenda.