President Obama has officially named Thomas Perez as his nominee to replace Hilda Solis as the next Secretary of the Department of Labor. Since 2009, Perez has served as the Assistant Attorney General of the Department of Justice’s Civil Rights Division. Prior to holding this position, Perez worked as the Secretary of Maryland's Department of Labor, Licensing and Regulation. Despite the fact that the Senate promptly approved Perez’s transition to the DOJ three years ago, it is anticipated that his confirmation as Labor Secretary will face certain hurdles.

Work History

According to his DOJ bio, Perez spent several years early in his legal career as a federal prosecutor in the Civil Rights Division. Perez worked under former Attorney General Janet Reno as Deputy Assistant Attorney General for Civil Rights in the 1990s. Among his other duties, Perez chaired the interagency Worker Exploitation Task Force, which, according to his DOJ bio page, “oversaw a variety of initiatives designed to protect vulnerable workers.” Perez worked also for the late Senator Ted Kennedy as his special counsel and principal adviser on civil rights, criminal justice and constitutional issues. In addition, Perez served two years under the Clinton administration as the Director of the Office for Civil Rights at the U.S. Department of Health and Human Services.

Quid Pro Quo Allegations

Although Perez was readily confirmed for his DOJ position, the approval process for Labor Secretary is bound to be more contentious. Specifically, Sen. Chuck Grassley (R-IA) has already voiced concern about the DOJ’s role in an alleged “quid pro quo” arrangement with the city of St. Paul, Minnesota. In Magner v. Gallagher, the City had challenged the use of statistics as evidence of race discrimination under the Fair Housing Act (FHA). The DOJ was reportedly concerned that the Supreme Court could strike down this practice and find that disparate impact claims are not cognizable under the FHA, so it allegedly encouraged the City to withdraw its lawsuit. In exchange, according to the accusations, the DOJ would decline to intervene in an unrelated False Claims Act (FCA) lawsuit. The FCA case at issue was brought by a private whistleblower charging that St. Paul violated the FCA by falsely certifying that it was using federal funds to create jobs for low income workers of all races, when the programs were allegedly focusing only on minority employment.

In a letter to the attorney general, Sen. Chuck Grassley (R-IA) and former Sens. Darrell Issa (R-CA), Lamar Smith (R-TX), and Patrick McHenry (R-NC) stated that they “were shocked to learn . . . that Assistant Attorney General Tom Perez, over the objections of career Justice Department attorneys, enticed the City to drop its lawsuit that Mr. Perez did not want decided by the Supreme Court,” an agreement that “potentially cost U.S. taxpayers over $180 million.” The senators further charged:

One of the features of this quid pro quo, distinguishing it from a standard settlement or plea deal, was that it obstructed rather than furthered the ends of justice. It was possible only because Mr. Perez knew the disparate impact theory he was using to bring fair lending cases was poised to be overturned by the Supreme Court. So he bargained away a valid case of fraud against American taxpayers in order to shield a questionable legal theory from Supreme Court scrutiny in order to keep on using it. This quid pro quo raises numerous legal and ethical questions of significant public interest.

The possibility that Perez declined to pursue a whistleblower claim is notable in that the DOL has significantly increased its enforcement of whistleblower claims in recent years. The DOL’s Occupational Safety Administration (OSHA) oversees the whistleblower provisions in 22 separate statutes, and recently created a Whistleblower Protection Advisory Committee. In 2012, the agency received a total of 2,787 whistleblower complaints.

Labor Advocate

Perez is generally regarded as an ally of organized labor. He has spoken in favor of unions, the Employee Free Choice Act (EFCA), and pay equality, among other employment issues. During a recent AFL CIO Martin Luther King Day commemoration, Perez stated that if Dr. King were alive today:

He would urge our nation’s leaders to move forward on health care reform . . . He would join with you, and with your fellow workers nationwide, in calling for passage of the Employee Free Choice Act to ensure workers can stand up for their rights in the workplace. He would ask the question: if women outnumber men in the workplace, then why are women still fighting for pay equity in the workplace?

In addition, he mentioned that he had “worked to advance civil rights, and . . . worked closely with labor organizations. Over the last century those two movements have learned from each other, have helped each other and have changed our nation into one where more people have access to the promise equal opportunity.”

A list of speeches Perez made while serving as the Assistant Attorney General can be found here.

What Does this Mean for Employers?

Employers can expect a number of important new regulations to be proposed and finalized with Perez at the helm of the DOL. The agency is expected to continue advancing its ambitious regulatory agenda in the areas of employee misclassification and the “right to know” rule, worker safety and revisions to the so-called “persuader” rule under Labor-Management Reporting and Disclosure Act. If finalized, these rulemakings could have a significant impact on employers and their operations. These actions were likely delayed in the run-up to the election and with former Secretary Solis’s resignation. Now that a new Secretary of Labor has been nominated, Perez’s tenure at the DOL, assuming he is confirmed, could prove to be even more dramatic for employers than that of his predecessor.