WASHINGTON— Eugene Scalia, President Trump’s nominee to lead the Labor Department, earned more than $6 million since the beginning of last year as a corporate attorney, according to government disclosures.
Mr. Scalia, a partner at the law firm Gibson, Dunn & Crutcher, also said in the disclosures that his legal clients include a range of businesses, from megabanks such as Bank of America and Goldman Sachs Group Inc. to tech giant Facebook Inc. and retailer Walmart Inc.
The disclosures came in filings released by the Office of Government Ethics late Thursday or early Friday.
The White House formally announced its intent to nominate Mr. Scalia earlier this week to succeed Alexander Acosta as Labor secretary. Mr. Acosta stepped down earlier this summer.
The ethics disclosures show that Mr. Scalia received $6,232,021 in “partnership share and bonus” between January 2018 and the time he signed the document in late July.
Mr. Scalia’s ties to the financial-services industry and other big businesses could complicate his tenure on high-profile initiatives should he win Senate confirmation to lead the department.
For instance, he is expected to sit out the department’s rewrite of a closely watched investment-advice rule, after successfully leading an industry challenge to the Obama administration’s version of the regulation, The Wall Street Journal reported this month.
Eugene Scalia, whom Mr. Trump plans to nominate as labor secretary, has been a go-to lawyer for businesses like UPS and SeaWorld.
Challenging the Fiduciary Rule
The Obama Labor Department spent six years developing a new rule for how brokers and other financial professionals advised clients on their retirement accounts. Under the old rule, advisers had been required to provide investing advice that was “suitable.” The new rule, which the Obama administration finalized in 2016, required brokers to act as fiduciaries, meaning they would have to provide advice that was in the best interest of their clients.
The administration estimated that conflicts of interest arising under the old standard cost Americans about $17 billion a year.
Mr. Scalia was part of a team at his law firm Gibson, Dunn & Crutcher that sued to block the rule on behalf of several industry groups, including the Chamber of Commerce and the Financial Services Roundtable. The groups argued that the regulation would harm less-affluent investors because firms would simply stop offering them advice to avoid exposing themselves to liability.
Mr. Scalia called the rule a prime example of “regulatory overreach” in an interview with the author of a newsletter. He said investment advice should be overseen by the Securities and Exchange Commission and state insurance regulators, not the Labor Department.
Mr. Scalia and his team lost in a trial court in early 2017, after which Alex Acosta, the labor secretary Mr. Scalia will replace, said there was no principled legal basis for delaying initial application of the rule and began to partially adopt it. But Mr. Scalia’s team continued the fight before a federal appeals court, which ultimately ruled in their favor the following year. The rule died when the Trump administration declined further legal challenges.
Helping UPS Defeat a Disability Lawsuit
Mr. Scalia was part of legal teams that defended UPS against claims brought under the Americans with Disabilities Act in two cases during the late 1990s and 2000s. In the first case, UPS employees who could only see with one eye sued the company for refusing to allow them to become drivers, arguing that the company’s policy had discriminated against people who were capable of operating vehicles safely. The federal Equal Employment Opportunity Commission brought the case, but UPS largely prevailed in two separate appeals.
In the second case, some UPS employees claimed that the company had refused to let them return to work after they had suffered on-the-job injuries because they were unable to perform all the responsibilities of their previous jobs. The workers argued that the company violated the Americans with Disabilities Act by not providing accommodations that would let them resume work.
A lower court certified the case as a class action, but Mr. Scalia and his team successfully argued that the court should not have allowed the plaintiffs to bring their claims jointly before first investigating whether each one should be allowed to return to work under the disability law based on their individual circumstances. An appeals court ruled in the company’s favor in 2009.
Peter Blanck, a professor at Syracuse University who has written extensively about the disabilities law, said that class action suits are often critical to allowing individuals to realize their rights under the law. Absent the class certification, the plaintiffs agreed to a settlement with the company.
In these and other lawsuits involving his clients, Mr. Scalia has “consistently sought to narrow A.D.A. protections on a variety of issues, including the definition of disability and class certification” Douglas Kruse and Lisa Schur, two experts on the employment of people with disabilities at Rutgers University, said in an email.
America’s working class is in desperate shape, and its longtime protectors — unions — have lost much of their power.
President Trump talks a good game about helping American workers but has pursued arguably the most anti-labor agenda of any modern president. Now he has doubled down by choosing for secretary of labor a corporate lawyer who has spent his career battling workers.
This is a bit like nominating Typhoid Mary to be health secretary.
The official mission of the Labor Department emphasizes the promotion of “the welfare of the wage earners,” but Trump’s mission has been to promote the exploitation of wage earners.
So Eugene Scalia is a perfect fit. Scalia, a son of the late Supreme Court Justice Antonin Scalia who has fought unions on behalf of Walmart and other companies, is a talented and experienced litigator who upon assuming office will be in a position to disembowel labor.
There’s a larger issue: The relentless assault on labor has gained ground partly because, over the last half-century, many Americans — me included — became too disdainful of unions. It was common to scorn union leaders as corrupt Luddites who used ridiculous work rules to block modernization and undermine America’s economic competitiveness.
There’s something to those critiques. Yet it’s now clear that the collapse of unions — the share of employees belonging to unions has plunged to 10 percent in 2018 from 35 percent in the mid-1950s— has been accompanied by a rise of unchecked corporate power, a surge in income inequality and a decline in the well-being of working Americans.
For all their shortcomings, unions midwifed the birth of the middle class in the United States. The period of greatest union strength from the late 1940s through the 1950s was the time when economic growth was particularly robust and broadly shared. Most studies find that at least one-fifth of the rise in income inequality in the United States is attributable to the decline of labor unions.
Unions were also a formidable political force, and it’s perhaps not a surprise that their enfeebling has been accompanied by a rise in far-right policies that subsidize the wealthy, punish the working poor and exacerbate the income gap.
“Labor unions, and their ability to create a powerful collective voice for workers, played a huge role in building the world’s largest, richest middle class,” notes Steven Greenhouse in his superb, important and eminently readable new book about the labor movement, “Beaten Down, Worked Up.”
“Unions also played a crucial role,” Greenhouse adds, “in achieving many things that most Americans now take for granted: the
- eight-hour workday,
- employer-backed health coverage,
- paid vacations,
- paid sick days,
- safe workplaces.
Indeed, unions were the major force in ending sweatshops, making coal mines safer, and eliminating many of the worst, most dangerous working conditions in the United States.”
Greenhouse, who covered labor for 19 years for The Times, acknowledges all the ways in which labor unions were maddening and retrograde. But he notes that corporations run amok when no one is minding them.
Union featherbedding and rigid work rules have been real problems. Yet without unions to check them, C.E.O.s engage in their own greedy featherbedding and underinvest in worker training, thus undermining America’s economic competitiveness.
Sure, it’s frustrating that teachers’ unions use political capital to defend incompetent teachers. In New York City, the union hailed its defense of a teacher who passed out in class, her breath reeking of alcohol, with even the principal unable to rouse her.
It’s also true that states with strong teachers’ unions, like Pennsylvania and Vermont, have far better student outcomes than states with feeble unions, like South Carolina and Mississippi. Teachers’ unions have also been heroic advocates for early childhood education, and Red for Ed strikers forced states like West Virginia, Oklahoma and Arizona to improve their school systems.
Remember, too, that manufacturing workers in Germany are unionized and earn $10 more an hour than their American counterparts. Mercedes-Benz autoworkers earn $67 an hour in wages and benefits, and German workers are guaranteed a presence on corporate boards. Unions don’t detract from Germany’s economic system and competitiveness but are a pillar of it.
The bigger picture is that America’s working class is in desperate shape. Average hourly wages are actually lower today, after inflation, than they were in 1973, and the bottom 90 percent of Americans have seen incomes grow more slowly than the overall economy over the last four decades. The reasons are complex, but one is the decline of unions — for unions benefit not only their own members but also raise wage levels for workers generally.
So I’ve come to believe that we need stronger private-sector unions — yet the Trump administration continues to fight them. Greenhouse notes that nearly 20 percent of rank-and-file union activists are fired during organizing drives, because the penalties for doing so are so weak: A corporation may eventually be fined $5,000 or $10,000 for such a wrongful dismissal, but that is a negligible cost of doing business if it averts unionization.
That’s why we need a secretary of labor who cares about laborers. Trump campaigned in 2016 as a voice for forgotten workers, but he consistently sides with large corporations against workers, and his nomination of Scalia would amplify the sad and damaging war on unions.