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Issues & Insights

Obama’s Midnight Regulations, Lawsuits Still Hamper The U.S. Economy

Pete Souza

Lawyers have long debated the concepts of discriminatory intent versus discriminatory impact. Discriminatory intent involves the real core of discrimination. How can you commit discrimination if you never intended to discriminate?

Discriminatory impact, often called disparate impact, can involve many neutral policies and requirements that can have differing effects on differing populations. Just about any test, or qualification requirement, for jobs, loans, apartment rentals, college admissions can have discriminatory or disparate impact.

The key concept for discrimination law is the protected class, against whom the discrimination is prohibited. Traditionally, protected classes, as designated by anti-discrimination statutes or case law precedents, have included race, color, religion, national origin, age, sex, and more recently disability, sexual preference and gender identification.

In disparate impact cases, where the discrimination is unintentional, the defendant can use the business necessity defense, which involves showing that the qualification is necessary for the business to operate effectively. A fireman may need to show that he can carry a certain weight upstairs. Or a bank can try to show that loan qualifications are necessary to avoid crippling losses.

President Obama was a big fan of extending discrimination law as far as possible. Much anti-discrimination law is enforced by the Department of Labor (DOL), particularly against government contractors through the Office of Federal Contract Compliance Programs, which is supposed to promote affirmative action by government contractors.

Obama’s DOL left behind many last minute, “midnight” lawsuits against government contractors alleging discrimination in pay, promotions, raises, and hiring based on the statistical analysis of disparate impact, with no evidence of actual discrimination or discriminatory intent. Those included lawsuits against Big Tech firms such as Oracle, Google, and Palantir.

But there is no statutory authority for lawsuits against federal contractors using the statistical analysis of disparate impact without any evidence of actual discrimination or discriminatory intent. These lawsuits are effectively regulation, contrary to President Trump’s pro-growth economic policies.

Deregulation was an essential component of President Trump’s Blue Collar boom, creating millions of jobs, plummeting unemployment, and soaring wages. Median family income, reflecting middle-class wages, have hit all-time highs under Trump’s boom. This has benefited low-income workers even more than higher-income workers

The lawsuits were inexplicably maintained by former Labor Secretary Alex Acosta. But Acosta has now been replaced by the more consistently conservative Eugene Scalia, son of the late Supreme Court Justice Antonin Scalia, subject to Senate confirmation. Scalia, formerly DOL Solicitor under President Bush, should better understand the Constitutional Separation of Powers issues raised by the DOL litigation, with the same agency serving both Executive Branch investigatory and prosecutorial functions, and Judicial Branch decision-making functions.

Indeed, Oracle has now sued in federal court arguing this Separation of Powers violation renders the DOL lawsuits unconstitutional. “Oracle filed this case because it is being subjected to an unlawful enforcement action by the Labor Department utilizing a process with no statutory foundation whatsoever,” Ken Glueck, executive vice president of Oracle, proclaimed.

Most importantly, as one of the original founders of the Federalist Society, Scalia will better understand the fundamental importance of following the law as written, as his father did. Acosta seemed more willing to tolerate more “progressive” pioneering reinterpretations of the law, advanced more vigorously by Obama Administration holdovers remaining at DOL.

Those holdovers served under Obama Administration Secretary of Labor Tony Perez, now head of the DNC.  Perez is notorious for his radical “progressivism,” so you can imagine the political views and biases of his holdovers.

Acosta had his eye on a future appointment as a federal judge. So his attention was distracted by his future confirmation by the Senate, including possible Democrat support. Scalia, once confirmed, should bring Trump’s DOL into compliance with the law and the Constitution. And President Trump’s pro-growth economic policies.

Peter Ferrara is the Dunn liberty fellow in Economics at the King’s College in New York and a senior fellow at the National Tax Limitation Foundation. He served on the White House Domestic Policy Council under President Ronald Reagan and as associate deputy attorney General of the United States under Attorney General Bill Barr and President George H.W. Bush.


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  • Good column. I am hopeful that Scalia will see it this way, as well.

    P.S. – The radical leftist former DOJ Civil Rights Division head, and then Obama Secretary of Labor (now head of the DNC) is ‘Tom Perez’, not Tony.

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Issues & Insights is a new site formed by the seasoned journalists behind the legendary IBD Editorials page. Our goal is to bring our decades of combined journalism experience to help readers understand the top issues of the day. We’re doing this on a voluntary basis, because we believe the nation needs the kind of cogent, rational, data-driven, fact-based commentary that we can provide. 

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