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Trump Labor Board Closes Ethics Audit, Revises Conflicts Rules

Nov. 19, 2019, 2:00 PM

Federal labor board members can insist on participating in cases they have been asked to sit out because of conflicts concerns, even if the agency’s ethics officer or the federal government’s ethics watchdog determine members should recuse themselves, according to a long-awaited review of the board’s recusal process.

The National Labor Relations Board’s current process for determining whether members must recuse themselves from certain cases is “strong, effective, and fully compliant,” Chairman John Ring (R) said in a statement accompanying the report, made public Nov. 19. The board said it will implement a set of new recusal protocols to fill certain gaps in that process, following what Ring has described as a comprehensive review of ethics and recusal rules.

The review was meant to resolve conflicts-of-interest questions swirling around the board since shortly after Republicans took control early in the Trump administration. The NLRB in 2017 issued a precedent-shifting decision in a case called Hy-Brand Industrial Contractors and then quickly scrapped that decision in the face of concerns that Member William Emanuel (R) should have recused himself from the case.

The report could have major implications for the Trump’s administration’s labor policy agenda. The board is widely expected to rely on the report’s findings to clear a path for Republican members to participate in a pending case involving McDonald’s USA LLC and a federal rulemaking about “joint employment.” Worker advocates and Congressional Democrats have requested their recusal from those matters because of alleged conflicts.

The new ethics review, which Ring ordered shortly after joining the board in 2018, includes a step-by-step process for determining whether members must sit out a case because of ties to their former employers or clients or because of other financial conflicts. It also resolves a lingering question about who has the final say in the “unusual circumstances” that a member disagrees with a recusal determination by the NLRB’s designated agency ethics officer and the federal Office of Government Ethics.

“In that rare case, although the DAEO’s determination is considered ‘binding,’ it is not self-enforcing, which means that the Board member can invoke statutory process to challenge the DAEO’s recusal determination, and, ultimately, insist on participating in the matter,” the board concluded in the report.

If that happens, a federal appeals court or the president can step in to resolve the disqualification dispute, according to the document.

The NLRB’s sole Democratic member, Lauren McFerran, said the report was produced via a “broader delegation of administrative authority to the Chairman,” which she abstained from. The findings reflect the work of staffers under Ring’s direction and supervision, she said.

The NLRB didn’t immediately respond to a request for comment. The agency didn’t answer questions about a timeline or how it was conducting the review while the process was underway.

The board announced in the report that it would make members’ recusal lists public—following a testy back-and-forth with Democratic lawmakers who’ve been requesting the information. It’s also going to begin requiring that members sign off on their recusal lists and any modifications, after discovering that they weren’t “always formally advised” of changes.

The board will incorporate a list of “red flag” situations developed by its ethics officer into its ethics trainings as well to help spot cases that may raise the appearance of a conflict, the agency said in the report.

Previously Misunderstood Ethics Rules

The nearly two-years-long ethics review was undertaken in response to an unprecedented conflict issue that ended last year when the previous GOP Chairman and two Democrats voted to withdraw the Hy-Brand ruling just two months after it was issued.

The board’s inspector general and designated ethics office found that Emanuel should have sat out that case because the decision impacted a separate case still on appeal, involving a business represented by Emanuel’s former law firm.

Conflicts questions related to members’ work as private attorneys before joining the board are not new. It’s not clear whether the board had ever previously been faced with a situation in which a member, like Emanuel in Hy-Brand, disagreed with the agency ethics officer’s determination that the member should sit out a case.

Although the agency ethics officer and the Office of Government Ethics have a significant role in the recusal process, the decision on whether a member will sit out a case ultimately rests with the member, the board said in the review.

“OGE views compliance with a DAEO determination as required and noncompliance may give rise to an ethics violation, but that violation does not empower” an ethics officer to “direct NLRB staff to screen Board members off a case or otherwise prevent the Board member from participating,” the Chairman said.

The government ethics office said that’s “because its government ethics program is premised on an expectation of compliance,” Ring said.

Senior NLRB leadership consulted with eight other independent agencies, including the Equal Employment Opportunity Commission, the Federal Trade Commission, and the Securities and Exchange Commission, on their processes to resolve conflicts of interest. The NLRB also consulted the Administrative Conference of the United States, a nonpartisan agency focused on government efficiency.

The Board implemented on Nov. 18 a new, five-step process to be followed when the DAEO makes a determination that a member should recuse themselves.

The new protocols require that the member, DAEO, and chairman meet to try and reach a “consensus resolution.” The member can ultimately participate in the ruling on the case, although the DAEO and chairman are obligated at different steps to report the matter up the chain—including to the Department of Justice, Congress, and the President.

To contact the reporter on this story: Hassan A. Kanu in Washington at hkanu@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com