The Economist's General Counsel Roundtable Session Review: How Will the New Regulatory Environment Impact the GC?

On Tuesday, December 1st, the ILN participated as a marketing partner in The Economist's 7th General Counsel Roundtable in Washington, DC.  The theme of the conference was "navigating through the new regulatory landscape," and the morning kicked off with a session with Seth Harris, the Deputy Secretary of the US Department of Labor, entitled "How will the new regulatory environment impact the GC?"

Moderated by Matthew Bishop, the New York Bureau Chief and US Business Editor for The Economist, Harris gave a brief overview of the current unemployment situation and talked about the Recovery Act.  Bishop asked him for his thoughts on the outlook for unemployment, and Harris started by saying that when President Obama took office, 700,000 jobs were being lost a month and the economy was frozen and declining.  Though the US hasn't dug its way out entirely, there is some improvement, with recent job loss at 180,000 a month.  Jobs lost claims are the lowest they have been since September of 2008 and banks are doing better.  The Administration is working to turn job loss into job creation.  Harris observed that the 2.8% growth in the GDP during the last quarter, which should continue, will likely lead to job growth as well, which generally lags behind by a couple of quarters.  He added that he hopes the workers will see a share of growth next year.  That being said, he cautioned that there will be continuing rates of unemployment for a long time, and that the economy will take a long time to recover.  Though it's not an utterly jobless recovery, Harris would like to see more growth.

Bishop moved on to the topic of compliance and enforcement at the Labor Department level, and Harris said that the agencies have developed principles to target the most serious compliance offenders.  He added that it's an impossible task, given their resources, to police all workers in all companies, so he encouraged the audience to get involved with their compliance officers, as well as safety and health officers, in pre-emptive compliance.  Harris indicated that there is a group of employers who calculate the  benefit of complying versus the cost of complying times the likelihood of being caught and the penalty if caught and encouraged the general counsels (GCs) in the room not to think this way.  In terms of compliance violations, some are individual while others are systemic.  The Labor Department wants to remedy these situations and prevent them going forward, and hopes to enlist the GCs or internal compliance office to ensure compliance.  Bishop asked Harris what the Labor Department considers to be the most serious violations, and he said that they focus on hazards that will kill or hurt workers, and on the regulatory side, they're interested in pensions.  There have been heated comments about the card check proposal, but the Administration won't back off.  The health care debate is causing a wait for the Employee Free Choice Act, but Harris said it would be a topic for debate in the early part of 2010.  He believes there is a majority to pass the legislation, but doesn't know for certain.

Bishop then opened up the floor for questions and started with one of his own, asking if there is an agenda for pensions.  Harris answered that there is a multifaceted agenda, which also involves other agencies.  They want to be more transparent and require participants to opt out if they don't want to participate.  He emphasized that the theme for the Obama administration is transparency, so that's the Labor Department's theme as well.  John Graham, the senior Vice-president and General Counsel of XL House, asked what the Labor Department's priorities are on behalf of US workers, so that workers have the skills to succeed in the US.  Harris said that they are looking to reauthorize the act that assured that workers who don't get the skills in elementary and high school can get them so that they succeed.  He said that they are also working with the Education Department to get workers into community colleges.  He feels that it's their job to get workers ready and they are investing a lot of effort in that.  As a follow up to Graham's question, Bishop asked what the Administration's stance on outsourcing is. Saying that a lot of policy is wrapped up in that question, Harris answered that the economy has transitioned and there are categories of work that are now being outsourced.  He feels the US needs free trade agreements and a skilled workforce, so that the sound investment is to invest in the United States.  He cautioned that not every job will be in the US, but those that are will stay here and those workers will succeed.

Margaret McLean, the Vice-president, Chief Legal Officer, and Corporate Secretary of CH2M HILL, asked what role the Department of Labor plays in the Recovery Act.  Harris said that every agency that received any money is engaged in the process of disclosing how that money was spent.  The government has created http://www.recovery.gov, so that any taxpayer can look at a map to see the projects, money spent, and jobs being created in any neighborhood in the US.  The Labor Department went to grantees, contractors and loan recipients to get the information, and all but one provided the information they requested.  Harris said that transparency changes behavior, so they want to translate this to the other organizations that they work with.

Mike McAlevey, Vice-president and Chief Corporate, Securities and Finance Counsel of General Electric, said that as the economy experiences unemployment, it seems that the stimulus is starting to take effect, but there is still very high unemployment.  He asked whether the government was thinking about another stimulus or more government spending in the future.  Harris said that he doesn't think unemployment will remain at 10-12%, but that it will peak in a month or two, and then there will be stability or decline.  He did caution that it will likely be over 8% through 2010.  To deal with that, they will aggressively implement the Recovery Act, and as the pace in spending picks up, there will be a move in jobs.  In the next report, Harris anticipates an accelerated pace of job creation.  There have been discussions of job creation packages for a lot of the jobs that have been seen before in these types of packages.  It may be the time to do something like that now, versus at the beginning of the recession.  He said that now, with GDP growth and stabilizing product markets, it may help with job growth.  Harris finished by saying that he's optimistic that in a year, unemployment will be lower.