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September 2015

Obama administration launches broad pro-worker campaign...

Unable to win congressional approval for minimum-wage hikes and other proposals favored by organized labor and worker groups, President Obama and his appointees have launched a broad effort to accomplish some of the same goals through concerted and coordinated regulatory actions.

This effort cuts a broad swath across government departments and regulatory agencies, from the National Labor Relations Board (NLRB) to the Occupational Safety and Health Administration to the Labor Department.  Some of these actions have been in the works for more than a year while others are far more recent.

But, the net effect is a legal and regulatory environment that attempts to tilt the scales toward employees against their employers, opening the door to higher pay, shorter hours and more government oversight of more businesses.

The NLRB has been at the forefront of these efforts, with the Obama-appointed Democratic majority expanding its definition of employers while making it easier for unions to win quick approval for representation elections.

Expanding employer responsibility for contract or temp workers…

Late last month, the NLRB ruled that a business which uses subcontractors to supply workers can more easily be classified as a joint employer of those contracted employees. The board said that such factors as whether a company exercised control over employees "indirectly through an intermediary, or whether it has reserved the authority to do so" would determine whether that company is a joint-employer with the subcontractor.

The case involved waste management company Browning-Ferris Industries and Leadpoint Business Services, which supplied workers to Browning-Ferris.

Before this far-reaching NLRB decision, a company was required to exercise “direct operational and supervisory control” over contract workers in order to be considered a joint employer.  The new rules say the company could be viewed as a joint employer if it merely has the potential alone to affect working terms and conditions.  So, a company that imposes codes of conduct, for example, on contract or temp workers, risks being seen by the NLRB as a joint employer, creating exposure to wage and labor laws the company sought to avoid by using those workers in the first place.

Labor law experts noted that this ruling, combined with an earlier NLRB holding that MacDonald’s was a joint employer of workers employed by its franchisees, dramatically expands the reach of the NLRB’s regulation under the National Labor Relations Act and the Labor Department’s oversight of wage and hours laws.  These rulings also have implications for employer requirements to provide health insurance coverage under Obamacare—the Affordable Care Act.

Meanwhile, OSHA appears to be moving toward the NLRB’s concept that companies are joint employers with their franchisees.  The International Franchise Association (IFA) claims that OSHA safety investigators have been asking businesses to provide documents about their relationship with franchisees. In a letter to OSHA, IFA said these requests “have nothing to do with the franchisors’ direct involvement in the safety issues” at franchisee locations.

Elizabeth Taylor, IFA’s vice president of government relations, charged that OSHA and the NLRB are pushing to make companies joint employers of their franchise employees to make it easier for unions to organize franchise businesses, calling this effort a “witch hunt” that exceeds the authority of both agencies.

Raising pay and workplace standards without changing federal laws…

As noted previously in this column, President Obama is moving to dramatically expand the number of salaried workers eligible for overtime pay, by raising the salary threshold below which employees who work more than 40 hours a week automatically qualify for time-and-a-half overtime, from the current $23,660 a year to a new level of $50,440 a year.

Under current federal wage rules, a worker earning at least $455 per week ($23,660 annualized salary) is exempt from overtime requirements assuming the worker’s job includes executive, administrative or professional duties.  The proposed rule more than doubles that minimum salary to $970 per week.

This move comes as state and local governments across the country are increasing minimum wage requirements even as Congressional Republicans have repeatedly beat back efforts to raise the federal minimum wage.

Undeterred by the congressional impasse over a minimum wage hike, the Obama administration is using a far-reaching executive order to raise pay and employment standards for government contractors and their subcontractors.  That order requires that all companies with government contracts over $500,000 must disclose whether they have been penalized for violations of 14 federal laws and executive orders.  These include federal wage and hour standards, regulations on health and safety, collective bargaining, family or medical leave or anti-discrimination.

And, prime contractors will be expected to conduct similar reviews of most potential subcontracts over $500,000.

Making it easier for unions to organize workers…

The NLRB’s so-called “ambush election” rules are designed to speed the timetable for providing notice and holding a union organizing election and provide unions with more access to employee information.  So far, they appear to be achieving those goals.

The rules allow posting an election notice only two days after providing notice to the employer and setting of the election at the “earliest date practicable,” requiring the employer to file a written Statement of Position before the customary pre-election hearing and giving NLRB regional directors discretion to decline even to consider claims of ineligible voters or inappropriate bargaining units.  In addition, employers may be required to furnish the union with not only names and addresses, but also e-mail addresses and personal cell phone numbers of employees.

The results are as predicted by business groups, which have so far been unsuccessful in challenging the new rules in the courts.  A study by the law firm Roetzel & Andress found there was a 17% increase in election filings in the first month over the same period last year and a 32% increase from the last month under the old rules.

“The increase in petitions is worrisome for employers, but not as worrisome as the shortened timeframe for the elections,” the law firm said.

The time between when a union files a petition seeking an election to the time when the election occurs used to average about 38 days. Under the new “ambush election” rules, that period was as few as 11-15 days. The law firm further found that the median time between filing a petition and an election is down to 23 days.

Additionally, all of the added requirements and restrictions of the ambush election rules appear to have deterred employers from challenging the petitions. Only four of 280 petitions went to a hearing on their lawfulness, which means 98.5% (instead of the historical 80%) of the petitions resulted in a stipulated election agreement, the law firm found. 

The NLRB rules went into effect this past April, but they have been under almost constant attack from business groups including the National Association of Manufacturers, the U.S. Chamber of Commerce and other organizations.  So far, however, two federal courts have upheld the new rules against challenges from the business groups.

Chemical safety reform is still on track, but time is running short…

Backers of long-stalled updates to the 37-year-old Toxic Substances Control Act (TSCA) insist they are still on track to win passage of legislation this year.  But they admit that time is running short amid a backlog of key budget and highway construction measures that must be approved by the end of September.

It would seem that with 52 Senate sponsors and overwhelming passage in the House, the TSCA reform plan would be a sure thing for quick Senate passage.  But, nothing is certain in Congress these days as any legislation requires at least 60 votes in the Senate to avoid being bogged down by unrelated amendments.  In particular, conservative lawmakers will tie up any legislation open to amendments with proposals to cut funding for Planned Parenthood or to protect the confederate flag, among other issues.

So, despite its broad support, the important TSCA reform measure may have to be attached to a “must-pass” measure such as the highway bill or a resolution to continue funding the government in order to get through the Senate.

“The TSCA legislation is another example of something important that enjoys bipartisan support,” said Senate Majority Leader Mitch McConnell, R-KY. “I’m going to continue to look for things that make a difference for this country…that can clear the Senate, a body that requires 60 votes to do most things.”

The TSCA overhaul is sponsored in the Senate by Senators David Vitter, R-LA, and Tom Udall, D-NM.  “With 52 cosponsors representing 33 states, I am certainly confident that the Senate will pass the Udall-Vitter bill this year,” Vitter said.

One encouraging sign:  Sen. Edward Markey, D-MA, who co-sponsored a competing TSCA bill with Sen. Barbara Boxer, D-CA, former chairman of the Senate Environment and Public Works Committee, has indicated that he can support the Udall-Vitter bill with some minor changes.

Avoiding a government shut-down could hinge on funding Planned Parenthood…

An effort by conservative Republican lawmakers to eliminate more than $500 million in government funding for Planned Parenthood threatens to shut down the federal government unless a confrontation can be avoided.

But, in an ironic twist, it appears that shutting down the government would not shut down Planned Parenthood, which gets most of its support from non-government sources and in any case would continue to receive federal funding even in a government shutdown.

Funding for the federal government under a so-called Continuing Resolution runs out on Sept. 30 unless Congress votes to extend authority for government offices and programs to operate.  Complicating this already complicated situation, a group of House conservatives has vowed to vote against a new spending plan if it includes money for Planned Parenthood. 

Now, a new study by the non-partisan Congressional Research Service (CRS) finds that most of Planned Parenthood’s financial backing comes from outside the government, according to a report in Politico.

And, while Planned Parenthood received $528.4 million in government funding last year, much of that total would continue to flow to the organization because it comes through Medicaid, Children’s Health Insurance and other programs that would either continue in the midst of a shutdown or are already funded through multi-year grants, the CRS study found.

Despite that study, conservative lawmakers have vowed to vote against any funding bill that contains money for Planned Parenthood while Democrats have vowed to oppose any bill that cuts funding for the group.

Republican leaders, while sympathetic to their members, are struggling to develop a plan that would avoid a confrontation over shutting down the government.  They don’t want to be blamed for the disruptions that would result.  So they are looking to stage a series of votes and investigations of Planned Parenthood to mollify conservative lawmakers.


Most companies do not know where their conflict minerals came from…

Most companies using so-called “conflict minerals” were unable to determine the source of those materials, according to a new study by the government’s General Accountability Office (GAO).

The GAO reviewed the first-ever corporate disclosures filed with the Securities and Exchange Commission (SEC) in 2014 under a 2012 federal law that requires disclosure of where companies obtain the four “conflict minerals”—tantalum, tin, tungsten and gold.  The disclosures were required by the Dodd-Frank financial reform legislation after the State Department determined that these minerals were financing conflict in the Democratic Republic of the Congo (DRC) or adjoining countries.

While 94% of the companies using “conflict minerals” reported exercising due diligence to find the source and supply chain for those minerals, two-thirds (67%) of the companies said they were unable to determine the country of origin.  And none of the companies could determine whether the minerals financed or benefited armed groups in the conflict nations, the GAO found.

Meanwhile, a federal appeals court in Washington ruled for the second time that the requirement for companies to publicly disclose their use of conflict minerals is a violation of their corporate First Amendment rights.  The U.S. Court of Appeals for the District of Columbia Circuit said that disclosure requirement was “unconstitutionally compelled speech.”

Legal experts warned, however, that companies using “conflict minerals” must still conduct due diligence on the sourcing of these materials and report their findings to the SEC.  The court ruling applies only to the requirement that companies include information in their public reports.