- June 2016
While we are not seeing a rush of legislation this year, the Federal regulators are very busy. It is not uncommon for an outgoing Administration to rush through regulations in its last year in office, and this Administration is certainly no exception.
The Fall 2015 Unified Agenda of Federal Regulations
Every Administration is required to release a unified Regulatory Agenda twice a year in which each agency reports on its new and on-going regulatory actions. The Obama Administration has repeatedly tried to underplay its Regulatory Agendas, and did not release the Fall 2015 agenda until the Friday before Thanksgiving. While most people were not paying close attention, the release did not entirely escape scrutiny. A November 23rd story in Forbes ran with this delightful headline: Big Sexy Holiday Fun With The Fall 2015 Unified Agenda Of Federal Regulations.
Beyond the headline, the Forbes story was far less entertaining, but very informative. According to Forbes’ analysis, the 2015 Fall Agenda includes 3,297 rules and regulations either active, completed, or scheduled for long-term consideration. More significant than the total number of proposed regulations is the number that are considered “economically significant” – costing more than $100 million annually. This is where the Obama regulatory agenda is most troubling.
A graph produced by the George Washington University Regulatory Studies Center paints the picture well, showing that since 2010 at least, the Obama Administration has proposed a significantly larger number of costly regulations than either President Bush or President Clinton.
To put this data into numbers, according to research released by the American Action Forum (AAF), the economic cost of the Fall 2015 Agenda will be at least $118 billion. And that cost is an analysis of just 38 of the “economically significant” regulations; it does not include “the cost of proposed rulemakings not yet published, nor the countless other rules that will be final next year, but were excluded from this agenda.”
Further according to AAF research, since January 1st there have been 97 new Final Rules costing $86.4 billion, and 52 new Proposed Rules costing $21.2 billion – a total of 38,060 pages of regulation costing a total of more than $107 billion. And there is no relief in sight. The Spring 2016 Regulatory Agenda was just released in mid-May and while analyses are still preliminary, AAF reports that it includes an additional $113 billion in regulatory costs – and this estimate covers just 40 or so of the likely hundreds of final rules stemming from the report.
Congressional action and options
The GOP Congress has railed against the Administration’s agenda, holding hearings and considering legislation to roll back some of the more significant regulations. There is also legislation to reform our regulatory processes. One bill, the “Regulations from the Executive in Need of Scrutiny (REINS) Act” would subject executive branch regulations to Congressional review. Another bill with even broader business support is the Regulatory Accountability Act, which would reform the regulatory process from the beginning, rather than using the REINS Act’s retroactive approach. Both bills have passed the House, but have not been taken up in the Senate.
Even without new legislation, Congress does have one option under current law: the Congressional Review Act (CRA). Under the CRA, Congress can pass legislation to reverse a specific regulation with an expedited floor procedure – in order words, with a time limit on debate and not subject to a Senate filibuster so it can pass with a simple majority vote. A CRA resolution must be introduced within 60 legislative days in the House/60 session days in the Senate (not calendar days) of Congress being notified of a new regulation, and a successfully-passed CRA resolution must be signed by the president or his/her veto overridden. Last year both houses of Congress passed a CRA resolution revoking the NLRB’s “Ambush Election” rule. President Obama of course vetoed the resolution, and neither house of Congress had the necessary two-thirds vote to override the veto.
Given the veto power of a sitting president whose regulation is challenged by a CRA resolution, the utility of the law is obviously limited. In fact, there has been only one successful CRA revocation of a regulation. In late 2000, in the last months of the Clinton Administration, OSHA proposed very controversial ergonomics regulations. In early 2001, within 60 session-days of the issuing of the regulation, Congress passed a CRA resolution revoking the Ergonomics regulations, and sent that resolution to newly-elected President Bush for his signature. (As an ironic aside, President Clinton had signed into law in 1996 the statute that created the CRA and allowed the revocation of his OSHA regulation.)
The parallel for us today is obvious: If Republicans remain in control of the Congress and if a Republican wins the White House in November, a new GOP president would sign into law any CRA resolutions passed by a GOP-led Congress revoking regulations finalized by the Obama Administration late enough in the year to be within the 60-session-day window.
While those “ifs” are notable and daunting, the possibilities for use of the CRA in 2017 are real, and analysts are looking at the legislative calendar to try to determine just when the 60-session-day window opens for the next Congress. Early analyses suggested that the deadline for final rules to avoid a CRA action would be May 17th, but that date may have slipped because of the short congressional calendar.
It would appear that the Obama Administration is also looking at that calendar. While many presidents have waited until late in their last year in office to release controversial regulations – the Clinton ergo rule was released in November, 2000 – this Administration is not following that course, and is instead moving much of their agenda early enough in the year to preclude a CRA action.
NAW and Business Community Response to Workplace/Labor regulations:
The most active federal agencies – and those with the most immediate impact on the workplace – are OHSA, EBSA, W&D, OFCCP, FLSA, OLMS … the whole alphabet soup of regulatory agencies within the Department of Labor (DoL). And, even more threatening to business, the National Labor Relations Board (NLRB) continues to pursue its rule-making and aggressive case law agenda.
In response to the regulatory threat in the labor area, the Coalition for a Democratic Workplace (CDW) – the business coalition organized to oppose card check legislation which NAW helps manage – has committed extensive time and resources to fighting the regulations and NLRB case decisions that threaten employers’ ability to manage their own places of business. To increase our effectiveness, the coalition retained labor counsel to follow the regulatory agenda and coordinate the filing of comments and amicus briefs in response to agency rulemaking and to take our case for regulatory restraint to court.
We successfully challenged the Board’s Notice Posting rule, and their original “Ambush elections” rule, and filed an unsuccessful challenge to their second “Ambush” rule. We filed amicus briefs in other cases, including in several “Specialty Healthcare” cases in which the Board paved the way for the creation of multiple “micro” collective bargaining units in a single workplace. And on March 31st we filed a court challenge to the Department of Labor’s ill-conceived “Persuader” Rule. These actions are all in addition to our multiple challenges to the legitimacy of the “recess” appointed Board members.
NAW and many of our member associations have lent their names to these briefs and comments, and we will continue to do so through the next year. We have also worked with Congress on legislation and hearings responding to the labor regulatory agenda. And we will certainly look forward to the opportunity to see CRA resolutions signed into law next year if all the pieces fall into place on the timing of the release of the regulations and the outcome of the elections.
An overview of specific regulations
While the complete list of regulations is too long to cover in this report, a brief listing of some of the most troubling of the on-going and proposed rule-makings and case decisions of DoL and the NLRB follows. To access additional detailed information on this regulatory agenda, go to:
NLRB “Ambush Elections” rule to speed up union organizing elections: The Board’s first rule was promulgated in 2011; CDW and others challenged in court and the court struck down rule in 2012. The Board promulgated a new Ambush rule in February, 2014. NAW filed comments in opposition to this new rule, and signed onto comments filed by CDW as well. The Board, largely ignoring business concerns, promulgated a final rule late last year. In early January CDW and coalition partners filed a challenge to the new Ambush rule in court. A second court challenge was also filed. Unfortunately, both the DC Court and the 5th Circuit Court of Appeals upheld the rule, which has now been in effect since April 2015. A strategic decision was made not to appeal the court decisions.
Affirmative action: The Office of Federal Contract Compliance Programs (OFCCP) issued new regulations requiring contractors to set affirmative action hiring goals for the disabled.
Protected concerted activity: The NLRB has issued a number of decisions on the right of employees to comment negatively on their employers on Social Media as “protected concerted activity,” in response to which employers should review their social media policies – or implement one if needed.
The NLRB continues to reach into non-union workplaces through additional expansion of “protected concerted activity,” which they have now ruled applies to issues involving arbitration agreements, confidentially requirements during internal employee investigations, “at will” employment agreements, improper behavior, disrespectful conduct. The Board even held that the posting of a company policy against workplace violence interfered with employee rights.
Micro Bargaining units: The NLRB continues to apply their “Specialty Healthcare” decision regarding what constitutes an appropriate collective bargaining unit to other companies and industries, and several companies have challenged these decisions in Federal court.
“Blacklisting” Executive Order: In July, 2014, President Obama issued an executive order requiring most federal contractors to disclose previous citations under more than a dozen separate labor laws to the government both before and after being awarded government contracts. When the regulations implementing this “blacklisting” executive order are final, they will almost certainly be challenged in court.
Joint Employer Standard: In July, 2014, the NLRB General Counsel issued a decision reversing decades of precedent defining what a “joint employer” is for purposes of union organizing; in this case determining that McDonalds and its franchisees are joint employers. In December the General Counsel followed up by issuing 13 complaints against McDonalds for the employment decisions of franchisees. This “joint employer” decision will have far-reaching impact outside the franchise industry; in fact, the original decision involved not a franchise entity but a recycling company (Browning-Ferris) which hired a firm (Leadpoint) that supplies workers at recycling plants.
Access to employer email system: In December, 2014, the Board issued a decision (Purple Communications), finding that employees have a right under the National Labor Relations Act to use their employer’s email system for organizing purposes absent a showing by the employer of special circumstances.
Fair Labor Standards Act: In June 30, 2015, DoL issued a Notice of Proposed Rulemaking (NPRM) proposing changes to regulations governing which employees can be deemed exempt from overtime pay under the FLSA’s “white collar exemption” – Exemption for Executive, Administrative, Professional, Outside Sales, and Computer Employees (EAP). The proposed rule would have more than doubled the salary threshold – the minimum salary an employee must earn to be classified as exempt from overtime – from $455 weekly/$23,660 annually to $970/$50,440; increased the salary for “highly compensated” from $100,000 a year to $122,148; and created a mechanism to index those salaries so they rise regularly.
The proposed new salary would “apply to all employees nationwide, including employees who work in low-wage regions and low-wage industries” and would take effect 60 days from the release of the Final Rule.
NAW filed comments with DoL objecting to the proposed new rule, and joined in comments submitted by the Partnership to Protect Workplace Opportunity, the business coalition coordinating business community response to this rule. DoL received almost 270,000 comments in response to the NPRM.
In March, 2016, DoL sent the overtime rule to the Office of Management and Budget (OMB) for its required review; NAW and PPWO filed comments with OMB, and NAW member companies requested and conducted a meeting with government officials to explain the negative impact of the proposed rule on their businesses.
DoL released its final overtime rule on May 18th with a minimum salary threshold of $47,476 – only slightly less than the $50,440 originally proposed. Although the new rule is still highly objectionable and costly, a number of significant changes were made from the NPRM:
Bonuses and commissions will be allowed to satisfy 10% of the minimum salary threshold, a surprise since they had indicated they would not consider commissions;
The bonuses and commissions can be paid quarterly, which is also an improvement from the proposed rule, and catch-up payments can be made within one week of the end of the quarter;
The rule will take effect December 1, 2016 – a 6-month period rather than the originally-proposed 60 days; and
- The salary threshold will increase automatically every three years, not annually as originally proposed, and it will be tied to the 40th percentile of wages in the lowest wage region of the country.
Legislative efforts are being pursued to roll back or at least postpone this rule, but an Obama veto of any legislative remedy is likely.