June Government Updates

NLRB Proposes Rulemaking on Joint Employer Standard

National Labor Relations Board (NLRB) Chairman John Ring announced on June 5 that the Board would issue a rulemaking this summer clarifying the standard for joint employer liability. The announcement follows months of confusion concerning the current definition of joint employer liability. Chairman Ring stated in the announcement that a rulemaking will provide more certainty regarding the standard and eliminate any concerns about ethical restrictions on pending cases.

In December 2017, the Board voted three to two to return to the traditional “joint employer” standard, which requires a business to have a direct and immediate connection to the employees in question to be held jointly liable for labor violations. The decision was then vacated in February 2018 following a memo issued by the NLRB Inspector General stating that Board member William Emanuel should have recused himself from the case involving Hy-Brand Industrial Contractors (Hy-Brand) because of a potential conflict of interest.

On April 5, NLRB General Counsel Peter Robb filed a response disapproving of the Board’s decision to exclude Emanuel from deliberations in vacating the Hy-Brand case, claiming the Board ignored precedent and may even have broken the law in doing so.

Adding to the flurry of activity, on April 12, John Ring was sworn in as the new NLRB Chairman. Republican members continue to have a 3-2 majority on the five-member board. While there is now a Republican majority at NLRB, it does not resolve William Emmanuel’s recusal from the Hy-Brand case that would return to a traditional standard for joint employer liability. As such, the NLRB has chosen to address the issue through a rulemaking.

BSCAI members should be aware that despite the enforcement climate under the Trump Administration, the broader standard for joint employer liability remains in place. BSCAI plans to submit comments once a formal proposal is issued by NLRB.

ICE Increases Worksite Enforcement

Less than seven months after U.S. Immigration and Customs Enforcement (ICE) Deputy Director Thomas Homan issued a directive that called for increased worksite enforcement investigations to ensure U.S. businesses maintain a culture of compliance, the agency’s Homeland Security Investigations (HSI) has already doubled the amount of ongoing worksite cases for the current fiscal year (Fiscal Year 2018) compared to the last fully completed fiscal year.

From October 1, 2017, through May 4, 2018, HSI opened 3,510 worksite investigations; initiated 2,282 I-9 audits; and made 594 criminal and 610 administrative worksite-related arrests, respectively. In comparison, for fiscal year 2017 – running October 2016 to September 2017 – HSI opened 1,716 worksite investigations; initiated 1,360 I-9 audits; and made 139 criminal arrests and 172 administrative arrests related to worksite enforcement.

“Employers need to understand that the integrity of their employment records is just as important to the federal government as the integrity of their tax files and banking records. All industries, regardless of size, location and type are expected to comply with the law,” said Derek Benner, Acting Executive Associate Director for ICE’s HSI division.

BSCAI Signs Letter Seeking Action on Workforce Development Programs

BSCAI has joined over 400 organizations in signing a letter that asks the Senate Committee on Health, Education, Labor, and Pensions (HELP) to swiftly consider and approve a reauthorization of The Carl D. Perkins Career and Technical Education Act that has provided federal support to state and local career and technical education (CTE) programs since 1984.

Last summer, the House of Representatives approved the Strengthening Career and Technical Education for the 21st Century Act (H.R. 2353) by a voice vote. The bipartisan legislation would reauthorize The Perkins Act and help more Americans — especially young Americans — enter the workforce with the knowledge and skills they need to compete for good-paying, in-demand jobs in industries critical to the nation’s economy. The Senate has yet to introduce or consider similar legislation.

Click here to view the letter.

Supreme Court Upholds Enforceability of Class Action Waiver in Arbitration Agreements

In a 5-4 decision, the Supreme Court decided in the case of NLRB v. Murphy Oil USA that arbitration agreements that waive employees’ ability to file class action lawsuits are legal. Justice Neil Gorsuch delivered the opinion and was joined by Chief Justice Roberts as well as Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito.  Justice Ruth Bader Ginsburg dissented, and was joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan.  

The decision states that “Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the National Labor Relations Act (NLRA) suggests otherwise.” 

The case was originally heard by the NLRB in 2014; the Board’s decision claimed the right to file a class action lawsuit is protected concerted activity under the NLRA and therefore arbitration agreements with class action waivers violate employees’ Section 7 right to act collectively.

The case was then appealed to the Fifth Circuit in 2015. In its decision the Fifth Circuit disagreed with the NLRB’s assertion, believing that class action waivers in arbitration agreements did not violate the NLRA.  Justice Gorsuch similarly wrote in his opinion that Section 7 “focuses on the right to organize unions and bargain collectively. It does not mention class or collective action procedures or even hint at a clear and manifest wish to displace the Arbitration Act. It is unlikely that Congress wished to confer a right to class or collective actions in Section 7, since those procedures were hardly known when the NLRA was adopted in 1935.”

NLRB Issues Guidance on Handbook Rules

NLRB General Counsel Peter Robb has issued guidance to Regional Directors on how to evaluate handbook rules in light of the Board’s decision in The Boeing Company. Last December, the Board established a new standard for the legality of employee work rules.

In the Boeing decision the Board replaced the Lutheran Heritage “reasonably construe” standard with a new test for the Board to use when evaluating the validity of employer rules, policies, and handbook provisions under the National Labor Relations Act.  In the Boeing case, the Board wrote that it will evaluate “the nature and extent of the potential impact on NLRA rights, and legitimate justifications associated with the rule” when evaluating employer policies that may interfere with the exercise of NLRA rights. The Board also announced the outline of three categories of work rules to provide clarity to employers, employees, and unions—Rules that are Generally Lawful to Maintain, Rules Warranting Individualized Scrutiny, and Rules that are Unlawful to Maintain.

The General Counsel’s memo “contains general guidance for Regions regarding the placement of various types of rules into the three categories set out in Boeing, and regarding the Section 7 interests, business justifications, and other considerations that Regions should take into account in arguing to the Board that specific Category 2 rules are unlawful.”

Senate Bill Introduced Suspending Health Insurance Tax for 2020

House and Senate lawmakers have introduced legislation suspending the health insurance tax (HIT) for 2020. A bipartisan group of House lawmakers introduced the Health Insurance Premium Reduction Act (H.R. 5863) on May 24. Identical legislation was introduced by Sen. John Barrasso (R-WY) on June 13. In January, the HIT was suspended for 2019 as part of a short-term agreement funding government operations.

As part of President Obama’s health care reform bill passed in 2010, the Affordable Care Act (ACA) created a new tax on a type of health care plan offered by many small businesses. The HIT is levied against companies offering fully insured plans that is then passed on to employers and employees in the form of higher premiums.

The HIT first took effect in 2014 and was $8 billion. For 2015 and 2016, the tax was $11.3 billion annually. It was suspended for 2017. However, the tax has returned for 2018 and is $14.3 billion. The HIT is suspended for 2019. In 2020 and beyond, the HIT increases annually based on premium growth.

House and Senate Democrats Introduce Bill Favorable to Labor Union Organizing

Seeking to make it easier for employees to organize and join a labor union, House and Senate Democrats have introduced Workplace Democracy Act (H.R. 5728, S. 2810). The legislation not only contains the card check and interest arbitration provisions, but also would codify the vague and expansive Browning-Ferris joint employer standard, abolish Right to Work protections nationwide, codify the Obama-era Persuader rule, make it much harder for people to work as independent contractors and eliminate any restrictions on unions targeting consumers and neutral companies (i.e., those not directly involved in the labor dispute). The bill was introduced on May 9 by 16 House Democrats and 12 Senate Democrats, including 2020 Presidential hopefuls Bernie Sanders, Elizabeth Warren, Kirsten Gillibrand and Cory Booker. 

While the legislation is unlikely to be signed into law anytime soon, employer groups are very concerned about moderate members of congress endorsing any of the provisions in this bill and how that might translate into support for future federal, state and local laws and regulations. BSCAI is monitoring the legislation and companion efforts at the state and local levels that could employee-employer relationships.