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Appropriations Committee Moves to Defund Harmful Labor Regulations

Yesterday, the full House Appropriations Committee held a markup of the Labor, Health and Human Services appropriations bill, which defunds numerous harmful regulations implemented by the Department of Labor (DOL) and the National Labor Relations Board (NLRB). These rulings from the past few years include the DOL’s overtime and fiduciary rules, the NLRB’s new joint employer standard, and ambush election rules among others. Democrats on the committee failed to block these provisions on Wednesday, yet the bill still has an uphill battle through the legislative process.

Let’s take a look at the policies.

Overtime Rule: The rule, set to come into effect on December 1, 2016, almost doubles the salaried threshold for overtime pay, from $23,660 to $47,476. This new regulation has widespread impacts on private-sector businesses, non-profits, and universities.

Universities, for instance, have fixed budgets that are often set by the state, yet will face millions of dollars of increased pay by either increasing salaries above the threshold or by paying the time and a half overtime rate. Furthermore, small businesses are at extreme risk from the new rule, punishing entrepreneurs’ already limited budgets to the point that their venture has no room for growth. Non-profits are in the same boat, struggling to figure out how to cover the extra costs.

To put the costs into perspective, the National Retail Federation projects this rule will cost retail and restaurant businesses $745 million, and the total cost on society will be more than $5 billion. These are just the downside from the employer’s viewpoint; employees face job loss as well as limits on their hours. Being available to work extra hours show one’s dedication and work ethic, characteristics that are often rewarded

Fiduciary Rule: The language also hopes to prevent the Fiduciary Rule from coming into effect in April 2017. The DOL’s rule implies that individuals cannot wisely manage their retirement funds on their own, as well as limits what investors can do in the broad, yet prohibitive best interest of investors. Furthermore, the rule would create a “guidance gap” that would harm mainly middle-class investors who would have to pay larger fees as a result due to certain investment methods now being off limit for retirement investing. Competitive Enterprise Institute’s John Berlau has discussed the rule at length, while also suggesting that “The fiduciary rule is like Obamacare for your IRA and 401(k). If you like your brokers and investments, you might not be able to keep them.”

Joint Employer Standard:  The NLRB’s new, broad joint employer standard opens companies up to liability for labor violations by another company that they contract with. The standard also makes the commonplace use of contractors a risky endeavor when considering the increased liability. CEI wrote a letter of support for this House Appropriations Bill specifically for the defunding of the joint employer standard.

The new standard threatens entrepreneurship, small business and job creation; however, it also deters companies from expanding Corporate Social Responsibility (CSR) policies—policies President Obama has commended—as seen with the liability that can accompany CSR policies like in the Microsoft case.

Ambush Election Rule:  On April 14, 2015 this NLRB rule went into effect, altering how union elections are run. The intent behind the NLRB changing union representation case procedures is to limit the amount of time employees have to educate themselves on the impact of unionization before a union election. The rule shortens the time between filing of a petition to the date of the vote to as little as 14 days. Altogether, from 2013 to 2015, the median number of days from the petition to the election being conducted dropped from 38 to 33 days, while the percentage of elections going in favor of unions has jumped from 64% to just over 70%.

Quite possibly the worst element of the rule is the potential for privacy violations of employees, in which companies are required to hand over their employees' personal information—telephone numbers, email addresses and work shifts—to unions. This is worrisome because of many documented cases of information abuse even before the rule was in place, like the Communication Workers of America maliciously subscribing one woman to thousands of magazines which resulted in extensive costs in both time and money to resolve.

This new rule will make people more vulnerable to union harassment. Furthermore, even the NLRB recognizes that the rule could lead to “selling the list to telemarketers, (2) providing it to a political campaign, or (3) using the list to harass, coerce, or rob employees.”

Micro-Unions: This NLRB decision in Specialty Healthcare fundamentally changed the standard for an “appropriate bargaining unit.” Prior to the above decision, the NLRB historically deemed a bargaining unit appropriate when it includes all workers—a wall-to-wall unit—at a workplace who share a “community of interest,” such as similar wages, job functions, location, and skills. All of these employees would then participate in the organization, and receive the representation of any prospective union supported by a majority of workers. Only employees with distinct attributes and interests could form a separate union or abstain from representation.

However, Specialty Healthcare created what is known as “micro-unions.” The ruling has been described as “allowing organized labor to gerrymander units and disenfranchise employees that oppose unionization.” The new standard allows a union to cherry-pick employees to “the extent to which the employees are organized.” A standard that the NLRB has long held cannot be determinative when deciding the appropriateness of a bargaining unit.

Native American NLRA exemption: In recent years the NLRB has made efforts to force Native American businesses on sovereign land to have to abide by the National Labor Relations Act (NLRA). While some may not consider this out of place due to commonplace employment of American citizens on Native American land, this is a recent development. The NLRA was passed in 1935, yet the first time it was held to be applicable to Native American sovereign land was 2004. The appropriations bill language would exempt Native American tribes and their sovereign territory from the jurisdiction of the NLRA. Native Americans have a long, litigious history with the NLRB, yet it is unclear why the federal government is overreaching its bounds to enforce a hotly contested act on independent land. In the past, government interference with Native American businesses on sovereign land has mostly been in the context of casino employees, yet the language of this bill will re-exempt these lands from the grasps of Big Labor.

While the eventual fate of the appropriations bill is unclear, it is good to know that Congress is aware of the chaos that the Obama administration is having on the economy. It is a hopeful sign that Congress will continue to support the defunding of labor rules that unfairly benefit Big Labor at the expense of worker choice and economic prosperity.