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Last Chance for the 115th: Legislative Action on Labor and Employment

This June here at OpenMarket we’ll be looking at what the 115th Congress, which began January 3, 2017 and runs through January 3, 2019, has accomplished so far and what might still be achieved for limited government and free markets before it’s over. Read more about the Competitive Enterprise Institute’s recommendations for legislative reform here

Lawmakers have made little to no progress during the 115th Congress to improve labor and employment policy. U.S. labor law is outdated and in need of modernization. In December 2016, the Competitive Enterprise Institute released its “Agenda for Congress” outlining several opportunities to update labor law in order to increase worker choice and flexibility and remove onerous burdens on job creators.

Unfortunately, little headway has been made to liberate the labor market, and it is unlikely that Congress takes any action before the end of the 115th session. Below is a snapshot of the meager progress made on labor and employment legislation over the past two years.

Labor reform suggested in CEI’s Agenda for Congress can be easily divided into two categories—legislation that modifies the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA).

Recommended reform to the FLSA focused on lifting restrictions on flexible work arrangements.

A major focus of the Agenda for Congress was reforming overtime requirements. In some respect, Congress was let off the hook because Eastern Texas District Court struck down the Obama administration’s overtime rule that, among other changes, raised the overtime salary threshold from $23,660 to $47,476. The Court ruled that the Obama administration crafted an overtime rule that disregarded the intent of the law. The Trump administration has plans to issue a new rule, and CEI submitted comments in response to the Labor Department’s Request for Information on how best to craft an overtime regulation.

However, more needs to be done than to just nullify Obama administration policies. Congress needs to reform antiquated wage and hour laws that impede employers and employees from coming up with creative solutions to allow for flexible work schedules that workers desire.

Instead of restricting how individuals may work, Congress needs to reform the FLSA to allow employers to offer compensatory time instead of overtime pay. As I wrote in the Hill:

One solution to that problem is a proposal from Representative Martha Roby (R-Ala.) to amend the Fair Labor Standards Act, the primary federal wage and hour law, to expand choices when it comes to workers’ time. The Working Families Flexibility Act allows employers to offer employees what is known as compensatory, or “comp,” time, instead of overtime wages. With this legislation, a worker would be allowed to choose whether to take overtime compensation or receive paid “comp” time, both accruing at 1.5 times overtime hours worked.

CEI also sent a coalition letter to Congress in support of The Working Families Flexibility Act (H.R. 1180 and S. 801). Like many other bills, the Working Families Flexibility Act passed the House but has languished in the Senate.

Another area of the FLSA that CEI sees as an opportunity to reform is the worker classification process. The FLSA has one of the broadest definitions of employee. This restricts workers’ ability to engage in work as independent contractors.

Further, a patchwork of more than ten different federal and state statutes have varying definitions of “employee.” This lack of certainty creates an unfair playing field for independent contractors. Congress has an opportunity to simplify and harmonize the definition of “employee,” which will allow businesses to hire independent contractors without fear of litigation or running afoul of the Labor Department. Recently, CEI signed onto a coalition letter that would redefine and harmonize the definition of employee across several statutes including the FLSA. Here is a description of the H.R. 3825, the Harmonization of Coverage Act of 2017:

H.R. 3825 would achieve a harmonized definition of the term employee for purposes of federal statutes. It would conform the Fair Labor Standards Act (“FLSA”) to the other New Deal statutes that were enacted during the same era that all now follow a common-law definition for the term employee. And it would conform the FLSA to the more recent U.S. Supreme Court decisions that adopt a common-law test for the term “employee” for purposes of statutes, such as the FLSA, that define the term with a definition that is circular.

Unfortunately, H.R. 3825 has not made any progress in the House and has only been introduced by Rep. Diane Black (R-TN). 

CEI has long advocated for legislation to greatly reduce the National Labor Relations Board’s adjudicatory and rulemaking authority. The Board has become a highly politicized agency where case precedent flip-flops in favor of organized labor or management, depending on whether a Democrat or Republican holds the presidency.

CEI recommends implementing the reforms included in the Employee Rights Act H.R.2723, which reforms many provision in the NLRA and protects worker freedom to choose.

The ERA would modernize U.S. labor law by expanding worker freedom and increase union accountability to membership. The bill requires secret ballots in union organizing elections; require union recertification election to ensure workers voluntarily choose union representation and do not inherit them; give employees the right to opt out of sharing their private information during a union organizing campaign, among other pro-worker provisions.

Even though the ERA has 153 co-sponsors in the House, it still has not been afforded a vote.  

Last, CEI recommended Congress pass legislation, and led a coalition, to restore the traditional joint employer standard. During the Obama administration, the NLRB issued a decision Browning-Ferris that redefined the joint employer standard and created near-unlimited liability and uncertainty for employers.

To relieve the business community of this uncertainty, Rep. Bradley Byrne (R-AL) introduced the Save Local Business Act H.R. 3441. The legislation would reestablish the longtime standard of when two businesses would be held jointly liable for workplace rules and policies. In October of 2017, the House passed the Save Local Business Act.

The 115th session of Congress was not fruitful in terms of passing legislation to reform outdated U.S. labor law. Perhaps there is still time for a last ditch effort to implement legislation that protects worker freedom or allows for flexible work arrangements.

Read previous posts in the “Last Chance for the 115th” series: