Update on Labor Issues

PRO Act:  NAW has reported repeatedly over the last several years on organized labor’s top legislative priority, the union-written and anti-worker Protecting the Right to Organize (PRO) Act.  This radical bill would, among many other things, remove secret ballots from union certification elections and repeal all state right to work laws.  It has been introduced in both houses of Congress several times, has previously passed the House, but has never passed the Senate.

The PRO Act has just been re-introduced in both the House and Senate.  Given the GOP control of the House this Congress, it is highly unlikely that this bill will pass that chamber, despite the fact that Republican Representative Brian Fitzpatrick (R-PA) is an original cosponsor.  But the Senate Health, Education, Labor and Pensions (HELP) Committee is now chaired by Senator Bernie Sanders (I-VT), and he has scheduled a hearing this week – ridiculously described as Defending the Right of Workers to Organize Unions Free from Illegal Corporate Union Busting – that is expected to focus on the PRO Act.

The past few years have shown “messaging bills” can become day one agenda items in future Congresses. Therefore, NAW, as it has during past legislative debates, expects to help organize and lead the legislative push back on this issue.

“Investigation into violations of Federal labor law by major corporations:” HELP Committee Chair Sanders is also seeking authority to investigate unspecified violations of labor law by unidentified businesses, “including authorizing the Committee to hold hearings for the purpose of taking sworn testimony and testimony by subpoenaed witnesses in this investigation.”   This broad overreach and abuse of power is described by Chair Sanders: 

The Senate [HELP] Committee . . . will vote . . . to initiate an investigation into violations of federal labor laws by major corporations relating to the Committee’s jurisdiction over issues including mediation and arbitration of labor disputes; occupational safety and health; and wages and hours of labor. . . . Workers have, in recent years, shown increased interest in joining together to collectively bargain for improved working conditions, wages, and benefits. Those efforts have been met with strong resistance from major corporations trying to stifle workers who advocate for improved working conditions and impede the National Labor Relations Board (NLRB or Board) and Congressional oversight efforts. . .

NAW worked with allied organizations in the last few days to collect signatures on a letter from industry trade groups to members of the HELP Committee to “express our opposition to the granting of such untethered authority.” 

Labor policy nominations:  Several nominations for senior administration positions in labor policy areas are now or soon will be pending in the Senate:

Julie Su as Secretary of Labor:  Labor Secretary Marty Walsh has announced his resignation and President Biden is nominating Deputy Labor Secretary Julie Su to become the new cabinet member.  Ms. Su was California Labor Secretary during the pandemic and oversaw what is believed to be the most fraud-plagued unemployment program in the country, in which according to her own admission, at least $31 billion in fraudulent claims were paid.  She was also an architect of California AB5, a law which attempted to make it nearly impossible for a worker to be classified as an independent contractor.  As written, AB5 would have likely driven both Uber and Lyft out of the state, but was so unpopular that almost 59% of Californians voted for a ballot measure to exempt ride share drivers from the law.

Jessica Looman as Administrator of the Wage and Hour Division (WHD): Ms. Looman has been running the WHD since the Senate rejected the nomination of David Weil to be the agency Administrator after opposition led by NAW and like-minded business groups.  It’s unclear how quickly her nomination will move – she did not get confirmed in the last Congress and the President has just re-submitted her nomination to the Senate – but we are advised that the long-awaited and long-delayed Fair Labor Standards Act (FLSA) overtime rule can be expected some time in May, so we expect the HELP Committee will try to move her confirmation vote quickly.

Kalpana Kotagal as Member of the Equal Employment Opportunity Commission:   Ms. Kotagal was nominated last year, but her confirmation failed on a deadlock last year in the HELP Committee.  Her confirmation this spring would give the EEOC a working Democratic majority.  Last fall, before her nomination failed, Senators Shelly Moore Capito (R-WV) and Mike Braun (R-IN) (the only wholesaler-distributor in the Senate) wrote an op-ed opposing her highly controversial nomination, in which they wrote that:

With Ms. Kotogal at the EEOC, we would have another federal agency whose mission would be to advance an agenda at the expense of those they are chartered to help. . . Ms. Kotogal has tried to downplay her beliefs on fossil fuel and her activist positions. But there is not much left unclear when she says, “the connection between addressing climate change and adapting to its effects and furthering social justice and equity is a crucial one.”

NAW Personnel Announcement:   Seth Waugh, NAW’s Vice President of Government Relations, is leaving us at the end of this week. His departure is NAW’s loss, but the House Education and the Workforce Committee’s gain. Waugh will return to civil service as the Labor Director for the House Education and Workforce Committee, managing a large team of attorneys and other staff members.

Waugh led NAW’s labor, transportation and infrastructure portfolios and played a key role in several business coalitions. He capably led NAW’s efforts to keep distributors considered “essential” throughout the pandemic; captained NAW’s successful efforts stave off the PRO Act and to defeat the nomination of the radically left David Weil to lead the Wage and Hour Division in the Department of Labor – the first President Biden nominee to have been defeated on the floor of the Senate.

NAW will miss Seth, and we wish him well in his new endeavors.

Legislative update 

The House and Senate continue to work at a slow pace. The House was out for two weeks in February and continued to vote on messaging bills designed to appeal to the conservative base. The Senate largely continued to focus on executive and judicial nominations.  

Even so, there have been a few notable developments, starting with President Biden unexpectedly announcing last week that he would not veto a Congressional resolution overriding the District of Columbia crime bill.  

The D.C. crime bill has attracted criticism from Republicans and some moderate Democrats. The proposal eliminated mandatory minimum sentences for all crimes except first degree murder and reduced penalties for violent crimes like burglary, carjacking, and robberies. D.C. Mayor Muriel Bowser vetoed the legislation arguing it contained controversial policy proposals and would not improve public safety, however, the D.C. council overrode the veto.  

Last month, House Republicans took up a resolution blocking the bill. It was believed that the White House would veto the resolution based on the release of a Statement of Administration Policy in opposition to the proposal.

Instead, Biden announced to Senate Democrats last week that he would not veto the bill if passed by the Senate, a fact that reportedly enraged House Democrats. Media reports have contained anonymous quotes from irate lawmakers with one describing the situation as “#$%^&*! amateur hour.” Given Biden’s position on the resolution, it is expected that the Senate will soon approve it and override the D.C. crime bill on a bipartisan basis.

The House and Senate also passed a Congressional Review Act (CRA) resolution blocking the Department of Labor’s rule allowing retirement plan fiduciaries to consider environmental, social, and governance (ESG) factors when making investment decisions and exercising shareholder rights. This new DOL rule reverses a Trump administration rule that stated that retirement plan fiduciaries must make decisions based only on the financial benefits to the plan and participants.

The resolution was passed largely along party line votes with one House Democrat, Rep. Jared Golden (D-ME) and two Senate Democrats, Joe Manchin (D-WV) and Jon Tester (D-MT) voting to block the bill. In contrast to the resolution blocking the D.C. crime bill, it is expected that President Biden will veto the CRA blocking the ESG rule. 

Looking ahead, the Senate is expected to be in session for all of March, while the House will be in for three of the next four weeks. It is expected the Senate will continue working on nominations including beginning consideration of a new Labor Secretary and a floor vote to approve the new IRS Commissioner. The House is expected to continue working on oversight over the Biden administration and develop legislation related to their “Commitment to America,” a 2022 campaign document which includes proposals related to economic growth, energy independence and permitting reform, supply chains, and national security. More information on this agenda can be found here.  

Amazon update 

Senator Amy Klobuchar (D-MN), the Chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, will be holding a hearing related to Big Tech on Tuesday, March 7^th at 3:00 pm. The hearing is titled “Reining in Dominant Digital Platforms: Restoring Competition to Our Digital Markets.” A live video of the hearing can be found here. 

This is likely the first step toward reintroducing the American Innovation and Choice Online Act, and NAW expects Amazon’s unfair treatment of third-party sellers to be one of the main topics of discussion. There are several Republicans and Democrats on the Subcommittee that have supported AICOA, so the hearing will be an opportunity to build consensus on the legislation. 

Following this hearing, we expect Sen. Klobuchar to formally reintroduce AICOA in the next couple of months and attempt to pass it through the Judiciary Committee. The legislation passed the Committee on a bipartisan basis last Congress, and this should occur again this year. A strong showing will be critical to efforts to persuade Senate Majority Leader Chuck Schumer (D-NY) to hold a vote on the bill later in the year.  

On the regulatory side, it remains unclear when or even if the Federal Trade Commission (FTC) will launch actions against Amazon or big tech generally. The Wall Street Journal reported on February 3 that the FTC was possibly preparing an antitrust lawsuit against Amazon but noted there was significant uncertainty over what the lawsuit would entail, when it would move forward, and even if the FTC would proceed with the lawsuit.  

Several weeks later, Republican-appointed FTC Commissioner Christine Wilson wrote a scathing WSJ op-ed criticizing the commission and announcing her resignation. In the piece, Wilson criticizes FTC Chair Lina Khan for her “disregard for the rule of law and due process” and questions her honesty and integrity. Wilson’s resignation is unlikely to impact the ability of the FTC to move forward with any Amazon investigation as the makeup of the FTC is currently 3 Democrats and Wilson as the sole Republican. 

Finally, Marketplace Pulse recently released a study showing that Amazon’s sellers fees are now roughly 50 percent of a third-party seller’s revenue including a 15 percent transaction fee, a 20 to 35 percent fulfillment fee and 15 percent for advertising and promotions. This study is yet another example of Amazon’s unfair treatment of third-party sellers. 

Federal Trade Commission Non-compete Clause update 

As you may have seen, the FTC released a notice of proposed rulemaking (NPRM) to ban non-compete clauses. The FTC is soliciting feedback from stakeholders and has a public comment period that ends on March 20. More information on the NPRM can be found here and here. 

As written, the proposal would impose a blanket ban on all non-compete clauses. The proposed rule could also extend to other restrictive covenants like non-disclosures and non-solicitations if they are deemed to be broad in scope. Certain businesses like banks and nonprofits that are outside of the FTC’s jurisdiction would be exempt and there would be a narrow sale of business exemption allowing non-competes for an individual selling a 25% ownership stake in the business.  

The FTC is also seeking comment on several alternative rules such as a categorical ban on non-competes for some worker (such as below a certain compensation threshold or those classified as non-exempt) and a rebuttable presumption of unlawfulness. 

Opponents of the NPRM worry that this is a first attempt by the FTC to significantly increase its power and regulate businesses in new ways by giving itself authority to regulate “unfair methods of competition.”

For instance, FTC Republican Commissioner Christine Wilson issued a dissent claiming that the NPRM is outside of the agency’s scope. She argues that the FTC was never granted authority by Congress to regulatory unfair competition including non-competes and that the NPRM violates the major questions doctrine which prohibits agencies from regulating issues significant economic or political issues unless the agency had clear authorization from Congress.