Vice President, Labor Policy
September 13, 2021
The week of September 6, House committees began releasing text covering their respective issue areas under the budget reconciliation process. In particular, proposals emerged from the House Ways and Means and the House Education and Labor Committees. Observers of labor policy believe these proposals have, to at least some degree, undergone a “preconference” process with the corresponding Senate committees.
There are two significant areas of employment and labor policy worth monitoring as the budget reconciliation unfolds: penalties under the Protecting the Right to Organize (PRO) Act and establishment of new federal paid leave program. With the text that has been released, there is now at least a little bit of clarity around these issues.
The PRO Act:
At noon on September 8, the House Education and Labor Committee released its reconciliation language. As expected, it included the penalty language of the PRO Act and a few other provisions from the bill.
• It appropriates $350,000,000 for the National Labor Relations Board (NLRB), above its request of $301,900,000, and it authorizes the use of up to $5,000,000 for the purpose of implementing an electronic voting system for representation elections.
• In addition, the language amends the National Labor Relations Act (NLRA) by adding the following:
- Civil penalties up to $50,000 per violation for unfair labor practices (ULPs)
- Civil penalties up to $100,000 per violation for ULPs resulting in discharge of or “serious economic harm to an employee” if the employer has committed ULPs within the previous five years.
- Director and officer personal liability for ULPs, which will be assessed at the discretion of the NLRB.
Going beyond ULPs already articulated in the NLRA, the Ed and Labor language also includes prohibitions against:
- Promising, threatening, or taking action to:
- Communicating or misrepresenting to an individual that they are not an employee under the NLRA’s definition. (Bizarrely, this would seem to outlaw telling a worker who is legally an independent contractor that he or she is actually an independent contractor).
- Requiring or coercing employees “to attend or participate in … campaign activities unrelated to [an] employee’s job duties.”
- Entering into or attempting to enforce agreements prohibiting class action in employment claims. (This would effectively ban employment arbitration agreements
- Coercing an employee “into undertaking or promising not to pursue, bring, join, litigate, or support any kind” of class action in employment claims (again, effectively banning arbitration agreements).
- Retaliating against or threatening to retaliate against an employee for refusing to undertake or promise not to do the above.
Violation of these provisions would result in civil penalties up to $50,000 for violations and up to $100,000 for repeat violations. Interestingly, the text specifies that these new violations should be enforced as if they were existing ULPs under the NLRA, but that enforcement of these provisions would only result in civil money penalties (no requirement to cease the prohibited behavior). This appears to be an attempt to avoid the argument that the Committee is re-writing the NLRA and instead convince the senate parliamentarian the it is just raising revenue.
All of the PRO Act provisions in the Education and Labor language will be challenged under the so-called Byrd Rule on the Senate side. Given that these provisions have next to nothing to do with outlays or revenues, it is difficult to see how most, if any, of it would survive a “Byrd bath.” That said, the Senate parliamentarian works in something of a black box, and until this language is actually stricken, it remains a significant concern.
The Ways and Means committee September 7 released its language related to a new paid leave program. Interestingly, the language includes no direct revenue raisers. Thus, the cost of the bill would be covered by a separate stream of corporate and personal taxes to be revealed later, or simply added to the deficit. Major provisions include:
• Paid leave benefits would be provided by the federal government to all workers who expect to provide at least 4 hours of caregiving in a week. (Note that this effectively does away with the 50 employee cap in the FMLA). Self-employed individuals would seem to be covered but the bill does NOT appear to expand the definition of an employee.
• The program would start paying benefits in July 2023.
• It is funded from general revenue (no dedicated employer or employee tax). It does not appear to have any sunset clause after the 10-year budget window.
• A maximum of 12 weeks of benefits would be available. This could be taken in increments.
• Workers would apply to the Treasury Department for payment of benefits. For those workers receiving such a benefit (as opposed to getting benefits from an employer-sponsored program) there does not appear to be job protection.
• Expands the FMLA’s definition of individuals to whom a worker can provide qualifying care (e.g. domestic partners, grandparents, etc.)
• The language specifically adds bereavement leave.
• Benefits are equal to a maximum of 85% of weekly earnings, and are reduced for higher income workers on a sliding scale. The benefit amounts would be adjusted for inflation.
• For “legacy states” (those with pre-existing paid leave programs) the Treasury will provide reimbursement for costs associated with paid leave.
• Employers that provide paid leave could receive reimbursement for 90 percent of their costs. As a condition of receiving a grant, job protection must be offered.
• Small businesses (those with 50 employees or less) could receive a grant to cover the cost of hiring a replacement worker under certain conditions.
This proposal leaves much to be desired, and most notably it fails to provide a national platform providing employers with one standard to comply with. Instead it layers the new federal program on top of the existing “legacy” state laws. It is unclear at this time how much of this may be subject to a Byrd rule challenge as well. Suffice to say, as the U.S. Chamber has stated publicly, reconciliation is the worst way possible to build a new benefit program of this magnitude.
It is not a secret that the Chamber is opposed to the reconciliation bill as a whole. While individual provisions of these proposals may be “improved” along the way, different parts stricken in the Senate, and the overall amount of spending ratcheted downward over time, this will not impact the Chamber's view that the process is fatally flawed.