April 19, 2021

Volume XI, Number 109

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April 16, 2021

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US Federal Labor Viewpoints – Week of February 22, 2021

This is a weekly post spotlighting labor topics in focus by the US legislative and executive branches. In this issue, we cover:

  • Biden Administration labor leadership update
  • Congressional COVID-19 relief package update
  • Republican federal minimum wage proposals
  • Joint employer status under review
  • Department of Labor enforcement news
  • Federal paid family/sick leave policy

Biden Administration Labor Leadership Update

  • At this time, there is no news on when the U.S. Senate may take up Marty Walsh’s nomination to serve as Secretary of Labor.
    • Meanwhile, the Senate is set to vote next week on President Joe Biden’s nominations of Cecilia Rouse to serve as Chair of the Council of Economic Advisers, Gina Raimondo to serve as Secretary of Commerce and Miguel Cardona to serve as Secretary of Education.

Congressional COVID-19 Relief Package Update

In laying out next week’s Senate schedule, Senate Majority Leader Chuck Schumer (D-New York) said in opening floor comments on Thursday that there exists bipartisan national support for the Democratic-led $1.9 trillion COVID-19 relief package.  Republican lawmakers, however, continue to resist the latest stimulus package, raising concerns it is not targeted and contains extraneous provisions not related to the COVID-19 pandemic.

The House takes up the bill today.  Few Republicans, if any, are likely to vote for it.  Representative Ron Estes (R-Kansas) wrote an opinion piece published by The Daily Signal on Thursday, February 25, that criticized as fiscally irresponsible the pension provision included in the bill, noting this could cost more than $60 billion, and the $350 billion in relief for states and localities, spotlighting that 21 states reportedly saw revenue growth in 2020.

Congressional staffers from both parties argued behind closed doors before the Senate Parliamentarian on Wednesday, February 24, over whether critical pieces of the $1.9 trillion House coronavirus relief plan conflict with the budget rules that govern debate in the Senate.  Senators Joe Manchin (D-West Virginia) and Kyrsten Sinema (D-Arizona) continue to resist including the $15 per hour federal minimum wage increase in the package, citing concerns of the price increase on Rural America and issues with the Byrd Rule.  The pension funding provision and subsidies meant to help laid-off workers remain on their health insurance plans are also being debated.

The Senate Parliamentarian ruled late on Thursday that the $15 per hour federal minimum wage provision would be ruled out of order when challenged.  The Parliamentarian’s ruling means that any Senator could raise a point order against the minimum wage increase and thereby force the provision to be removed from the bill.  When the House of Representatives votes on its COVID-19 relief package, the minimum wage provision will be included.  Democrats, nonetheless, will have to seek another route for advancing the federal wage increase.

White House Press Secretary Jen Psaki said in a statement released later that night,

President Biden is disappointed in this outcome, as he proposed having the $15 minimum wage as part of the American Rescue Plan. He respects the parliamentarian’s decision and the Senate’s process. He will work with leaders in Congress to determine the best path forward.”

Progressive Democrats criticized the Senate Parliamentarian’s decision, with some calling on party leaders to set the ruling aside and proceed, despite President Biden indicating the White House would not go that route.  Senate Budget Committee Chairman Bernie Sanders (I-Vermont) vowed“In the coming days, I will be working with my colleagues in the Senate to move forward with an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages. That amendment must be included in this reconciliation bill.”  Senate Finance Committee Chairman Ron Wyden (D-Oregon) similarly supports a “tax penalty for mega-corporations that refuse to pay a living wage.”  The tax increase amendment is likely to qualify under the reconciliation rules, which require all elements of the bill have a direct fiscal impact.  This effort will likely result in criticism from Republicans and the business community, including restaurants and retailers.

Republican Federal Minimum Wage Proposals Emerge

Via Twitter on Tuesday, February 23, Senator Josh Hawley (R-Missouri) said he could support the $15 per hour federal wage minimum wage increase, with a caveat:

The biggest corporations in America can afford to pay their workers $15 an hour.  Raise the minimum wage for big business, not small business.”

On Friday, February 26, Senator Hawley introduced an alternative federal minimum wage proposal – the Blue Collar Bonus – a three-year program that would increase worker wages in 2021, paid by taxpayers rather than employers.  The Democrats’ plan to increase the federal minimum wage to $15 per hour in the $1.9 trillion COVID-19 relief package would be phased-in by 2025.   Senator Hawley told Axios that he would support a $15 federal minimum wage for workers of large corporations that generate at least $1 billion in annual revenue.  In a press release on Wednesday, he shared his proposal would target American workers with valid social security numbers that are making $34,000-$35,000 a year and less.  Undocumented immigrants would be excluded.  Those making below $16.50 per hour would receive a refundable tax credit worth 50 percent of the difference, paid out in quarterly installments.  The $16.50 could increase over time, as it would be tied to the Consumer Price Index.  This credit would only apply to those working 40 hours or less a week.  Text of the legislation is not yet available.

On Tuesday, February 23, Senators Mitt Romney (R-Utah) and Tom Cotton (R-Arkansas) introduced another Republican proposal – the Higher Wages for American Workers Act – that would include a phased-in $10 per hour federal minimum wage over four years and a slower phase-in for small businesses with fewer than 20 employees.  The bill would also mandate E-Verify for all employers, phasing-in implementation over 18 months to allow small businesses additional time to comply.  Text of the legislation is not yet available.

Democratic lawmakers rejected the Romney-Cotton proposal.  Representative Rashida Tlaib (D-Michigan) tweeted on Tuesday,

Incrementally increasing a pitiful 7.25 wage to $10 over 5 yrs is a cruel joke. Poverty cannot be overcome just by $2.75/hour more. Liveable wage now.”

Joint Employer Status Under Review

On Tuesday, the U.S. Department of Labor’s Wage & Hour Division sent a proposed rule – titled, “Joint employer status under the Fair Labor Standards Act” – to the White House Regulatory Office for review.  Text of the proposed rule is not yet publicly available.  This action marks the Biden Administration’s first public notice that it plans to issue a new regulation covering the matter of when more than one employer could be held jointly responsible for failing to pay minimum wages and overtime to workers.  It may also indicate the Biden Administration plans to undo the Trump Administration’s business-friendly approach to the issue of shared liability among multiple companies toward possibly returning to the Obama Administration’s view that corporations are often accountable for the labor standards at their franchisees, subcontractors, staffing firms, and other affiliated companies.

The Trump Administrations’ rule went into effect in 2020.  A group of 17 Democratic state attorneys general filed a legal challenge; in September, Judge Gregory Woods of the U.S. District Court for the Southern District of New York ruled the regulation was “arbitrary and capricious” and inconsistent with the Fair Labor Standards Act (FLSA).  His ruling vacated the Labor Department’s new test for vertical employment, referring to when a worker enters an employment relationship with one company, such as at a staffing agency or subcontractor, but is economically dependent on another employer.  The U.S. Department of Justice under the Trump Administration appealed that decision to the Second Circuit, prior to President Biden taking office, filing a detailed brief backing the rule’s legality.  While this move makes it more difficult to for the Biden Administration to abandon defense of the regulation via the litigation, the Trump Administration regulation can be repealed via new rulemaking.

Labor Department Enforcement News

The Biden Administration’s Labor Department is reportedly looking to increase enforcement of wage standards on federally funded construction and service projects.  The Department has reportedly begun preparations to expand its investigative capacity under two statutes that require government contractors to pay workers prevailing wages and benefits.  During the Trump Administration, there was an exodus of veteran officials and investigators, which has created a shortage of institutional knowledge about the complexities of requiring government contractors to pay workers prevailing wages and benefits.

The building trades and service unions have been pushing the Labor Department to increase enforcement on what they have described as government contractors’ persistent noncompliance with (1) the Davis-Bacon Act, which covers public construction projects, and (2) the McNamara-O’Hara Service Contract Act, which applies to government spending on services, such as janitorial work and food preparation.  The changes Labor’s Wage & Hour Division is reportedly formulating would align with the infrastructure package that President Biden is planning to unveil.

Federal Paid Family/Sick Leave Policy

While Republicans, Democrats and Corporate America appear to be coalescing around a federal paid leave policy, divisions are emerging that may hamper progress on this matter.  Democrats are pushing for a robust policy, while Republicans and employers, who remain concerned with the potential cost to businesses and the government, are seeking a more targeted approach.  President Biden is pushing for workers to receive a week of paid sick leave to care for a personal illness and 12 weeks of longer-term paid family and medical leave to care for themselves or a family member.  House Education and Labor Ranking Member Virginia Foxx (R-North Carolina) warned, “[A] permanent one-size-fits-all federal mandate being pushed by Democrats is not the answer.”  She added, “New and small businesses are the least equipped to deal with sweeping national mandates during the best of times, let alone a pandemic, and the last thing we want to do is pile on yet another.”

The U.S. Chamber of Commerce has expressed a preference for lawmakers to hold off on paid sick leave, but it appears to be open to a paid family leave policy.  Many states have rolled out paid family leave programs that are paid for in whole or in part via employee contributions, a model that would place less of a burden on businesses.  The cost of paid sick leave, on the other hand is at the employer’s expense.  Republicans, who remain concerned about how the policy could be funded in order to not place too much pressure on employers, appear to be more amenable to paid family leave over paid sick leave.

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© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 63
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About this Author

Stacy Swanson, Public Policy Specialist, Squire Patton Boggs Law Firm
Public Policy Specialist

Stacy Swanson helps sovereign governments successfully navigate Washington and understand United States Government policy. She regularly provides clients with strategies which effectively leverage existing relationships to advocate policy objectives before the legislative and executive branches of the U.S. government. 

202-457-5627
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