DC Download - January 2024

February 1 2024

Government, Labor Relations, Legislative Affairs, TAUC News

DOL Announces Final Rule on Employee Classification

The U.S. Department of Labor (DOL) issued a final rule to determine whether a worker is an employee or a contractor under the Fair Labor Standards Act (FLSA). The rule, which DOL proposed more than a year ago, replaces a Trump-era standard issued in 2021 for classifying workers that made it easier for employers to misclassify workers as independent contractors.

The final rule establishes a new standard for provide guidance for worker classification to combat employee misclassification, which is rampant in the construction industry and provides employers who misclassify an unfair advantage over law-abiding businesses.

The final rule makes the following changes:

• Restores the multifactor, totality-of-the-circumstance analysis to determine whether a worker is an employee or an independent contractor.
• Ensures all factors are analyzed without certain factors getting assigned a predetermined weight.
• Employs the longstanding interpretation of economic reality factors, including opportunity for loss and profit, the length of the relationship between employer and worker, the extent to which a worker exerts control over their work, how important a workers’ duties are to the employer’s business, and more.

The rule will become effective March 11, 2024.

TAUC and the Construction Employers of America (CEA) advocated for the Administration to rescind the 2021 ABC-supported rule and reinstate the multifactor test.

Four freelance writers and editors have filed a federal lawsuit in Georgia to invalidate the rule. The U.S. Chamber of Commerce and other trade associations are also expected to file lawsuits against the final rule.

Also, Senator Bill Cassidy (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, has stated that intends to introduce a Congressional Review Act (CRA) resolution to repeal the final rule.

DOL Proposes New Rule to Boost Apprenticeships

DOL issued a notice of proposed rulemaking (NPRM) to bolster the National Apprenticeship System. The new regulations will be the first updates to the National Apprenticeship System since 2008. The goal of the rule is to enhance worker protections, improve the quality of registered apprenticeships, revise State governance provisions, and establish clearer pipelines to registered apprenticeship programs.

The proposed rule would:

• Strengthening of labor standards, quality and worker protections by making occupational skills and training more portable, enhancing alignment with postsecondary education and providing better performance data.
• Better defining roles for State Apprenticeship Agencies and other stakeholders within the National Apprenticeship System.
• Codifies the Office of Apprenticeship’s role for national leadership, promotion and standards.
• Promoting apprenticeship pathways, including pre-apprenticeship and apprenticeship readiness programs, by expanding performance and data requirements to improve accountability, transparency and program outcomes.
• Creating a student-centric model of Registered Apprenticeship, called Registered Career and Technical Education Apprenticeship designed to make them more seamless for full-time high school and community college students to enroll in a Registered Apprenticeship.

Comments are due March 18^th, 2024. TAUC is currently reviewing the proposed rule and plans to submit comments on the proposed changes.

Su Renominated

President Joe Biden has renominated Julie Su to lead the U.S. Department of Labor (DOL). Su, who has served as the acting secretary of labor since Marty Walsh left the role in February 2023, has been unable to win enough support in the Senate to be formally confirmed. In recent months, some industry trade groups have used Su’s acting designation to try and thwart Biden Administration rulemakings arguing that Su does not have the authority to sign off on DOL regulations. These trade groups and congressional Republicans believe that Su is in violation of the Federal Vacancies Reform Act by serving as acting labor secretary in perpetuity. However, the Government Accountability Office (GAO), an independent federal watchdog, has issued a decision that Su can stay in the role in perpetuity because of the line of succession rules determined in the law.

It is unclear if Su can gather enough support to get confirmed as Labor Secretary in an election year. All Senate republicans and Senator Joe Manchin (D-WV) have previously rejected her nomination.

NLRB Joint Employer Rulemaking

The U.S. House of Representatives voted 206 to 177 to approve a Congressional Review Act (CRA) resolution to repeal a National Labor Relations Board rule that rescinded the Trump Administration’s joint employer rule and implemented a new standard for determining joint employer status under the National Labor Relations Act. The CRA process allows Congress to nullify “major” rules issued by federal agencies if a majority of lawmakers in the House and Senate pass a CRA resolution by a simple majority and the President signs it. TAUC and other union contractor associations have supported the new rule, which will help reduce employee misclassification in the construction industry.

Senators Joe Manchin (D-WV) and Bill Cassidy (R-LA) have introduced a companion piece of legislation in the Senate. If the legislation passes, President Joe Biden has announced that he will veto it, meaning the rule will stay in place for now.

Lawsuit Filed to Block Project Labor Agreement Rule

Associated General Contractors of America and its Louisiana AGC chapter filed a lawsuit in the U.S. District Court for Western Louisiana to block the Biden Administration’s final regulation requiring the use of project labor agreements (PLAs) be utilized for major federal construction projects.

TAUC and the CEA filed comments in support of the rule, which would require PLAs for all federal construction projects that are valued at or above $35 million.

Bipartisan Tax Package

House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) announced an agreement on a bipartisan tax package. The Tax Relief for American Families and Workers Act of 2024 combines an extension of business tax provisions and the child tax credit.

The package includes the following business tax provisions:

• Research and Experimental Expenses — Allows U.S. businesses to immediately deduct their U.S.-based research and experimentation expenditures.
• Bonus Depreciation — 100% bonus depreciation is extended through 2025, allowing businesses to fully expense qualified property.
• Increased Section 179 Deduction — Restore full and immediate expensing for investments in machines, equipment, and vehicles.
• Interest Deductibility – Allows for the deduct of interest expenses.

The bill also includes provisions to address fraud related to the Employee Retention Tax Credit (ERTC) by increasing penalties on fraudulent promoters of ERTC claims and accelerating the termination of the period for making new claims for the ERTC. The ERTC is a refundable tax credit for eligible businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The IRS has found widespread efforts marketing to businesses to “apply” for ERTC when they may not qualify. Businesses found to have incorrectly claimed the credit are required to pay back the amount of the tax credit with penalties and interest.

The House Ways and Means Committee approved the package by a vote of 40-3. Chairman Smith hopes to have the full House consider the package before the end of January. The timing of Senate consideration remains unclear give the procedural constrains to floor considers of legislation in that body. Both Smith and Wyden are hoping to get the measure passed as soon as possible, so provisions in the bill can apply to 2023 federal tax filings.