Legislative & Regulatory Update – January 2021
President-elect Biden and Vice President-elect Harris continue to move forward with a formal transition, assembling a White House staff and naming nominees for cabinet-level positions. As of this point, the Department of Labor remains one of the few agencies without a nominee. Names that continue to be circulated as potential candidates include California Labor Secretary Julie Su, Boston Mayor Marty Walsh, and Rep. Andy Levin (D-MI).
As the 117th Congress kicks off and the new Administration prepares to take office, here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.
COVID Relief Legislation
After months of contentious negotiation, lawmakers reached an agreement on the approximately $900 billion COVID relief measure in time to attach it to the omnibus appropriations package. Congressional leaders finally maneuvered past many contentious issues to finalize the legislation that includes $600 direct payments for individuals; extends $300 enhanced unemployment insurance until mid-March; provides $284 billion for the Paycheck Protection Program; and secures $82 billion for education, $45 billion for transportation providers, $25 billion for housing assistance, $15 billion for performance venues, $69 billion for vaccine distribution and healthcare and $10 billion for childcare. The legislation had been delayed for month over Republican opposition to including state and local aid and Democratic resistance to business liability protections. Neither element made it into the final bill.
Multiemployer Pension Relief and Composite Plans
There had been hope that multiemployer pension reform and the authorization of composite plans would be included into the final COVID relief legislation package or an end-of-year spending package (which also cleared congress right before Christmas), but neither option materialized.
As we have reported previously, the House had twice passed COVID-relief legislation that included significant multiemployer pension relief and reforms, including authorizing the voluntary use of hybrid composite plans. Democrats and Republicans had been working constructively in narrowing their differences on a rescue and reform proposal, leading to a chance that an agreement could be reached in time to include comprehensive multiemployer pension provisions in the must pass end of year legislative package.
Unfortunately, after weeks of discussions, the lead Republican negotiators — Sen. Grassley (R-IA) and Sen. Alexander (R-TN) — announced an agreement could not be reached before the end of the 116th Congress. The primary sticking point was an unwillingness by Republican negotiators to agree to the amount of federal funding necessary to address the crisis. Instead, they insisted that the majority of the revenue to address this crisis should come from the multiemployer pension "system" in the form of significant increases in PBGC premiums, more stringent plan funding requirements and additional fees on plans and plan participants.
Thus, the push for multiemployer pension reform legislation will now have to start all over again in the 117th Congress. Given that there will be several new players in key committee and leadership roles, there is a lot of uncertainty over the path forward for this critical reform proposal.
Pension Benefit Guaranty Corporation (PGBC) Annual Report
On a related note, the PBGC released its fiscal year 2020 annual report last month. The report found that the multiemployer deficit improved slightly from fiscal year 2019, going from a $65.2 billion deficit in 2019 to a $63.7 billion in 2020. The improvement was primarily due to the passage of legislation in 2019 to address the impending insolvency of the United Mine Workers of America Pension Plan. Despite the slight improvement, the multiemployer pension program is projected to become insolvent in 2026 without additional legislative actions.
Independent Contactors/Worker Misclassification
The Trump Administration is planning to release a final rule on January 7th that will make it easier for businesses to classify workers as independent contractors under the Fair Labor Standards Act (FLSA). Both TAUC and the Construction Employers of America (CEA) submitted comments in opposition to the proposed rule, which would provide a more lenient framework compared to current case law and state laws and increase the risk of misclassifying workers.
However, the Biden Transition team announced that President-elect Biden will issue a memorandum on Inauguration Day freezing "midnight regulations" and guidance documents issued in the final days of the Trump Administration that are not final and effective on January 20th. The team specifically cited the DOL independent contractor rule as a regulation the Biden Administration would seek to freeze.