TAUC Legislative & Regulatory Update, March 2021

March 2 2021

Congressional Democrats are working to finalize the $1.9-trillion coronavirus relief package proposed by President Biden. The package passed the House on a mostly party line vote late Friday night. Senate consideration is set to begin this week and they are working to pass the package into law before March 14, when extended federal unemployment benefits expire. To accomplish this, they are using a process known as budget reconciliation. Under this expedited process, only a simple majority is necessary to pass legislation in the Senate – not the 60 votes that would be required to end a filibuster of the proposed legislation. While reconciliation expedites consideration of budgetary legislation, the rules for using this process also limits the ability to include non-budgetary policy provisions.

Here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.

Multiemployer Pension Provision in COVID Relief Legislation

The COVID Response legislation includes several provisions designed to stabilize multiemployer pension plans and to provide financial assistances to rescue falling plans.

Special Financial Assistance for Plans: The COVID-19 relief legislation includes a multiemployer pension rescue measure to establish a fund for the Pension Benefit Guaranty Corporation (PBGC) to provide federal financial assistance to multiemployer pension plans that are:

• In critical status for any plan year from 2020 through 2022 and less than 40 percent funded and have a worse than 2:3 active to inactive ratio;
• In critical and declining status for any plan year from 2020 through 2022; or
• Have suspended benefits applications under the Multiemployer Pension Reform Act (MPRA) as of February 2021.

The amount of financial assistance would be provided to plans as a lump sum in the amount needed for the plan to be able to pay benefits — with no reduction to a beneficiary’s accrued benefit — through plan year 2051 (30 years) and would not have to be repaid. Plans receiving special financial assistance must reinstate any benefits that were reduced as a result of a MPRA benefit suspension. The deadline for plans to apply for special financial assistance is December 31, 2025.

Additional Provisions to Deal with the Impact of COVID on Plans: The bill also includes provisions to allow plans to deal with losses due to the COVID public health crisis. Specifically, the legislation would:

• Allow a plan to election to maintain their 2019 zone status for plan years 2020 and 2021 and to delay updating the required funding improvement or rehabilitation plans for one plan year, postponing the need for plans to take steps to offset losses incurred during the pandemic;
• Plans in critical or endangered status may also elect to extend their rehabilitation plans by 5 years; and 
• Plans to amortize investment and related losses incurred in the first two plan years ending after February 29, 2020 over a 30-year period, as opposed to the normal 15-year period. 

Increased PBGC Premium in 2031: The Act increases the PBGC premium rate for multiemployer pension plans to $52 per participant, effective for plan years beginning after December 31, 2030. This premium rate is indexed for inflation for years after 2031.

No GROW Act: The legislation does NOT include the GROW Act, which authorizes the voluntary use of composite plans.

COBRA Subsidy for Joint Labor Management Health and Welfare Plan Participants

An important component of the COVID response package for the union construction industry is the inclusion of a provision providing assistance for workers eligible for continued health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).  This COBRA continuation coverage would subsidize 85 percent of the premium for workers who lost their eligibility for health insurance and allow these participants to continue to be able to afford coverage provided through joint labor management health and welfare plans. Under this provision, employees would be responsible for 15 percent of the premium and the employer or health plan could claim a refundable tax credit against its Medicare payroll tax liability for paying the remaining 85 percent.  The premium subsidy would be available through September 30, 2021 for individuals who lost their job or had their hours reduced.

National Apprenticeship Act

With a bipartisan vote of 247-173, the House passed bipartisan legislation to reauthorize the National Apprenticeship Act (H.R. 447). The legislation was introduced by Representatives Bobby Scott (D-VA), Brian Fitzpatrick (R-PA), Don Norcross (D-NJ), and David McKinley (R-WVA). Both TAUC and the Construction Employers of America (CEA) sent letters to the House in support of the bill prior to the House vote.

The legislation expands and strengthens privately funded joint labor-management registered apprenticeship programs. The legislation would expand access to apprenticeships and training opportunities by codifying standards for registered apprenticeships. The bill will also provide funding to expand youth apprenticeships and pre-apprenticeship programs. The sponsors of the legislation say the goal is to create nearly one million new apprenticeship opportunities over the next five years.

Under the legislation, no funding would be made available to Industry Recognized Apprenticeships (IRAPs). IRAPs were included in a training rule finalized by the Trump Administration last year and would shift apprenticeship oversight and credentialing authority to industry groups. IRAPs were strongly opposed by TAUC and the union construction industry. The final rule explicitly exempted the construction industry.

Timing for Senate consideration of similar legislation is not clear at this point. The CEA has sent a letter to Senate leaders urging consideration of the House-passed legislation.

Industry Recognized Apprenticeship Programs (IRAPs) Executive Order Rescinded

President Biden rescinded an Executive Order (EO) issued by President Trump that led to the development of Industry Recognized Apprenticeship Programs (IRAPs). In response to EO 13801, DOL announced it will no longer provide approval of Standards Recognition Entities (SREs), the entities that review and approved IRAPs. In taking this step, DOL stated its concern that IRAPs may lead to the development of duplicative, lower-quality training programs that compete with and undermine Registered Apprenticeship Programs. Finally, the DOL reinstated the National Advisory Committee on Apprenticeships, which provides guidance to DOL in overseeing registered apprenticeship and training programs.

PRO Act

In the coming weeks, the House is expected to consider H.R. 842, the "Protecting the Right to Organize Act" (PRO Act). The legislation passed the House last Congress with a bipartisan vote of 224-194. The legislation would make significant changes to dozens of labor laws, including:

• Authorizes "card check" organizing;
• Repeals restrictions on secondary boycotts and common-situs picketing;
• Allows intermittent strikes;
• Imposes mediation and binding arbitration;
• Establishes joint employer status change could alter well-settled subcontracting practices in the construction industry; and
• Grants the NLRB the power to levy civil fines on employers that violate labor law.

The bill also:

• Includes provisions designed to address employee misclassification, by establishing a new "ABC" test for determining independent contractor status; and
• Overrides "right to work" laws by allowing employers and unions to enter into a contract that allows unions to collect fair-share fees that cover the costs of collective bargaining and administering the agreement.

Companion legislation has been introduced in the Senate by Senator Patty Murray (D-WA), the Chair of the Senate Health, Education, Labor and Pension Committee. It is not clear if it will pass the narrowly divided Senate.

Mayor Walsh's Nomination for Secretary of Labor

The Senate Health, Education, Labor and Pensions Committee voted to confirm Boston Mayor Marty Walsh's nomination for Secretary of Labor, with an 18-4 vote. Prior to the Committee's hearing on Walsh's nomination, TAUC sent a letter to the committee in support of his confirmation. Walsh's nomination still needs to be approved by the full Senate. No date has been set for consideration for nomination.

Worker Misclassification

The DOL's Wage and Hour Administration issued a notice in the Federal Register announcing that it was delaying the implementation date of the Trump Administration's independent contractor final rule until May 7, 2021. The rule was frozen on Inauguration Day by President Biden and was set to take effect on March 8, 2021. The notice states that Wage and Hour plans to use the additional time to review the final rule and consider issuing a new rule.