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TAUC Legislative & Regulatory Update, November 2020
Editor's Note: This column was written before the election and focuses on non-electoral legislative topics. For complete post-election political and economic analysis and what it all means for the union construction and maintenance industry, we encourage you to sign up for our upcoming December webinars (free for members) at www.tauc.org/talks.
The uncertainty over the outcome of the 2020 election – at the presidential, Senate and House levels – has made it difficult to resolve differences over the next round of COVID relief legislation and finalize Fiscal Year 2021 spending bills. Congress will have to figure out these issues in the lame-duck session or early next year. Meanwhile, the Trump Administration has been very aggressive in trying to finalize several regulatory actions.
Here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.
Independent Contractors/Worker Misclassification
The 30-day comment period ended this month on the U.S. Department of Labor's (DOL) Notice of Proposed Rulemaking (NPRM) seeking to clarify guidelines for determining if a worker is an independent contractor or an employee under the Fair Labor Standards Act (FLSA). TAUC joined its allies in the Construction Employers of America (CEA) in opposition to the proposed rule (click here to read the letter).
The DOL stated its goal is to simplify, clarify and harmonize principles that federal courts have used to determine what workers are "employees" by creating a new five-factor "economic reality" test. The CEA expressed opposition to the proposed test, arguing it would provide a more lenient framework compared to current case law and state laws. If implemented, the test would make it easier for employers to misclassify workers as independent contractors, which is already a crisis in the construction industry, CEA said. The coalition of specialty trade associations also expressed concern that the new test would incentivize misclassification, denying misclassified workers wage and hour protections; making them ineligible for employer-sponsored health insurance; and put contractors who properly classify their employees at a significant competitive disadvantage when bidding for work.
Multiemployer Pension Relief and Composite Plans
President Trump signed a memo calling on the Secretaries of Treasury, Commerce and Labor to provide recommendations to the President within 180 days on actions that may be taken to address the looming multiemployer pension crisis. The memo called for recommendations, including possible legislative initiatives, to address the insolvency of failing plans and to maintain the future solvency of the PBGC's Single-Employer and Multi-Employer Programs.
As we reported last month, the Pension Benefit Guaranty Corp.'s (PBGC) FY 2020 Annual Report found that the multiemployer pension program deficit will increase by $17.1 billion — from $65.2 billion to $82.3 billion by September 30, 2029 — and faces a "very high likelihood" of insolvency (i.e. run out of money) during fiscal year 2026 and that "insolvency is a near certainty by the end of fiscal year 2027."
While it is unclear what the secretaries may propose and how it may impact ongoing negotiations, we remain hopeful that there will be an opportunity to finalize multiemployer reform legislation (which would include the authorization of composite plans) during the upcoming lame duck session.
EPA Rule on New Source Review for Power Plans and Factory Upgrades
The U.S. EPA finalized a rule reworking the process for determining if an expansion, major modification, or other upgrades at industrial facilities and power plants would result in a significant emissions increase, thus triggering the need for a "New Source Review" for pre-construction permit and potentially additional pollution control requirements under the Clean Air Act.
Currently, facility owners must first determine whether the project would by itself lead to a significant emission increase. If that is found to be the case, owners would be required to determine whether there would be an overall emission increase once all other increases or decreases at the plant over the preceding few years are factored in. Under the revised approach in the new rule, companies can simultaneously consider both the expected emissions increases and decreases during the first stage.
The rule is part of a series of actions the Trump administration has taken to reduce regulatory hurdles and address concerns regarding complexity in the application of the New Source Reviews. Proponents of reform argue that the current system discourages upgrades and technology improvements to facilities that could lead to improvements in operator efficiency and reductions in air pollution.