United States: Draft Appropriations Bill Seeks To De-Fund Various Regulatory Efforts

A draft House appropriations bill to fund various federal agencies, including the Department of Labor, for Fiscal Year 2016 includes several provisions that would effectively halt a number of controversial regulatory efforts. Including stipulations on how federal appropriations are spent is one way to prevent agency rules or initiatives from moving forward. The draft bill contains riders that would curtail a number of recent National Labor Relations Board efforts, as well as the DOL's move to alter the definition of "fiduciary" for the provision of investment advice, and OSHA's policy allowing third parties, including union agents, to enter non-union worksites during an OSHA inspection.

National Labor Relations Board Initiatives

The NLRB has implemented or advanced several contentious measures over the past year. Having the most impact on employers by far is the agency's new representation election rule, which took effect on April 14, 2015. The draft funding bill includes the following provision:

SEC. 407. None of the funds made available by this Act may be used to implement or enforce any rule amending parts 101, 102, and 103 of title 29, Code of Federal Regulations (relating to the filing and processing of petitions pursuant to the representation of employees for the purposes of collective bargaining with their employer), including the final rule published by the National Labor Relations Board in the Federal Register on December 15, 2014 (79 Fed. Reg. 74308).

In essence, the measure would prevent any funds from being used to implement the new election rule. A separate section (406) of the measure would bar any funds from being used to "issue any new administrative directive or regulation that would provide employees any means of voting through any electronic means in an election to determine a representative for the purposes of collective bargaining."

Similarly, the funding bill seeks to curtail efforts by the NLRB to expand the definition of "joint employer" for unfair labor practice liability. The Board's General Counsel has been a vocal proponent of returning to the so-called "traditional" theory of joint employment, which is that an entity is considered a joint employer if it "has the potential" to control the terms and conditions of employment of another entity, or if "industrial realities" otherwise make it an essential party to meaningful collective bargaining. For the past 30 years, the relevant inquiry has been whether the company exerts a significant and direct degree of control over another business's employees and their essential terms and conditions of employment. Notably, the General Counsel has filed multiple charges against franchisors seeking to hold them liable for alleged misdeeds of their franchisees. Meanwhile, pending before the Board is the case of Browning-Ferris, in which the Board is fully expected to adopt the General Counsel's looser standard for determining joint employment.

The draft funding bill, therefore, stipulates:

[n]one of the funds made available by this Act may be used to investigate, issue, enforce or litigate any administrative directive, regulation, representation issue or unfair labor practice proceeding or any other administrative complaint, charge, claim or proceeding that would change the interpretation or application of a standard to determine whether entities are ''joint employers'' in effect as of January 1, 2014.

Finally, a separate rider would prevent funds from being used to enforce any action under the NLRA against a Native American-owned and operated businesses, "including any enterprise or institution owned and operated by an Indian tribe and located on its Indian lands." The same day the draft bill was released, the House Committee on Education and the Workforce held a hearing to address the NLRB's attempts to exert jurisdiction over Native American businesses. The hearing focused on a bill, the Tribal Labor Sovereignty Act (H.R. 511), which seeks to prevent the Board from asserting its jurisdiction over businesses owned by Native Americans on tribal lands. The draft appropriations bill language would achieve the same end.

Fiduciary Rule

In April, the Employee Benefits Security Administration issued a proposed rule to redefine who is rendered a "fiduciary" of an employee benefit plan under the Employee Retirement Income Security Act (ERISA) by providing investment advice to a plan or its participants or beneficiaries. A hearing on the proposed changes to the definition of fiduciary is scheduled for Wednesday, June 17. Additionally, the agency just extended the comment deadline on this proposed rule from July 6 to July 21, 2015, likely due to the rule's complexity and potential implications. The agency also intends to hold a series of hearings starting August 10.

The draft appropriations bill would address this rule as well. Section 113 of the measure would ensure that no funds are used to "finalize, implement, administer, or enforce" the proposed rule.

OSHA Inspections

Two years ago, OSHA issued a letter of interpretation stating that, during inspections of non-union workplaces, employees can be represented by anyone selected by the employees, including outside union agents. This policy raised significant concerns in the employer community. To ensure this practice is not carried out, Section 114 of the draft bill states:

An Occupational Safety and Health Administration inspector shall not administer, enforce, or otherwise implement any policy or interpretation of the Occupational Safety and Health Administration that allows an individual affiliated with a third party organization to accompany such OSHA inspector on a walkaround inspection except in accordance with applicable laws and regulations and by a vote of approval of the employees of an affected worksite.

The House Appropriations Subcommittee will hold a markup of the draft spending bill at 9:00 a.m. ET on Wednesday, June 17. It remains to be seen which of these provisions survive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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