Beltway Buzz, April 12, 2024

DOL OT Rule Imminent. On April 10, 2024, the Office of Information and Regulatory Affairs completed its review of the U.S. Department of Labor’s rule that makes changes to the overtime regulations implementing the Fair Labor Standards Act. This means that the new rule could be published any day now. As a reminder, the proposed regulation increased the salary basis threshold to at least $55,068 per year.

U.S. Senate Sends Joint-Employer Rescission to POTUS. On April 10, 2024, the U.S. Senate voted 50-48 to approve a Congressional Review Act resolution rescinding the National Labor Relations Board’s (NLRB) joint-employer rule. Senators Joe Manchin (D-WV), Kyrsten Sinema (I-AZ) and Angus King (I-ME) voted with Republicans to rescind the rule that NLRB Member Marvin Kaplan described as “an unprecedented and unwarranted expansion of the Board’s joint-employer doctrine.” The U.S. House of Representatives passed a resolution to rescind the rule back in January 2024. Accordingly, the resolution will head to President Biden’s desk, and the White House has already stated that the president will veto the resolution. But while the president’s expected rejection of Congress may have political ramifications, readers should recall that the U.S. District Court for the Eastern District of Texas already struck down the Board’s joint-employer rule and reinstated the Board’s 2020 rule.

NLRB: Election Petitions, ULPs Increase. According to a recent National Labor Relations Board press release, both representation petition filings and unfair labor practice (ULP) charges have increased during the first six months of fiscal year (FY) 2024, when compared with the same period in FY 2023. Between October 1, 2023, and March 1, 2024, 1,618 representation petitions were filed, compared to 1,199 during the first half of the previous fiscal year—an increase of 35 percent. According to the press release, this increase “is driven by a spike in employer-filed RM-petitions … accompanied by an uptick in employee-filed RC-petitions” after the Board adopted its new recognition standard. Unfair labor practice charges increased from 9,612 in the first half of FY 2023 to 10,278 in the previous six months—a 7 percent  increase. The press release concludes with the agency bemoaning how underfunded it is, as Congress is in the early stages of FY 2025 funding debates, despite just wrapping up FY 2024 funding several weeks ago.

Fed Agencies Release Joint Statement on AI Enforcement. On April 4, 2024, nine federal agencies, including the Department of Labor (DOL), the Equal Employment Opportunity Commission, the Consumer Financial Protection Bureau, and the Department of Justice, released a “Joint Statement on Enforcement of Civil Rights, Fair Competition, Consumer Protection, and Equal Opportunity Laws in Automated Systems.” The statement, which doesn’t contain any new guidance and simply chronicles previous examples of the signatory agencies’ efforts regarding artificial intelligence, is perhaps meant to serve as a precursor to guidance that is expected later this month from the DOL and other agencies pursuant to President Biden’s October 2023 executive order on artificial intelligence. The statement concludes with the following: “Today, our agencies reiterate our resolve to monitor the development and use of automated systems and promote responsible innovation. We also pledge to vigorously use our collective authorities to protect individuals’ rights regardless of whether legal violations occur through traditional means or advanced technologies.”

NLRB GC Continues to Seek Expanded Remedies. The NLRB’s general counsel has been clear about her intentions to expand the types of remedies available in situations involving unlawful workplace conduct. This week, she issued a memorandum to NLRB Regional Directors explaining that they should seek expanded remedies in cases involving unlawful work rules because “mere rescission of an overbroad, unlawfully promulgated, or unlawfully applied rule or contract term does not expunge discipline imposed under those unlawful provisions or retract related legal enforcement actions, and thus fails to make impacted employees whole.” According to the memorandum, in addition to rescinding an unlawful rule, “Regions should seek settlements that include make-whole relief for employees who were disciplined or subject to legal enforcement as a result of an unlawful work rule or contract term.”

Senate Committee Scrutinizes Arbitration Agreements. On April 9, 2024, the U.S. Senate Committee on the Judiciary held a hearing entitled, “Small Print, Big Impact: Examining the Effects of Forced Arbitration.” Hearing witnesses and senators—both Democrat and Republican—who oppose arbitration used the hearing to promote existing bills that erode the arbitration process. These bills, which were introduced following passage of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act in 2022, include the “Protecting Older Americans Act of 2023,” which would prohibit arbitration of age related discrimination clams and is co-sponsored by Republican senators Lindsey Graham (R-SC) and Chuck Grassley (R-IA). The hearing also covered the Ending Forced Arbitration of Race Discrimination Act of 2023 and the Forced Arbitration Injustice Repeal (FAIR) Act .

House Committee Examines Portable Benefits. On April 11, 2024, the House Education and the Workforce Subcommittee on Workforce Protections held a hearing entitled “Unlocking Opportunity: Allowing Independent Contractors to Access Benefits.” As the title implies, the hearing focused on the concept of portable benefits for independent contractors. According to Subcommittee Chair Kevin Kiley (R-CA), pigeon-holing workers into the “employee” or “independent contractor” buckets might not be ideal in the modern economy, and an option moving forward might be to “transition to a new model in which benefits are attached to the worker and not the employer.” While a portable benefits framework on the federal level is likely still a long ways away, this week’s hearing is perhaps a sign of where this debate may be heading.

“The Power to Tax is the Power to Destroy.” This week in 1816, President James Madison signed into law legislation establishing the Second Bank of the United States—an action that would eventually lead to a landmark decision by the nascent Supreme Court of the United States. Not everyone was pleased with the establishment of the National Bank. In fact, the state of Maryland viewed the bank as unfairly competing with its own state-chartered banks, and levied a $15,000 annual tax on the bank. When James McCullough, the cashier of the bank’s Baltimore branch, issued bank notes without paying the tax, Maryland sued to collect the tax. The bank, represented by future representative, senator, and secretary of state, Daniel Webster, argued that Maryland’s tax was unconstitutional, while Maryland argued that the bank was unconstitutional because the U.S. Constitution was silent with regard to the establishment of a national bank. Writing for a unanimous Court in McCulloch v. Maryland (1819), Chief Justice John Marshall ruled that Congress had the constitutional authority to establish the bank. The Court held that the Necessary and Proper Clause of Article I, Section 8, expressly empowered Congress to make laws that are “necessary and proper” to carry out its enumerated powers, which includes the power to borrow money, collect taxes, and regulate interstate commerce. The Court further ruled that pursuant to the Constitution’s Supremacy Clause and because “the power to tax is the power to destroy,” federal laws trump conflicting state laws. McCulloch v. Maryland remains a foundational case of constitutional law that established early principles of federalism.