In a clear rebuke, a Federal District Court struck down a controversial Federal Trade Commission (FTC) rule that sought to ban employers from using noncompete agreements.  Such a widespread prohibition would have affected the use such contracts by millions of Americans – including those used by CIRT members.  The court found fault with the FTC banning the entire category of non-compete agreements, rather than targeting “specific harmful” sub-categories of such contracts.  However, more importantly, the decision found that the FTC’s attempted prohibition went beyond the commission’s mandate to police unfair methods of competition. The ban on the non-compete contracts was supposed to go into effect on September 4, 2024, affecting roughly 30 million American workers according to the FTC.

In a stinging  finding the District Judge concluded: “The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition — that prohibits entering or enforcing virtually all non-competes — instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious” (emphasis added).  The District Court ruling seems to be an early example of the new landscape for federal government agencies and quasi-independent commissions in the wake of the Supreme Court ruling discarding the “Chevron Deference Doctrine” that had been cited to favor the federal government’s regulatory authority and actions.

The FTC has yet to announce whether or not it intends to appeal the District Court opinion overturning its attempted prohibition.

The Supreme Court of the United States issued a unanimous decision requiring the National Labor Relations Board (NLRB) to prove it would likely succeed on the merits of a case before obtaining a preliminary injunction against employers. Under the Biden Administration, the Board has pursued 10(j) injunctions against employers based on flawed legal theories and often times unsubstantiated claims without the necessary showing of success. Essentially, SCOTUS ruled the NLRB must abide by the same rules that all other entities, including federal agencies and departments, must meet.

The Securities and Exchange Commission is indefinitely delaying the implementation of a final rule that would require registrant businesses to include certain climate-related information in their registration statements and annual reports pending the completion of judicial review by the Eighth Circuit. The rule was to become effective May 28, 2024.

 For details see, Federal Register SEC notice at: https://www.federalregister.gov/documents/2024/04/12/2024-07648/the-enhancement-and-standardization-of-climate-related-disclosures-for-investors-delay-of-effective

The Equal Employment Opportunity Commission (EEOC) issued its final rule on April 15^th enforcing the Pregnant Workers Fairness Act (PWFA), giving new protections for women seeking abortions. The EEOC rule includes abortions under the definition of “pregnancy, childbirth or related medical considerations” requiring that employers with 15 or more employees give time off to attend to undertake an abortion procedure and/or for recovery.  Essentially, the EEOC found that a worker can seek a reasonable accommodation related to an abortion as a potential reason.  However, the law’s requirements are narrow and will likely concern only a request by a qualified employee for leave from work.

As the EEOC makes clear in its final rule, does not require that employers give paid time off to employees seeking abortions and does not compel employers or employer-sponsored health insurance plans to pay for the procedure, according to the rule. Employers also do not have to pay for the travel expenses of women seeking abortions. Moreover, employers can include religious defenses and undue hardship, as defense or to reject a request for accommodation depending on the situation.

Today, the U.S. Department of Labor published a final rule clarifying the rights of employees to authorize a representative to accompany an Occupational Safety and Health Administration (OSHA) compliance officer during an inspection of their workplace. The Occupational Safety and Health Act gives the employer and employees the right to authorize a representative to accompany OSHA officials during a workplace inspection. The final rule clarifies that, consistent with the law, workers may authorize another employee to serve as their representative or select a non-employee. For a non-employee representative to accompany the compliance officer in a workplace, they must be reasonably necessary to conduct an effective and thorough inspection. [CIRT has been part of an industry-wide coalition critical of an earlier version of the rulemaking that was overly broad and lacked specificity with respect to an open-ended ability of non-employees to be simply designated to join an OSHA inspection].

The new rule clarifies that a non-employee representative may be reasonably necessary based upon skills, knowledge or experience. This experience may include knowledge or experience with hazards or conditions in the workplace or similar workplaces, or language or communication skills to ensure an effective and thorough inspection. These revisions claim to better align OSHA's regulation with the OSH Act and enable the agency to conduct more effective inspections. OSHA regulations require no specific qualifications for employer representatives or for employee representatives who are employed by the employer.

The rule is in part a response to a 2017 court decision ruling that the agency's existing regulation, 29 CFR 1903.8(c), only permitted employees of the employer to be authorized as representatives. However, the court acknowledged that the OSH Act does not limit who can serve as an employee representative and that OSHA's historic practice was a "persuasive and valid construction" of the OSH Act. Today's final rule is the culmination of notice and comment rulemaking that clarifies OSHA's inspection regulation and is said to align with OSHA's longstanding construction of the act.

The rule is effective on May 31, 2024.

After years of waging a tireless effort to constrain or stop favored and/or required PLAs on federal infrastructure projects, the Associated Builders and Contractors and its Florida First Coast chapter filed suit in federal court to stop the Biden administration’s unlawful scheme to mandate project labor agreements on construction contracts procured by federal agencies. ABC’s complaint asserts that President Joe Biden lacks the legal and constitutional authority to impose a new federal regulation injuring the economy and efficiency in federal contracting while illegally steering construction contracts to certain unionized contractors, which only employ roughly 10-percent of the U.S. construction workforce; leaving the vast 90-percent majority of workers ineligible to compete.

The Securities and Exchange Commission (SEC) voted 3–2 on March 6th to approve a climate disclosure rule, which sets more stringent standards for how companies communicate with investors about greenhouse gas emissions and weather-related risks. The Commission modified some aspects of its original version with respect to Scope 3 emissions (indirect, upstream activities beyond a given company’s immediate control or knowledge), but the revised rule has still drawn swift condemnation and a legal challenge from a coalition of ten states.  The measure seeks to impose more stringent requirements on publicly traded companies with respect to their financial statements disclosing climate-related risks to their operations, as well as the companies own contributions to “climate change.”

Critics of the rule-making point out, the new disclosure framework isn’t really about investing but about climate transition and climate risk more broadly.  As such, former SEC-Chair, Jay Clayton, contends the matter “is not really the SEC’s purview. It’s not the SEC’s expertise. And this is against the background where administrative agencies are seen by the courts and others to be greatly exceeding and testing their authority.”

The approved rule has a 30-day comment period after its publication in the Federal Register (or 60 days after the date of issuance and publication on SEC.gov, whichever is longer).  For more information about the rule and site to the SEC issuance document, see: https://www.sec.gov/news/press-release/2024-31

The Biden Administration released a new rule on how to classify “independent contractors” which narrows the definition and restricts its application.  The Department of Labor’s final rule sets forth an analysis for determining whether a worker is classified as an employee or independent contractor under the Fair Labor Standards Act. To that end, a six-factor test that considers: (1) opportunity for profit or loss depending on managerial skill; (2) investments by the worker and the potential employer; (3) degree of permanence of the work relationship; (4) nature and degree of control; (5) extent to which the work performed is an integral part of the potential employer's business; and (6) skill and initiative.  [NOTE: the new rule does not adopt the “ABC” test that some states have used. Also, additional factors may be relevant if they bear on whether the worker is economically dependent on the potential employer for work -- which seems like a given for nearly everyone in the workforce].

The new rule will rescind the 2021 “Independent Contractor Rule” which sort to clarify and expand reasonable criteria given the changing nature of the workforce particularly during the COVID-19 shutdowns. The Biden Administration rule will become effective March 11, 2024; barring any likely injunctions while legal challenges are decided.

For details on the new rule, see: Federal Register: Employee or Independent Contractor Classification Under the Fair Labor Standards Act

CIRT submitted a comment on the Department of Labor, Wage and Hour Division’s proposed rule nearly doubling the “salary threshold” required to meet the exemption from requirements for hourly/overtime status.  CIRT pointed out that “This is a particularly inopportune time to suggest a major across the board hike in the salary threshold – particularly given the recent substantial increase a few years ago (which DOL has failed to show any reason to renew), and the potential to continue or fuel an inflationary spiral that higher wages my ignite or prolong in the U.S. economy.”  Moreover, the Round Table also pointed out that what appears to be the Wage & Hour Division’s intent i.e., to “ensure that middle class jobs pay middle class wages [by] extending important overtime pay protections to millions of workers and raising their pay;” -- is wholly beyond the Wage & Hour Division’s authority.

CIRT emphasized that the “salary” portion of the exemption test is a THRESHOLD salary level, NOT an attempt to set what “should” be the salary for employees by the Department. . .  That task rightfully and appropriately belongs to the private sector firms to determine given market, economic, regional, industry, company, and competitive norms.

For details, see attached CIRT’s Comment Letter.

A wide array of construction/design industry groups joined together to address concerns regarding Treasury’s Notice of Proposed Rulemaking, Increased Credit or Deduction Amounts for Satisfying Certain Prevailing Wage and Apprenticeship Requirements. The rulemaking proposes regulations clarifying the applicability of tax credits for the construction of private clean energy projects funded by the “Inflation Reduction Act” (hereinafter IRA)––including solar, wind, hydrogen, carbon sequestration, electric vehicle charging stations and more––conditioned on compliance with controversial expansion of prevailing wage and government-registered apprenticeship requirements. [Accordingly, project developers who satisfy these regulations are eligible for a 500% increase in tax credits compared to baseline tax credits offered to developers under previous regulations].

The coalition’s comments point out, clean energy developers are not required to mandate the use of PLAs in order to receive enhanced tax credits, but the coalition believes this new and overly expansive policy proposal (which was not included in the IRA statute or initial IRS guidance -- will coerce developers into mandating PLAs to avoid extreme penalties for violating new and disruptive labor policies.  This is a remarkable expansion of pro-PLA policy onto private construction projects using a novel approach through the U.S. tax code. The organizations in the coalition have engaged in the rulemaking process in order to preserve “a record below” for any possible future legal actions.

For further information, see coalition letter on this matter Opposing PLA Requirements.