TAUC Legislative & Regulatory Update, May 2021
Heading into late spring, Washington is focused on President Biden's broad infrastructure and investment economic programs - the "American Jobs Plan" and "American Families Plan" proposals. As Congress and the Administration roll up their sleeves and get to work, a number of important policies impacting TAUC members will be in play. Here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.
Infrastructure & Paid Family Leave
The American Jobs Plan would investment $2.3 trillion in a broad range of infrastructure and infrastructure-related activities (see last month's article for more details). Meanwhile, the $1.8 trillion American Families Plan would expand nutrition aid to poor households and access to childcare, universal pre-kindergarten, and community college. It would also provide extended child, earned income, and dependent care tax credits. Congress is expected to send much of this session working through the various proposals laid out by the President.
Of particular interest to TAUC members, the American Families Plan also calls on Congress to create a $225 billion program to provide up to 12 weeks of guaranteed paid family and medical leave. Under the proposals, employees would receive up to $4,000 monthly, with at least two-thirds of average weekly wages replaced. The President also called on Congress to pass the "Healthy Families Act," which would require employers with 15 or more employees to provide their employees a minimum of seven paid sick days annually if they become ill, or if they need time to care for a child, a parent, a spouse. Employers with fewer than 15 employees are required to provide unpaid sick leave.
The President proposed to pay for the American Families Plan by raising taxes on wealthy households, increasing top income and capital gains tax rates to 39.6%, ending tax breaks related to inheritance and investment funds, and increasing support for IRS tax enforcement. Republicans have widely panned both the family and infrastructure proposals as too big and too broad and expressed strong opposition to the proposed tax increases. Nevertheless, the President has continued to hold a series of bipartisan meetings to discuss opportunities for bipartisan compromise. Senate Republicans led by Senator Capito (R-WV) announced a proposed $568 billion response to the President's infrastructure package. The proposal is focusing on what is more traditionally viewed as infrastructure -- roads, bridges, ports, airports, broadband, and water infrastructure-- and would be funded by unspecified user fees.
At this point, bipartisan compromise appears unlikely, leaving Democrats to hold out the option once again of attempting to pass the proposals through budget reconciliation, a budgetary process that allows legislation to pass with a simple majority (as opposed to the 60 votes require to cut off a filibuster). At this point it is not clear if Senate Democrats can convince all of their members to support a pure partisan approach.
The U.S. DOL announced that it will withdraw a Trump-era final rule relaxing the factors for determining Independent contractor status under the Fair Labor Standards Act. The DOL's Wage and Hour Administration initially announced 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.
DOL rescinded the regulation without replacing it with a new interpretation of when workers can function as independent contractors and when they must be classified as employees under federal law. DOL will now rely on a longstanding seven-factor "economic realities" test established by judicial precedent in determining questions of employee status.
TAUC joined with the Construction Employers of America in submitting comments in support of the U.S. DOL's proposal to withdraw Trump Administration's final rule.
This move seems to be an indication of the direction DOL may be moving on the issue of employee misclassification. Recently, it has been widely rumored that David Weil, a strong opponent of misclassification, is DOL Secretary Walsh's preferred pick to lead the Wage and Hour Division (a position he held during the Obama Administration). Also, the Biden Administration fiscal year (FY) 2022 discretionary budget request calls for $2.1 billion to invest in DOL's worker protection agencies. According to the request, the proposed funds will be used to enable DOL to address the misclassification of workers as independent contractors, ensure workers' wages, benefits, and rights are protected, and improve workplace health and safety.
Joint Employer Rule
The CEA also submitted comments in support of the DOL's proposal to withdraw the Trump-era final rule narrowing the definition under the Fair Labor Standards Act (FLSA) of what constitutes a "joint employer." The Joint Employer Final Rule went into effect in January 2020 and addressed the standard for determining whether an employee may be deemed to be jointly employed by two or more employers.
CEA expressed its opposition to the final rule, which encouraged employee misclassification and would undermine the competitiveness of contractors who properly classify their employees.
COVID-19 Emergency Temporary Standard
The DOL has sent an "emergency temporary standard" (ETS) establishing COVID-19 workplace safety rules to the Office of Management and Budget for review. This is the first step before the regulations are released publicly and go into effect. Biden gave the Labor Department a March 15 deadline to decide whether mandatory workplaces safety rules were necessary to protect workers from COVID-19.
As reported last month, TAUC and its partners in the CEA sent a letter to DOL regarding a COVID-19 ETS. The CEA did not recommend for or against the idea, but requested that an ETS respect labor-management relationships and not apply to workplaces in which an employer and its union mutually agree on best practices.
Clean Energy for America Act
Senate Finance Chairman Ron Wyden (D-Ore.) recently introduced legislation designed to revise and streamline clean energy tax provisions. While President Biden's America Job Plan called for extending existing tax credits for wind and solar power and energy storage, Wyden's Clean Energy for America Act is much broader, consolidating over 40 existing energy tax provision into three technology-neutral incentives: for power generation, transportation fuels and energy efficiency. The Wyden proposal would also tighten emission limits, while eliminating tax treatment fossil fuel sectors.
For clean electricity, owners would be able to choose between the production tax credit (PTC) or the investment tax credit (ITC). Both credits would be based on the carbon emissions of the electricity generated, measured as grams of carbon dioxide equivalents (CO2e) emitted. The bill would limit the credits to facilities with zero or net-negative emissions. Both credits would be made "direct pay," which would provide greater efficiency in the use of these tax credits by allowing project owners to bypass tax equity markets and access these tax credits directly.
The legislation also includes several provisions that could be beneficial to TAUC members and their customers:
- Expanding eligibility for use of the ITC to include grid improvements, energy storage, transmission projects, rooftop solar and wind turbines;
- Extending the 45Q carbon capture and sequestration incentive until the power and industrial sectors meet emission goals; and
- Lifting the per-manufacturer cap associated with the electric vehicle tax credit to encourage the electrification of the transportation sector.
Prior to the introduction of the legislation, TAUC sent a letter to Senator Wyden encouraging that his proposal require energy infrastructure projects receiving taxpayer assistance to comply with federal prevailing-wage requirements and utilize registered apprentices. The inclusion of these provisions will ensure that TAUC members can remain competitive in delivering high-quality construction services and project outcomes on renewable and clean energy projects.