Ruining countless August vacations this week, the National Labor Relations Board’s Democratic majority handed down a new joint-employer standard that radically rewrites U.S. labor law and upends thousands of business relationships. The majority asserts that throwing out three decades of legal precedent is necessary “to encourage the practice and procedure of collective bargaining.” Labor unions are celebrating a decision sure to harm diverse industries in every state …
A major goal of the new rule is to pit corporate parents against their franchisees in collective bargaining. Last year NLRB General Counsel Richard Griffin directed that McDonald’s be charged as a joint-employer in dozens of unfair labor practice complaints against franchises. Unions say corporations should be on the hook for their franchisees’ workers because computer systems can monitor sales and labor costs.
But under the new rule, there’s no limit on the number of parties that could be seated at the bargaining table. For example, West Coast tech companies such as Apple, eBay and Yahoo have contracted with the same private bus service, which the Teamsters have unionized. Would all these companies have to bargain individually with the Teamsters? What if they disagree? Could eBay’s labor agreement override Apple’s bus contract?
The majority dismisses the Republicans’ dissent as a “law-school-exam hypothetical of doomsday scenarios.” Perhaps the board had to pass the rule to find out what it does. Nor does the majority consider its economic implications. “It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers,” the majority writes …
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The Department of Labor is pushing a regulatory proposal that will make it harder for working families to save for retirement. In an op-ed featured in The Hill, Education and the Workforce Committee member Rep. Earl L. “Buddy” Carter (R-GA) draws from his experience as a community pharmacist to explain how the proposal will negatively impact small business owners and the hardworking men and women they employ:
Having owned and operated community pharmacies for nearly thirty years, I take pride in having provided my employees with the tools they needed to achieve financial independence. One of the most important tools in this effort were retirement investment plans so they could save to retire comfortably.
Unfortunately the Obama administration is now taking steps threatening the ability for small businesses to provide their employees with this vital resource. If the administration gets its way, many more employees will not have a retirement plan at work and will have to save on their own by either paying unreasonable fees or getting their retirement advice online without one-on-one assistance. Experts estimate Americans stand to lose $80 billion in retirement savings annually due to the rule.
The United States Department of Labor’s new regulation, known as the “fiduciary standard,” would leave many unable to save for retirement at all. It would prohibit any business with fewer than 100 employees from receiving investment information about its retirement plan options. In doing so, it would render small businesses like the pharmacies I owned unable to help their employees plan and save for retirement.
Middle class families would be hit the hardest by this “fiduciary standard.” By treating local financial representatives as fiduciaries, the proposed more than 400-page regulation would expand the Department of Labor’s overly-burdensome and complex pension rules to cover Individual Retirement Accounts (IRAs) used by most middle class savers. The rule change ignores the fact that these accounts are already heavily regulated by existing securities laws.
By far the scariest consequence of the DOL regulation is how it would curtail access to retirement education for middle class savers and potential savers who would benefit most from one-on-one advice. The regulation limits them to “managed accounts” where financial services firms charge a fee, usually around one percent, based on an account’s assets under management. Buy and hold or long-term savers would pay significantly more over the long run if charged an annual asset-based fee.
Moreover, the minimum balance required for managed accounts at most firms is at least $25,000 if not much, much more. That would cut off as many as 20 million Americans whose accounts do not reach that threshold from receiving face-to-face retirement advice.
This misguided change would severely restrict access to information and education about retirement options for those already struggling to save. Those with less than $25,000 to save and invest, would likely be forced to pay an hourly fee of $250-$500 for retirement advice, search blindly for advice on the Internet, or forgo saving at all.
Anyone who thinks the average middle class saver – who has less than $250 per month to save for retirement – is going to shell out $250 an hour or more for someone to give them retirement advice is out of their minds. And if you think getting sound retirement advice online is easy, just Google it and see the many ads that overtake your screen.
This is a classic case of federal government stepping in the way of a Main Street success story with a “Washington bureaucrats know best” mentality. Having had the privilege of helping my employees at the pharmacies save for their retirement, I know what cutting off this resource could mean for them and their families.
Like many small business owners, I consider my employees part of my family. That’s why I am so committed to working with Chairman John Kline (R-Minn.) and the House Education and the Workforce Committee to block this rule change so they – and millions of working Americans like them – aren’t left in the dark when it comes to retirement savings.
By the end of the current fiscal year, HHS is expected to spend approximately $1 trillion administering numerous programs affecting millions of Americans, including child care, welfare, health care, and early childhood development. At a time when families are being squeezed by a weak economy and record debt, we have an urgent responsibility to make sure the federal government is operating efficiently and effectively. It is a responsibility we take seriously, which is why this hearing is important and why we intend to raise a number of key issues.
For example, we are interested to learn about the department’s progress implementing recent changes to the Child Care and Development Block Grant program. Last year, the committee helped champion bipartisan reforms of the program to strengthen health and safety protections, empower parents, and improve the quality of care. This vital program has helped countless moms and dads provide for their families, and we hope the department is on track to implement these changes quickly and in line with congressional intent.
Another vital program for many low-income families is Head Start. Earlier this year, the committee outlined a number of key principles for strengthening the program, such as reducing regulatory burdens, as well as encouraging local innovation and better engagement with parents. The committee then solicited public feedback that would help turn these principles into a legislative proposal.
It was in the midst of this effort to reform the law that the department decided to launch a regulatory restructuring of the program. Some of the department’s proposed changes will help improve the program; however, the sheer scope and cost of the rulemaking raises concerns and has led to some uncertainty among providers who serve these vulnerable children. Strengthening the law is a better approach than transforming a program through regulatory fiat, and we urge the administration to join us in that effort.
These two areas alone could fill up most of our time this morning, and I haven’t even mentioned services provided under the 1996 welfare reform law and the Older Americans Act. Of course, as you might expect, Secretary Burwell, on the minds of most members are the challenges the country continues to face because of the president’s health care law. Families, workers, and employers are learning more and more about the harmful consequences of this flawed law. For example:
Patients have access to fewer doctors. To control costs, it is estimated that insurance plans on the health care exchanges have 34 percent fewer providers than non-exchange plans, including 32 percent fewer primary care doctors and 42 percent fewer oncologists and cardiologists.
The law is plagued by waste and abuse. In 2014, investigators with the nonpartisan Government Accountability Office used fake identities to enroll 12 individuals into subsidized coverage on a health care exchange. Just this month, GAO announced 11 of the 12 fake individuals are still enrolled and receiving taxpayer subsidies.
More than seven million individuals paid a penalty for failing to purchase government-approved health insurance, roughly 25 percent more than the administration expected under the worst case scenario.
According to the Associated Press, at least 4.7 million individuals were notified that their insurance plans were cancelled because they did not abide by the rigid mandates established under the health care law.
The nonpartisan Congressional Budget Office estimates the law will result in 2.5 million fewer full-time jobs. This reflects what we’ve heard over and over again from employers who have no choice but to cut hours or delay hiring because of the law’s burdensome mandates.
Health care costs continue to skyrocket. According to the New York Times, health insurance companies are seeking rate increases of “20 percent to 40 percent or more,” suggesting markets are still adjusting to the “shock waves set off by the Affordable Care Act.”
Finally, after all the mandates, fraud, loss of coverage, fewer jobs, higher costs, and nearly $2 trillion in new government spending, it’s estimated more than 25 million individuals will still lack basic health care coverage. And yet, just last month, President Obama said the law “worked out better than some of us anticipated.” Of course, for those who opposed this government takeover of health care, this is precisely what we anticipated and it is precisely why the American people deserve a better approach.Read More
Recognizing this administration’s propensity for executive overreach, I shared many of those concerns. But I was still hopeful that somehow, this time might be different – that somehow the administration would listen to all of the concerns, consider all of the data, and put forward a proposal that would help do some good without doing any harm. As it turns out, that optimism was misguided, much like the rule the administration eventually proposed.
In the weeks since the administration unveiled its overtime proposal, even more concerns have been raised about the impact it would have on both employees and employers. Various studies and analyses have shown the administration’s plan would result in billions of new costs for employers annually – a reality that is tough for many employers in this economy, but even tougher on small businesses and nonprofits. Unfortunately, the proposal’s anticipated consequences extend far beyond added costs and could have much more serious implications for many Americans.
Of all the concerns we’ve heard about this proposal, the ones I find most alarming are those that it will limit flexibility and opportunity in the workplace. As employers struggle to cope with the added costs of these new overtime rules, many salaried employees will be demoted to hourly workers with lower pay and stricter schedules. With that shift comes fewer opportunities for on-the-job training, talent development, and managerial experience. All of which leads to fewer opportunities to advance up the economic ladder.
One of the most inspiring things about the American workforce is that a crew member at a fast-food restaurant can work hard, earn a spot in management, and eventually go on to become a leader at a major U.S. business. That’s the American Dream, one that all policymakers should work to encourage, not stifle. I’m sure Mr. Williams will have more to say on that topic. Unfortunately, if the administration’s proposal has the effect many anticipate it will, stories like that of Mr. Williams will become harder to come by.
In as much as the administration’s proposal is flawed for what it would do, it’s equally disappointing in what it doesn’t do. It doesn’t address the complexity of current regulations, and it doesn’t reduce unnecessary litigation. As Chairman Kline and I said when the proposal was first unveiled, it’s a missed opportunity. What we need instead – and what the American people deserve – is a balanced approach that will strengthen employee safeguards, eliminate employer confusion and uncertainty, and encourage growth and prosperity for those working hard to make a living. From what we’ve heard so far, the administration’s proposal is not that approach.
This committee has held numerous hearings and explored various efforts over the years to improve the rules and regulations guiding federal wage and hour standards. We’ve heard from employees and employers alike that the current system is too complex, burdensome, and outdated. And we’ve seen studies that show related litigation is on the rise. For all these reasons, we will continue to urge the administration to improve these rules and regulations responsibly and in a way that doesn’t destroy opportunities for hardworking Americans.
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Today the committee will consider H.R. 511, the Tribal Labor Sovereignty Act of 2015. This important legislation will prevent the National Labor Relations Board from exerting jurisdiction over Native American businesses operating on tribal lands.
As we all know, policies governing labor-management relations are extremely complex and controversial. More than 80 years after its enactment, the National Labor Relations Act continues to be a source of heated debate in the United States Congress and in workplaces across the country. No doubt that debate will continue to take place in this committee as we work to ensure the law is implemented fairly and objectively.
But that’s a debate for another time. The bill before us is not about union workers versus nonunion workers; it’s not about big business versus big labor; and it’s not about Republican versus Democrat. The bill we are considering today is about whether Native Americans should be free to govern employee-employer relations in a way they determine is best for their workplaces.
Over the last 10 years, the National Labor Relations Board has taken an approach contrary to the rights of Native Americans and long-standing labor policies. In a 2004 decision, the board broke from more than 30 years of precedent and decided it has jurisdiction over tribal activities. Since that time, the board has determined on a case-by-case basis whether a business on tribal land is for commercial purposes, and if it is, the board will assert its jurisdiction over that business.
At a subcommittee hearing held in June, Rodney Butler, chairman of the Mashantucket Pequot Tribal Nation of Connecticut, criticized the board’s decision as an “affront to Indian Country.” He went on to say that the board’s flawed logic “suggests that Indian tribes are incapable of developing laws and institutions to protect the rights of employees who work on our reservations.” Jefferson Keel, Lieutenant Governor of the Chickasaw Nation, described the board’s approach as “incompatible with the very nature of sovereignty and self-government.”
Imagine the public outcry we would hear across the country if the board began imposing its will on enterprises owned and operated by state and local governments, such as schools, parks, and recreation centers. Are we supposed to believe that state leaders in California and Connecticut are more capable of managing their affairs than the leaders of the Shakopee and Saginaw Chippewa Indian tribes? Yet for more than a decade, that’s precisely the message the board has sent to Native Americans.
It is time for Congress to right this wrong, and the Tribal Labor Sovereignty Act will help us do just that. The bill amends the National Labor Relations Act to reaffirm that the National Labor Relations Board cannot assert its authority over Indian tribes and enterprises or institutions owned and operated by an Indian tribe on tribal land. This is the same standard that was in place before the board abruptly changed course and it must be the standard that governs the board’s actions moving forward.
I want to thank Congressman Todd Rokita for his leadership on this important issue. Over the years, a number of men and women in Congress have helped lead the fight on behalf of tribal sovereignty. Thanks to their hard work, we are here considering a proposal that will restore to Indian tribes the ability to regulate labor relations in their businesses and ensure they are afforded the same rights and protections enjoyed by state and local government leaders.
Two years ago, President Obama signed an executive order establishing a White House Council on Native American Affairs. Now, I am not usually one to cite favorably an executive order by the president, but I do believe this one is pertinent to today’s meeting. The executive order says:
“The United States recognizes a government-to-government relationship, as well as a unique legal and political relationship, with federally recognized tribes … Honoring these relationships and respecting the sovereignty of tribal nations is critical to advancing tribal self-determination and prosperity.”
That is the essence of why we are here today – to honor and respect the sovereignty of tribal nations. Native Americans have spoken loud and clear: They do not want an unelected and unaccountable federal labor board dictating policies in their workplaces. I urge my colleagues to stand with the Native American community by supporting the Tribal Labor Sovereignty Act.Read More
Before I explain the technical changes included in the substitute amendment, I’d like to take a minute to discuss the importance of the broader legislation.
As the chairman said, the purpose of this bill is simple: to protect the sovereignty and promote governmental parity, of Native Americans by making it very clear that tribal businesses on tribal lands are free to operate with the same autonomy provided to any other sovereign body.
Since the early 1830s, our courts have held that “tribes possess a nationhood status and retain inherent powers of self-government.” Over the years, there has been widespread agreement on both sides of the aisle that these rights should be protected and that tribes should remain sovereign – free to govern and develop policies that best meet the needs of their members. Unfortunately, in recent years, the National Labor Relations Board has threatened that sovereignty by exerting control over tribal businesses.
For nearly 70 years, the NLRB respected Native American sovereignty, holding that tribes should be free from outside intervention. But in 2004, the board reversed course and overturned long-standing precedent with its San Manuel Bingo & Casino decision. Since then, the board has used a subjective test to determine when and where to exert its jurisdiction over Native American tribes. There shouldn’t be a test, as was said at the hearing.
Not surprisingly, the Native American community strongly opposed the board’s move, and today, we continue to hear strong concerns with what many consider an attack on tribal sovereignty. Unfortunately, these concerns seem to have fallen on deaf ears at the NLRB as the board continues to exert its authority over Native American tribes, and the problem is only getting worse and is creating uncertainty for tribal governments and tribally owned businesses, often in regions that can least afford it.
At a subcommittee hearing just last month, tribal leaders said they’ve seen “an increasingly aggressive approach to enforcement by the board, which creates unacceptable risks and uncertainties for all tribal nation rights under federal law and to their dignity as sovereigns.” If enacted, the Tribal Labor Sovereignty Act will put an end to the board’s overreach and give authority over labor relations back to tribal governments.
As Dr. Roe said at last month’s hearing, “We should never stand idly by while the sovereignty of Native Americans is threatened.” And that’s why we are here today. The legislation we’re considering will prevent the NLRB from asserting its jurisdiction over businesses owned by Native American tribes on tribal lands. It’s a bipartisan, commonsense proposal that will provide legal certainty to the Native American community and restore a standard that was in place for years before the misguided NLRB San Manuel decision.
I appreciate all that my colleagues have done over the years to move this issue forward, and I am very pleased that we’re taking this next step today. The technical change in the proposed substitute amendment clarifies that the National Labor Relations Act does not apply to tribal enterprises and institutions, as well as the tribal governments themselves. I urge my colleagues to support the substitute, as well as the underlying bill, to help provide Native American tribes the legal clarity and labor sovereignty they deserve.Read More
The nation’s one-size-fits-all mandates dictating K-12 education have been letting students down for years. Federal involvement in classrooms is at an all-time high. Yet far too many schools are ill-equipped to make the grade. The Obama Administration has only made a broken system worse by imposing a backdoor education agenda on states and school districts through pet projects and temporary, conditional waivers.
As Education and the Workforce Committee member Rep. Mike Bishop (R-MI) writes in a recent op-ed:
For too long, the Department of Education has disregarded the 10th Amendment and our state’s ability to effectively lead the people it knows best – including our students. It doesn’t make sense to treat Brighton or Rochester, Michigan’s school districts like Brooklyn, New York’s or Milwaukee, Wisconsin’s. There cannot be just one, broad-stroke approach to achieving student success.
Fortunately, the Student Success Act places the country on a new course. Rep. Bishop continues:
While serving as the Senate Majority Leader of Michigan, I saw firsthand how much more effective we could be when control over education decisions was kept at the state versus the federal level. I’ve taken that experience with me to the House Committee on Education and the Workforce, where my colleagues and I have focused on reducing the federal footprint in the classroom.
That’s one of the goals behind the Student Success Act, which the U.S. House of Representatives passed last week. Its improvements to our K-12 system would give states the freedom to choose what works best for them without the strings attached, including additional protection for states that choose to opt-out of Common Core. Best of all, it empowers parents and educators with greater flexibility by eliminating regulations that monopolize how and where students are taught.
This Congress has a duty to build a better path forward for our children. The Student Success Act does just that.
Americans deserve a better law, one that will help ensure every child in every school has access to an excellent education. By passing the Student Success Act, Congress has moved one step closer to that goal.
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It’s time to provide those responsible for implementing child nutrition programs with the flexibility they need to ensure taxpayer dollars are well spent and students are well served. I am confident learning from your experiences, observations, and recommendations will inform our efforts to accomplish just that.
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One of the most difficult challenges we face as a country is a lack of real retirement security for America’s families. The defined benefit pension system continues to experience a decades-long decline, while many workers are still rebuilding the savings they lost in the recent recession. Due to these and other challenges – including a persistently weak economy – too many workers are retiring without the means necessary to ensure their financial security.
Our goal as policymakers should be to advance bold, bipartisan solutions that will help more Americans plan, invest, and save for retirement. Regrettably, the department’s fiduciary regulation would move our country in the opposite direction. It would cut off a vital source of support many low- and middle-income families and small business owners rely on, and that is the help of a trusted financial advisor.
Four years ago, the subcommittee examined a similar proposal that was later withdrawn under intense bipartisan opposition. I said at the time that anyone who provides investment assistance should be well trained, committed to high ethical and professional standards, and devoted to the best interests of those they are serving.
That is why financial advisors have long been subject to a host of securities, tax, and disclosure requirements. It is a complex system of rules and regulations, but it is an important one that has worked well for decades. That does not mean we shouldn’t look for opportunities to improve current standards. But we cannot – in any way – make it harder for workers, retirees, and small business owners to receive the financial advice they may need.
Yet that is precisely what this regulatory proposal would do. Offering some of the most basic assistance would be prohibited, such as advice on rolling over funds from a 401(k) to an IRA. Financial advisors would no longer be able to assist individuals in how to manage their funds upon retirement. And small business owners would be denied help in selecting the right investment options for their workforce, which will lead to fewer employees enrolled in a retirement plan.
It has been suggested on numerous occasions that this proposal will simply apply to financial advisors the same standard recognized in the medical profession. Mr. Secretary, I believe you have drawn that comparison from time to time. It is a clever talking point, but one that couldn’t be more flawed.
As a physician with more than 30 years of experience treating patients, let me just say that the approach reflected in this proposal would destroy what’s left of our health care system. Imagine what would happen if doctors were prohibited from receiving compensation, or were required to sign a contract with each patient before delivering services, or were forced to publish online each and every treatment that had been prescribed the following year. No doctor could run a successful practice under this type of regulatory regime, and no responsible financial advisor will be able to either.
Make no mistake, if this rule goes into effect, a lot of people will quickly learn that their financial adviser – someone they may have known and trusted for years – will no longer be able to take their call. And it is important to note that low- and middle-income families are the ones who will bear the brunt of this misguided proposal. They will lose access to the personal service they rely on and be forced to find suitable advice online or simply fend for themselves.
As is often the case with big government schemes, the wealthiest Americans will do just fine and those we want to help will be hurt the most. Mr. Secretary, this latest fiduciary proposal will lead to the same harmful consequences as the first and should suffer the same fate: Please withdraw this proposal and work with this committee on a responsible, bipartisan approach that will strengthen protections for investors and preserve robust access to financial advice. Our nation’s workers and retirees deserve nothing less.
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