A federal court of appeals struck down the Biden-era’s NLRB landmark Cemex case, which had allowed for unions to more easily gain representation without elections. Meanwhile, the DOL is engaging in new rulemakings for joint employer status and 401(k) plans, and states continue to pass laws allowing benefits for contractors. Catch up the latest federal and state regulatory developments impacting your workplace below.
Cemex struck down (partially): The signature case of the Biden-era National Labor Relations Board, Cemex Construction Materials Pacific LLC, was struck down by the Sixth Circuit Court of Appeals earlier this month.
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The Cemex decision paved the way for union representation without elections, essentially guaranteeing a union’s victory as long as it had majority support among employees and the employer was accused of unfair labor practices during the campaign (which happens in nearly all cases, even if the allegations are later proven untrue).
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The Sixth Circuit found that the landmark new precedent was beyond the Board’s authority. Specifically, the court found that the new standard was beyond the scope of the case and its facts, and would have required a formal rulemaking process.
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The decision is presently limited to cases within the Sixth Circuit (which covers Kentucky, Michigan, Ohio, and Tennessee), but other circuit courts could soon follow suit.
Why it matters: While Cemex is at the top of the list of Biden-era precedents for the new Republican-majority Board to overturn, the Board will not do so until it has a third Republican Member, which is unlikely to happen anytime soon. The Sixth Circuit result is therefore a welcome respite for employers in the interim.
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Perhaps more importantly in the broader sense, the Sixth Circuit’s attack on Board authority to create new standards out of adjudication is a significant blow to its policymaking ability.
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The Supreme Court’s recent limits on agency authority are clearly already manifesting for the NLRB, as more and more circuit courts are dismissing the Board’s traditional authority to set federal labor policy through adjudication.
DOL pushes two new (old) rules: The Department of Labor is proposing a new rule for joint employer liability and restoring a decades-old rule for 401(k) fiduciary status.
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Joint employer: Despite initial speculation that the DOL would only shape joint employer liability through opinion letters, the Department has engaged in a new rulemaking, continuing a nearly two-decade-long game of regulatory ping-pong on the issue.
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The bottom line: The rule itself will not be released for another few weeks at the earliest, but it is likely to be similar to the first Trump administration’s rule, which makes it easier for companies to shield themselves from liability for the actions of their suppliers and other third-party companies with which they do business.
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401(k) plans: The DOL also proposed new rulemaking for 401(k) fiduciary status. The rulemaking would not create any new standard, but would instead formally rescind the Biden-era rule (which expanded fiduciary duties to cover workers’ rollovers from 401(k) and 403(b) accounts into annuities and other investment vehicles, and had been struck down in court), and restore a standard that has been the norm until the Biden-era rule.
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The bottom line: The DOL is simply formally restoring the traditional standard for 401(k) fiduciary status that has been in place since 1975.
States continue to allow benefits for contractors: West Virginia became the latest state to pass legislation (HB 4009) that allows employers to provide benefits typically reserved for employees—such as health insurance, unemployment insurance, disability insurance, and retirement benefits—to independent contractors, without creating an employer-employee relationship.
Why it matters: The idea of allowing contractors access to employee benefits without changing their status was heretofore a policymaking nonstarter. It appears that that dam has now fully burst, as even in blue states, the focal point has switched from trying to turn contractors into full legal employees to simply allowing contractors access to employee-like benefits.
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This trend is poised to continue and allows employers more freedom to enjoy the flexibility of contract workers while also rendering constant federal efforts to change worker classification rules to be less meaningful.
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Lastly, the explosion of these laws in the states serves as another example of states taking action in workplace regulation in response to continued stalemate at the federal level.
