Public Policy Deep Dive Panel Explores Pressures on Federal Contractors, Pending Regulatory Actions

September 12, 2014

With Congress unlikely to enact major legislation anytime soon, the Administration has rolled out a range of executive orders and new regulations to shape government policy in its last two years—as our afternoon panel described, the Association is playing an active role in meeting these new challenges.  Pitney Bowes Executive Vice President and Chief Human Resources Officer Johnna Torsone, who chairs our Employment Rights Committee, and HR Policy President and General Counsel Dan Yager led a panel of Association staff in an in-depth discussion of many major public policy issues which continue to move forward despite ongoing congressional gridlock.  They were joined by Center On Executive Compensation President Tim Bartl and Executive Vice President Shelly Carlin as well as the Association's Chief Economist Mark Wilson and Government Relations Director Alec Wescott.

  • Federal Contractor Requirements/"Blacklisting"  Dan Yager led a discussion of the Obama Administration's strategy to change workplace laws through the use of executive orders and the federal contractor system, quoting OFCCP Director Pat Shiu as saying that while Congress is in gridlock, federal contractors will be "ahead of the curve" on the "unfinished business of America."  There was extensive discussion of the OFCCP's proposed "Equal Pay Report," which will require federal contractors to report the total number of employees, W-2 earnings, and the total number of hours for each EEO-1 job category by race, gender, and ethnicity.  Ms. Torsone expressed concern about the proposed development of misleading industry standards based on the data, noting "if they find gaps between your pay and that of others in your industry, you're going to be placed at the top of the target list for enforcement."  Yager and Wilson then briefed the members on the new "blacklisting" executive order that would ban certain companies from federal contracts based on labor law violations.  Yager discussed the strong potential for a legal challenge, while Alec Wescott described the lobbying efforts being led by the Association on Capitol Hill.

  • The Dodd-Frank Pay Ratio   Shelly Carlin warned of the major challenge ahead for companies required to comply with the Dodd-Frank pay ratio, noting that it is possible that a final rule will be released as early as this October.  Ms. Carlin also detailed the Center's plan to help companies manage the disclosure's public relations impact which will likely be the focal point for companies when the disclosure is finally required.

  • "Updating and Modernizing" FLSA Regulations  Dan Yager outlined the Association's hopes for reforming the FLSA but cautioned the audience that the administration's idea of doing so may amount to simply ensuring that more employees are eligible for overtime by paring back the exemptions.  This will likely be done by more than doubling the minimum salary for having the exemption from $23K to $50K and by establishing limits on the amount of time an exempt employee can spend performing non-exempt work for those that still may otherwise qualify under the complicated duties tests.  Mark Wilson described a letter from the Association to the Secretary of Labor seeking more urgent reforms, such as those enabling employers to provide flexible work arrangements to nonexempt employees.

  • Tax Reform & Executive Compensation  Tim Bartl outlined how executive compensation tax code sections 162(m), which allows for the deduction of performance-based executive pay exceeding $1 million, and 409A, which permits non-qualified deferred compensation, are likely targets in a tax reform effort.  However, even in the absence of a tax reform effort, Bartl cautioned, both provisions are likely bipartisan targets as revenue raisers to offset social spending.

  • NLRB Labor Law Reforms  Dan Yager discussed the recent McDonald's decision in which the NLRB General Counsel ignored over 40 years of precedent by declaring a franchisor to be a "joint employer" of the franchisee's employees.  Mr. Yager stated that the issue is not unique to either franchises or the NLRB but instead represents a broader attack by the administration on contractual relationships, such as independent contractors, staffing firms, etc.

  • Scheduling Rights  In describing the "Schedules that Work Act," Dan Yager noted that the "family-friendly workplace" debate is moving beyond paid leave to include scheduling rights which could start moving at the state and local level with or without congressional action.  Mark Wilson warned that this could also be the subject of another executive order applying to federal contractors' policies.

  • Proxy Advisors  Tim Bartl provided views on the SEC's recent proxy advisory firm guidance, noting that while the guidance did not provide a binding regulatory scheme, it did provide additional opportunities to highlight and evaluate proxy advisory firm conflicts of interest and errors.