Biden Picks Becerra to Head HHS

President-elect Joe Biden’s nomination of California Attorney General Xavier Becerra to lead the Health and Human Services Department suggests the administration plans to make it easier for states to create single-payer systems under the Affordable Care Act.

Becerra’s antitrust case against Sutter Health has implications for the health care system and how insurers negotiate with hospitalsThe case claimed Sutter Health exploited the market by aggressively buying hospitals and physician groups.  The company paid $575 million to settle while agreeing to end the practices that the suit alleged limited competition and increased health care costs. 

Becerra is a fierce defender of the Affordable Care Act and has previously expressed support for Medicare for All.  While Becerra does not have experience running public health programs, he does have significant experience in health care policy and litigation.  Supporters think he will bring the legal and political acumen needed to strengthen and enhance the Affordable Care Act after filing numerous lawsuits aimed at overturning Trump administration efforts to dismantle aspects of the ACA.

Outlook:  Becerra has taken several positions that impact employer-sponsored insurance, including opposition to association health plans and short-term health plans.  Becerra has stated he intends to “build on our progress and ensure every American has access to quality, affordable health care—through this pandemic and beyond.” 

Contact Margaret Faso

Installation of Acting DOL Officials May Accelerate Biden Agenda

The Biden transition team is moving to fill key Department of Labor leadership roles as quickly as possible by inserting individuals into “acting” roles instead of waiting for nominees to obtain Senate confirmation.

These include acting leaders at the Occupational Safety and Health Administration—who will be immediately responsible for rolling out a national OSHA COVID-19 emergency standard—and the Wage and Hour Division, among other areas within the Labor Department that carry significant regulatory weight.

Among the names being floated to fill these positions are labor leaders Sonia Ramirez, a former top lobbyist for North America’s Building Trades Unions, and former United Steelworkers safety official Jim Frederick.

The first 100 days of the Biden presidency will likely see the Labor Department attempt a number of reversals of Trump administration policy as well as a tougher enforcement regime.   

However, per the Federal Vacancies Reform Act, in general, officials serving in an acting capacity will lose much of their authority 300 days after a president is sworn in.

The Biden administration will ultimately seek to install officials through the nomination and Senate confirmation process following the posting of acting leadership.  The individuals selected are expected to be determined with the input of the DOL nominee, once identified.

Contact Greg Hoff

Mexico Delays Decision on Controversial Proposal to Ban Outsourcing

Following protests from the business community, a legislative decision on a controversial HR Policy-opposed bill banning outsourcing in Mexico has been delayed until February 2021 to allow time for negotiations.

The decision comes less than a month after Mexican President Andrés Manuel López Obrador introduced a bill to ban the practice of outsourcing in the country, consistent with a campaign promise.  The practice, though commonplace, has drawn heavy criticism from Obrador and others who claim companies use it to avoid paying taxes and benefits to workers.  President Obrador pressed to pass the bill within two weeks of its introduction. 

Business community pushback:  Both the bill and the speed with which it was moving immediately drew heavy condemnation from business groups within Mexico and abroad.  Carlos Salazar, head of the influential CCE business group, told newspapers the impact of the bill would be “devastating” to the Mexican economy.  Mr. Salazar noted CCE has now signed an accord with the Mexican government to negotiate. 

Profit share rules to be center of negotiation:  HR Policy Global has previously detailed the debate over outsourcing in Mexico for multi-national companies and urged members with operations in Mexico to raise their concerns with the Mexican government.  Adding further complexity, under current Mexican law, all companies—even multinational ones not headquartered in Mexico—must distribute 10% of profits to workers.  To reduce the tax liability, many multi-national companies either outsource jobs to agencies (outsourcing) or create a second entity in Mexico which serves as the payroll service and employer of the Mexican workforce (insourcing).  How the profit sharing rules work will be a central discussion point for the upcoming negotiations. 

HR Policy Global will continue to engage on the issue and work with its international coalition to monitor these important developments in Mexico. 

Contact Henry Eickelberg

Supreme Court Decision Upholding Arkansas PBM Rule Carries ERISA Preemption Implications

The Supreme Court ruled 8-0 in favor of a 2015 Arkansas law regulating pharmacy benefit manager (PBM) reimbursements, reversing a lower court order blocking the Arkansas law.

The Arkansas law:

  • Required PBMs to reimburse pharmacies for generic drugs at a rate equal to the wholesaled invoice amount the pharmacy paid for the drug inventory,

  • Mandated PBMs to use updated maximum allowable cost lists, and

  • Enabled pharmacies to decline to dispense when a particular transaction would cause them to lose money.

No ERISA preemption:  In a unanimous decision, the Supreme court ruled ERISA does not preempt the Arkansas law because it only regulates the relationship between PBMs and pharmacies.  The state law does not make "reference to" or have an impermissible "connection with" ERISA health plans.  Nor does the law regulate plans themselves or their relationships with PBMs, pharmacies, or plan participants.

The Court's decision may pave the way for additional state regulation and health reform that indirectly impacts the cost of employer health plans at the state level.  As health care reforms make little progress at the federal level, states may engage in additional state level reforms to decrease health care costs for their state populations. 

Could surprise billing be addressed through state reforms?  As Congress approaches the end of the year, federal action on surprise billing seems less likely.  Justice Sotomayor wrote in her opinion that “…not every state law that affects an ERISA plan or causes some disuniformity in plan administration has an impermissible connection with an ERISA plan.  That is especially so if a law merely affects costs.”  Following that logic, state approaches like bans on surprise billing by providers or limits on out-of-network charges may not be preempted by ERISA either. 

Contact Margaret Faso

Federal Judge Fully Reinstates DACA, But Fate of Program Still Uncertain

In the wake of a federal court ruling fully reinstating the Deferred Action for Childhood Arrivals program, a 2018 lawsuit poses yet another threat to the besieged program, underlining the necessity of a legislative solution.

The Department of Homeland Security has indicated that it will begin accepting new applications for the program in compliance with last week’s ruling.

However, a lawsuit filed by Texas Attorney General Ken Paxton and several state attorneys general in the Southern District of Texas seeks to wind down the program over the next two years.  A hearing is scheduled for December 22nd. 

U.S. District Judge Andrew Hanan, who will consider the lawsuit, has signaled that DACA is likely unlawful, as plaintiffs argue that the program is a “textbook case of prohibited executive lawmaking.” 

“If the nation truly wants to have a DACA program, it is up to Congress to say so,” Judge Hanan wrote in a previous ruling.  Congress has been considering various measures to accomplish this since 2001.  The most recent version, The American Dream and Promise Act, passed the House but failed to be taken up in the Senate. 

Outlook:  Passing DACA legislation will be a priority for Democrats in 2021 but Senate Republicans will be the key.

Contact Daniel Chasen

Members Look to Changes in 2021 and Beyond in Future Workplace Policy Council Labor and Employment Meeting

“Following these elections there is so much uncertainty, and so much to consider, which makes discussions like these critically important,” Future Workplace Policy Council Chair Johnna Torsone, CHRO of Pitney Bowes said during our Fall Labor and Employment Conference that looked ahead to a very different next few years.

What is the future of employee voice?  HR Policy Global Affairs Director Alan Wild moderated an exploration of how American labor laws could be modernized to reflect the 21st century workplace.  He noted that new forms of employee voice—for example, online activism—are conflict-focused rather than resolution-focused.  Oren Cass, Executive Director of American Compass, asked, “Is government going to step in with ever-increasing regulation and mandates?  Or are we going to want workers to have power so they can work things out with employers?  We should lean into the latter one.”  Andy Stern, former SEIU president and Senior Fellow of the Economic Security Project, noted the critical need for experimentation at the local and state level, and for unions to diversify sources of income to operate more like businesses providing a skilled workforce for employers.  The lack of trust in government and business highlighted by the populist movement on the left and the right presents a roadblock to making impactful change, noted Sharon Block, former NLRB Member and Executive Director of the Labor and Worklife Program at Harvard Law School.

HR Policy President and CEO Tim Bartl led a panel on the future of diversity and inclusion.  Morgan Lewis Partner and former EEOC Commissioner Chai Feldblum suggested several steps to enhance diversity and inclusion, including developing disaggregated workforce, senior executive working groups and an employee-led diversity and inclusion council that engages employees throughout the organization.  Fortney & Scott Co-Founder and former DOL Acting Solicitor David Fortney pointed to the need to be aware of the Title VII prohibition against discrimination on the basis of race and sex in seeking to bolster the participation of women and minorities.  Cardinal Health CHRO Ola Snow, bringing the practical perspective, noted her organization’s emphasis on creating diverse talent pipelines rather than quotas.  Eric Dreiband, Assistant Attorney General, Civil Rights Division, pointed to the Harvard admissions lawsuit as potentially significant in terms of Title VII in how lower courts react to it, if the Supreme Court takes it up and finds that Harvard engaged in illegal discrimination.

Policy veterans’ view on what the next four years could bring:  HR Policy Senior Labor and Employment Counsel Roger King moderated a lively discussion where veteran policymakers peered into the looking glass on the state of labor and employment policy over the next four years.  The panel discussed the wild swings in policy direction between administrations, particularly at the NLRB, and how the pandemic has created a sharp focus on the inadequacies of our system to provide needed protections to workers.  Also discussed were the potential for greater litigation that can come with greater government involvement, passing costs down to consumers during a time of economy distress.  The panel featured former NLRB Chair Wilma Liebman, former EEOC Commissioner Victoria Lipnic, former DOL Assistant Secretary for Policy Chris Spear (now CEO of the American Trucking Associations), and former DOL Wage and Hour Division head David Weil.

Johnna Torsone and HR Policy staff led a panel on the election’s impact on labor and employment laws, including likely COVID-19 workplace safety standards, potential executive orders from the Biden administration, expanded joint employer liability, immigration, paid leave, diversity and inclusion, and data privacy.  The staff were joined by Patricia Insley, Senior Vice President, Human Resources at Lincoln Financial Group and Pamela Richardson, Labor and Employment Counsel at American Water.

Contact Daniel Chasen

BEERG: UK Set to Ban Job Exclusivity Clauses for Low-Paid Workers

In response to the economic crisis brought on by COVID-19, the UK government is seeking to ban exclusivity clauses for nearly 2 million workers with a weekly income of less than £120.

The ban will allow low-income workers the option to take on extra part-time and flexible jobs with other employers.  The UK Department of Business, Energy and Industrial Strategy estimates it could also allow employers to tap into a larger pool of part-time workers.

“Following the impacts of the COVID-19 pandemic, companies are not always in a position to offer enough hours for every worker,” the UK government said in a statement.  “If more workers are able to take on additional work, on short hours contracts, this could also increase businesses’ confidence to create jobs with contracts which suit them and their current circumstances.”

Why it's important:  In the United States, non-compete agreements are also being targeted, with various states and localities considering or enacting restrictions.  It could also become a priority in the Biden administration with the Federal Trade Commission as a focal point.  The challenge for employers will be ensuring that agreements with highly-paid executives and individuals with access to sensitive proprietary information are not covered by the restrictions. 

Read the full BEERG Global Labor Newsletter here.

Contact Tom Hayes

Retiring Congressman Bradley Byrne Sees Increased Regulation, Little Legislation Ahead

Employers need to be prepared for an “onslaught from the NLRB, the Department of Labor, the DOL’s Wage and Hour Division and OSHA—you name it,” said Rep. Bradley Byrne (R-AL) in a conversation with HR Policy Senior Policy Advisor Dan Yager.  The discussion with Rep. Byrne, who has a background in employment law, took place during HR Policy's Future Workplace Policy Council Fall Labor and Employment Conference. 

“We need to have a strategy to push against that both in the notice and comment period and in cases with the NLRB," Rep. Byrne continued.  “We need to develop a litigation strategy that makes a substantive case that they’re exceeding their authority.” 

Congress will take a more moderate approach, Rep. Byrne predicted.  He noted that in the election battleground states, the difference between the Trump vote and the Biden vote was 0.1%.  Members from “purple” districts will be wary of hedging too far to one side or the other, negatively impacting the chances to pass progressive priorities. 

The conversation covered a wide array of topics, including what policies need amending to meet the challenges of the future.  Rep. Byrne said he would focus on reforming the National Labor Relations Act, noting that the law “wasn’t made for a gig economy, or an economy where workers work from home, or for an economy where workers are a part of the decision-making process about how work is done.”  He went on to mention that members of Congress with union backgrounds tend to agree that something should be done, and that there is room for a conversation.  In a later panel, leading thinkers, former union leadership, and senior policymakers from both sides conferred in a lively discussion on employee voice. 

Contact Daniel Chasen

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