LawFlash

Biden Administration’s Focus on Unions Extends to OSHA and Inflation Reduction Act Projects

26. September 2023

Beyond the recent, precedent-rewriting National Labor Relations Board decisions that have been making headlines, the Biden administration has been furthering its pro-labor agenda through other rulemaking efforts, from the US Department of Labor’s proposed rules updating Occupation Safety and Health Administration onsite inspection guidelines, to the US Department of the Treasury and Internal Revenue Service’s proposed regulations for obtaining clean industry tax credits subject to new requirements that in part encourage collective bargaining agreements.

OSHA’S ‘UNION WALKAROUND RULE’

As background, under the Occupational Safety and Health Act and its implementing regulations, elected union representatives who are active employees of the employer have always been permitted to accompany Occupational Safety and Health Administration (OSHA) inspectors during onsite inspections. The current law also permits third-party representatives who OSHA inspectors deem “reasonably necessary” for conducting an effective inspection to join onsite inspections, specifically giving the examples of safety engineers or industrial hygienists.

In 2013, under the Obama administration, OSHA issued a letter of interpretation that permitted third-party representatives to accompany OSHA investigators during onsite inspections even if (1) the worksite was not unionized and (2) the “representative” was not an employee of the employer. In 2017, following a lawsuit challenging the policy, OSHA under the Trump administration withdrew the letter.

The Biden administration’s new proposed rule, Worker Walkaround Representative Designation Process, [1] seeks to reinstitute the 2013 letter. Under the proposed rule, OSHA would once again allow investigators to permit union representatives to accompany their onsite inspections even if the worksite is not unionized and the representative is not an employee of the employer.

The OSHA inspector need only deem the representative to be “reasonably necessary” to conduct the inspection “because of their relevant knowledge, skills, or experience with hazards or conditions in the workplace or similar workplaces, or language skills.”

The proposed rule also eliminates the specific references to “industrial hygienist” and “safety engineer” as examples of third parties who might be “reasonably necessary.” In its Preamble to the proposed rule, OSHA takes a broad view of this requirement, stating that “there are a multitude of third parties who might serve as representatives authorized by employees for purposes of the OSHA walkaround inspection,” including “[w]orker advocacy organizations, labor organization representatives, consultants, or attorneys who are experienced in interacting with government officials or have relevant cultural competencies.”

OSHA further states that such persons might serve as a “trusted presence” and make employees feel more “comfortable” participating in an OSHA inspection.

Takeaways for Employers

The proposed rulemaking would make it much easier for third-party union representatives to gain access to nonunionized workplaces, giving these organizations a new foothold from which to launch a union-organizing campaign.

In addition, among other issues, the rule raises serious concerns about third-party access to proprietary information in nonpublic areas of a worksite, their ability to communicate with employees during the course of an OSHA inspection (along with the appearance of being “endorsed” by or working with the government), and their influence to expand the scope of an OSHA inspection based on the “plain view doctrine,” which permits the agency to investigate hazards in areas beyond the initial scope of an inspection if the OSHA investigator (or now, potentially, the third-party representative) observes a hazard in plain view.

The public comment period for the proposed rulemaking ends on October 30, 2023.

IRA PROPOSED REGULATIONS’ SUPPORT OF PREHIRE LABOR AGREEMENTS

The passage of the Inflation Reduction Act (IRA) in the summer of 2022 provided legislative incentive for taxpayers wishing to take advantage of the tax credits extended or added by the IRA to employ union labor.

The IRA provided new, enhanced, and extended tax credits for a wide range of clean tech industry projects, including for renewable or low-carbon-emissions energy and fuel production facilities.

However, subject to certain exceptions, the generally expected amount of such tax credits are reduced by 80% unless project developers ensure that “prevailing wages” are paid to workers and that registered apprentices are utilized for the construction of projects (such requirements, the Prevailing Wage and Apprenticeship Requirements, or PWA Requirements). “Prevailing wages” for purposes of the IRA tax credits are determined by reference to the US Department of Labor’s published prevailing rates under the Davis-Bacon Act.

On August 30, 2023, the US Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued proposed regulations detailing the PWA Requirements. Consistent with legislative text, the proposed regulations provide for a number of ways that taxpayers may “cure” failures to adhere to the PWA Requirements to avoid the loss of tax credits, including through providing backpay (with interest) to relevant employees and the payment of potentially hefty penalties to the IRS.

Theses penalties include “$5,000 multiplied by the total number of laborers and mechanics who were paid” below the applicable prevailing wage “for any period” during the year (subject to a significant increase if any underpayment is attributable to “intentional disregard” of the PWA Requirements). [2]

The proposed regulations, however, would not require such penalties be paid with respect to any laborer or mechanic employed pursuant to a prehire collective bargaining agreement with one or more labor organizations that meet certain requirements (a Qualifying Project Labor Agreement). To be a Qualifying Project Labor Agreement, the agreement must be with a labor organization representing the construction employees and

  • bind all contractors and subcontractors on the project;
  • prohibit strikes, lockouts, and “similar job disruptions”;
  • establish binding grievance procedures;
  • pay prevailing wages; and
  • include language concerning the proper use of qualified apprentices. [3]

Treasury and the IRS solicited public comments on the proposed treatment of Qualifying Project Labor Agreements and other ways such agreements could be used to meet the PWA Requirements.

Takeaways for Developers in the Clean Technology Industry

Developers in the clean technology industry may face increased pressure, via the PWA Requirements and related Treasury regulations, to enter into collective bargaining agreements with unions before a project begins. More broadly, however, this proposed rulemaking demonstrates the Biden administration’s attempts to impose collective bargaining on employers through numerous different avenues.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:


[1] See Worker Walkaround Representative Designation Process, 88 Fed. Reg. 59,825 (Aug. 30, 2023).

[2] See Prop. Treas. Reg. § 1.45-7(c).

[3] See Prop. Treas. Reg. § 1.45-7(c)(6)(ii).