Trade Adjustment Assistance Petitions: What Businesses Need to Know

During the coronavirus (COVID-19) pandemic and related economic downturn, businesses that have laid off workers may be more likely to receive a request for business information from the US Department of Labor in connection with a Trade Adjustment Assistance petition.

The Trade Adjustment Assistance (TAA) for Workers Program is a federal program that provides reemployment services and benefits to workers who have lost jobs or experienced reduced hours and wages due to increased imports or shifts in production outside the United States.[1] The TAA for Workers Program is administered by the Office of Trade Adjustment Assistance (OTAA) within the US Department of Labor (DOL). The TAA Program has undergone changes through periodic Trade Act amendments, [2] resulting in different funding levels, program benefits and services, and performance and reporting requirements.

Requests for benefits and services under the program are initiated when a TAA petition is filed with the DOL. Petitions may be filed by three workers from a company, a company official, a union or other duly authorized representative, a state workforce official, or an operator of an American Job Center (AJC). DOL then investigates whether foreign trade was a contributing cause of the job losses. If DOL certifies a group of workers under the petition, the workers are individually eligible to apply for a number of benefits and services, at no expense to the workers’ firm.

The benefits and services aim to help participants obtain new jobs and earn wages comparable to their prior employment, and include employment and case management services (such as career counseling), training, apprenticeship programs, income support to workers who are enrolled in full-time training and have exhausted their unemployment insurance, job search and relocation allowances, a wage supplement, and a health coverage tax credit.

Worker Group Eligibility and Loss Due to Foreign Trade

For a worker to be eligible to apply for TAA Program benefits and services, the worker must have been part of a group of workers that was the subject of a petition filed with and certified by DOL. The worker group eligibility requirement requires that a significant number or proportion of the workers in the workers’ firm, or a subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated, due to the following “foreign trade” criteria:

• Increased imports: Sales or production (or both) of the firm has decreased “absolutely,” and imports have increased, and the increase in imports contributed “importantly” to the workers’ separation or threat of separation and to the decline in the sales or production of the firm.
• Shifts to a Foreign Country: The workers’ firm has either shifted production of articles or shifted the supply of services to a foreign country, and that shift contributed “importantly” to the workers’ separation or threat of separation.
• Acquisition from a Foreign Country: The workers’ firm has acquired articles or services from a foreign country and the acquisition contributed “importantly” to the workers’ separation or threat of separation.
• Secondary Component Supplier or Downstream Producer: The workers’ firm is a supplier or a downstream producer to a firm that employed a group of workers who received a TAA certification of eligibility, and the firm’s supply or production is related to the article or service that was the basis for each certification. In addition, the loss of business by the firm must have contributed “importantly” to the workers’ separation or threat of separation (or, in the case of a secondary component supplier, the component parts accounted for at least 20% of the production or sales of the firm).
• Industry Deemed to Be Injured: The final criteria is where a US industry has been deemed injured by the US International Trade Commission (ITC) in an affirmative determination of serious injury or threat thereof. When a firm is named as a part of the domestic industry on the determination, the TAA investigator does not need to establish a foreign trade impact during the investigation of the group of workers. Because of this, ITC-related petitions often have shorter investigation periods than other types of petitions.

DOL Investigation Process

The petition is filed simultaneously with both DOL and the governor of the state in which the workers’ firm is located. Upon receiving a TAA petition, a DOL program analyst is assigned to investigate whether foreign trade was a contributing cause of the workers’ job loss or threat of job loss. Under the applicable statute, DOL is required to issue a determination on a TAA petition as soon as possible but no later than 40 days following the filing date of the petition. [3]

The program analyst collects information from the workers’ company (the subject firm) as well as from customers that used the products or services of the subject firm, and then analyzes the data and other facts to determine whether increased imports or shifts in production or services contributed to the layoffs or work reductions. The program analyst must also determine whether the required minimum proportion of the workforce either has been laid off or is threatened with layoffs.

The DOL program analyst typically sends an email to the subject firm or customer, providing the applicable DOL form that the business needs to complete, along with the specific date ranges at issue, and the deadline to respond. This is usually the first time the business becomes aware of the petition, and oftentimes the receiving company official does not know what the form is, why the data is being requested, or whether they must respond.

Responding to the forms is mandatory and the Secretary of Labor is authorized to obtain this information through issuance of a subpoena if the recipient fails to comply with the data requests. [4] Although it is not clear how often DOL uses this subpoena power, it is a sufficient incentive to most companies to provide the information. DOL data requests fall into the following categories:

• Business Data Request: Most information is collected from the subject firm through the Business Data Request form. This form requires the subject firm to provide information on employment levels, sales, production, and activity related to imports of articles or services, and shifts from the United States to a foreign country of the production or acquisition of articles and supply or acquisition of services. There are separate forms for subject companies that produce articles and those that provide services .
• “First Tier” and “Second Tier” Customer Surveys: DOL sometimes conducts customer surveys to obtain data from customers, which were either listed by the subject firm on the Business Data Request form, or listed by other customers as “second tier” customers. Businesses receiving these forms are required to provide data on purchases of the articles produced by the worker group(s) of the subject firm on whose behalf the petition was filed, purchases of the services provided by the worker group(s), or finished products that incorporate the articles produced or services provided by the worker group(s).
• Bid Survey: This form is used to collect data from the subject firm’s customers that solicit business through a bid process, and seeks information from the successful awardee as well as runner-ups in the competition .
• Business Information Request: This form is used to collect data from firms of workers employed as leased/contract workers in support of the subject firm, and seeks information on the relationship between the firm employing the leased workers and the client/subject firm to determine whether the client/subject firm has operational control over the leased workers .

Confidentiality

DOL publishes basic information regarding petitions, investigations, and determinations in the Federal Register and on its website, but a major concern for responding businesses is the confidential, proprietary, or otherwise sensitive nature of company data requested by DOL. Each of the DOL data collection forms contain assurances that DOL “will protect the confidentiality of the information provided to the full extent of the law,” including under the Trade Secrets Act and the Freedom of Information Act (FOIA).

DOL is required by Executive Order 12600 to notify the submitting entity prior to FOIA disclosure of its data. Notably, DOL frequently receives FOIA requests for the data provided by firms and will disclose two pieces of data: the estimated number of allegedly affected workers and the countries impacting workers. DOL notifies the business of this disclosure when it sends the data request. If DOL receives a FOIA request for the entire form, it will separately notify the company. The respondent may object to public disclosure within 14 calendar days of notice by providing a detailed statement indicating why it believes that disclosure of the information could cause competitive harm. DOL will disclose the information if the firm fails to provide a timely objection to disclosure.

If DOL certifies the TAA petition, the business may then be contacted for additional information by the relevant state agency that administers the benefits and services. The state agency should only need the names and mailing addresses of the affected workers—if the agency asks for more detailed information, the business should consult with legal counsel as to what is required under the federal law.

COVID-19 Impact on TAA Petitions

As is clear from the TAA Program’s eligibility criteria, COVID-19’s impact is not, standing alone, a basis for TAA certification, but workers may still be eligible to apply for TAA if their firm is impacted by a closure or work stoppage.

Regardless of whether DOL ultimately grants or denies the petition, it seems likely that many workers or unions will file petitions without fully understanding whether and how the criteria apply to COVID-19-related job losses. Perhaps in recognition of this, DOL has published a Fact Sheet explaining the TAA Program’s eligibility criteria under the banner of a COVID-19 response, which states that workers may be eligible to apply.

Recommendations for Responding to TAA Data Requests

Collecting responsive information was a time-consuming process even before the ongoing disruption caused by COVID-19, but DOL is still subject to the statutory deadline and will expect businesses to respond within the allotted timeframe. Businesses that have recently laid off workers, or may do in the near future, can get ahead of responding to a TAA petition information request by building this possibility into workforce change planning.

• DOL instructs petitioners to identify two company officials who can provide information on the worker separations; for example, “ supervisors, managers, and human resources specialists. If the company is closed, company officials can be former company officials, former owners, bankruptcy trustees, or attorneys representing the company.” Thus, it is hard to predict who in the company may receive a TAA data request, but the recipient often contacts the legal department for guidance. As part of the workforce change process, alert likely business partners, such as human resources, that they may receive a DOL form and to immediately consult with in-house counsel upon receipt. It may be helpful to provide a copy of the Business Data Request to the relevant business partners.
• Relatedly, identify the business units that have knowledge or access to company information regarding sales, production, customers, and trade impacts.
• As a general matter, companies that maintain robust and detailed business records on easily searchable IT platforms are better positioned to respond to such requests.
• Upon receipt of one of the TAA petition forms described above, the company should identify who is responsible for collecting the data and who is responsible for communicating with DOL. In-house or outside counsel is best positioned to communicate with and to transmit data to DOL, both to preserve privilege in the collection of the data and to assert confidentiality protections when submitting the data to DOL.
• The business unit and counsel should work together to evaluate the scope of the request and determine whether there is an opportunity to focus or limit the request to, for example, a discrete division of the company rather than the entire company. More importantly, identify whether job losses are clearly attributable to the impact of COVID-19 through the closure of a nonessential business, loss of customers, or supply chain disruption.
• Reach out to the DOL program analyst as soon as possible to let her know you are processing the request and to establish a point of contact. Discuss the scope of the request with the program analyst. Ask to understand the basis for the petition and to try to limit the data requested if possible, particularly if job losses are directly attributable to the COVID-19 pandemic and there is no discernible foreign trade causation.
• Consider requesting an extension of the time to respond. Although DOL is under a tight 40-day deadline, our experience is that analysts may grant short extensions and are more likely to be flexible if offered assurances that the data collection is proceeding.
• When completing and submitting the data collection form to DOL, mark information confidential and proprietary as appropriate, and make it clear in the cover letter or email that the company expects DOL to take all necessary steps to protect the confidentiality of the data, and that the company has not consented to disclosure.

Navigating the TAA process is beneficial to your employees and helpful in maintaining a stronger workforce. Responding to DOL’s inquiry can have downstream effects before other government agencies, so a coordinated and measured approach to preparing any submission to DOL is beneficial.

Return to Work Resources

We have developed many customizable resources to support employers’ efforts in safely returning to work. These include tracking of state and local orders on return to work requirements and essential/nonessential work; policy templates and guidelines for key topics such as social distancing procedures, temperature testing, and workplace arrangements for high-risk employees; and webinar training on safety measures for return to work. View the full list of return to work resources and consult our workplace reopening checklist.

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Contacts

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

Washington, DC
Giovanna M. Cinelli
Kenneth J. Nunnenkamp
Jonathan L. Snare
Katelyn Hilferty
Christian Kozlowski

[1] TAA programs are also administered by the US Department of Commerce (DOC) and US Department of Agriculture (USDA). The DOC program, TAA for Firms, provides financial assistance to manufacturers and service firms affected by import competition. The USDA administers TAA for Farmers, whereby certain agricultural producers can receive payments if a decline in prices for their commodity were caused at least partly by imports.

[2] The Trade Act of 1974 established the Trade Adjustment Assistance for Workers, Alternative Trade Adjustment Assistance (ATAA), and the later Reemployment Trade Adjustment Assistance (RTAA) programs. The Trade Adjustment Assistance Reauthorization Act of 2015 (TAARA 2015) (Pub. L. No. 114-27, Title IV), enacted on June 29, 2015, reauthorized and changed key provisions of the Act.

[3] 19 U.S.C. § 2273(a).

[4] See 19 U.S.C. §§ 2272(d)(3)(B) and 2321.