ABC continues to fight against the Biden administration’s anti-growth and oppressive regulatory agenda, which creates significant uncertainty and barriers to job creation.

ABC’s legal challenges against the Biden administration’s final rules include:

Victories

DOL: Overtime

On Nov. 15, ABC applauded the decision of the U.S. District Court for the Eastern District of Texas, which vacated the U.S. Department of Labor’s controversial 2024 final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees. The rule changed overtime regulations under the Fair Labor Standards Act.

The court found that the Biden DOL’s 2024 overtime rule’s July 1, 2024, increase was unlawful as well as the scheduled Jan. 1, 2025, increase. Specifically, DOL’s final rule increased the minimum annual salary level threshold for exemption to $43,888 on July 1, and it was scheduled to increase to $58,656 on Jan. 1, 2025. In addition, the threshold for highly compensated employees increased to $132,964 on July 1, 2024, and was scheduled to increase to $151,164 on Jan. 1, 2025. Further, salary thresholds would have been updated every three years starting on July 1, 2027. ABC’s general counsel, Littler Mendelson, published an article discussing the court decision.

As a result of this decision, the minimum salary threshold for exemption is once again set to $35,568, and the threshold for highly compensated employees is set to $107,432. In May, ABC joined a coalition of business groups in filing a complaint in the U.S. District Court for the Eastern District of Texas challenging the DOL’s overtime rule.

ABC immediately issued a news release applauding the decision stating, “This decision is the correct one, and an important win for ABC members and the rest of the regulated community. It’s also no surprise. In 2017, this court permanently enjoined the DOL’s 2016 overtime rule on similar grounds, writing that the rule increased the minimum salary level threshold for exemption far beyond a level which the DOL is permitted to adopt. The court also found unlawful the automatic indexing provision in the new rule that would have further increased the salary threshold without the notice-and-comment rulemaking required by the Administrative Procedure Act.”

On Nov. 26, the DOL appealed the Nov. 15 decision. Continue to monitor Newsline for further updates.

NLRB: Joint Employer

On July 19, 2024, the National Labor Relations Board moved to withdraw its appeal of the U.S. District Court for the Eastern District of Texas’ decision to vacate the 2023 Joint-Employer final rule, which means the court’s favorable decision will become final. The Board appealed the decision on May 7.

On March 8, 2024, the district court vacated the 2023 final rule. Under the court’s decision, the ABC-supported 2020 Joint-Employer Final Rule, which provides clear criteria for companies to apply when determining their joint-employer status, remains in effect today.

On Nov. 9, 2023, ABC joined the U.S. Chamber of Commerce and a coalition of business groups in filing a lawsuit challenging the NLRB’s final rule for violating the National Labor Relations Act and acting arbitrarily and capriciously in violation of the Administrative Procedure Act.

ABC is pleased the Board decided to withdraw its appeal of the court’s decision and that the court’s ruling to block the NLRB’s radical and overbroad joint-employer standard is now final. The 2023 final rule would have disrupted long-established, efficient operational processes that are followed by construction service providers who work together to build America. And it clearly would have had a harmful effect on a significant segment of the construction industry: small businesses. Because the ABC-supported 2020 final rule remains in effect, contractors will be better able to work and coordinate with multiple employers without fear of being unexpectedly and unfairly found to be joint employers.

FTC: Ban on Noncompete Agreements

In a win for ABC members, on Aug. 20, the U.S. District Court for the Northern District of Texas blocked the Federal Trade Commission from implementing its rule to ban noncompete agreements. The court found that the FTC lacked statutory authority to promulgate the rule and that the rule is arbitrary and capricious. This means the rule will not be enforced or otherwise take effect on Sept. 4, 2024.

As expected, on Oct. 18, the FTC appealed the court’s Aug. 20 decision. ABC will continue to monitor the litigation and provide any updates in Newsline. For now, though, the Aug. 20 decision will remain in effect during the pendency of the appeal.

On July 3, the U.S. District Court for the Northern District of Texas issued a limited preliminary injunction and stay of the FTC’s rule.

On May 14, ABC joined a broad group of trade associations in filing an amicus brief in support of the plaintiffs’ request for injunctive relief against the FTC’s final rule to ban noncompete clauses.

ABC is extremely pleased with the court’s decision and has consistently stated that ABC members have valid business justifications for utilizing noncompete agreements, such as protecting confidential information and intellectual property. The new rule would have had a harmful effect on member companies as well as their employees, forcing employers to rework their compensation and talent strategies.

Pending Federal Lawsuits

FAR Council: Use of Project Labor Agreements for Federal Construction Projects 

On Feb. 4, 2022, President Joe Biden signed Executive Order 14063, Use of Project Labor Agreements for Federal Construction Projects. Effective Jan. 22, 2024, following a multiyear rulemaking by the Federal Acquisition Regulatory Council, federal agencies now require every prime contractor and subcontractor on a federal construction project of $35 million or more performed within the United States to sign a PLA as a condition of winning a taxpayer-funded contract.

On March 28, 2024, ABC and its Florida First Coast chapter filed suit against the federal government seeking to overturn the final rule, asserting that President Biden lacks the legal and constitutional authority to impose the mandate. As federal contractors await a decision, ABC members are filing bid protests against federal solicitations containing PLA mandates on a case-by-case basis.

When mandated by governments, PLAs increase construction costs to taxpayers by 12% to 20%, reduce opportunities for qualified contractors and their skilled craft professionals and exacerbate the construction industry’s worker shortage of more than half a million people in 2024.

PLA mandates are bad public policy because they effectively exclude almost 90% of the U.S. construction workforce who do not belong to a union from building taxpayer-funded projects.

ABC and a diverse coalition of construction industry stakeholders and taxpayer watchdogs will continue to oppose this anti-competitive and inflationary final rule and call on the Biden-Harris administration to instead promote policies that will welcome fair and open competition from all contractors to ensure the best value possible for taxpayer investments

Learn more about government-mandated PLAs.

DOL: Updating the Davis-Bacon and Related Acts Regulations

On Aug. 23, 2023, the U.S. Department of Labor issued its final rule, Updating the Davis-Bacon and Related Acts Regulations. The regulation’s drastic revisions to existing rules regarding government-determined prevailing wage rates that must be paid to construction workers on federal and federally assisted construction projects funded by taxpayers took effect on Oct. 23. All contracts entered into after Oct. 23 are subject to the new rule’s provisions, and in certain situations the rule may apply to preexisting contracts.

On Nov. 7, 2023, ABC and its Southeast Texas chapter announced the filing of a complaint in the U.S. District Court for the Eastern District of Texas, challenging the DOL’s final rule.

In a separate lawsuit by the Associated General Contractors of America, on June 24, 2024, the U.S. District Court for the Northern District of Texas granted a nationwide preliminary injunction that blocks some provisions of the final rule. These provisions include those expanding coverage to include manufacturing facilities miles away from projects and delivery truck drivers spending any amount of time on a jobsite, as well as the imposition of the rule on already executed contracts, among other things.

ABC’s pending federal lawsuit targets these and other controversial provisions in the DOL’s extreme overhaul of more than 50 Davis-Bacon Act regulations that undermine commonsense reforms put in place by the Reagan administration.

Far from “updating” the DOL’s enforcement of the Davis-Bacon Act, the final rule returns to failed policies of the 1970s and unlawfully expands coverage of prevailing wage requirements onto new projects and industries and increases its regulatory burden on small construction contractors working on federally funded contracts. The DOL’s final rule forces ABC to take legal action to address its numerous illegal provisions and protect its members, the free market and taxpayers from the devastating impacts of this regulation.

Learn more about the DOL’s Davis-Bacon and Related Acts final rule.

DOL: Worker Walkaround Representative Designation Process

On April 1, 2024, OSHA issued its Worker Walkaround Representative Designation Process final rule, which allows employees to choose a third-party representative, such as an outside union representative or community organizer, to accompany an OSHA safety inspector into nonunion workplaces during site inspections. The final rule went into effect on May 31.

On May 21, ABC joined the U.S. Chamber of Commerce and a coalition of business groups in filing a lawsuit in the U.S. District Court for the Western District of Texas, Waco Division against OSHA’s final rule.

OSHA’s overreach does nothing to promote workplace health and safety, but instead pushes the Biden-Harris administration’s “all-of-government” agenda to encourage unions and collective bargaining.

ABC repeatedly told OSHA there is no business case for this rule and no benefit during a compliance inspection. OSHA can have a bigger impact on jobsite safety by fostering positive partnerships with employers and promoting safety practices that produce results. Such best practices can be found in ABC’s 2024 Safety Performance Report, which found top-performing contractors that participate in ABC’s STEP Safety Management System^® are nearly six times safer than the industry average.

Learn more about the OSHA Worker Walkaround final rule.

On Jan. 10, 2024, the DOL’s Wage and Hour Division issued the final rule on Employee or Independent Contractor Classification Under the Fair Labor Standards Act, which rescinds the ABC-supported 2021 final rule and replaces it with a confusing multifactor analysis to determine whether a worker is an employee or an independent contractor. The final rule went into effect on March 11.

Thereafter, ABC, its Southeast Texas chapter, the Coalition for Workforce Innovation and the Financial Services Institute filed a motion in the U.S. Court of Appeals for the 5th Circuit requesting that it lift the stay of appeal and remand the case to the U.S. District Court for the Eastern District of Texas so that the district court may consider whether the 2024 final rule complies with the APA in its attempt to rescind and replace the current 2021 final rule. In 2022, the district court found that the DOL violated the APA when it first attempted to delay and later withdraw the 2021 final rule. The court vacated these efforts.

On March 5, ABC, its Southeast Texas chapter, the Coalition for Workforce Innovation and five other organizations filed an amended complaint in the U.S. District Court for the Eastern District of Texas, arguing that the 2024 independent contractor final rule is unlawful and a violation of the APA.

Replacing the commonsense 2021 final rule was the wrong move by the DOL. The 2024 final independent contractor rule is confusing, vague and unworkable and will harm construction workers classified as independent contractors because they will lose crucial opportunities for work. Further, the difficult-to-interpret standard strips independent contractors of basic freedoms and rights to choose how they work.

Learn more about the DOL’s independent contractor final rule.

Continue to monitor ABC’s legal challenges by visiting ABC’s Regulatory Roundup, Regulatory Resource Hub on Final Rules and Newsline.