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ABC Newsline
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. According to media reports, the FTC is considering appealing the decision. To learn more about the decision, read ABC’s general counsel Littler Mendelson’s analysis.
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.
On July 3, the same Texas court 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.
Following the FTC’s vote on April 23 to finalize the ban on noncompetes rule, ABC issued a release opposing the rule, stating, “The final rule to ban all noncompete agreements nationwide—except existing noncompetes for senior executives—is a radical departure from hundreds of years of legal precedent. Ultimately, this vastly overbroad rule will invalidate millions of reasonable contracts—including construction project contracts—around the country that are beneficial for both businesses and employees.”
In April 2023, ABC submitted comments in opposition to the FTC’s unprecedented proposal to ban noncompetes. ABC also joined the U.S. Chamber of Commerce and 280 business groups in submitting comments urging the FTC to rescind the proposed rule.
Continue to monitor ABC’s Newsline for further updates.
On Aug. 15, the U.S. Department of Defense issued a proposed rule, Assessing Contractor Implementation of Cybersecurity Requirements, which seeks to implement contractual requirements for DOD contracts related to the recently proposed Cybersecurity Maturity Model Certification 2.0 Program. Comments on the proposed rule are due Oct. 15.
Previously, on Dec. 26, 2023, the DOD released a proposed rule and guidance documents to establish CMMC 2.0. As proposed, CMMC 2.0 would require federal contractors and subcontractors competing for DOD contracts to demonstrate continued compliance with a range of cybersecurity measures to maintain eligibility for performing and winning new federal awards. ABC joined coalition comments on that rule, calling for more clarity and urging a flexible implementation of CMMC requirements. This rule has yet to be finalized.
The Aug. 15 rule largely defers to CMMC 2.0 as previously proposed, with a focus on providing guidance to contracting officers as well as standard contracting clauses and solicitation provisions to incorporate CMMC 2.0.
However, the proposed rule includes new provisions of note, including:
For more information on the proposed rule and cybersecurity requirements impacting federal contractors, see Wiley Rein’s legal analysis of the proposal and ABC’s Cybersecurity Resource Guide.
On Aug. 1, the Senate Health, Education, Labor, and Pensions Committee voted to advance two nominees to the National Labor Relations Board. Democrat Lauren McFerran's nomination to serve another term as chair passed in a party-line vote, 11-10. The nomination of Republican Josh Ditelberg passed with a bipartisan vote of 18-3. A full Senate vote on these two nominations is not yet scheduled.
The ABC-led Coalition for a Democratic Workplace issued a statement on the vote, saying:
“Chair Sanders chose to hold this vote without providing his colleagues any opportunity to publicly question Lauren McFerran about her troubling record. Her tenure on the Board has included condemnations from federal courts, OIG reports criticizing the NLRB for ‘gross mismanagement’ under her watch and bipartisan rejection of her policies by Congress.
“Moreover, this nomination is an attempt by the Biden administration to control the Board’s agenda for years into the next administration, regardless of who wins the election.
“The Board’s mismanagement and malfeasance under McFerran’s leadership should disqualify her from confirmation. CDW strongly urges the full Senate to reject her nomination.”
CDW sent letters to the HELP Committee in and urging members to reject McFerran's nomination due to the Board's mismanagement and malfeasance under her leadership, her extreme policy agenda, and the decision by comittee chair Sen. Bernie Sanders, I-Vt., to break with long-standing precedent and not hold a confirmation hearing on her nomination.
CDW will continue to reach out to Senate offices to educate them about McFerran's record on the Board and urge them to reject her nomination.
Effective Jan. 1, 2024, the Corporate Transparency Act requires certain entities, including many small businesses, to report information about the individuals who ultimately own or control them (also known as their “beneficial owners”) to the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury.
A separate regulatory requirement currently requires many financial institutions to also collect beneficial ownership information, or BOI, from certain customers that seek to open accounts as part of federal customer due diligence requirements.
ABC has expressed serious concerns with the Treasury’s FinCen’s implementation of CTA. FinCEN’s implementing regulations require millions of small businesses, including nearly every employer with 20 or fewer employees, to report personal information of their beneficial owners and update that information periodically throughout the life of the business.
On March 1, a federal judge for the U.S. District Court for the Northern District of Alabama Northeastern Division ruled that the CTA is unconstitutional. The decision, however, only applies to members of the association involved in the suit, and all other businesses are still required to adhere to the CTA’s filing requirements. ABC has called on Congress to examine the ruling and has argued that a stay in enforcement should apply to all affected parties. On March 11, Treasury appealed the decision.
ABC, along with 100 organizations representing millions of small businesses nationwide, sent a letter to Congress strongly supporting legislation introduced by Rep. Warren Davidson, R-Ohio, to repeal the CTA. ABC also calls on Congress to enact the Protect Small Business and Prevent Illicit Financial Activity Act (S. 3625). The legislation, championed by Sen. Tim Scott, S.C., would delay the onerous CTA filing requirements and accompanying jail time and penalties by one year. A similar bipartisan bill sponsored by Reps. Zach Nunn, R-Iowa, and Joyce Beatty, D-Ohio, passed the House late last year 420-1.
Information about FinCEN’s BOI reporting requirements:
ABC encourages members and small business owners to discuss FinCEN’s BOI reporting requirements with counsel.
Please continue to monitor Newsline for additional updates.
On July 26, the National Labor Relations Board issued its misnamed Fair Choice-Employee Voice final rule, which rescinds the ABC-supported 2020 Election Protection final rule, jeopardizing employees’ right of free choice in representational matters and disrupting the Board’s current representation processes. The 2020 final rule was intended to “better protect employees’ statutory right of free choice on questions concerning representation.”
Immediately following the issuance of the final rule, the Coalition for a Democratic Workplace issued the following statement attributed to Kristen Swearingen, ABC vice president of legislative & political affairs and CDW chair:
“The Board’s final rule eliminates commonsense measures that protect workers’ right to decide for themselves if they want union representation in the workplace. The rule forces employees into unions they may not want and makes it more difficult for employees to decertify unions that no longer have support from the workforce. These policies undermine employee free choice, and Congress and/or the courts should move to nullify them.”
The new rule makes three key policy changes: It rescinds and replaces the provisions of the 2020 final rule that address the “blocking charge” policy and voluntary-recognition bar doctrine and rescinds the portion of the final rule that addresses proof of majority support for labor organizations representing employees in the construction industry.
Specifically, the rule returns to the blocking charge policy that halts union representation or decertification elections if the union alleges the employer committed unfair labor practices until those charges are resolved; eliminates the 45-day window that allows workers to demand a secret ballot election if the employer voluntarily recognizes the union based on signed authorization cards; and rescinds amendments that require unions in the construction industry to maintain proof of majority support if they want an exclusive collective bargaining relationship that is resistant to challenge.
The effective date of the new rule is Sept. 30, 2024, and will only be applied to cases filed after the effective date.
Board members David Prouty and Gwynne Wilcox joined Chair Lauren McFerran in issuing the final rule. Member Marvin Kaplan dissented. Read ABC’s 2023 comments opposing the proposed rule. ABC also joined comments submitted by the ABC-led CDW.
NLRB Chair Lauren McFerran stated, “Today’s rule restores the Board’s prior law, including longstanding principles that ensure a fair process for workers to choose whether they want representation, and provide a better foundation to allow collective bargaining relationships to thrive.”
Continue to monitor Newsline for any future updates.
The Biden administration continues to roll back Trump-era initiatives and institute new, pro-union policies that challenge ABC members’ ability to win work. ABC is fighting against these proposed rules and regulations affecting merit shop contractors and advocating for open competition and free enterprise.
The Biden administration’s costly and burdensome regulatory actions continue to harm American families and businesses by:
This adds up to $201.4 billion in regulatory costs and 276 million hours of paperwork over three years.
ABC’s Regulatory Roundup is updated on a regular basis and includes information about federal regulations, guidance and compliance materials from the U.S. Department of Labor, U.S. Department of the Treasury, Federal Acquisition Regulation Council, National Labor Relations Board, Federal Trade Commission, Environmental Protection Agency and Council on Environmental Quality.
Read ABC’s July Regulatory Roundup to learn more about the latest developments affecting the construction industry.
On July 3, ABC submitted comments in response to the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency proposed rule on Cyber Incident Reporting for Critical Infrastructure Act Reporting Requirements. The rule imposes new cyberincident and ransom payment reporting requirements for companies deemed to have responsibility for critical infrastructure.
Specifically, entities potentially covered by the rule fall under any of 16 critical infrastructure sectors. Many construction contractors are likely to be covered by the proposed rule. The proposal would require that these covered entities report any substantial cyberincident within 72 hours, and any ransom payments made in response to a ransomware attack within 24 hours.
ABC’s comments, while recognizing the government’s vital need to protect critical infrastructure from cybersecurity threats, urged CISA to improve the rule by addressing key concerns including:
More information on the rule is available on CISA’s website and ABC’s previous Newsline article.
ABC has provided resources and webinars on new cybersecurity requirements affecting the construction industry at abc.org/cybersecurity.
This year’s Camp NAIWC, sponsored by the National Association of Women in Construction’s Greater Washington, D.C., chapter, was held in June. The camp is a four-day, all-girls camp offering students in grades 7 through 12 experience in trades such as carpentry, plumbing, electrical and more. ABC arranged a jobsite tour with ABC member Hensel Phelps on their National Institutes of Health jobsite in Bethesda, Maryland. ABC member Shapiro and Duncan also provided a trade demonstration. Finally, DEWALT, sponsor of ABC’s National Student Chapter Network and 2024 Safety Performance Report, donated PPE, including hard hats, gloves and glasses, to the participants for their jobsite tour.
On July 19, 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, 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.
ABC issued a release stating, “We are 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,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “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,” said Brubeck.
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 for acting arbitrarily and capriciously in violation of the Administrative Procedure Act.
ABC National staff and an ABC member testified at the June 27, 2024, U.S. House Oversight and Accountability Committee’s subcommittee hearing on President Biden’s controversial policies promoting and mandating anti-competitive and inflationary project labor agreements on federal and federally assisted projects.
The hearing, “Cutting Competition in Contracting: The Administration’s Pricey Project Labor Agreement Mandate”—held by the Subcommittee on Cybersecurity, Information Technology, and Government Innovation—gave ABC an important platform to shed light on the Biden administration’s controversial pro-PLA policies.
Ben Brubeck, ABC vice president of regulatory, labor and state affairs, provided written testimony and opening remarks attacking the Biden administration’s pro-PLA policies.
The opening statement and written testimony of Aric Dreher of Cianbro––an ABC member contractor headquartered in Pittsfield, Maine, building federal and federally assisted construction projects––described how Biden PLA policies injure Cianbro and other merit shop general contractors and subcontractors by reducing competition and harming the merit shop workforce. Cianbro signed an affidavit in support of ABC’s ongoing federal lawsuit in Jacksonville, Florida, against the Biden rule requiring PLAs on federal construction contracts of $35 million or more.
Check out this hearing recap for links to key video moments of the hearing.
ABC continues to fight for fair and open competition on taxpayer-funded construction projects. Find more information at the ABC-led federal coalition website, BuildAmericaLocal.com, and get details on the Biden administration’s PLA mandate policy on federal construction projects at abc.org/BidenPLAFAQs.