Government, Courts, and the World of Work

The U.S. Department of Labor has proposed regulations implementing Executive Order 13496, signed on January 30, 2009, and which applies to all firms under contract with the federal government to provide goods or services in the amount of $100,000 or more. The regulations define the type of notification covered contractors and subcontractors must give employees about their rights to organize a labor union. Among other things, the proposed notification informs employees that they have a right to take actions to improve working conditions without penalty, including the right to strike and picket.

While labor law is exclusively proscribed by the National Labor Relations Act (NLRA), the proposed regulations state that the President’s legal authority is under the federal Procurement Act, which authorizes executive policies that ensure “economical and efficient” procurement and supply.  Every president dating back to the Roosevelt administration has used this authority to pursue executive policies, including encouraging or discouraging union activity, although the U.S. Supreme Court has held that the Procurement Act does not give the president broad discretionary power to set labor policy.  For example, in 1996, the court held that Executive Order No. 12954, which prevented the U.S. government from contracting with employers who hire permanent replacement workers during a strike, violated the NLRA and the Procurement Act, and was unconstitutional.

Specifically, the proposed regulation states, in relevant part, that the U.S. government:

Has a proprietary interest in ensuring that [government] contracts will be performed by contractors whose work will not be interrupted by labor unrest. The attainment of industrial peace is most easily achieved and workers’ productivity is enhanced when workers are well informed of their rights under Federal labor laws, including the [NRLA].

The Office of Federal Contract Compliance Programs (OFCCP) will enforce the Order when finalized, although it is more than likely that a lawsuit will be filed to enjoin enforcement.

Everyone supports health care reform as a goal.  The costs of health care are growing faster than inflation, wages and the overall economy.  The United States pays more than twice on health care than any other country but 150 million Americans remain uninsured, many of them working full or part-time jobs.

Current reform measures envision near universal coverage with private insurance companies selling coverage to employers and individuals in competition with a government-sponsored plan. Insurance is expanded to millions of uninsured at a cost of roughly $1 trillion over the next decade – mostly for subsidies to low and middle income people and expansion of the Medicaid program for the poor.

Employers, particularly small business, and their employees are greatly concerned about costs.  Nearly 177 million Americans are covered by an employer-sponsored plan.

Health care economists see promise in steps like improved management of chronic diseases, increased focus on preventive care and advances in health information technology, but the Congressional Budget Office believes that savings from these measures will not mitigate the costs of expanding health care.

Fundamental changes such as permitting the government to demand discounts from drug companies and reduce payments to inefficient hospitals have been side tracked by the given and take of negotiation. So employers with payrolls exceeding $400,000 would have to provide coverage or pay an 8% payroll tax.  Employers with payrolls between $250,000 and $400,000 a year would pay a smaller tax, and those less than $250,000 would be exempt.

But for small employers it could be cheaper to pay the 8% payroll tax rather than provide health insurance. The employers who continue to provide coverage will pick up the tab for those who don’t, until they too are driven out of the game.   

In short, the current reform proposals will ultimately shift the costs of health care onto the same workers who can’t afford it now, consumers who are struggling to pay down debt, and onto the already burdened taxpayer. Without controlling costs, health care reform will actually harm the people that it is designed to help.

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