U.S.-Chamber-Coalition-Comments-on-Employee-or-Independent-Contractor-Classification

December 13, 2022

Ms. Jessica Looman

Principal Deputy Administrator Wage and Hour Division

U.S. Department of Labor 200 Constitution Avenue NW Washington, DC 20210

Via Electronic Submission: https://www.regulations.gov

 

Re:      Comments Regarding Employee or Independent Contractor Classification Under the Fair Labor Standards Act, 87 Fed. Reg. 62218, et seq. (Oct. 13, 2022); RIN 1235- AA43

 

Dear Ms. Looman:

The undersigned associations, businesses and stakeholders submit these comments to the Department of Labor (“DOL”) in response to its Notice of Proposed Rulemaking and Request for Comments Regarding Employee or Independent Contractor Classification Under the Fair Labor Standards Act (“FLSA”) (the “Proposed Rule”).¹

The current DOL rule regarding independent contractor classification, which went into effect on March 8, 2021 (the “2021 IC Rule”)² provides badly needed clarity, uniformity, and simplicity to the independent contractor analysis and accounts for the realities of the modern workplace. In doing so, it allows businesses and their workers to structure mutually beneficial relationships most suitable to those realities. The Proposed Rule, which would rescind the 2021 IC Rule, would do just the opposite. Indeed, by design, the Proposed Rule reverts to the original subjective “totality of the circumstances” analysis with an array of factors, none carrying more weight than the others, with the effect being an increase in litigation and inconsistent results in the courts.

DOL’s recission of the 2021 rule is unwarranted as it has been in effect for only a brief time and DOL offers no evidence that it has been shown to be inadequate for DOL’s

enforcement mission. Indeed, quite the opposite is the case as DOL has repeatedly boasted about the cases it has brought showing improper classification of independent contractors and the amounts of back pay remedies it has secured.

The Proposed Rule would negatively impact employers and independent contractors in a number of ways as its undefined terms and vague concepts create a scenario where a hiring entity would never be confident it has correctly classified a worker as an independent contractor. Thus,

¹ Employee or Independent Contractor Classification Under the Fair Labor Standards Act, 87 Fed. Reg.

62218, et seq. (Oct. 13, 2022) (to be codified at 29 CFR Pts. 780, 788, and 795) (“87 FR 62218, et seq.”).

² Independent Contractor Status Under the Fair Labor Standards Act 86 Fed. Reg. 1168, et seq. (January 7, 2021) (to be codified at 29 CFR Pts. 780, 788 and 795) (“86 FR 1168, et seq.”).

the only scenario in which a hiring entity can be sure it is safe from an enforcement action by the DOL is when it classifies, or misclassifies, its workers as employees—regardless of the economic realities of the work arrangements and regardless of whether such is to the benefit of the workers—because the DOL makes no habit out of challenging employee classification. As a result of this uncertainty, and the bias towards finding an employment relationship demonstrated throughout the different factors as detailed below, the Proposed Rule has the potential to all but eliminate, or at least severely limit, the use of the independent contractor model in the modern workplace.

Accordingly, the undersigned groups oppose creating a new standard for independent contractor classification and urge the DOL to withdraw the Proposed Rule Not only does the Proposed Rule ignore the realities of how businesses and independent contractors work together in 21st century America, but in so doing, it ignores the preference many workers have to remain independent contractors.

COMMENTS

 

The DOL’s rescission of the 2021 IC Rule is a de facto resurrection of the 2015 Administrator’s Interpretation covering independent contractors, which was withdrawn in 2017. That AI was also built around a multi-factor “totality of the circumstances” approach and interpreted the factors so broadly that it decreed, “[A]pplying the economic realities test in view of the expansive definition of ‘employ’ under the [FLSA], most workers are employees under the FLSA.”³ Further, by eliminating the two “core” factors approach of the 2021 IC Rule, returning consideration of investment to a stand-alone factor, broadening the analysis of the “control” factor, and returning to the supposedly “longstanding” interpretation of the “integral” factor, the Proposed Rule ensures that employers would never be confident they have properly classified a worker as an independent contractor.

As the Comments below reflect, each of the factors that comprise the economic realities test under the Proposed Rule tilts the scale towards finding an employment relationship and leaves employers little, if any, room to find an independent contractor relationship on which millions of companies and their contractors depend.

Finally, the Proposed Rule is arbitrary and capricious under the Administrative Procedure Act because of its recission of the 2021 rule. The recission of the 2021 rule is based on mere

³ Administrator’s Interpretation No. 2015-1 (“AI 2015-1”), Dep’t of Labor, Wage and Hour Division, July 15, 2015, withdrawn, June 7, 2017 (DOL News Release 17-0807-NAT, “US Secretary of Labor Withdraws Joint Employment, Independent Contractor Informal Guidance” (June 7, 2017), available at https://www.dol.gov/newsroom/releases/opa/opa20170607). Like the Proposed Rule, AI 2015-1 adopted so

expansive a view of “employ” and such a biased interpretation of the economic realities factors, that it all but eliminated the independent contractor distinction. For example, AI 2015-1 emphasized that the control factor “should not play an oversized role in the analysis” and that an employer’s “lack of control over workers is not

particularly telling if the workers work from home or offsite.” AI 2015-1 also stated that “workers’ control over the hours when they work is not indicative of independent contractor status” and that the agreement between the parties is “not indicative of the economic realities of the working relationship and is not relevant to the analysis of the worker’s status.”

speculation about possible legal challenges, meaning that it is not supported by adequate data or evidence, and should therefore be left in place.

1.                  Under the Proposed Rule, employers can never be confident they have properly classified a worker as an independent contractor.

 

• Eliminating the two “core” factors approach is inconsistent with case

 

The Proposed Rule would eliminate the two “core” factors approach adopted by the 2021 IC Rule and in doing so, supposedly restore the traditional analysis of the independent contractor issue. But in elevating the two core factors of the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss, the 2021 IC Rule does not, in the words of the DOL, “depart from the economic reality test,” but “merely elucidates the factors’ respective probative values that have always existed but never been explained.”⁴ Although the line of cases reviewing the independent contractor issue has recited platitudinally that none of the economic reality factors should be assigned more weight than the others, the reality paints a different picture. As the DOL noted in the 2021 IC Rule, “[t]he Department’s review of case law indicates that courts of appeals have effectively been affording the control and opportunity factors greater weight, even if they did not always explicitly acknowledge doing so.”⁵

Courts typically find employee classification appropriate when the hiring entity predominantly controls the work, and independent contractor classification appropriate when the worker predominantly controls the work.⁶ Similarly, courts routinely find employee or

⁴ 86 FR at 1199 (citing Sec’y of Lab., U.S. Dep’t of Lab. v. Lauritzen, 835 F.2d 1529, 1539 (7th Cir. 1987) (Easterbrook, J., concurring).) Further, contrary to the DOL’s assertion, the 2021 IC Rule still applies a “totality-of- the-circumstances” analysis that focuses on the “economic reality” of the relationship between an employer and worker. See, e.g., 86 FR at 1179 (“The Supreme Court has said and the Department agrees that this is a totality of

the circumstances analysis, based on the facts.”); id. at 1171, 1172 (“The Department thus proposed to promulgate a regulation that would clarify and sharpen the contours of the economic reality test used to determine independent

contractor classification under the FLSA.”); id. at 1201 (“The Department agrees with commenters that the

circumstances of the whole activity should be considered as part of the economic reality inquiry.”) Indeed, all five of the factors in the 2021 IC Rule are rooted in the foundational case, United States v. Silk, which identified five

factors as “important for decision”: “degrees of control, opportunities for profit or loss, investment in facilities, permanency of relation[,] and skill required in the claimed independent operation.” 331 U.S. 704, 716 (1947).

⁵ Id. at 1198 (citing Saleem v. Corp. Transportation Grp., Ltd., 854 F.3d 131, 147 (2d Cir. 2017) and Martin v. Selker Bros., 949 F.2d 1286, 1295 (3d Cir. 1991) (“Given the degree of control exercised by [the employer] over the day-to-day operations of the stations, this [“special skill”] criterion cannot be said to support a conclusion of independent contractor status.”)); Silk, 331 U.S. at 719 (truck drivers were independent contractors because of “the control [they] exercised [and] the opportunity for profit from sound management,” without discussing any of the other economic reality factors); Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28, 33

(1961) (homeworkers paid on a piece-rate basis to produce knitted goods were employees; Court did not analyze any of the specific factors that are part of the current economic realty test; determination was instead based entirely on

facts that related to control (“regimented under one organization, manufacturing what the organization desires”) and opportunity for profit (“selling their products on the market for whatever price they can command” versus

“receiving the [piece rate] compensation the organization dictates”).

⁶ Compare Hobbs v. Petroplex Pipe & Constr., Inc., 946 F.3d 824, 830 (5th Cir. 2020) (finding employee classification appropriate where hiring entity predominantly controlled the work) and Gayle v. Harry’s Nurses Registry, Inc., 594 F. App’x 714, 717-18 (2d Cir. 2014) (same) and Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 307-09 (4th Cir. 2006) (same) and Baker v. Flint Eng’g & Const. Co., 137 F.3d 1436, 1441 (10th Cir. 1998) (same)

independent contractor classification appropriate consistent with their consideration of the opportunity for profit or loss factor.⁷ Moreover, in the few instances when courts have classified workers in a manner that is inconsistent with their finding on the control factor, it is precisely because the opportunity factor weighed in favor of employee or independent contractor classification.⁸

The DOL’s Proposed Rule favors form over substance by concluding that “[n]o court of appeals considers any one factor or combination of factors to predominate”, simply because courts of appeal have not used such express language.⁹ But the substance of the case law could not be more clear—a fact made all the more salient by the DOL’s complete failure in the Proposed Rule to identify any case law to the contrary—courts of appeal unwaveringly classify workers consistent with their findings on the two core factors, or a combination thereof, identified in the 2021 IC Rule: control of the work, and opportunity for profit or loss.¹⁰

Elevating these two core factors encouraged uniformity in the analysis of the independent contractor question. The DOL’s Proposed Rule acknowledges the need for uniformity, but eliminates the core factor feature of 2021 IC Rule and then inexplicably concludes that returning to the factual “kaleidoscope” model would somehow ensure uniformity in the analysis.¹¹

and Martin v. Selker Bros., Inc., 949 F.2d 1286, 1294 (3d Cir. 1991) (same), with Parrish v. Premier Directional Drilling, L.P., 917 F.3d 369, 381-82 (5th Cir. 2019) (finding independent contractor classification appropriate where worker predominantly controlled the work) and Nieman v. Nat’l Claims Adjusters, Inc., 775 Fed. Appx. 622, 624-25 (11th Cir. 2019) (same) and Saleem, 854 F.3d at 143-44 (same) and Iontchev v. AAA Cab Serv., Inc., 685 Fed.

Appx. 548, 550-51 (9th Cir. 2017) (same) and Barlow v. C.R. England, Inc., 703 F.3d 497, 506-07 (10th Cir. 2012)

and Chao v. Mid-Atl. Installation Servs., Inc., 16 Fed. Appx. 104, 106-08 (4th Cir. 2001) (same).

⁷ Compare Hobbs, 946 F.3d at 832-36 (finding employee classification appropriate where opportunity factor weighed in favor of employee classification) and Acosta v. Off Duty Police Services, Inc., 915 F.3d 1050, 1059-62 (6th Cir. 2019) (same) and McFeeley v. Jackson St. Entm't, LLC, 825 F.3d 235, 243-44 (4th Cir. 2016) (same) and Hopkins v. Cornerstone Am., 545 F.3d 338, 344-46 (5th Cir. 2008) (same) and Baker, 137 F.3d at 1441- 44 (same) and Dole v. Snell, 875 F.2d 802, 808-12 (10th Cir. 1989) (same) and Brock v. Superior Care, Inc., 840 F.2d 1054, 1059-61 (2d Cir. 1988) (same), with Parrish, 917 F.3d at 384-88 (finding independent contractor classification appropriate where opportunity factor weighed in favor of independent contractor classification) and Saleem, 854 F.3d at 140-48 (same) and Iontchev, 685 F. App'x at 550-51 (same) and Freund v. Hi-Tech Satellite, Inc., 185 Fed. Appx. 782, 783-84 (11th Cir. 2006) (same) and Eberline v. Media Net, L.L.C., 636 F. App’x 225, 228-29 (5th Cir. 2016) (same) and Mid-Atl. Installation Servs., 16 F. App’x at 106-08 (same).

⁸ See, e.g., Acosta, 884 F.3d at 1235 (employee classification appropriate where worker controlled the schedule because the worker had no opportunity to increase profit or loss based on job performance); Cromwell v.

Driftwood Elec. Contractors, Inc., 348 Fed. Appx. 57, 61 (5th Cir. 2009) (control factor weighed in favor of

independent contractor status, but employee status appropriate because of the “severely limit[ed]…opportunity for profit or loss”).

⁹ See 87 FR at 62218-01.

¹⁰ Supra footnotes 8-11.

¹¹ Lauritzen, 835 F.2d at 1539 (“It is comforting to know that ‘economic reality’ is the touchstone. One cringes to think that courts might decide these cases on the basis of economic fantasy. But ‘reality’ encompasses millions of facts, and unless we have a legal rule with which to sift the material from the immaterial, we might as well examine the facts through a kaleidoscope.”)

Elevating two core factors is precisely the type of aid the DOL is positioned to provide. The DOL is not a judicial body that interprets the laws, but it can provide guidance to the judiciary that will aid in doing so and promote uniformity in that interpretation, not to mention a more predictable legal landscape for employers and workers. Discarding the core factor feature of the 2021 IC Rule goes directly against this goal.

(b)               Opportunity for profit or loss depending on managerial skill favors employee status.

 

As discussed in more detail below, the Proposed Rule directs that the opportunity for profit or loss factor be considered distinct from the investment factor. According to the Proposed Rule, the opportunity for profit or loss factor “considers whether the worker exercises managerial skill that affects the worker’s economic success or failure in performing the work.”¹² The Proposed Rule states further that the following additional factors “can be relevant”:

• whether the worker determines or can meaningfully negotiate the charge or pay for the work provided;

• whether the worker accepts or declines jobs or chooses the order and/or time in which the jobs are performed;

• whether the worker engages in marketing, advertising, or other efforts to expand their business or secure more work; and

• whether the worker makes decisions to hire others, purchase materials and equipment, and/or rent space.¹³

The opportunity for profit or loss factor, considered under the Proposed Rule’s framework would virtually always weigh in favor of employment status. Many independent contractors offer their services to select employers for the express purpose of avoiding negotiating costs for services, advertising, and hiring support staff. The Proposed Rule utterly fails to account for workers’ preference for having an independent contractor relationship that avoids these costs, which is an increasingly common reality in the modern workplace.

Further, the Proposed Rule is unclear on whether, when assessing the opportunity for profit or loss factor, a worker’s ability to accept or decline work weighs in favor of independent contractor status. On one hand, the DOL indicates that a worker’s ability to “accept[] or decline[] jobs” is consistent with independent contractor status, but on the other hand, states that “the decision to…take more jobs[] generally do[es] not reflect the exercise of managerial skill indicating independent contractor status under this factor.”¹⁴ Whatever the DOL’s intent with the Proposed Rule’s interpretation of this factor, a worker’s ability to determine which work

¹² 87 FR at 62237 (§ 795.110(b)(1)).

¹³ Id.

¹⁴ Id. at 62224.

assignments to accept or reject is recognized as being consistent with independent contractor status, but the Proposed Rule muddies the waters.¹⁵

(c)                Investments by the worker and the employer should be part of profit or loss consideration.

 

According to the Proposed Rule, this factor “considers whether any investments by a worker are capital or entrepreneurial in nature,” and in contrast to the 2021 IC Rule and Second Circuit case law, considers this factor to be separate and distinct from the opportunity for profit or loss factor.¹⁶ Like the other factors, the DOL’s guidance and interpretation of this factor would all but preclude an independent contractor finding.

At the outset, considering worker investment as a standalone factor is irrational. Under the 2021 IC Rule, the second “core” factor—the worker’s opportunity for profit or loss— ”weighs towards the individual being an independent contractor to the extent the individual has an opportunity to earn profits or incur losses based on his or her exercise of initiative (such as managerial skill or business acumen or judgment) or management of his or her investment in or capital expenditure on, for example, helpers or equipment or material to further his or her work.”¹⁷ Thus, a worker’s “management of his or her investment in or capital expenditure on . . . helpers or equipment or material to further his or her work” is a fact to be considered when analyzing the worker’s opportunity for profit or loss, along with the worker’s exercise of initiative.¹⁸ The 2021 IC Rule states further that a worker “does not need to have an opportunity for profit or loss based on both [exercise of initiative and management of investment] for [the opportunity for profit or loss] factor to weigh towards the individual being an independent contractor.”¹⁹

In the Proposed Rule, the DOL proposes considering “investments by the worker and the employer” as a standalone factor in the economic reality test.²⁰ According to the DOL, “the way in which [the 2021 IC Rule] considers investment as part of the opportunity for profit or loss

¹⁵ See, e.g., Karlson v. Action Process Serv. & Private Investigations, LLC, 860 F.3d 1089, 1094 (8th Cir. 2017) (recognizing that worker’s ability to “decide which assignments he was willing to accept” supported jury’s finding that worker was not an employee); Saleem, 854 F.3d at 145 (noting in support of independent contractor status that the degree to which the worker's relationship with the potential employer “yielded returns was a function .

. . of the business acumen of each [worker]”); Herman v. Express Sixty-Minutes Delivery Serv., Inc., 161 F.3d 299, 304 (5th Cir. 1998) (opportunity for profit or loss factor weighed in favor of independent contractor status where the workers “had the ability to choose how much they wanted to work”).

¹⁶ See 87 FR at 62275; see also 86 FR at 1168.

¹⁷ 86 FR at 1247 (emphasis added).

¹⁸ Id.

¹⁹ Id.

²⁰ 87 FR at 62237, 62275.

factor may incorrectly tilt the analysis in favor of independent contractor outcomes.”²¹ The DOL goes on at length about supposed inconsistencies that would arise if a worker’s investment was considered as fact relative to the worker’s opportunity for profit or loss, and in doing so, disproves its own point.²² According to the DOL, under the 2021 IC Rule, “if either initiative or investment suggests independent contractor status, the other cannot change that outcome even if it suggests employee status.”²³

The DOL’s fear is misplaced. The 2021 IC Rule does not require an independent contractor finding “if either initiative or investment suggests independent contractor status.”²⁴ Rather, the 2021 IC Rule simply says that a worker need not have an opportunity for loss based on both initiative and investment in order to be an independent contractor.²⁵ The 2021 IC Rule confirms this in the very next sentence: “This [opportunity for profit or loss] factor weighs towards the individual being an employee to the extent the individual is unable to affect his or her earnings or is only able to do so by working more hours or faster.”²⁶ In other words, the paramount question is whether the worker has the opportunity to increase profits or incur losses. If the answer to that question is “no” or “only by working more hours or faster,” then under the 2021 IC Rule, the profit or loss factor weighs in favor of employee status and it does not matter that one of two underlying facts—initiative and investment—might weigh in favor of independent contractor status. The supposed inconsistency that could arise under the 2021 IC Rule is precisely why investment is more appropriately considered as a fact under the opportunity for profit and loss factor than as a standalone factor.

The Proposed Rule also requires that a worker’s investment be “capital or entrepreneurial in nature” in order for it to weigh in favor of independent contractor status.²⁷ As an initial matter, this requirement is already provided for in the 2021 IC Rule, which, under the profit or loss factor, considers a worker’s “capital expenditure on, for example, helpers or equipment or material to further his or her work.”²⁸ Further, the Proposed Rule fails to articulate how investment could practically be considered independent of the opportunity for profit or loss factor as “[e]conomic investment, by definition, creates the opportunity for loss.”²⁹ In addition,

²¹ Id. at 62240.

²² Id.

²³ Id.

²⁴ Id.

²⁵ 86 FR at 1247.

²⁶ Id. (emphasis added).

²⁷ 87 FR at 62275 (§ 795.110(b)(2)); see also id. at 62241.

²⁸ 86 FR at 1247 (§ 795.105(d)(1)(ii)); see also id. at 1186 (“[T]he Department reiterates that the investment must be capital in nature and consistent with the worker being in business for him/herself for the investment to indicate an opportunity for profit or loss.”)

²⁹ Saleem, 854 F.3d at 144 n.29; see also Lauritzen, 835 F.2d at 1537 (“The capital investment factor is

interrelated to the profit and loss consideration.”); Donovan v. Gillmor, 535 F. Supp. 154, 161-62 (N.D. Ohio 1982)

the Proposed Rule’s guidance that “[c]osts borne by a worker to perform their job (e.g., tools and equipment to perform specific jobs and the workers’ labor) are not evidence of capital or entrepreneurial investment and indicate employee status” is far too broad of a directive to be of any use in conducting an independent contractor analysis. If implemented, employers and factfinders would have to ignore any amount of investment a worker made in his or her tools and equipment, even if those tools and equipment were—as in the case of a software security auditor who provides his own specially designed laptop—highly specialized and expensive.

For the same reason, the Proposed Rule’s guidance that “the use of a personal vehicle that the worker already owns to perform work—or that the worker leases as required by the employer to perform work—is generally not an investment that is capital or entrepreneurial in nature,” is impractical and poorly suited for the modern workplace.³⁰ The Proposed Rule presumptively declares that a vehicle, should be considered “generally not an investment that is capital or entrepreneurial in nature.”³¹ While a worker’s ownership of his or her own vehicle may not always indicate independent contractor status, to say it is “generally” not an indicator paints with too broad a brush. For example, a worker who is engaged to service an employer’s equipment at multiple locations across a city may use his own car or may use a company-provided vehicle. If he uses his own vehicle, regardless of whether he also uses that vehicle for personal reasons, the vehicle would clearly be “an investment that is capital or entrepreneurial in nature” because the worker could not conduct his business without it. On the other hand, if that same worker used a company-provided vehicle, he might still be an independent contractor, but his use of the company-provided vehicle would either weigh in favor of employee status or be a negligible consideration.

The Proposed Rule’s apparent assumption that if a vehicle is also used for personal reasons, then it is less likely to indicate independent contractor status when it is used for professional reasons, is also problematic.³² As a practical matter, rarely does a worker who uses a vehicle for his or her business, restrict his or her use of that vehicle to only business purposes and does not also use it for personal reasons. The same is true for non-independent contractors who use a company-provided vehicle with the company’s logo painted on the side to take weekend camping trips, for example. Further, the case law upon which the DOL relies in the Proposed Rule does not support a principle as generic as the one the DOL adopts. In one of the cases relied upon by the DOL, Brock v. Mr. W Fireworks, Inc., for example, the workers at issue slept in their personal recreational vehicles while tending to a fireworks stand.³³ The court in that case stated as follows:

(recognizing that investments, other than investments of time, involve risking capital, which is necessarily accompanied by an opportunity for profit or loss).

³⁰ 87 FR at 62241.

³¹ Id.

³² Id.

³³ 814 F.2d 1042, 1052 (5th Cir. 1987).

It is true, as the court pointed out, however, that nearly every operator testified to sleeping in a sleeping bag, trailer or recreational vehicle while attending the stand at night. This is hardly surprising, since the record also shows that the operators were required by Mr. W to spend the night at the stands. Thus, it is simply bootstrapping to say that this indicates a substantial investment on the part of the operators.

Second, and of equal importance, only one operator claimed to have purchased a recreational vehicle solely for the fireworks business, and only one operator claimed to have rented a trailer for the season. At least ten operators who testified that they slept in sleeping bags or recreational vehicles purchased these items prior to becoming operators, and used such items for family recreational purposes as well as for the fireworks business.³⁴

Thus, the vehicles in Brock v. Mr. W Fireworks were owned by workers who worked in a seasonal business and clearly did not own the vehicles for the purpose of engaging in that business. Likewise, the personal vehicles in Acosta v. Off Duty Police Servs., Inc., were “simply parked and sat in for hours at a time” and “required no specialized mastery.”³⁵ Consequently, “[t]his limited investment in specialized equipment favor[ed] employee status........................................................................ ”³⁶

These cases do not support the general presumption the DOL posits in its Proposed Rule. A vehicle is a substantial investment and few independent contractors who rely on their personal vehicle to conduct business also keep a separate vehicle for personal use. As explained above, there may well be scenarios, as in Brock v. Mr. W Fireworks, where use of a personal vehicle does not indicate independent contractor status, but these scenarios are fact-specific and do not support the broad assumption that a vehicle is “generally not an investment that is capital or entrepreneurial in nature.”³⁷

Finally, the DOL’s proposal to consider the worker’s investment in relation to the employer’s (which will almost certainly always be greater than the worker’s) is nonsensical.³⁸ To the extent this a useful consideration at all, it is already appropriately accounted for in the 2021 IC Rule’s profit or loss factor framework, which considers the worker’s investment in relation to his or her opportunity for profit or loss.

(d)               Proposed degree of permanence of the work relationship favors employee status regardless of analysis.

 

 

³⁴ Id.

³⁵ 915 F.3d 1050, 1057 (6th Cir. 2019).

³⁶ Id.

³⁷ 87 FR at 62241.

³⁸ Id. at 62241-42.

According to the Proposed Rule, this factor “weighs in favor of the worker being an employee when the work relationship is indefinite in duration or continuous, which is often the case in exclusive working relationships.”³⁹ The Proposed Rule states further that this factor weighs in favor of independent contractor status “when the work relationship is definite in duration, non-exclusive, project-based, or sporadic based on the worker being in business for themself and marketing their services or labor to multiple entities.”⁴⁰ However, the Proposed Rule suggests that a working relationship that lacks permanence would not weigh in favor of independent contractor status where the lack of permanence is due to operational characteristics (seasonal or temporary operations, for example) rather than the worker’s independent business initiative.⁴¹

Thus, the Proposed Rule would essentially make employees out of any worker who performs temporary work for an employer, even if that worker’s assignment has nothing to do with the employer’s principal business. In doing so, the Proposed Rule fails to account for the modern reality that many independent contractors enter into multiple, long-term contracts with the same business. It also ignores the fact that employers derive value from working with the same independent contractors. For example, an independent contractor who, over time, develops familiarity with the various intricacies of a particular employer’s worksite, may be specifically asked to return to the worksite for future projects. Thus, weighing the permanence factor in favor of employee status simply because a working relationship is “exclusive” or “continuous” is disconnected from the realities of the modern workplace and disadvantages those independent contractors who have performed well and earned the right to continue.

Further, the Proposed Rule fails to identify how “exclusiv[ity]” could have any bearing on permanence. The same worker could have indefinite or continuous working relationships with multiple hiring entities and “exclusiv[ity]” has no definitional relationship to “permanence.” The DOL illogically suggests that the permanence factor only weighs in favor of independent contractor status when the indicia of a lack of permanence result from “the worker…marketing their services or labor to multiple entities.”⁴² Yet, as with exclusivity, the marketing of services or labor is definitionally untethered from the permanence of any single working relationship and has no place in the consideration of this factor.⁴³ Finally, the Proposed Rule’s inclusion of “exclusiv[ity]” in the consideration of the permanence factor invites a duplicative analysis, as exclusivity of the working relationship is a component of the control factor established by the Supreme Court in Silk and accounted for in the 2021 IC Rule.⁴⁴ By limiting the situations in which the permanence factor weighs in favor of independent contractor status to considerations of exclusivity and the worker’s marketing of services, and by directing that the continuous nature

³⁹ Id. at 62275 (§ 795.110(b)(3)).

⁴⁰ Id.

 

⁴¹ Id.

 

⁴² See 87 FR at 62275.

⁴³ See Silk, 331 U.S. at 719

⁴⁴ See id. (analyzing exclusivity as part of the control factor).

of a working relationship weigh in favor of employee status, the DOL ignores modern workplace realities and virtually assures that the permanence factor will weigh in favor of an employment relationship.

(e)                Nature and degree of control factor expands analysis to increase chances of employee status.

 

In addition to de-emphasizing the “control” factor as a core factor, the Proposed Rule seeks to broaden the analysis of what constitutes an employer’s control over the work performed and in so doing tilts the analysis towards finding an employment relationship.⁴⁵

(i)                 Broadening control to include undefined “reserved control” introduces new, undefined, vague terminology.

 

In the Proposed Rule, the DOL introduces “reserved control” as part of the control factor, but neither defines “reserved control” nor specifies the degree to which it should be considered. Presumably, “reserved control” embodies the concept of “right to control” and refers to circumstances in which a hiring entity has the ability to exercise control over a worker but does not or has not exercised such control. Assuming this is the case, the DOL fails to specify just how important such “reserved control” is. Besides exacerbating the uncertainty with which the Proposed Rule may be implemented, the DOL’s interpretation apparently directs the factfinder to weigh the control factor in favor of employee classification if a hiring entity merely possesses the ability to exercise control of a worker, regardless of whether the hiring entity ever has exercised such control.

The inclusion of “reserved control” in the worker classification consideration turns the economic reality test on its head. By definition, the economic “reality” test does not look to “what [a worker] could have done…but as a matter of economic reality what [the worker] actually [did].”⁴⁶ Indeed, unexercised control has not been a significant consideration when applying the economic reality test because “[t]he controlling economic realities are reflected by the way one actually acts.”⁴⁷ By including the vague concept of “reserved control”, which is to be considered in some unstated capacity, the Proposed Rule broadens the control factor far beyond its historical bounds and creates such uncertainty that the definition of “control” under the Proposed Rule is unworkable and would all but preclude an independent contractor finding.

⁴⁵ See 87 FR at 62246.

⁴⁶ Saleem, 854 F.3d at 142; see also Parrish, 917 F.3d at 387 (“[T]he analysis is focused on economic reality, not economic hypotheticals.”).

⁴⁷ Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1311 (11th Cir. 2013) (quoting Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1312 (5th Cir.1976)) (internal quotation marks omitted) (emphasis added); see also Hobbs, 946 F.3d at 833 (quoting Brock, 814 F.2d at 1047) (internal quotation marks omitted) (finding it irrelevant “that the [workers] could hypothetically negotiate their rate of pay because, under the economic realities test, it is not what the [putative employees] could have done that counts, but as a matter of economic reality what they actually do that is dispositive.”).

(ii)               Broadening control to include compliance requirements undermines workplace safety and quality control.

 

The DOL proposes taking into account “an employer’s compliance with legal obligations, safety or health standards, or requirements to meet contractual or quality control obligations” when assessing the nature and degree of control an employer has over the work, and suggests that such compliance could weigh in favor of employee classification.⁴⁸ Not only is the DOL’s interpretation contrary to how courts interpret the control factor, but it also ignores modern workplace realities and would leave little, if any, room for an independent contractor finding under this factor.⁴⁹

For example, very many employers have drug-free workplace requirements and require all workers, including independent contractors, to be drug tested before being allowed to enter the jobsite. This is particularly true of employers in the energy industry. For example, a chemical plant might hire an independent contractor to provide electrical maintenance on the plant’s machinery. The chemical plant will invariably require (and may be required to ensure under state and federal law) that the electrician is not only drug tested, but properly trained on safety protocols in the event of an emergency. The electrician might be required again, under state and federal law or the employer’s safety protocols, to spend several hours attending a class learning how to don and doff a gas mask and take other appropriate action in the event of an emergency before beginning work.

In addition, many independent contractors are subject to federally-mandated drug testing requirements. The Department of Transportation (“DOT”) requires drivers who operate commercial motor vehicles, including independent contractors, to undergo DOT drug and alcohol testing.⁵⁰ Various states also have drug testing requirements that apply to certain classes of workers. Georgia and South Carolina, for example, require certain state contractors and subcontractors to maintain drug-free workplaces.⁵¹ If an employer hires an independent contractor and requires that the independent contractor be compliant with the DOT or state drug testing requirements, doing so can hardly be viewed as indicative of employee status. Even without a state or federal requirement, many employers, for liability purposes, implement some kind of drug testing protocol. After all, declining to drug test a driver on grounds that he or she is an independent contractor is not necessarily a defense in a negligent hiring lawsuit. Employers and workers should not be put in the position of choosing between complying with safety

⁴⁸ 87 FR at 62247.

⁴⁹ See, e.g., Iontchev, 685 Fed. Appx. at 550 (employer’s control over disciplinary rules and regulations, and enforcement thereof, governing workers’ conduct and operations requirements was not the type of control that weighs in favor of employee status); Mid-Atl. Installation Servs., Inc., 16 Fed. Appx. at 106 (ensuring workers

comply with legal obligations or technical specifications is “entirely consistent with the standard role of a

contractor”); Dole v. Amerilink Corp., 729 F. Supp. 73, 76 (E.D. Mo.1990) (specifications and quality control “inhere[ ] in any subcontractor relationship”).

⁵⁰ 49 C.F.R. § 382.103(b) (“An employer who employs himself/herself as a driver must comply with both the requirements in this part that apply to employers and the requirements in this part that apply to drivers.”)

⁵¹ GA. CODE ANN. 50-24-2 to 50-24-6; S.C. CODE ANN. §§ 44-107-20 to 44-107-90.

requirements and best practices or maintaining an independent contractor relationship. The Proposed Rule, however, suggests this exact trade-off.

The notion in the Proposed Rule that an employer cannot require an independent contractor to comply with legal obligations, attend safety training, or take other steps necessary “to meet contractual or quality control obligations” without converting that independent contractor to an employee ignores completely the reality of the modern segmented workplace, the need for specialization that only an independent contractor can provide, as well as the potential for liability if an employer does not meet its contractual or quality control obligations, and is contrary to the substantive case law.⁵² The Proposed Rule’s analysis of the “control” factor would make any worker who took on a job that required “compliance with legal obligations, safety or health standards, or requirements to meet contractual or quality control obligations” (i.e. virtually any job of import and any job where the hiring entity must comply with federal, state, or local laws) an employee. In the age of specialization, where the smallest detail of a process might be contracted out to ensure it is performed with maximum efficiency and expertise, such an analysis is simply unworkable.

(iii)            The remaining control elements all but ensure employee status.

 

The Proposed Rules states that additional facts are relevant to the question of control, including whether the employer:

• sets the worker’s schedule;

• supervises the work;

• explicitly limits the worker’s ability to work for others;

• uses technological means of supervision;

• reserves the right to supervise or discipline workers;

• places demands on the worker’s time that do not allow the workers to work for others when they choose; and

• has control over prices and marketing of the worker’s ⁵³

Like the opportunity for profit or loss factors, these elements all but ensure an employee status finding. Indeed, rare is the case that an employer will not place at least some restrictions on when, where, and how often an independent contractor works for the employer. Thus, factors as nebulous as “scheduling” and “supervision” would almost always tilt in favor of employee

⁵² For example, the DOL attempts to support its position in the Proposed Rule by relying on cases such as Shultz v. Mistletoe Exp. Serv., Inc., 434 F.2d 1267 (10th Cir. 1970), but its efforts are misguided, as those cases instead stand only for the proposition that the need to comply with regulations in and of itself does not confer independent contractor status. Id. at 1271.

⁵³ 87 FR at 62275 (§ 795.110(b)(4)).

status. In addition, independent contractors in the modern age, particularly those who work in data security or related fields, are frequently given access to an employer’s confidential or sensitive data. Prohibiting these workers from retaining independent contractor status simply because, for example, the employer uses technology to monitor their manipulation of the sensitive data or restricts them from working for competitors while accessing that data ignores realities in the modern workplace. Even less sophisticated technology—a GPS device in a vehicle used by an independent contractor who travels between an employer’s multiple worksites—is hardly indicative in this era of an employment relationship.

In addition, while substantive employment decisions may be seen as an indicator of an employment relationship, simply reserving the right to supervise or discipline an independent contractor who, for instance, shows up to work intoxicated, verbally abuses employees or customers, or refuses to comply with safety protocols, should not weigh in favor of employee status. Even less egregious circumstances, such as ensuring an independent contractor uses tools or methods that are compliant with applicable codes, can hardly be said to indicate employment status in an era of heightened legal liability and technical compliance. Finally, as with the opportunity for profit or loss factors, demands on a worker’s time and control over prices and marketing are often aspects an independent contractor might seek to delegate to another entity.

(f)                Extent to which the work performed is an integral part of the employer’s business is vague and leans heavily towards employee classification.

 

The Proposed Rule’s consideration of the “integral” factor would all but eliminate independent contractors in many common workplace scenarios. As one of the three non-core factors to be considered in conducting an independent contractor analysis, the 2021 IC Rule includes “whether the work is part of an integrated unit of production.”⁵⁴ The 2021 IC Rule states further that “[t]his factor weighs in favor of the individual being an employee to the extent his or her work is a component of the potential employer’s integrated production process for a good or service.”⁵⁵ The 2021 IC Rule also states that the factor “weighs in favor of an individual being an independent contractor to the extent his or her work is segregable from the potential employer’s production process.”⁵⁶ The 2021 IC Rule clarifies that “[t]his factor is different from the concept of the importance or centrality of the individual’s work to the potential employer’s business.”⁵⁷ The Proposed Rule would “return[] to the framing of this factor as whether the worker’s work is an ‘integral part’ of the employer’s business.”⁵⁸

Here again the Proposed Rule ignores the realities of the modern workplace. As mentioned above, the modern economy, not to mention the ever-growing legal liability

⁵⁴ 86 FR at 1247 (§ 795.105(d)(2)(iii)).

⁵⁵ Id.

⁵⁶ Id.

⁵⁷ Id.

⁵⁸ 87 FR at 62253.

landscape, requires employers to achieve unprecedented levels of specialization and precision in order to stay competitive. For this reason, employers often outsource some of the most integral parts of their business to independent contractors. Indeed, on some level, all tasks are integral to an employer’s business. If the task was not integral, the employer would have little interest in seeing that it was performed. Drug testing laboratories, for example, often do not collect the samples they test and third party administrators, who facilitate drug testing programs for employers often do not collect or analyze samples. If the litmus test for independent contractor status depends on whether a worker is performing a task that is “integral” to the employer’s business, then it is hard to imagine a scenario in today’s economy where that worker would not be considered an employee. Leaving employers to decide what is “integral” to a particular business will only increase uncertainty and, as a result, costly litigation.

(g)               Skill and initiative factor is narrowed so that it points toward finding an employment relationship.

 

According to the Proposed Rule, this factor “considers whether the worker uses specialized skills to perform the work and whether those skills contribute to business-like initiative.”⁵⁹ Where a worker does not use specialized skills in performing the work, or where the worker is dependent on training from the employer to perform the work, this factor weighs in favor of employee status.⁶⁰ “Where the worker brings specialized skills to the work relationship, it is the worker’s use of those specialized skills in connection with business-like initiative that indicates that the worker is an independent contractor.”⁶¹ While this factor in the Proposed Rule largely conforms to the recitation of the same factor in the 2021 IC Rule, it differs in one key aspect: it considers this factor to weigh in favor of independent contractor status only when the worker uses specialized skill “in connection with business-like initiative.”⁶²

The inclusion of “initiative” in the consideration of this factor is problematic, as initiative is encompassed by the control and opportunity for profit or loss factors. Further, tying an independent contractor finding to whether a worker uses specialized skill in connection with business-like initiative is not only a vague concept, but inconsistent with Silk’s articulation of the skill factor.⁶³ To be sure, the DOL’s proposed narrow application of the skill factor does not consider skill at all unless it has some connection to business-like initiative, which is already considered under the control and opportunity for profit and loss factors. In addition to creating yet another unnecessary duplication in the analysis, the DOL’s approach in the Proposed Rule dispenses with all independent consideration of a worker’s specialized skills obtained or

⁵⁹ Id. at 62275.

⁶⁰ Id.

 

⁶¹ Id.

 

⁶² Id.

 

⁶³ See Silk, 331 U.S. at 716; see also Acosta, 884 F.3d at 1235 (articulating the factor as “the degree of skill required to perform the work); Iontchev, 685 Fed. Appx. at 550 (considering this factor only insofar as whether

“special skill” was required to perform the job and compiling cases doing the same).

developed separate and apart from the hiring entity. In so doing the DOL, again, all but ensures consideration of this factor will preclude an independent contractor finding.

(h)               Anything else the DOL considers relevant is a new factor that means an employer will never be confident of an independent contractor classification.

 

Finally, the DOL proposes adding to the economic realities test any “[a]dditional factors [that] may be relevant in determining whether [a] worker is an employee or independent contractor for purposes of the FLSA, if the factors in some way indicate whether the worker is in business for themself, as opposed to being economically dependent on the employer for work”⁶⁴ Thus, the Proposed Rule contains a “miscellaneous” or catch-all factor that not only renders its application impossible to predict, but would allow the DOL to dictate the nature of the relationship however they please. In other words, the DOL inserts into the Proposed Rule a mechanism whereby it can hinge its classification decision on anything it deems to “indicate” that a worker is either in business for themselves or economically dependent on an employer, regardless of whether such consideration has historically, or ever, been considered as part of the classification analysis. This renders the Proposed Rule useless for hiring entities, as they can never be certain they have correctly classified an independent contractor.

2.                  The DOL’s Proposed Rule’s Recission of the 2021 Rule Renders it arbitrary and capricious.

 

Contrary to what the DOL now asserts about a rule it introduced a little over a year ago, the 2021 IC Rule does not “depart from decades of case law.”⁶⁵ Rather, it seeks to homogenize and codify that case law for consistent application in the modern workplace. The Proposed Rule creates the impression that the 2021 IC Rule crafted a new framework out of whole cloth, without any reference to or reliance on legal precedent. Nothing could be further from the truth. In reality, the 2021 IC Rule codified, for the first time, a doctrine that until 2021, existed only as a patchwork of jurisprudence dating back to the 1940s, that left employers and workers without any consistency in how courts might view their working relationship under the FLSA. To the extent the 2021 IC Rule departed from precedent at all, such departure was necessary, given the passage of time and disarray of opinions, to accomplish the goal of creating a workable framework in the modern economy.

The Administrative Procedure Act establishes the limits on agency rulemaking. Among those limits, agency rules, including the DOL’s rules, shall be deemed unlawful and set aside when they are “arbitrary [or] capricious.”⁶⁶ To overcome an arbitrary and capricious finding, the DOL, when implementing a new rule that upends or changes a previous rule, is obligated to provide an explanation for the change, namely that the change is “permissible under the statute,

⁶⁴ 87 FR at 62275 (§ 795.110(b)(7)).

⁶⁵ Id. at 62219.

⁶⁶ 5 U.S.C.§ 706(2)(A).

that there are good reasons for it, and that the agency believes it to be better” than the previous policy.⁶⁷

In articulating its justification for the proposed change, the DOL “must examine the relevant data and articulate a satisfactory explanation for its action, including a rational connection between the facts found and the choice made.”⁶⁸ An agency rule is typically arbitrary and capricious if the agency (1) developed the rule in reliance on factors which Congress has not intended it to consider; (2) entirely failed to consider an important aspect of the problem; (3) offered an explanation for its decision that runs counter to the evidence before the agency; (4) is so implausible that it could not be ascribed to a difference in view or the product of agency expertise; or (5) bases the rule on a lack of evidentiary support.⁶⁹

The Proposed Rule is arbitrary and capricious for several reasons. First, the DOL admits that the Proposed Rule is “supported” by nothing more than speculation that the courts may not adopt the 2021 rule, which is “a question that could take years of appellate litigation in different Federal circuits to sort out.”⁷⁰ This sort of rank speculation is far from sufficient evidentiary support to avoid an arbitrary and capricious finding.⁷¹ Further, the 2021 IC Rule covers all of the supposed issues that the Proposed Rule identifies. The Proposed Rule is, therefore, arbitrary and capricious in that the DOL has not explained why it must rescind the 2021 IC Rule. The DOL admits it has not waited long enough to determine whether the 2021 IC Rule would result in litigation and appellate court disapproval.⁷² The DOL claims it is moving swiftly to avoid confusion of workers and employers, and to wait for courts to begin ruling could take years. But that is a wait that is supposed to occur before deciding that the 2021 IC Rule was defective in some way—it’s called developing a record upon which a decision can be based.

Finally, a new rule, to a degree and by design, will alter or deviate from prior precedent, as that is the very nature of and reason for introducing a new rule.⁷³ In other words, any new

⁶⁷ See F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 513-15 (2009).

⁶⁸ See Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (internal quotation marks omitted); see also Coal. for Workforce Innovation v. Walsh, No. 1:21-CV-130, 2022 WL 1073346, at *11 (E.D. Tex. Mar. 14, 2022) (agency action must be reasonable and reasonably explained).

⁶⁹ See Motor Vehicle Mfrs., 463 U.S. at 43-44, 53-55; see also Coal. for Workforce Innovation, 2022 WL 1073346, at *12.

⁷⁰ 87 FR at 62219.

⁷¹ Sorenson Commc’ns. Inc. v. F.C.C., 755 F.3d 702, 708 (D.C. Cir. 2014) (a purported “common sense” prediction is an insufficient explanation for an agency’s action); Sierra Club v. Babbitt, 15 F. Supp. 2d 1274, 1283 (S.D. Ala. 1998) (speculation insufficient to justify agency action and avoid arbitrary and capricious finding).

⁷² 87 FR at 62219-20.

⁷³ See, e.g., Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 982-83 (2005) (“Only a judicial precedent holding that the statute unambiguously forecloses the agency’s interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction.”) (emphasis added); Rogers v. Comm’r of Soc. Sec., No. 320CV00206RJCDSC, 2022 WL 135310, at *4 (W.D.N.C. Jan. 13, 2022)

(“[R]evisions to agency policy that are inconsistent with judicial precedent do not make an agency’s revisions

rule, especially one that seeks to harmonize (to the extent possible) 75 years of jurisprudence, necessarily will conflict with some prior cases that interpreted the prior rule. This fact alone is not a reason to reject an existing rule. If it were, no rule could ever be materially changed.

CONCLUSION

 

The DOL’s Proposed Rule is biased toward finding employment relationships rather than independent contractor relationships. As a result, it will upend millions of legitimate, productive independent contractor relationships where both parties benefit, and both parties have agreed to the terms. For those employers that classify a worker as an independent contractor, there will be great uncertainty that they have properly classified that worker because of the “totality of the

circumstances” approach the Proposed Rule uses, the vagueness of various terms the DOL has proposed as part of the analysis, and the catch-all additional factors that may be relevant provision. Finally, the DOL provides no supporting evidence, only pure speculation, as the basis for rescinding the 2021 rule that has been in effect only a few months and which has provided DOL ample authority to pursue its enforcement mission. For all these reasons, the Proposed Rule must be withdrawn.

Sincerely,

National

American Hotel and Lodging Association America's SBDC

Associated Builders and Contractors Associated General Contractors of America Associated Wire Rope Fabricators Consumer Technology Association

Direct Selling Association HR Policy Association

Independent Lubricant Manufacturers Association Institute for Liberty

Insured Retirement Institute International Sign Association Manufactured Housing Institute

Motor & Equipment Manufacturers Association National Alliance of Forest Owners

National Association for Fixed Annuities National Association of Home Builders

National Association of Insurance and Financial Advisors National Association of Mutual Insurance Companies National Association of Women Business Owners National Automobile Dealers Association

National Independent Automobile Dealers Association

arbitrary or capricious.”); see also Smiley v. Citibank (S. Dakota), N.A., 517 U.S. 735, 742 (1996) (“[T]he mere fact that an agency interpretation contradicts a prior agency position is not fatal.”); Chevron, U.S.A., Inc. v. Nat. Res.

Def. Council, Inc., 467 U.S. 837, 863-64 (1984) (“An initial agency interpretation is not instantly carved in stone.”).

National Ready Mixed Concrete Association National Roofing Contractors Association National Small Business Association National Stone, Sand & Gravel Association Pennsylvania Food Merchants Association

The American Association of Advertising Agencies The International Warehouse Logistics Association The Toy Association

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EIGHT:18, LLC

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Albany Area Chamber Oregon Business & Industry

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Cambria Regional Chamber Clearly Clean Products, LLC

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Burlington Chamber of Commerce Centralia-Chehalis Chamber of Commerce Covington Chamber of Commerce Enumclaw Chamber of Commerce Greater Yakima Chamber of Commerce Moses Lake Chamber of Commerce Washington Retail Association

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Outside Counsel

Robert Quackenboss

1. Michael Reed Lukas Moffett

Hunton Andrews Kurth LLP 2200 Pennsylvania Avenue, NW Washington, DC 20037

November 28, 2022

The Honorable Nancy Pelosi                                      The Honorable Chuck Schumer

Speaker                                                                       Majority Leader

U.S. House of Representatives                                   United States Senate

Washington, DC 20515                                              Washington, DC 20510

The Honorable Kevin McCarthy                                The Honorable Mitch McConnell

Republican Leader                                                      Republican Leader

U.S. House of Representatives                                   United States Senate

Washington, DC 20515                                              Washington, DC 20510

Dear Speaker Pelosi, Majority Leader Schumer, and Republican Leaders McConnell and McCarthy:

We write you today on a matter of grave urgency. Once again, the United States is facing the threat of a major rail strike between the major freight railroads and 12 labor unions, the second such time in less than three months. A stoppage of rail service for any duration would be extremely damaging to American families and our economy, costing $2 billion dollars per day.¹ As provided for under federal law and consistent with past practice, Congress must be prepared to intervene before the end of the current “status quo” period on December 9 to ensure continued rail service should railroads and four unions fail to reach a voluntary agreement. A strike by any one union would assuredly result in a stoppage of national rail service.

While the recent decision to have all four unions align the end of their “status quo” to December 9 is good, in reality the decision is hardly helpful. Many businesses and communities rely on regular, uninterrupted rail service. The uncertainty of rail service during this year’s protracted contract negotiations has created enormous anxiety.² In September, the mere possibility of a rail service stoppage created significant disruptions to the timely delivery of critical goods and products. The freight railroads must safely reduce operations and secure their customers’ goods days in advance of a potential strike, meaning businesses and communities saw interruptions in the delivery of fertilizers, chlorine, and other products essential to clean water, our food supply, and electricity generation. Many businesses will see the impacts of a national rail strike well before December 9 – through service disruptions and other impacts potentially as early as December 5.³ The sooner this labor impasse ends, the better for our communities and our national economy.

A potential rail strike only adds to the headwinds facing the U.S. economy. A rail stoppage would immediately lead to supply shortages and higher prices. The cessation of Amtrak and commuter rail services would disrupt up to 7 million travelers a day. Many businesses would

¹ Association of American Railroads, “The Economic Impact of a Railroad Shutdown,” September 2022, https://www.aar.org/wp-content/uploads/2022/09/AAR-Rail-Shutdown-Report-September-2022.pdf

² AP News, “Rail strike worry prompts businesses to seek WH intervention,” by Josh Funk, October 27, 2022, https://apnews.com/article/biden-business-economy-congress-government-and-politics- 6b60d53fefc7b85f301b0a3e7011715b

³ Association of American Railroads, “Railroad Suspension of Operations” November 2022, https://www.aar.org/wp-content/uploads/2022/11/AAR-Railroad-Suspension-of-Operations-Fact-Sheet.pdf

see their sales disrupted right in the middle of the critical holiday shopping season. Even a short- term rail strike would have enormous impacts. The American agricultural community could see disruptions in transporting 6,300 carloads of food and farm products that are carried by rail daily. It would also halt the delivery of key chemicals necessary to our communities including chlorine, which is necessary for effective water and wastewater treatment operations. In many cases, businesses and communities rely on regular rail service and may not have significant reserves, even in the event of a short-term strike.

No one wins when the railroads stop running. Congress recognized their necessity to interstate commerce and America’s economic health with the passage of the Railway Labor Act and past congressional interventions in rail labor disputes when other steps fail. Indeed, Congress has intervened 18 times since 1926 in labor negotiations that threaten interstate commerce and there is no reason why Congress should deviate from this record today. While a voluntary agreement with the four holdout unions is the best outcome, the risks to America’s economy and communities simply make a national rail strike unacceptable. Therefore, absent a voluntary agreement, we call on you to take immediate steps to prevent a national rail strike and the certain economic destruction that would follow.

Thank you for your time and attention.

Sincerely,

Agribusiness Association of Iowa AgriBusiness Association of Kentucky

Agricultural & Food Transporters Conference of ATA Agricultural Retailers Association

Agriculture Transportation Coalition

Air-Conditioning, Heating, and Refrigeration Institute Airforwarders Association

Alameda Chamber & Economic Alliance Albany Area Chamber

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Auburn Area Chamber of Commerce Auto Care Association

Autos Drive America Beer Institute

Billings Chamber of Commerce Blount County Chamber of Commerce Border Trade Alliance

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Cache Valley Chamber of Commerce California Alfalfa and Forage Association California Association of Wheat Growers California Building Industry Association

California Business Properties Association (CBPA) California Business Roundtable

California Chamber of Commerce

California Farm Bureau

California Grain and Feed Association California Retailers Association California Seed Association California Trucking Association California Warehouse Association Can Manufacturers Institute

Carlisle Area Chamber of Commerce Carlsbad Chamber of Commerce Carolina Feed Industry Association Carson City Chamber of Commerce

CAWA - Representing the Automotive Parts Industry Central Fairfax Chamber of Commerce

Chamber of Commerce Hawaii Chandler Chamber of Commerce

Chehalem Valley Chamber of Commerce Chino Valley Chamber of Commerce

Coalition of California Chambers Orange County Coalition of New England Companies for Trade Coastal Agricultural Supply, Inc.

Color Pigments Manufacturers Association Colorado Motor Carriers Association Columbia Montour Chamber of Commerce

Columbia River Customs Brokers and Forwarders Association Concrete Reinforcing Steel Institute

Consumer Brands Association Consumer Technology Association Convenience Distribution Association Corn Refiners Association

Corvallis Chamber of Commerce

Council Bluffs Area Chamber of Commerce Council for Responsible Nutrition

Council of Fashion Designers of America

Council of Supply Chain Management Professionals Covington Chamber of Commerce

CropLife America

Customs Brokers and Forwarders Association of Northern California

Customs Brokers and International Freight Forwarders Association of Washington State Danville Area Chamber of Commerce

Distilled Spirits Council of the United States

Donalsonville Seminole County Chamber of Commerce and Development Authority of Seminole County

Dubuque Area Chamber of Commerce Effingham County Chamber of Commerce El Paso Hispanic Chamber

Fashion and Accessories Shippers Association

Fashion Jewelry and Accessories Trade Association Flexible Packaging Association

Florida Feed Association, Inc. Florida Retail Federation Florida Trucking Association

FMI - The Food Industry Association Foodservice Equipment Distributors Association

Footwear Distributors & Retailers of America (FDRA) Forest Resources Association

Fountain Valley Chamber of Commerce Freight Rail Customer Alliance

Fresh Produce Association of the Americas Fresno Chamber of Commerce

Gallup McKinley County Chamber of Commerce Garden Grove Chamber of Commerce

Gardner Chamber of Commerce Gateway Chambers Alliance Gemini Shippers Association Georgia Beverage Association Georgia Chamber of Commerce

Georgia Motor Trucking Association Gilbert Chamber of Commerce Glass Packaging Institute

Glendale Chamber of Commerce Glendora Chamber of Commerce Global Cold Chain Alliance

Grain and Feed Association of Illinois Grand Rapids Area Chamber of Commerce Greater Bakersfield Chamber

Greater Boston Chamber of Commerce Greater Des Moines Partnership

Greater Escondido Chamber of Commerce Greater Fairbanks Chamber of Commerce Greater Flagstaff Chamber of Commerce Greater Gainesville Chamber

Greater Lake Stevens Chamber of Commerce Greater Magnolia Parkway Chamber of Commerce Greater North Dakota Chamber

Greater Oklahoma City Chamber Greater Ontario Business Council Greater Phoenix Chamber

Greater Riverside Chambers of Commerce Greater Scranton Chamber of Commerce Greater Shreveport Chamber

Greater Spokane Incorporated

Greater Springfield Chamber of Commerce

Greater Yakima Chamber of Commerce Green Coffee Association, Inc.

Green Valley Sahuarita Chamber of Commerce Growth Energy

GWACC Chamber of Commerce Hampton Roads Chamber of Commerce Hanover Area Chamber of Commerce

Harbor Association of Industry and Commerce Harbor Trucking Association

Hardwood Federation

Harrison Regional Chamber of Commerce Hawthorne Chamber of Commerce

Health Industry Distributors Association Henderson Chamber of Commerce

Hilton Head Island-Bluffton Chamber of Commerce Home Fashion Products Association

Hospitality Minnesota

IAPD - The Performance Plastics Association Idaho Trucking Association

Illinois Retail Merchants Association Indiana Chamber of Commerce Indiana Motor Truck Association Inland Empire Economic Partnership Institute of Makers of Explosives Institute of Shortening and Edible Oils

Intermodal Association of North America International Association of Movers International Bottled Water Association

International Council of Shopping Centers (ICSC) International Dairy Foods Association International Foodservice Distributors Association International Franchise Association

International Fresh Produce Association International Housewares Association International Wood Products Association Iowa Association of Business and Industry Iowa Motor Truck Association

IWLA (International Warehouse Logistics Association) Jerome Chamber of Commerce

Kalispell Chamber of Commerce

Kansas Agribusiness Retailers Association Kansas Grain and Feed Association Kansas Motor Carriers Association

Kentucky Grocers and Convenience Store Association Kentucky Propane Gas Association

Kentucky Retail Federation

Kentucky Trucking Association Leather and Hide Council of America Lincoln City Chamber of Commerce Little Rock Regional Chamber

Long Beach Area Chamber of Commerce Longview Chamber of Commerce

Los Angeles Area Chamber of Commerce Los Angeles County Business Federation

Los Angeles Customs Brokers and Forwarders Association

Los Angeles Customs Brokers and Freight Forwarders Association Loudoun County Chamber of Commerce

Louisiana Chamber of Commerce Lynchburg Regional Business Alliance Maryland Chamber of Commerce Maryland Motor Truck Association Maryland Retailers Association

Mason City Chamber of Commerce Meat Import Council of America Mesa Chamber of Commerce Metals Service Center Institute Methanol Institute

Metro South Chamber of Commerce Michigan Agri-Business Association Michigan Chemistry Council Michigan Retailers Association Michigan Trucking Association Minneapolis Regional Chamber Minnesota Chamber of Commerce Minnesota Grain and Feed Association

Minnesota Soybean Growers Association Mississippi Economic Council - the State Chamber Mississippi Retail & Grocers Association

Missouri Chamber of Commerce and Industry Missouri Retailers Association

Mobile Chamber

Montana Chamber of Commerce Montana Retail Association Montana Trucking Association

Moore County Chamber of Commerce Moses Lake Chamber of Commerce Motorcycle Industry Council

Nacogdoches County Chamber of Commerce Naperville Area Chamber of Commerce National Association of Chemical Distributors National Association of Egg Farmers

National Association of Flour Distributors (NAFD)

National Association of Home Builders National Association of Manufacturers

National Association of Wholesaler-Distributors National Cattlemen's Beef Association

National Chicken Council

National Confectioners Association National Cotton Council

National Cotton Ginners Association National Council of Farmer Cooperatives

National Customs Brokers and Forwarders Association of America National Electrical Manufacturers Association (NEMA)

National Fisheries Institute

National Grain and Feed Association

National Independent Automobile Dealers Association (NIADA) National Industrial Transportation League

National Lumber & Building Material Dealers Association National Marine Manufacturers Association

National Milk Producers Federation National Mining Association

National Oilseed Processors Association National Pork Producers Council National Restaurant Association National Retail Federation

National Sporting Goods Association National Stone, Sand and Gravel Association National Waste & Recycling Association

National Wooden Pallet & Container Association Natural Products Association

NC Chamber

Nebraska Cooperative Council Nebraska Trucking Association Nevada Trucking Association

New Hampshire Retail Association New Jersey Motor Truck Association

New Jersey Retail Merchants Association New Jersey State Chamber of Commerce New Mexico Chamber of Commerce

New York New Jersey Foreign Freight Forwarders and Brokers Association Nogales-Santa Cruz Chamber Commerce

North American Association of Food Equipment Manufacturers (NAFEM) North American Association of Utility Distributors (NAAUD)

North American Home Furnishings Association North American Meat Institute

North American Millers' Association North American Renderers Association North Bay Leadership Council

North Carolina Agribusiness Council, Inc North Carolina Retail Merchants Association North Country Chamber of Commerce

North Dakota Grain Growers Association North Dakota Motor Carriers Association Northeast Agribusiness and Feed Alliance Northern Kentucky Chamber of Commerce Northwest Horticultural Council

Norwalk Chamber of Commerce Oceanside Chamber of Commerce Ohio AgriBusiness Association Ohio Council of Retail Merchants Ohio Trucking Association Orange County Business Council Oregon Business & Industry Oregon Trucking Association

Outdoor Power Equipment Institute Overland Park Chamber of Commerce

Pacific Coast Council of Customs Brokers and Freight Forwarders Association Pacific Egg and Poultry Association

Pacific Northwest Grain & Feed Association Pacific Seed Association

Palm Desert Area Chamber of Commerce Pasadena Chamber of Commerce

Pasco Chamber of Commerce

Payson Santaquin Area Chamber of Commerce Peanut and Tree Nut Processors Association (PTNPA) Pennsylvania Chamber of Business and Industry Pennsylvania Motor Truck Association

Pennsylvania Retailers' Association Peoria Chamber of Commerce

Pet Advocacy Network Phoenix Feeds and Nutrition

Plumbing Manufacturers International

Point of the Mountain Chamber of Commerce Portland Cement Association

PRINTING United Alliance

Promotional Products Association International (PPAI) Queen Creek Chamber of Commerce

Queens Chamber of Commerce Rail Supply Institute

Railway Supply Institute Railway Systems Suppliers, Inc Railway Tie Association

Recreational Off-Highway Vehicle Association Renew Kansas Biofuels Association

Renewable Fuels Association

Reno + Sparks Chamber of Commerce Renton Chamber of Commerce

Retail Association of Maine Retail Council of New York State

Retail Industry Leaders Association Retail Merchants of Hawaii

Retailers Association of Massachusetts Rhode Island Trucking Association, Inc. Riverton Chamber and Visitor's Center Roseville Area Chamber of Commerce RV Industry Association

Sacramento Metro Chamber Salt Lake Chamber

San Diego Customs Brokers Association San Gabriel Valley Economic Partnership San Jose Chamber of Commerce

San Pedro Chamber of Commerce

Santa Barbara South Coast Chamber of Commerce Santa Clarita Valley Chamber of Commerce

SC Timber Producers Association SC Trucking Association Schuylkill Chamber of Commerce

Scottsdale Area Chamber of Commerce Seattle Southside Chamber of Commerce Seguin Area Chamber of Commerce Shippers Coalition

Sierra Vista Area Chamber of Commerce Simi Valley Chamber of Commerce SNAC International

Society of Chemical Manufacturers & Affiliates South Bay Association of Chambers of Commerce South Carolina Chamber of Commerce

South Carolina Restaurant and Lodging Association South Carolina Retail Association

South Carolina Trucking Association South Dakota Agri-Business Association South Dakota Association of Cooperatives South Dakota Soybean Association

South Kitsap Chamber of Commerce South Salt Lake Chamber

South Valley Chamber of Commerce Southeastern Grain & Feed Association Southern California Leadership Council Southwest Valley Chamber of Commerce Specialty Equipment Market Association

Specialty Vehicle Institute of America

Sports & Fitness Industry Association (SFIA) Spring Hill Chamber of Commerce

St. Charles Regional Chamber

St. George Area Chamber of Commerce State Chamber of Oklahoma

Surprise Regional Chamber of Commerce Tag and Label Manufacturers Institute Tea Association of the U.S.A., Inc.

Tennessee Trucking Association

Texarkana USA Regional Chamber of Commerce Texas Ag Industries Association

Texas Association of Business Texas Business Leadership Council Texas Grain and Feed Association Texas Trucking Association

The Fertilizer Institute The Sulphur Institute The Toy Association

Thurston County Chamber

Torrance Area Chamber of Commerce Transportation Intermediaries Association (TIA) Travel Goods Association

Trucking Association of Massachusetts Trucking Association of New York Tucson Metro Chamber

Tulsa Regional Chamber

U.S. Apple Association

U.S. Chamber of Commerce

U.S. Durum Growers Association

U.S. Fashion Industry Association

United Corpus Christi Chamber of Commerce United Dairymen of Arizona

USA Minority Chamber of Commerce, Inc. Valve Manufacturers Association

Vegas Chamber

Vermont Retail & Grocers Association Vinyl Institute

Virginia Agribusiness Council Virginia Chamber of Commerce Wake Forest Area Chamber Washington Retail Association Washington State Potato Commission

Washington State Tree Fruit Association Washington Trucking Associations

West Valley Chamber of Commerce Alliance

West Ventura County Business Alliance West Virginia Chamber of Commerce White Pine Chamber of Commerce Wickenburg Chamber of Commerce Window & Door Manufacturers Association Wisconsin Bakers Association

Wisconsin Manufacturers & Commerce (WMC) Wisconsin Motor Carriers Association

WV Retailers Association

Wyoming State Chamber of Commerce Yorba Linda Chamber of Commerce

cc: Members of the United States Senate

cc: Members of the U.S. House of Representatives

June 14, 2022

 

The Honorable Lauren McFerran Chair

National Labor Relations Board 1015 Half Street, SE Washington, DC 20570

 

Dear Chair McFerran:

 

The undersigned organizations write to express serious concerns with several issues coming before the National Labor Relations Board (NLRB or “the Board”). Specifically, we urge you to reject the legally-flawed arguments that the Board should impose card check organizing via case law and interfere with employer speech rights that are protected under the National Labor Relations Act (NLRA).

 

In a case called Cemex, the General Counsel (GC) has asked the Board to consider overturning long-standing precedent, and ignore Supreme Court decisions and the plain text of the NLRA. With regard to card check, the GC has asked the Board to revive the long-discredited Joy Silk doctrine. Under Joy Silk, if a union presented an employer with signature cards allegedly indicating interest by 50% +1 of workers in joining a union, the burden of proof would be on the employer to demonstrate why the cards were invalid. Short of satisfying what, in the eyes of the NLRB is likely to be a high bar, the employer would be compelled to recognize the cards and commence collective bargaining.

 

In two seminal Supreme Court cases, Gissel Packing and Linden Lumber, the Court rejected the concept of mandatory card check recognition. In fact, in the Gissel decision, the Court specifically stated that “secret ballot elections are generally the most satisfactory—indeed the preferred—method of ascertaining whether a union has majority support.” Moreover, Congress has repeatedly rejected efforts to amend the NLRA to impose card check, including the Employee Free Choice Act and the Protecting the Right to Organize Act.

 

With regard to employer speech, in Cemex the GC has asked the Board to find that

mandatory staff meetings to discuss union issues are “inherently coercive” and to prohibit them. This completely disregards section 8(c) of the NLRA which states that “the expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this Act, if such expression contains no threat of reprisal or force or promise of benefit.” Leaving aside potential Constitutional issues, this section of the Act was included in 1947 specifically to protect employer speech rights, and the Board and GC are not at liberty to disregard it.

 

These issues, should the Board agree with the GC’s position, will have a real world impact on our member companies and make it far more difficult for them to manage their businesses. We urge you to reject the legally-flawed arguments put forward by the GC in Cemex and to maintain current law.

 

Thank you for your consideration.

 

 

cc: The Honorable Bobby Scott, Chairman, House Committee on Education and Labor

The Honorable Virginia Foxx, Ranking Member, House Committee on Education and Labor The Honorable Patty Murray, Chair, Senate Committee on Health, Education, Labor &

Pensions

The Honorable Richard Burr, Ranking Member, Senate Committee on Health, Education, Labor & Pensions

 

 

Signed:

 

U.S. Chamber of Commerce

 

Alabama

Enterprise Chamber of Commerce Mobile Chamber

Opelika Chamber of Commerce Prattville Area Chamber of Commerce Shoals Chamber

 

Alaska

Haines Chamber of Commerce

 

Arizona

Apache Junction Area Chamber of Commerce Chandler Chamber of Commerce

Glendale Chamber of Commerce Greater Flagstaff Chamber of Commerce Greater Oro Valley Chamber

Greater Phoenix Chamber

Green Valley Sahuarita Chamber of Commerce & Visitor Center Lake Havasu Area Chamber of Commerce

Mesa Chamber of Commerce

Nogales-Santa Cruz County Chamber of Commerce Scottsdale Area Chamber of Commerce

Sierra Vista Area Chamber of Commerce

 

Tempe Chamber of Commerce Tucson Metro Chamber

 

Arkansas

Arkansas State Chamber/AIA Little Rock Regional Chamber

Rogers Lowell Area Chamber of Commerce

 

California

Brea Chamber of Commerce California Chamber of Commerce Carlsbad Chamber of Commerce Chino Valley Chamber of Commerce Fresno Chamber of Commerce Garden Grove Chamber of Commerce Gateway Chambers Alliance

Greater Coachella Valley Chamber of Commerce Greater Conejo Valley Chamber of Commerce Greater Riverside Chambers of Commerce Laguna Niguel Chamber of Commerce

Los Gatos Chamber of Commerce Modesto Chamber of Commerce

Murrieta/Wildomar Chamber of Commerce Norwalk Chamber of Commerce

Rancho Cordova Area Chamber of Commerce Rancho Mirage Chamber of Commerce Redondo Beach Chamber of Commerce Roseville Area Chamber of Commerce

Sacramento Metropolitan Chamber of Commerce San Juan Capistrano Chamber of Commerce

San Pedro Chamber of Commerce

Santa Barbara South Coast Chamber of Commerce Santa Maria Valley Chamber of Commerce

Simi Valley Chamber of Commerce

South Bay Association of Chambers of Commerce

 

Tracy Chamber of Commerce Tulare Chamber of Commerce

Valley Industry & Commerce Association West Ventura County Business Alliance

 

Colorado

Colorado Springs Chamber and EDC

 

Grand Junction Area Chamber of Commerce

 

Delaware

Delaware State Chamber of Commerce

 

Florida

Florida Chamber of Commerce

Greater Boca Raton Chamber of Commerce Greater Zephyrhills Chamber of Commerce The Osceola Chamber

 

Georgia

Georgia Chamber of Commerce

 

Hawaii

Maui Chamber of Commerce

 

Idaho

Boise Metro Chamber

Greater Idaho Falls Chamber of Commerce Idaho Association of Commerce and Industry Idaho Chamber Alliance

 

Illinois

Chicagoland Chamber of Commerce Edwardsville/Glen Carbon Chamber of Commerce GLMV Chamber Of Commerce

Illinois State Black Chamber of Commerce Lombard Chamber of Commerce

Pekin Area Chamber of Commerce Western DuPage Chamber of Commerce

 

Indiana

Greater Lawrence Chamber Indiana Chamber of Commerce South Bend Regional Chamber

 

Iowa

Council Bluffs Area Chamber of Commerce Dubuque Area Chamber of Commerce

Iowa Association of Business and Industry Mason City Chamber of Commerce

 

Kansas

Leavenworth-Lansing Area Chamber of Commerce Wichita Regional Chamber of Commerce

 

Kentucky

Commerce Lexington Inc.

Greater Louisville Inc. - The Metro Chamber of Commerce Kentucky Chamber of Commerce

 

Louisiana

Central Louisiana Regional Chamber of Commerce Louisiana Association of Business and Industry

 

Maine

Maine State Chamber of Commerce

 

Maryland

Maryland Chamber of Commerce

 

Michigan

Greater Niles Chamber

Lansing Regional Chamber of Commerce Michigan Chamber of Commerce

 

Minnesota

Austin Area Chamber of Commerce Minnesota Chamber of Commerce

St. Cloud Area Chamber of Commerce

 

Mississippi

Mississippi Economic Council

 

Missouri

Liberty Area Chamber of Commerce Missouri Chamber of Commerce and Industry

 

Montana

Kalispell Chamber of Commerce Montana Chamber of Commerce

 

Nebraska

Kearney Area Chamber of Commerce Lincoln Chamber of Commerce

 

Nebraska Chamber of Commerce & Industry

 

Nevada

Henderson Chamber of Commerce Vegas Chamber

White Pine Chamber of Commerce/Information Center

 

New Hampshire

Business and Industry Association of New Hampshire

 

New Jersey

New Jersey State Chamber of Commerce

 

New Mexico

Gallup McKinley County Chamber of Commerce New Mexico Chamber of Commerce

 

New York

Buffalo Niagara Partnership Capital Region Chamber

North Country Chamber of Commerce The Business Council of New York State

 

North Carolina

North Carolina Chamber

 

North Dakota

Greater North Dakota Chamber

The Chamber Grand Forks / East Grand Forks

 

Ohio

Dayton Area Chamber of Commerce Marian Area Chamber of Commerce Ohio Chamber of Commerce Reynoldsburg Chamber of Commerce

Solon Chamber of Commerce/Western Reserve Safety Council Union County Chamber of Commerce

 

Oklahoma

Broken Arrow Chamber of Commerce The State Chamber of Oklahoma

 

Oregon

Heppner Chamber of Commerce Oregon Business & Industry

Oregon State Chamber of Commerce Salem Area Chamber of Commerce

 

Pennsylvania

Hanover Area Chamber of Commerce Pennsylvania Chamber of Business and Industry Schuylkill Chamber of Commerce Williamsport/Lycoming Chamber of Commerce

 

Rhode Island

Northern Rhode Island Chamber of Commerce

 

South Carolina

Hilton Head Island-Bluffton Chamber of Commerce South Carolina Chamber of Commerce

Greater Sioux Falls Chamber of Commerce

 

Tennessee

Chattanooga Area Chamber of Commerce Tennessee Chamber of Commerce & Industry

 

Texas

Abilene Chamber of Commerce Central Fort Bend Chamber

Greater Magnolia Parkway Chamber of Commerce Greater Waco Chamber of Commerce

Ingleside Chamber of Commerce Longview Chamber of Commerce

Nacogdoches County Chamber of Commerce Rowlett Area Chamber & Visitors Center San Antonio Chamber of Commerce Sherman Chamber of Commerce

Texarkana Chamber of Commerce

 

Utah

Salt Lake Chamber

South Salt Lake Chamber of Commerce

 

Virginia

Hopewell/Prince George Chamber of Commerce

 

Loudoun County Chamber of Commerce Virginia Chamber of Commerce

 

Washington

Greater Issaquah Chamber of Commerce Greater Yakima Chamber of Commerce Moses Lake Chamber of Commerce

 

West Virginia

Weirton Area Chamber of Commerce West Virginia Chamber of Commerce

 

Wisconsin

Greater Green Bay Chamber Oshkosh Chamber of Commerce

Wisconsin Manufacturers & Commerce

 

Wyoming

Greater Cheyenne Chamber of Commerce

June 15, 2022

 

 

To the Members of the United States Congress:

 

On behalf of the undersigned state and local chambers of commerce from 46 states, we strongly oppose recent legislation that would fundamentally rewrite America’s antitrust laws to protect competitors rather than consumers. Bills like S. 2992, the “American Innovation and Choice Online Act,” and S. 2710, the “Open App Markets Act,” would lead to higher prices and fewer choices for consumers, discourage vigorous competition, and create different rules for American companies based on arbitrary criteria like market capitalization, while imposing no restraints on most foreign companies. Moreover, enactment of any of these bills would intensify calls for the federal government to pick winners and losers in the economy – an endless slippery slope.

 

For the past four decades, antitrust law has served as a successful example of bipartisanship, with members of both parties agreeing that the law should protect the welfare of consumers, rather than particular competitors. This consensus has created a stable legal framework across congresses and presidential administrations that has allowed America’s innovative economy to thrive and American consumers to benefit from quality goods and services at low prices.

 

This stability is threatened. The antitrust bills currently under consideration would shift the focus of antitrust from promoting competition to protecting competitors from competition. They would punish some companies for competing vigorously while leaving other companies free to engage in the exact same conduct. As a result, these bills would give federal agencies the power to micromanage large sectors of the economy. In the future, the federal government would decide whether a company can innovate, lower prices, or offer free shipping and other services – or whether such vigorous competition is unfair.

 

These bills would harm consumers by raising prices, fueling inflation, reducing investment, and damaging innovation. For instance, S. 2992 would bar covered companies from using data to develop competing products that are often less expensive and would bar certain companies from providing consumers with information about lower-cost alternatives. It may well ban companies from providing certain services to consumers at no cost.

 

Instead of rewriting the antitrust laws to protect competitors, we encourage Congress to ensure that federal agencies have the resources they need to address potential anticompetitive conduct in the marketplace, subject to appropriate oversight. Through this approach, Congress could preserve competition in the economy while maintaining the long bipartisan consensus that has served America well.

 

Sincerely,

 

National

 

U.S. Chamber of Commerce

 

Alabama

 

Enterprise Chamber of Commerce Prattville Area Chamber of Commerce Shoals Chamber

 

Alaska

 

Haines Chamber of Commerce

 

Arizona

 

Apache Junction Area Chamber of Commerce Arizona Chamber of Commerce & Industry Chandler Chamber of Commerce

Glendale Chamber of Commerce Greater Flagstaff Chamber of Commerce Greater Oro Valley Chamber

Greater Phoenix Chamber

Lake Havasu Area Chamber of Commerce Mesa Chamber of Commerce

Nogales-Santa Cruz County Chamber of Commerce

Scottsdale Area Chamber of Commerce Sierra Vista Area Chamber of Commerce Surprise Regional Chamber of Commerce Tempe Chamber of Commerce

Tucson Metro Chamber

 

Arkansas

 

Arkansas State Chamber/AIA Little Rock Regional Chamber

Rogers Lowell Area Chamber of Commerce

 

California

 

Bay Area Council

Brea Chamber of Commerce California Chamber of Commerce Carlsbad Chamber of Commerce Fremont Chamber of Commerce

Fresno Chamber of Commerce Garden Grove Chamber of Commerce Gateway Chambers Alliance

 

Greater Coachella Valley Chamber of Commerce

Long Beach Area Chamber of Commerce Los Angeles Area Chamber of Commerce Los Angeles County Business Federation Modesto Chamber of Commerce Murrieta/Wildomar Chamber of Commerce North San Diego Business Chamber Norwalk Chamber of Commerce Oceanside Chamber of Commerce

Orange County Business Council

Palos Verdes Peninsula Chamber of Commerce Rancho Cordova Area Chamber of Commerce Rancho Mirage Chamber of Commerce Redondo Beach Chamber of Commerce Roseville Area Chamber of Commerce

San Diego Regional Chamber of Commerce San Jose Chamber of Commerce

San Juan Capistrano Chamber of Commerce San Pedro Chamber of Commerce

Santa Barbara South Coast Chamber of Commerce

Santa Clarita Valley Chamber of Commerce Santa Maria Valley Chamber of Commerce Simi Valley Chamber of Commerce

South Bay Association of Chambers of Commerce

Torrance Area Chamber of Commerce Tracy Chamber of Commerce

Tulare Chamber of Commerce

USA Minority Chamber of Commerce Valley Industry & Commerce Association West Ventura County Business Alliance

 

Colorado

 

Colorado Springs Chamber and EDC

Grand Junction Area Chamber of Commerce Greater Woodland Park Chamber of Commerce Vail Valley Partnership

 

Delaware

 

Delaware State Chamber of Commerce

 

Florida

 

Stuart/Martin County Chamber of Commerce The Osceola Chamber

 

Georgia

 

Ashburn Turner County Chamber of Commerce

Barrow County Chamber of Commerce, Inc. Georgia Chamber of Commerce

Gwinnett Chamber of Commerce

 

Hawaii

 

Chamber of Commerce Hawaii

 

Idaho

 

Greater Idaho Falls Chamber of Commerce Idaho Chamber Alliance

 

Illinois

 

Chicagoland Chamber of Commerce Edwardsville/Glen Carbon Chamber of

Commerce

GLMV Chamber of Commerce

Greater Springfield Chamber of Commerce Illinois Chamber of Commerce

Illinois State Black Chamber of Commerce Lombard Chamber of Commerce

Pekin Area Chamber of Commerce Western DuPage Chamber of Commerce

 

Indiana

 

Greater Lawrence Chamber Indiana Chamber of Commerce South Bend Regional Chamber

Wayne County Area Chamber of Commerce

 

Iowa

Council Bluffs Area Chamber of Commerce Iowa Association of Business and Industry Mason City Chamber of Commerce

 

Kansas

 

Leavenworth-Lansing Area Chamber of Commerce

 

Kentucky

 

Commerce Lexington Inc.

Greater Louisville Inc. - The Metro Chamber of Commerce

Kentucky Chamber of Commerce

 

Louisiana

 

Central Louisiana Regional Chamber of Commerce

 

Maine

 

Maine State Chamber of Commerce

 

Maryland

 

Maryland Chamber of Commerce Olney Chamber of Commerce

 

Michigan

 

Greater Niles Chamber

Lansing Regional Chamber of Commerce Michigan Chamber of Commerce

 

Minnesota

 

Austin Area Chamber of Commerce Minnesota Chamber of Commerce

St Cloud Area Chamber of Commerce

 

Missouri

 

Missouri Chamber of Commerce and Industry

 

Mississippi

 

Mississippi Economic Council

 

Montana

 

Kalispell Chamber of Commerce Montana Chamber of Commerce

 

North Carolina

 

North Carolina Chamber

 

North Dakota

 

Chamber Grand Forks / East Grand Forks Greater North Dakota Chamber

 

Nebraska

 

Kearney Area Chamber of Commerce Nebraska Chamber of Commerce & Industry

 

Nevada

White Pine Chamber of Commerce

 

New York

 

Buffalo Niagara Partnership

Business Council of New York State, Inc. Capital Region Chamber

Greater Binghamton Chamber of Commerce Greater Rochester Chamber of Commerce North Country Chamber of Commerce

 

Ohio

 

Dayton Area Chamber of Commerce Marian Area Chamber of Commerce Ohio Chamber of Commerce Reynoldsburg Chamber of Commerce

Solon Chamber of Commerce/Western Reserve Safety Council

Sunbury Big Walnut Area Chamber of Commerce

Union County Chamber of Commerce

 

Oklahoma

 

 

 

Henderson Chamber of Commerce Reno + Sparks Chamber of Commerce Vegas Chamber

 

New Hampshire

 

Lakes Region Chamber of Commerce

 

New Jersey

Broken Arrow Chamber of Commerce State Chamber of Oklahoma

 

Oregon

 

Heppner Chamber of Commerce Portland Business Alliance

 

Pennsylvania

 

 

 

African American Chamber of Commerce of New Jersey

Greater Westfield Area Chamber of Commerce New Jersey State Chamber of Commerce

 

New Mexico

 

Gallup McKinley County Chamber of Commerce

New Mexico Chamber of Commerce

Hanover Area Chamber of Commerce Juniata River Valley Chamber of Commerce Pennsylvania Chamber of Business and

Industry

Schuylkill Chamber of Commerce Williamsport/Lycoming Chamber of

Commerce

 

Rhode Island

 

Northern Rhode Island Chamber of Commerce

 

South Dakota

 

Greater Sioux Falls Chamber of Commerce

 

Tennessee

 

Chattanooga Area Chamber of Commerce Gallatin Area Chamber of Commerce

Seguin and Guadalupe County Area Chamber of Commerce

 

Texas

 

Abilene Chamber of Commerce Central Fort Bend Chamber

Greater Magnolia Parkway Chamber of Commerce

Greater Port Arthur Chamber of Commerce Greater Waco Chamber of Commerce Ingleside Chamber of Commerce Longview Chamber of Commerce Mansfield Area Chamber of Commerce North Texas Commission

Rowlett Area Chamber & Visitors Center Sherman Chamber of Commerce

South Padre Island Chamber of Commerce Texarkana Chamber of Commerce

 

Utah

Greater Yakima Chamber of Commerce Moses Lake Chamber of Commerce Washington Retail Association

 

West Virginia

 

Weirton Area Chamber of Commerce West Virginia Chamber of Commerce

 

Wisconsin

 

Oshkosh Chamber of Commerce Wisconsin Manufacturers & Commerce

 

Wyoming

 

Greater Cheyenne Chamber of Commerce Sheridan County Chamber of Commerce

 

 

Salt Lake Chamber

South Salt Lake Chamber of Commerce South Valley Chamber

 

Virginia

 

Hopewell/Prince George Chamber of Commerce

Loudoun County Chamber of Commerce Virginia Chamber of Commerce

 

Washington

 

Greater Issaquah Chamber of Commerce