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Labor Fines for Current Violations Kept in White House Plan (1)

Oct. 28, 2021, 4:01 PMUpdated: Oct. 28, 2021, 8:06 PM

The White House is moving forward with a proposal to fine employers for existing violations of labor laws, while dropping penalties for new labor violations, sources familiar with the negotiations said.

The latest labor penalty proposal is included Democrats’ sweeping tax and social spending package released Thursday by the House Rules Committee, confirming earlier reports from sources familiar with the negotiations.

It’s not clear yet whether the administration’s proposal will gain the support of the party’s progressive and moderate wings. Democratic leaders say elements of the bill could change as it moves forward

The House Democrats’ original proposal would have attached financial penalties to newly defined violations of the National Labor Relations Act, like “captive audience” meetings to discourage workers from joining union organizing efforts. Two sources briefed on the negotiations said those penalties will be cut from the package because they were deemed unlikely to pass muster with the Senate official who oversees rules for reconciliation, the procedure Democrats are using to advance the bill. The draft text of the proposal confirms those reports.

The bill retains provisions from House Democrats that would establish penalties for existing unfair labor practices, enabling the National Labor Relations Board to collect penalties of $50,000, with that fine doubling in some cases.

FLSA, OSHA Fines

An original proposal to greatly increase penalties under the Fair Labor Standards Act, to be used against employers violating child labor and overtime laws, is also still in the package, the sources said and the text confirmed.

The U.S. Department of Labor’s Wage and Hour Division, which enforces the FLSA, would see its enforcement power bolstered by the fines which were increased by more than tenfold. For example, maximum financial penalties for employers where child labor law violations cause death would jump to $601,150 from $50,000.

Greatly increased Occupational Safety and Health Administration fines also made the cut. The maximum fine for willful or repeat violations, for example, would increase to $700,000 from $136,532, and serious violations would rise from $13,653 to $70,000.

Senate Rules

Lawmakers are advancing the bill via the reconciliation process, allowing it to be passed with a simple majority in both the House and Senate. However, that also makes proposals subject to a test of whether items are solely budget-related.

A senior Republican labor committee staffer said GOP lawmakers will challenge whether the financial penalties for existing unfair labor practices hew closely enough to the budget. The Republicans won’t, however, challenge the ratcheted fines under the FLSA and those levied by OSHA, the GOP aide said.

A coalition of more than 600 business groups rallied against including new NLRA fines in the reconciliation package.

The latest legislative proposal also retains budget increases for labor enforcement agencies. The National Labor Relations Board would receive $350 million to be spent through fiscal 2026, the Wage and Hour Division would receive $405 million, OSHA would receive $707 million, and the U.S. Equal Employment Opportunity Commission, which enforces workplace anti-bias laws, would receive $321 million to be spent through fiscal 2026.

The DOL’s Office of Federal Contract Compliance Programs, which enforces anti-discrimination laws and affirmative action obligations for federal contractors, would receive $201 million.

—With assistance from Robert Iafolla and Bruce Rolfsen

(Updates with additional reporting and detail throughout. )

To contact the reporters on this story: Ben Penn in Washington at bpenn@bloomberglaw.com; Paige Smith in Washington at psmith@bloomberglaw.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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