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BPAA Federal Policy Update - June 30

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LABOR

  • SCOTUS Stands Up for Public-Sector Workers: Public-sector unions have thrived, in large part, by collecting fees from government employees who do not wish to be associated with them. Today, in a victory for the First Amendment, the Supreme Court put an end to this practice in a 5–4 decision written by Justice Samuel Alito. The case — Janus v. AFSCME — overturns 1977’s Abood, the Court’s ham-handed attempt to reconcile the financial claims of public-sector unions with the constitutional rights of public employees. Under that ruling, while public-sector workers couldn’t be compelled to join a union or pay for the union’s political activities, they could be required to pay “agency fees” to cover labor activities such as negotiating contracts and handling grievances. In the present case, the fees amounted to nearly 80 percent of full union dues. As the Court noted today, this arrangement is not satisfactory. For one thing, the distinction between political and labor activities is difficult to draw; non-members in this case were told they had to support “lobbying,” “social and recreational activities,” “advertising,” “membership meetings and conventions,” “litigation,” and other services that “may ultimately inure to the benefit of the members of the local bargaining unit.” And for another, in the public sector, even unions’ most basic labor activities are inherently political as well: “It is impossible to argue that the level of . . . state spending for employee benefits . . . is not a matter of great public concern,” Alito wrote, quoting another recent decision.
  • Supreme Court Deals Blow To Government Unions: In a blow to organized labor, the U.S. Supreme Court ruled Wednesday that government workers who choose not to join a union cannot be charged for the cost of collective bargaining. The vote was a predictable 5-4. Justice Samuel Alito wrote the majority opinion with the court's conservatives joining him. "Under Illinois law, public employees are forced to subsidize a union, even if they choose not to join and strongly object to the positions the union takes in collective bargaining and related activities," Alito wrote. "We conclude that this arrangement violates the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern." The decision reverses a 4-decades-old precedent and upends laws in 22 states. It also comes on the last day of this Supreme Court term, adding an exclamation point on the final sentence of a chapter that began with the appointment of conservative Justice Neil Gorsuch and saw conservative wins in decision after decision. This term was also an affirmation of the risky political gambit played by Senate Majority Leader Mitch McConnell, who denied a confirmation hearing for Judge Merrick Garland, President Barack Obama's pick for the court after Justice Antonin Scalia died. Read more at NPR.
  • Trump administration finalizes rule to expand association health plan access: The Trump administration's decision to expand access to association health plans will encourage healthy people to seek the cheaper, less robust coverage options but also could lead millions to forgo coverage, according to Labor Department officials. The agency on Tuesday unveiled the final version of its association plan rule that allows more small businesses and self-employed workers to band together to buy insurance. The final rule is part of the administration's plan to encourage competition in the health insurance markets and lower the cost of coverage. It broadens the definition of an employer under the Employee Retirement Income Security Act of 1974, or ERISA, to allow more groups to form association health plans and bypass rules under the Affordable Care Act. ERISA is the federal law that governs health benefits and retirement plans offered by large employers. "The Trump administration hopes to level the playing field between large companies and small businesses by expanding access to association health plans," Labor Secretary Alexander Acosta said on a call with reporters Tuesday. "This expansion will offer millions of Americans more affordable coverage options." Read more at Modern Healthcare.
  • President Trump unveiled his administration's plan to reorganize the federal government during a Cabinet meeting on Thursday, June 21, including plans to merge the Departments of Education and Labor into a single agency, rename the Department of Health and Human Services to the Department of Health and Public Welfare, and reform the housing finance system (pages 75-77). Be smart: This massive proposed shakeup, titled “Delivering Government Solutions in the 21st Century: Reform Plan and Reorganization Recommendations,” will make it easier to cut and revise several domestic agencies. Key changes, outlined on page 15 of the proposal are:
    • "Merge the Departments of Education and Labor into a single Cabinet agency, the Department of Education and the Workforce."
    • "Move the non-commodity nutrition assistance programs currently in the U.S. Department of Agriculture’s (USDA) Food and Nutrition Service into the Department of Health and Human Services — which will be renamed the Department of Health and Public Welfare."
    • "Move the Army Corps of Engineers (Corps) Civil Works out of the Department of Defense (DOD) to the Department of Transportation (DOT) and Department of the Interior (DOI)."
    • "Reorganize the USDA’s Food Safety and Inspection Service and the food safety functions of HHS’s Food and Drug Administration (FDA) into a single agency within USDA."
    • "Move USDA’s rural housing loan guarantee and rental assistance programs to the Department of Housing 
  • Vocational Programs Get Boost From Congress: Congress is poised to renew a bill providing incentives for states to increase their vocational education offerings at high schools and community colleges, a rare point of bipartisan agreement on Capitol Hill. The bill represents a priority for the White House, which has made bolstering job-training programs a centerpiece of its domestic agenda. Vocational education programs are geared toward filling openings that require technical skills but not necessarily a college education, and such jobs make up a growing sector of the economy. Should the legislation reach President Donald Trump’s desk this summer, he and Republicans can tout it ahead of the November elections as a bipartisan achievement that occurred under their leadership, though Democrats can claim credit as well. The bill, which reauthorizes the Perkins Career and Technical Education Act, passed the House last year on a voice vote, attracting bipartisan approval that is unusual for major legislation these days. The Senate is also expected to give the bill its unanimous consent, likely in coming days. It encourages states to fund high-school programs in such fields as culinary arts, information technology and welding, where students can learn a trade and graduate with a job or relevant credits to put them ahead in higher education settings. The six-year, $1.2 billion bill also attaches funding for such programs to performance goals, including graduation rates and job placements. Read more at the Wall Street Journal.

MUSIC LICENSING/ASCAP & BMI

  • Senate Judiciary Approves Music Licensing Bill: The Senate Judiciary Committee has unanimously passed the Music Modernization Act. The House has already unanimously passed similar legislation. It now moves on to the Senate, where it is expected to pass as well. The bill is a carefully struck compromise that creates a framework for better compensating artists for digital plays of their music and making it easier for music rights organizations to collect those fees from distributors of streamed music, like Pandora and Spotify, as they do from traditional plays on TV and radio. The legislation has been billed as the most significant change in music licensing laws in decades and has drawn praise from a chorus of stakeholders. It actually incorporates a trio of bills. The base Modernization Act creates a single licensing entity for reproduction rights for digital uses, like those of Spotify, Pandora, Google, Apple and Amazon. It also randomly assigns judges to preside over ASCAP and BMI rate-setting cases, according to the Recording Industry Association of America (RIAA). The package also includes The CLASSICS (Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society) Act, which compensates artists for pre-1972 recordings, which had previously not been eligible for digital royalties. Read more at MultiChannel.
  • Senate Judiciary Approves the Music Modernization Act — With Significant Changes: The Senate Judiciary Committee has just approved a markup of the Music Modernization Act, one that steps up transparency over the Mechanical Licensing Collective (MLC) — among many, many other changes. The Music Modernization Act (MMA) just got a facelift — or at least some nips-n-tucks. The Senate Judiciary Committee’s marked-up bill calls for greater transparency for the Mechanical Licensing Committee (MLC), and introduces stipulations related to the Department of Justice’s consent decrees that impact ASCAP and BMI. Here’s a quick look at the modifications to the House-approved Music Modernization Act:
    • The Mechanical Licensing Collection, or MLC, will be subject to increased transparency provisions. That includes requirements to share more information related to collections and administration activities, including its financials, song-matching database, and unclaimed royalty distributions.
    • The CLASSICS Act, a contested bill related to pre-1972 oldies recordings, will remain in the Music Modernization Act bundle. That could create some problems ahead, with a competing ACCESS to Recordings Act potentially threatening broader MMA passage.
    • The U.S. Department of Justice will keep Congress apprised of various changes related to current consent decrees that dictate statutory royalty rates to ASCAP and BMI. If the DOJ ultimately dismisses the consent decrees, then they would be required to notify Congress of the coming change.

TIP POOLING 

  • Supreme Court won't review tip pooling regs: The U.S. Supreme Court declined to take up two cases challenging the U.S. Department of Labor's (DOL) tip pooling regulations June 25. The appealed opinion — addressing National Restaurant Association v. DOL and Wynn Las Vegas, LLC v. Joseph Cesarz — came from the 9th U.S. Circuit Court of Appeals and upheld the agency's Obama-era rule limiting tip-sharing arrangements. The High Court's action leaves intact a split among the federal circuit courts of appeal.

FOOD AND BEVERAGE

  • Kentucky bourbon targeted in trade war: Retaliatory trade actions against the U.S. in response to President Trump's steel and aluminum tariffs are poised to inflict significant economic damage on Senate Majority Leader Mitch McConnell's home state of Kentucky and its bourbon industry. Last week, the European Union imposed a 25 percent duty on all U.S. whiskey products, part of $3.8 billion in tariffs on American goods. That came after Mexico slapped on a similar tariff for American whiskey exports, which amounted to $13.4 million last year. And starting July 1, Canada will impose a 10 percent tariff on all U.S. whiskey products, valued at $48.7 million in 2017. But despite pressure at home to fight back against the tariffs targeting an industry synonymous with Kentucky, McConnell has not spoken out forcefully against the administration's trade strategy, beyond saying in a speech in Louisville earlier this month that Trump's steel and aluminum tariffs "will not be good for the economy." Read more at The Hill.

TAX

  • Trump nominee vows to restore 'trust' in IRS: Trump nominee vows to restore 'trust' in IRS: President Trump's nominee to lead the IRS pledged in his confirmation hearing on Thursday to restore "trust" in the agency. "If I am privileged to serve as commissioner, my overriding goal will be to strengthen and rebuild the trust between the IRS, the American people and their representatives in Congress," IRS Commissioner nominee Chuck Rettig told the Senate Finance Committee. "That trust is critical to all that the IRS does, particularly as it works with the Department of Treasury to implement once-in-a-generation tax-reform legislation enacted by Congress last year.” Senators from both parties pressed Rettig to keep the agency free from political interference, and he in turn vowed to run the IRS in an "impartial and unbiased manner." "I would hope that the members of this committee and the American taxpayers see me as staunchly independent," he told the lawmakers. Read more at The Hill.
  • ‘Tax Reform 2.0’ Coming After July 4 Break: Brady: House Ways and Means Committee Chairman Kevin Brady said Tuesday that the tax writing committee should have a draft “tax reform 2.0” package addressing charitable contributions and retirement savings measures ready to circulate to House Republicans after the July 4 recess. Speaking at an event held at The Washington Post called “Tax Reform in America: A Six-Month Report,” Brady, R-Texas, said that the “centerpiece” of a tax reform 2.0 proposal will address “permanency” for middle-class families and small businesses. During July, Brady said, Ways and Means members will be “listening to our colleagues in the House about what they want to see in 2.0 and incorporating those changes,” adding that he anticipates a “legislative outline” to be released in early August with votes in the fall. Brady continued that he doesn’t envision 2.0 “as one bill — I see it as a package of two, three or four approaches with permanency being one of them.” Read more at ThinkAdvisor.
  • The New 1040 Tax Form: It’s Shorter. But There Are More Forms to Fill Out: The IRS is about to release the new version of the Form 1040, the main form used in individual taxation. According to a version reviewed by The Wall Street Journal, here’s a quick guide to what is expected to change: Read Here.

 

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