Regulatory and Legal Reform

The NAM is preparing manufacturers for a possible Emergency Temporary Standard that could be issued at the outset of the Biden administration.

What it is: An ETS is a set of mandatory rules and regulations for employers, issued by the Occupational Safety and Health Administration and the Department of Labor.

What it’s for: An ETS would be intended to protect the health and safety of workers. While manufacturers are encouraged to follow CDC guidance as they develop and implement their own tailored plans to protect against COVID-19, an ETS could impose compulsory requirements on manufacturing operations, HR departments and safety protocols.

What it includes: There’s no concrete information yet about the text of an ETS, but possible new requirements for manufacturers might include:

• Written plans for stopping the spread of COVID-19;
• A comprehensive assessment of COVID-19 hazards throughout the workplace and a clear plan for diminishing or eliminating those hazards;
• Expanded definitions of terms like “positive COVID-19 case,” “high-risk exposure period” and “physical distancing”;
• Requirements that employees are tested for COVID-19 in some scenarios and paid for the time spent taking tests;
• Increased recordkeeping and reporting on safety procedures; and
• Additional requirements for employees to receive paid leave and testing.

What we’re doing: The NAM has already begun its outreach to the incoming Biden administration to discuss the workplace investments, increased safety protocols and best practices that manufacturers have implemented during the pandemic.

• As part of those conversations, the NAM will also make sure the incoming administration understands the impact of an ETS on vaccine and therapeutics production, supply chains and other essential manufacturing operations.
• It will also educate NAM members via webinars, direct outreach and labor and employment updates so they can be prepared for any changes.

The last word: “Manufacturers are playing a critical role in fighting this pandemic, even as they go above and beyond to support the health and safety of their employees,” said NAM Director of Labor and Employment Policy Drew Schneider.

“The NAM will never stop working to ensure manufacturers have the tools and support they need to take on that challenge. And we will make sure that the incoming administration, the Labor Department and OSHA have the best possible information about how their actions impact the manufacturing industry and the nation.”

Congress’s new funding package, which covers COVID-19 relief and much more, will provide Americans with much-needed security during this holiday season. Manufacturers are among the major beneficiaries, as Congress recognized that the sector is essential to keeping our country healthy, fed and functional throughout the pandemic.

The NAM’s policy team reports that legislators closely followed the NAM’s recommendations in a wide variety of policy areas. Here are a few highlights.

The Paycheck Protection Program: This program was reauthorized with $284 billion in new funding and extended through March 31, 2021. It also lets businesses choose when to spend the loans, expands the list of acceptable uses for the loans and simplifies loan forgiveness.

Taxes: The last round of stimulus, called the CARES Act, included a payroll tax credit for “eligible employees” affected by the virus. This new package extends that credit through June 30, 2021, while also upping the percentage from 50% to 70%. Meanwhile, it increases the amount of workers’ pay that qualifies for this tax credit from $10,000 for the year to $10,000 per quarter.

And that’s not it for taxes. This package also extends or makes permanent many other provisions. For example, it extends the deadline by which workers must pay back deferred payroll taxes, while also extending the temporary, refundable tax credit for small and medium-sized employers that are providing required paid leave.

Labor: As you’ve probably read by now, the package gives workers on unemployment $300 per week on top of their state benefits. These payments will last until March 14, 2021.

Vaccines/COVID-19 care: And now for the measures that will help end this pandemic for good. The package includes $20 billion for the purchase of vaccines, making them free for all who need them; $8 billion for vaccine distribution; $20 billion to assist states with testing; and a $20 billion distribution from the existing provider relief fund.

And we’re still not finished . . .

Long-term fixes: Congress also included manufacturing priorities that predate the pandemic and remain absolutely crucial.

• Energy: This is the big one—the first comprehensive modernization of U.S. energy policy in well over a decade, and an upgrade that the NAM has long fought for. We can’t cover all of its many provisions here, but they include everything from energy storage to nuclear development to carbon capture to renewable energy. It’s a major victory for manufacturers and the NAM.
• Environment: The legislation also includes a provision for phasing down hydrofluorocarbons—greenhouse gases used in refrigeration. Relatedly, it creates new R&D programs for technologies that can reduce greenhouse gas emissions in the power sector. Both are high priorities for manufacturers’ sustainability efforts.
• Anti-counterfeiting measures: These measures are designed to protect manufacturers’ intellectual property, and they include the empowerment of the Federal Trade Commission to take action against bad actors exploiting the pandemic.
• Transportation: As part of this package, Congress passed the bipartisan Water Resources Development Act, which provides a two-year authorization for ports, inland waterways and important water infrastructure investments.
• Broadband: And lastly, the package funds the improvement of digital infrastructure and broadband access, including for underserved and rural populations. It also includes a support program for those experiencing hardship due to COVID-19.

What’s missing? Since you ask, the package does not include the liability protections that the NAM advocated. But the NAM will continue working on this priority next year.

The last word: NAM President and CEO Jay Timmons said of the legislation, “Some are stirring up controversy over aspects of the spending text to drum up ratings or score political points. But the bottom line is manufacturers—and all Americans—need relief now. This package gives manufacturers and many other Americans a lifeline in the face of the disaster this pandemic continues to wreak on lives and livelihoods. There is unfinished work for sure. But it makes no sense to hold up an action that can bring real relief to this country.”

You can read a more expansive list of policy wins here.

Washington, D.C. – Today, the EPA announced its final decision to retain the clean air standards for ozone. NAM Vice President of Energy and Resources Policy Rachel Jones released the following statement:

“Manufacturers’ commitment to clean air is why we support the EPA’s decision to keep the ozone standards established under the Obama administration. This decision comes after careful review and consideration of the most current available scientific evidence and risk and exposure information, as well as consultation with the agency’s independent science advisors.

“This decision, based on sound science, advances important goals while supporting sustainable domestic growth. We have long supported smart policies that protect the environment and improve public health, and the policy announced today is the right approach.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.2 million men and women, contributes $2.35 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 62% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org

Washington, D.C. – National Association of Manufacturers Senior Vice President, General Counsel and Corporate Secretary Linda Kelly released the following statement on the U.S. District Court for the Northern District of California’s order to strike down the Trump administration’s recent changes to the H-1B visa program:

“This ruling is a win for the hundreds of thousands of American-based workers who are essential to the recovery and renewal of our industry and our economy. We need high-skilled innovators now more than ever, and the administration’s attempt to rush these rules forward without properly considering their impact on thousands of people on the front lines of developing vaccines and treatments and making critical supplies, as well as saving lives in our hospitals, could have devastating consequences at a critical moment in our history. We’re pleased that the court’s decision recognizes the critical role the H-1B program plays in our manufacturing economy.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.2 million men and women, contributes $2.35 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 62% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

While everyone is talking about the election results, let’s not forget about the slow and steady slog for better government—by which we mean, a stable and predictable regulatory system that encourages manufacturing growth instead of hampering it.

Recently, NAM President and CEO Jay Timmons made the case for government-wide regulatory reform in a letter to the House Committee on Oversight and Reform. Here’s what he had to say.

The numbers: If you had any doubts that manufacturers pay a lot for regulatory compliance, lay them to rest:

• “On average, manufacturers pay $19,564 per employee to comply with federal regulations, or nearly double the $9,991 per employee costs borne by all firms as a whole.”
• “This burden falls heavily on small businesses; of the 248,039 firms in the manufacturing sector in 2017, all but 3,914 had fewer than 500 employees, with three-quarters of these firms having fewer than 20 employees.”
• “For the smallest firms (i.e., those with fewer than 50 employees), regulatory costs equal $34,671 per employee.”

A recap: Timmons also reminded the House that many of the NAM’s regulatory recommendations have already become policy—and that it’s working just as hard to support manufacturers during the COVID-19 pandemic.

• In 2017, the NAM submitted a list of 132 suggested reforms to the Trump administration—and since then, 89% of those suggestions have been addressed or adopted.
• In April of this year, the NAM released the “American Renewal Action Plan,” which included regulatory proposals designed to strengthen America’s response to COVID-19 and ensure manufacturers are poised to lead the recovery and renewal of the American economy. Dozens of these proposals have also been adopted—and the NAM is working on more.

What’s next: Timmons’ letter came with a list of proposals for further reforms, which will support manufacturers while benefitting consumers and protecting our environment. These include:

• Modernizing the Administrative Procedure Act, which governs federal rulemaking;
• Providing clarity on the difference between legally binding rules and nonbinding guidance;
• Ensuring that regulatory enforcement and adjudication is fair, efficient and transparent;
• Tackling the growing trade of dangerous counterfeits and other illicit goods; and
• Addressing international regulatory burdens.

The last word: “These proposals serve as a roadmap to smart regulation,” said NAM Director of Regulatory Policy Graham Owens. “These bipartisan measures would create a more effective and efficient regulatory system better equipped to protect worker safety, public health and our environment—while providing manufacturers with the regulatory certainty and uniformity necessary to unleash our country’s economic potential.”

You can read the full letter—and the entire list of recommendations—here.

The NAM is intervening in a lawsuit to help the Securities and Exchange Commission defend a hard-won SEC rule that protects manufacturers and increases oversight of proxy advisory firms.

The background: Investment advisers and fund managers can vote on the policies of companies in which their funds invest. These fund managers often turn for assistance to proxy advisory firms, which recommend which way to vote. The problem is that proxy advisory firms have never been subject to SEC oversight, and as a result, their work has relied on questionable methodologies and ignored conflicts of interest—often causing problems for manufacturers and their shareholders.

The win: After years of NAM advocacy, the SEC approved a landmark rule to regulate proxy advisory firms and increase transparency about the firms’ conflicts of interests and one-size-fits-all methodologies. This was a big victory for the NAM and for manufacturers nationwide.

The lawsuit: Now, proxy advisory firm Institutional Shareholder Services has sued the SEC to stop the rule from going into effect—and the NAM is stepping in to protect the progress it’s made.

• What we’re doing: The NAM is filing a motion to intervene in the case—which essentially means that, if the motion is granted, it will become a party to the lawsuit, mounting its own defense of the rule in court and participating on the same schedule as the SEC. By taking on the role of intervenor, the NAM will be better able to protect members’ interests and ensure the court understands why the rule is vital to manufacturers.

The bottom line: “The SEC’s rule on proxy advisory firms wasn’t just a victory for the NAM; it was a victory for accountability and transparency, and a victory for manufacturers across the country,” said NAM Senior Litigation Counsel Erica Klenicki. “We are committed to defending this rule in court to ensure that manufacturers’ voices are heard and that manufacturers and manufacturing workers have the protection and support they deserve.”

Washington, D.C. – The National Association of Manufacturers filed a motion to intervene in the lawsuit brought by Institutional Shareholder Services against the Securities and Exchange Commission on a recent rule that increases transparency and accountability for so-called “proxy advisory firms.” The NAM is seeking intervenor status to defend the SEC’s rulemaking and to protect publicly traded manufacturers from proxy firms’ conflicts of interest and outsized impact on corporate governance.

“The NAM strongly supported the SEC’s recent rule increasing oversight of proxy advisory firms—a targeted, well-reasoned regulatory solution to a problem that has impacted manufacturers and investors for years,” said NAM Senior Vice President and General Counsel Linda Kelly. “The SEC’s deliberate approach to this issue has resulted in vital reforms that will provide manufacturers and their shareholders with more information about these unregulated actors, and the NAM plans to vigorously defend the rule in court.”

Background: The NAM has long advocated increased oversight of proxy advisory firms—little-known, unregulated entities that exert enormous influence over publicly traded manufacturers. These firms have significant conflicts of interest and issue error-filled, one-size-fits-all proxy voting recommendations that can impact the direction of a business and the value of an investor’s shares. The NAM filed comment with the SEC supporting its proposed rule to provide for increased transparency and accountability, and NAM President and CEO Jay Timmons called the final rule, issued in July, a “long-sought, major win for the industry and millions of manufacturing workers.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.2 million men and women, contributes $2.05 trillion to the U.S. economy annually, has the largest economic multiplier of any major sector and accounts for 62% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit nam.org.

Companies with COVID-19 outbreaks could be vulnerable to costly lawsuits over workers’ transmission of the virus to their families, Reuters reports.

• Roughly 7% to 9% of COVID-19 deaths in the U.S. are believed to be “take-home infections,” where someone contracted the disease at work and then infects family members at home.
• Praedicat, a firm that evaluates risks for insurance companies, calculates that these types of lawsuits could cost companies as much as $21 billion if the number of U.S. COVID-19 deaths reaches 300,000.

As we explained back in July, a number of COVID-19 liability lawsuits are likely to be brought forward over the next two to five years, and the flood of COVID-19 litigation isn’t expected to begin until spring 2022.

More to the story: The NAM prevailed on Senate leaders—and the bipartisan Problem Solvers Caucus—to include key liability protections in draft COVID-19 relief legislation, while its efforts with manufacturing association partners continue to yield advances in many states.

The Securities and Exchange Commission changed an important standard for publicly traded companies today—the amount of stock that a shareholder must have to put proposals on the proxy ballot (which the full shareholder base votes on every year).

It might sound like a small thing, but this “threshold” is a big deal. NAM Director of Tax and Domestic Economic Policy Charles Crain broke it down in a recent interview.

The previous standard: Previously, any shareholder holding $2,000 in stock for one year could put a question on the ballot, Crain explains. Since that’s a relatively low number, activists would go to dozens of companies and buy $2,000 of stock at each—not because they were interested in the companies’ performance, but because they wanted a platform on which to debate political issues.

Here’s a data point that illustrates the extent of the problem: In 2019, just three people sponsored 38% of all shareholder proposals at Fortune 250 companies, Crain says.

The resubmission problem: Once something was on the proxy ballot, it was also easy to resubmit it the following year, adds Crain. A ballot question only needed 3% support among shareholders to stay on the ballot for a second year. If it was voted down a second time, it had to get 6% to move forward the next year and just 10% after that. “Ninety percent of shareholders could reject a measure forever, and it could still get resubmitted every year,” Crain says.

What’s changed? The SEC’s new rule creates tiered thresholds, which will give more power to long-term shareholders.

• To submit a proposal after holding stock for just one year, an investor now needs to hold $25,000 in stock.
• If an investor holds stock for two years, the threshold drops to $15,000.
• If an investor holds stock for three years, it drops to $2,000.

The rule also changes resubmission thresholds to 5% after one vote, 15% after two votes and 25% after three votes to keep a failing question on the ballot in consecutive years. Some measures take time to gain support, and the rule allows for that while taking a more commonsense approach, Crain says.

Why it matters: Holding repeated proxy votes can be time- and resource-intensive for companies, says Crain, and politically motivated proposals distract businesses and investors from the real issues that drive long-term value creation for shareholders.

The NAM’s actions: Crain says, “The NAM has called for proxy reforms for years, and we’ve engaged with both Congress and the SEC to highlight the need to modify the proxy ballot thresholds. Last November, NAM President and CEO Jay Timmons praised the SEC for proposing a rule to combat activists that ‘pressure manufacturers to focus on political issues at the expense of company growth,’ and our comments on the proposal helped lead to today’s final rule. We’ve pushed for this outcome for years—and we’re glad the SEC has come down on the right side.”

President Trump threatened to use executive actions if Republicans and Democrats can’t reach a deal on the next round of stimulus, reports The Washington Post (subscription). How much he can accomplish unilaterally is unclear, however.

What he said: “We’re negotiating right now as we speak, and we’ll see how that works out,” Trump said. “In the meantime, my administration is exploring executive actions to provide protections against eviction . . . . As well as additional relief to those who are unemployed as a result of the virus. Very importantly, I’m also looking at a term-limited suspension of the payroll tax.”

Meanwhile, on Capitol Hill: Democrats and Republicans intended to come to a deal by the end of this week. The latest word is that it will happen “in the near future,” according to Senate Majority Leader Mitch McConnell.

NAM connection: The NAM has been urging Congress to include liability protections in the next stimulus package. To that end, it organized a “Day of Action” yesterday on social media, calling for “commonsense protection from opportunistic lawsuits in order to fuel our recovery and help creators respond to this crisis.” A range of groups and organizations participated in the Day of Action, including the Minnesota Chamber of Commerce, the Michigan Manufacturers Association and the Illinois Manufacturers’ Association.