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The Build Back Better Act: A Congressional Watergate Salad in the Making

Even a week removed from Thanksgiving, I can’t stop thinking about my Gramma’s Watergate Salad, an unusual (but somehow traditional) green gelatinous holiday dish that features a mixture of pistachio pudding, canned pineapple, whipped topping, crushed pecans, and marshmallows. And my Gramma’s secret ingredient: water chestnuts. (Yum?) Perhaps the dish’s recent appearance atop the family table is why the so-called salad was the first comparator to cross my mind after I reviewed the Build Back Better Act (“BBBA”), a reconciliation bill recently passed by the U.S. House of Representatives. Much like the Watergate Salad, the provisions that make up the 2,400-plus page BBBA are quite diverse. From universal pre-K to immigration reform, the BBBA appears to have something for everyone, including a few surprises (like my Gramma’s water chestnuts) for employers. While the BBBA in its current state has many provisions that have the potential to affect employers, this post focuses on provisions relating to the act’s potential amendments to the National Labor Relations Act (“NLRA”), as they may be of particular import to readers of this blog.

As we’ve discussed in previous blog posts, the federal government has repeatedly attempted to make significant changes to federal labor law under the Biden administration. The U.S. House of Representative’s newest tome continues that trend. Specifically, the BBBA proposes new and increased penalties for unfair labor practices (“ULPs”) under the NLRA. While ULPs have historically been remedied through reinstatement and backpay, the BBBA would subject employers found guilty of committing ULPs to civil penalties of up to $50,000 per violation, or $100,000 per violation if the ULP resulted in serious economic harm to an employee and the employer had been found to have committed a similar violation in the preceding five years. The BBBA would also make company officers and directors personally liable for the increased penalties if they (i) directed or committed the violation, (ii) established the policy that led to the violation, or (iii) had actual or constructive knowledge of and authority to prevent the violation and failed to prevent the violation.

The BBBA also prohibits employers from engaging in conduct that has traditionally been considered lawful under the NLRA, such as employer lockouts, permanent replacement of economic strikers, and mandatory employee attendance at captive audience meetings. But perhaps of greater significance is that the BBBA would make it an ULP for employers to enter into or attempt to enforce class or collective action waivers, a favorite tool of employers since the Supreme Court blessed the practice in the context of arbitration agreements in Epic Systems Corp. v. Lewis, 128 S. Ct. 1612 (2018). The BBBA does allow for such waivers to be used, provided they are part of a contract between an employer and a labor organization.

It’s worth noting, however, that unlike my Gramma’s Watergate Salad, the BBBA is not likely to go untouched as it makes its way through the Senate. Because the BBBA is a budget reconciliation bill, it only requires a simple majority to pass in the senate, as opposed to the usual 60 votes needed to avoid the threat of a filibuster. However, before a reconciliation bill hits the Senate floor, the Senate Parliamentarian will review it and mark any provisions that do not meet the standard for a reconciliation bill (i.e., that a provision doesn’t change the level of spending or revenues, or one for which the change in spending or revenues is “merely incidental”). Then, once before the Senate, if a senator raises a “a point of order” with respect to a particular provision, the provision must garner the support of 60 senators, rather than a simple majority, to pass. Given the current political makeup of the Senate (50 Republicans, 48 Democrats, and 2 Independents, who both caucus with the Democrats), it’s unlikely that the BBBA will pass in its current state. Nevertheless, employers would be wise to monitor the BBBA as it makes its way through the Senate so as to not be surprised in case any water chestnuts make it through to the end.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.