The Biden admin and courts are in a tug of war over labor law — and other labor news

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Take a seat in the Break Room, our weekly round-up of labor news in Minnesota and beyond. This week: The push-pull over labor protections; new Uber and Lyft driver cost calculations; University of Minnesota workers to get clearer path to unionize; labor blocks cut to paid family and medical leave; Minneapolis teachers reach tentative agreement, averting strike vote; and construction contractor sentenced to probation. 

Biden admin’s three new labor rules

The Biden administration announced three new rules this week that will benefit millions of workers: banning non-compete agreements, guaranteeing many salaried workers overtime pay and setting minimum staffing levels for nursing homes.

But the new rules — along with federal enforcement of labor protections broadly — could be weakened or undone by the conservative supermajority of the U.S. Supreme Court, which has signaled its opposition to the administrative state. This week, for example, the Supreme Court appeared likely to side with Starbucks and make it harder for the National Labor Relations Board to halt unfair labor practices as it processes complaints. Amazon, SpaceX and Trader Joe’s are also challenging the constitutionality of the NLRB.

Back to those new rules:

On Monday, the Centers for Medicare and Medicaid Services introduced a set of rules on staffing levels in nursing homes that accept government-funded insurance, which is most of them. Workers and residents have long complained about a lack of staffing leading to poor quality care. Under the new rules, each resident must receive a minimum of about three-and-a-half hours of care per day from a nurse and nurse aide, and each facility must have a nurse on staff 24 hours a day.

USA Today mapped every nursing home in the country, and reports nearly all will have to hire more staff to meet the standards. Just 160 skilled nursing facilities out of 14,500 met the requirements every day last summer, according to their analysis. KFF Health News reports the nursing home industry has raised wages by 27% since 2020, but nursing home leaders say they still can’t compete against better-paying jobs elsewhere, and some facilities will be forced to close until government funding is increased. Last year, Minnesota state lawmakers sent $300 million in grants to nursing homes and created a nursing home workforce standards board with the power to set minimum wages for workers across the state.

On Tuesday, the Department of Labor announced a rule that will entitle roughly 4 million more salaried workers to overtime pay. Over the next year, the rule raises the income threshold at which salaried workers become ineligible for time-and-a-half overtime pay. On Jan. 1, workers with salaries less than about $59,000 per year will be eligible for overtime. And that threshold will rise over time because it’s set to the 35th percentile of full-time salaried workers in the lowest-wage census region.

The rule goes further than one issued by former President Barack Obama’s administration, which was struck down by a federal judge in Texas in 2017 after business groups and 21 states sued. President Trump’s administration set the salary threshold at about $35,500 in 2020.

Also on Tuesday, the Federal Trade Commission banned employers from requiring workers to sign noncompete agreements, which bar workers from taking jobs with competitors for a period of time. Businesses claim they need them to protect trade secrets, but the use of noncompete agreements has swelled to include an estimated one in five Americans including lower wage workers. The FTC argues the practice suppresses workers wages by limiting their employment opportunities — including the formation of new businesses.

The rule is expected to face legal challenges from business groups, but even if it’s overturned, noncompete agreements will still be void in Minnesota. State lawmakers banned the practice last year and are also expected to ban employment restrictions in contracts between businesses and customers. For example, child care centers will not be allowed to contractually bar parents from hiring their teachers.

Minneapolis calculates new Uber and Lyft driver cost estimates

The Minneapolis City Council took a procedural vote on Thursday signaling it may lower the city’s minimum pay rates for Uber and Lyft drivers. The companies say they’ll leave if current rates are enacted as planned on July 1. The council has already pushed back the enactment date twice as it faces pressure from many sides — including the state Legislature — to make a deal that keeps the two ridehail giants fully operational in the Twin Cities. The most recent vote allows the City Council to reconsider the pay rates alongside other proposed regulations on the companies moving through committees.

The vote comes after the Minneapolis city government’s research department released a new range of estimates of Uber and Lyft drivers’ expenses. Depending on what one considers reasonable assumptions about vehicle costs, the estimates either validate the minimum pay rates proposed in a sweeping state study, or justify the significantly higher rates passed by the City Council.

The latest report from the Minneapolis Policy and Research team carried over the state report’s cost estimates for maintenance, insurance, cell phone, cleaning, and benefits including health insurance, paid leave and retirement savings. But the city staff plugged in higher cost estimates for gas and vehicles, which they assume drivers buy new rather than used.

Assuming drivers finance new vehicles at the sticker price for three years, they would need to earn the city’s minimum rate of $1.40 per mile to pay for the vehicle costs and benefits like paid time off. However, if drivers are assumed to finance their cars over five years, then the per mile rate dips in line with the state recommendation of $1.20 per mile. The vehicles are assumed to have no trade-in value at the end of the loan term.

More than 23,000 to have easier path to unionize

More than 23,000 University of Minnesota employees — including adjunct lecturers, medical residents and student workers — will have a clearer path to unionize under a bill moving through the Democratic-controlled Legislature.

While most workers form unions based on shared workplaces or similar job duties, state law explicitly circumscribes 13 possible bargaining units for University of Minnesota workers, including two sprawling groups that are impractical to organize, according to university workers pushing for the law change.

For example, one bargaining unit enshrined in the Public Employee Labor Relations Act groups together more than 5,500 staff across nearly 200 job categories — including over 1,000 instructors, five event planners, a hundred or so librarians and Athletic Director Mark Coyle (whose salary is $1.4 million).

The bill eliminates several of the defined bargaining units for University of Minnesota workers, allowing them to unionize a bargaining unit according to the rules governing other public employees.

Labor blocks cut to paid family leave

After facing blowback from labor unions, Minnesota House Democrats walked back a proposal that would have cut a week of paid family and medical leave from workers who had saved up significant paid time off.

Under the scrapped proposal, workers with more than 80 hours of banked PTO would receive partial payment for the first week of family and medical leave, while workers with more than 120 hours of PTO saved would receive no payment the first week.

The change was likely proposed to mitigate increased costs of the new program, set to start in 2026, entitling workers to up to 12 weeks of paid family leave and 12 weeks of medical leave per year (or a total of 20 weeks combined). An actuarial analysis released in October found the program will require a higher tax than expected: a 0.78% payroll tax split between employers and workers with increases in later years, rather than 0.7%.

Labor unions blasted the unpaid week proposal, arguing it would penalize workers who had saved up PTO and force them to effectively pay twice for the benefit.

Minneapolis teachers reach tentative deal

The Minneapolis Federation of Teachers announced it reached a tentative agreement with the school district early Thursday morning hours after the union called a strike authorization vote. The union representing about 3,000 teachers did not release details of the tentative agreement, saying its members must first consider and vote to ratify the deal. The teachers sought an 8.5% raise in the first year of the contract and 7.5% in the second.

The union has not yet reached a tentative agreement on behalf of the 1,600 support staff it represents, and those workers began voting on whether to authorize a strike on Thursday. The results will be announced on Saturday.

The district is confronting a $110 million budget deficit, driven in part by declining enrollment.

Minneapolis teachers and support staff went on strike for three weeks just two years ago, winning modest pay increases of about 5% over two years and protections for teachers of color against layoffs.

Construction labor broker sentenced

The owner of a construction company was sentenced this week to three years probation and temporarily banned from supervising work crews after facing charges in Hennepin County for insurance fraud, sexual assault and threatening a worker with deportation in 2017 and 2018.

Fabian Espinosa is accused of misclassifying workers as independent contractors to avoid paying for workers’ compensation insurance and other benefits. He allegedly told an insurance company that he didn’t have any employees, even though a state investigation determined he had 13 workers on the payroll. When one worker was injured, Espinosa told the worker to lie to hospital staff about it happening at work and threatened to report the worker as an undocumented immigrant if he didn’t.

Espinosa also allegedly exposed himself to a female worker and then groped her in her hotel room, but that charge of sexual assault was dropped as part of his plea agreement.

The criminal investigation was prompted by a report from Centro de Trabajadores Unidos en Lucha, a worker center that assists non-union immigrant workers. CTUL says Espinosa has been hired by the Pohlad family’s United Properties, but the company denied he has worked on any of their job sites in a statement to the Star Tribune.

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