Middle-Market Public Policy Roundup

Democratic lawmakers and attorneys general used the week of Independence Day to send letters to the Department of Labor, arguing its joint-employer rulemaking weakens worker protections. Meanwhile, the opportunity zones program continues to be refined as the comment period for the second round of regulations came to an end and regulators held a hearing with key stakeholders.

Department of Labor Joint-Employer Rulemaking Comes Under Fire

Last week, Democrats in the Senate and state attorneys general sent letters to the Department of Labor in response to the department’s joint-employer rulemaking.

In the letters, a group of senators and leading state attorneys general argued against the proposal, which changes the definition of a joint employer under the Fair Labor Standards Act to include only companies that exercise direct control over essential terms of employment, such as hiring, firing and controlling work schedules of employees.

“The proposed interpretation would violate the language and intent of the Fair Labor Standards Act and weaken the enforcement of wage-and-hour protections on behalf of many of the most vulnerable workers in the country, directly contradicting DOL’s mission to ‘foster, promote, and develop the welfare of the wage earners … of the United States,'” said the letter, signed by high-profile Democrats, including Sens. Elizabeth Warren, Sherrod Brown, Kirsten Gillibrand, Bernie Sanders and Kamala Harris.

State attorneys general made similar arguments. “USDOL’s new interpretation would make it easier for employers to pass the buck and harder for workers to hold bad actors accountable,” they said in their letter.

In our comment letter on the issue, ACG agreed with the Department of Labor’s general view that the proposed rule would increase certainty and clarity of employment relationships. Such certainty provides a clear picture of who is responsible for ensuring wage and hour protections are enacted, providing workers with a direct path for complaints and claims.

It is unlikely that these letters will change the department’s schedule or proposed changes to the definition of a joint employer, but they may foreshadow potential actions taken under Democrats’ control of the agency.

Opportunity Zones Continue to Progress

Fundraising for qualified opportunity funds has exceeded $6.9 billion for the first five months of 2019, according to a McGuireWoods examination of SEC filings and public disclosures.

The comment period for the second round of opportunity zone regulations ended July 1. The second tranche of opportunity zone regulations, which provided further certainty for non-real estate investments in qualified opportunity zones, received 127 comments and was the subject of a July 9 hearing by the IRS.

Designed for the IRS to receive oral feedback on the proposed regulations, the hearing included speakers from Harvard Law School, the Novogradac Opportunity Zones Working Group, the American Bar Association and the Economic Innovation Group, a bipartisan group that championed the opportunity zone program prior to its passage into law.

The hearing was expected to focus on ensuring the opportunity zone program remains investor-friendly. ACG will report on the outcome of the hearing in the coming days.