Jurisdiction-Nonemployee Status of University and College Students Working in Connection With Their Studies; Correction and Extension of Comment Period
| Published date | 16 October 2019 |
| Citation | 84 FR 55265 |
| Record Number | 2019-22436 |
| Section | Proposed rules |
| Court | National Labor Relations Board |
Federal Register, Volume 84 Issue 200 (Wednesday, October 16, 2019)
[Federal Register Volume 84, Number 200 (Wednesday, October 16, 2019)]
[Proposed Rules]
[Pages 55265-55267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22436]
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NATIONAL LABOR RELATIONS BOARD
29 CFR Part 103
RIN 3142-AA15
Jurisdiction--Nonemployee Status of University and College
Students Working in Connection With Their Studies; Correction and
Extension of Comment Period
AGENCY: National Labor Relations Board.
ACTION: Notice of proposed rulemaking; Correction; extension of comment
period.
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SUMMARY: This document corrects the preamble to a proposed rule
published in the Federal Register of September 23, 2019, regarding
Nonemployee Status of University and College Students Working in
Connection with Their Studies. This correction revises the Regulatory
Flexibility Act section in the preamble of the proposed rule to
substitute an Initial Regulatory Flexibility Analysis. The date to
submit responses to the Notice of Proposed Rulemaking is also extended
for 60 days.
DATES: The comment period for the notice of proposed rulemaking
published at 84 FR 49691 is extended. Comments must be received by the
Board on or before Monday, December 16, 2019. Comments replying to
comments submitted during the initial comment period must be received
by the Board on or before Monday, December 30, 2019.
FOR FURTHER INFORMATION CONTACT: Roxanne Rothschild, Executive
Secretary, National Labor Relations Board, 1015 Half Street SE,
Washington, DC 20570-0001, (202) 273-1940 (this is not a toll-free
number), 1-866-315-6572 (TTY/TDD).
SUPPLEMENTARY INFORMATION:
Correction
In proposed rule FR 2019-20510, beginning on page 49691 in the
issue of September 23, 2019, make the following correction, in the
Supplementary Information section. On page 49699, in the 1st column,
revise the text between ``Regulatory Flexibility Act'' and ``Paperwork
Reduction Act'' to read as follows:
A. Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980 (``RFA''), 5 U.S.C. 601, et
seq., ensures that agencies ``review draft rules to assess and take
appropriate account of the potential impact on small businesses, small
governmental jurisdictions, and small organizations, as provided by the
[RFA].'' \1\ It requires agencies promulgating proposed rules to
prepare an Initial Regulatory Flexibility Analysis (``IRFA'') and to
develop alternatives wherever possible, when drafting regulations that
will have a significant impact on a substantial number of small
entities.\2\ However, an agency is not required to prepare an IRFA for
a proposed rule if the agency head certifies that, if promulgated, the
rule will not have a significant economic impact on a substantial
number of small entities.\3\ The RFA does not define either
``significant economic impact'' or ``substantial number of small
entities.'' \4\ Additionally, ``[i]n the absence of statutory
specificity, what is `significant' will vary depending on the economics
of the industry or sector to be regulated. The agency is in the best
position to gauge the small entity impacts of its regulations.'' \5\
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\1\ E.O. 13272, Sec. 1, 67 FR 53461 (``Proper Consideration of
Small Entities in Agency Rulemaking'').
\2\ Under the RFA, the term ``small entity'' has the same
meaning as ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' 5 U.S.C. 601(6).
\3\ 5 U.S.C. 605(b).
\4\ 5 U.S.C. 601.
\5\ Small Business Administration Office of Advocacy, ``A Guide
for Government Agencies: How to Comply with the Regulatory
Flexibility Act'' (``SBA Guide'') at 18, https://www.sba.gov/sites/default/files/advocacy/How-to-Comply-with-the-RFA-WEB.pdf.
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As discussed below, the Board believes its proposed rule will
likely not have a significant economic impact on a substantial number
of small entities but is not certain. The Board assumes for purposes of
this analysis that a substantial number of small employers and small
entity labor unions will be impacted by this rule because at a minimum,
they will need to review and understand the effect of the proposed
standard as it relates to undergraduate and graduate students who
perform services for compensation in connection with their studies.
Additionally, there may be compliance costs that are unknown to the
Board.
For these reasons, the Board has elected to prepare an IRFA to
provide the public the fullest opportunity to comment on the proposed
rule.\6\ An IRFA describes why an action is being proposed; the
objectives and legal basis for the proposed rule; the number of small
entities to which the proposed rule would apply; any projected
reporting, recordkeeping, or other compliance requirements of the
proposed rule; any overlapping, duplicative, or conflicting Federal
rules; and any significant alternatives to the proposed rule that would
accomplish the stated objectives, consistent with applicable statutes,
and that would minimize any significant adverse economic impacts of the
proposed rule on small entities.\7\ An IRFA also presents an
opportunity for the public to provide comments that will shed light on
impacted entities and potential compliance costs that are unknown to
the Board or on any other part of the IRFA.
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\6\ After a review of the comments, the Board may elect to
certify that the rule will not have a significant economic impact on
a substantial number of small entities in the publication of the
final rule. 5 U.S.C. 605(b).
\7\ 5 U.S.C. 603(b).
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Detailed descriptions of this proposed rule, its purpose,
objectives, and the legal basis are contained in the SUMMARY and
SUPPLEMENTAL INFORMATION sections of the Notice of Proposed Rulemaking.
See 84 FR 49691. In brief, the proposed rule states that students who
perform any services, including teaching or research assistance, at a
private college or university related to their studies are not
statutory employees subject to jurisdiction of the Board. The Board has
concluded that this rule--providing that undergraduate and graduate
students performing services in connection with their studies are not
statutory employees--is more consistent with the purposes and policies
of the National Labor Relations Act (Act or NLRA), which contemplates
jurisdiction over economic relationships not those that are primarily
educational in nature.
B. Description and Estimate of Number of Small Entities to Which the
Rule Applies
To evaluate the impact of the proposed rule, the Board first
identified the universe of small entities that could be impacted by the
determination that students who perform services at a private college
or university in connection with their studies are not statutory
employees. The United States Census Bureau does not specifically define
``small business'' but does break down its data into firms with fewer
than
[[Page 55266]]
500 employees and those with 500 or more employees. Consequently, the
500-employee threshold is commonly used to describe the universe of
small entities. However, for defining small businesses among specific
industries, the standards are defined by the North American Industry
Classification System (NAICS).
The Board believes that the proposed rule only impacts private
universities and colleges and the labor organizations that seek to
represent students at those institutions. Universities and colleges are
classified under the NAICS Sector 61 Educational Services, specifically
611210: Junior Colleges; and 611310: Colleges, Universities, and
Professional Schools.\8\ According to the Census Bureau, there were
2,746 entities included in those two NAICS definitions, and of those,
1,747 entities (63.6 percent of total) are small entities that fall
under the Small Business Administration's (``SBA'') ``small business''
standard for classifications in NAICS codes 611210 ($20.5 million) and
611310 ($27.5 million).\9\
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\8\ See U.S. Department of Commerce, Bureau of Census, 2012
Statistics of U.S. Businesses (``SUSB'') Annual Data Tables by
Establishment Industry, https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html (from downloaded Excel Table titled
``U.S., 6-digit NAICS'').
\9\ The Census Bureau only provides data regarding receipts in
years ending in 2 or 7. The 2017 data has not been published, so the
2012 data is the most recent available information regarding
receipts. See U.S. Department of Commerce, Bureau of Census, 2012
SUSB Annual Data Tables by Establishment Industry, https://www2.census.gov/programs-surveys/susb/tables/2012/us_6digitnaics_r_2012.xlsx.
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This proposed change will also impact labor organizations that
represent or seek to represent employees at universities and colleges.
Labor organizations, as defined by the NLRA, are entities ``in which
employees participate and which exist for the purpose . . . of dealing
with employers concerning grievances, labor disputes, wages, rates of
pay, hours of employment, or conditions of work.'' \10\ The SBA's
``small business'' standard for NAICS code 813930: Labor Unions and
Similar Labor Organizations'' is $7.5 million in annual receipts. In
2012, there were 13,740 labor unions (and similar labor organizations)
in the U.S., and of those, 13,408 (97.6 percent of total) are small
entities according to SBA standards. The Board lacks the means to
accurately identify the number of small labor unions that primarily
represent employees in the private higher education sector but welcomes
input from the public.
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\10\ 29 U.S.C. 152(5).
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Although the proposed rule would only apply to colleges and
universities who meet the Board's jurisdictional requirements, the
Board does not have the means to calculate the number of small colleges
and universities within the Board's jurisdiction.\11\ Accordingly, the
Board assumes for purposes of this analysis that the great majority of
the 15,155 identified small colleges, universities, and labor unions
could be impacted by the proposed rule.
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\11\ Pursuant to 29 U.S.C. 152(6) and (7), the Board has
statutory jurisdiction over private sector employers whose activity
in interstate commerce exceeds a minimal level. NLRB v. Fainblatt,
306 U.S. 601, 606-07 (1939). To this end, the Board has adopted
monetary standards for the assertion of jurisdiction that are based
on the volume and character of the business of the employer. As
relevant to this proceeding, the Board asserts jurisdiction over
private colleges and universities if they have a gross annual
revenue not less than $1 million. 35 FR 18370; 29 CFR 103.1.
The Census Bureau does not provide data on the number of
colleges and universities with annual receipts less than $1 million;
the lowest data range it covers is for entities with receipts less
than $100 million.
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C. Recordkeeping, Reporting, and Other Compliance Costs
The RFA requires agencies to consider the direct burden that
compliance with a new regulation will likely impose on small
entities.\12\ Thus, the RFA requires the Board to determine the amount
of ``reporting, recordkeeping and other compliance requirements''
imposed on small entities.\13\
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\12\ See Mid-Tex Elec. Co-op v. FERC, 773 F.2d 327, 342 (D.C.
Cir. 1985) (``[I]t is clear that Congress envisioned that the
relevant `economic impact' was the impact of compliance with the
proposed rule on regulated small entities.'').
\13\ See 5 U.S.C. 603(b)(4), 604(a)(4).
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The Board concludes that the proposed rule imposes no capital costs
for equipment needed to meet the regulatory requirements; no lost sales
and profits resulting from the proposed rule; no changes in market
competition as a result of the proposed rule and its impact on small
entities or specific submarkets of small entities; and no costs of
hiring employees dedicated to compliance with regulatory
requirements.\14\
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\14\ SBA Guide at 37.
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Small entities may incur some costs from reviewing the rule in
order to understand the substantive changes. To become generally
familiar with the proposed student assistant standard, the Board
estimates that a human resources specialist at a small employer or
labor union may take at most thirty minutes to read the rule. It is
also possible that a small employer or labor union may wish to consult
with an attorney, which the Board estimates will require thirty
minutes.\15\ Using the Bureau of Labor Statistics' estimated wage and
benefit costs, the Board has assessed these labor costs to be $71.08
for each college, university, and labor union.\16\
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\15\ We do not believe that more than thirty minutes of time by
each would be necessary to read and understand the rule. The rule
constitutes a return to the ``primarily educational'' standard, and
most employers and unions are already knowledgeable about that
standard if it is relevant to their businesses, as are labor-
management attorneys.
\16\ For wage figures, see May 2018 National Occupancy
Employment and Wage Estimates, found at https://www.bls.gov/oes/current/oes_nat.htm. The Board has been administratively informed
that BLS estimates that fringe benefits are approximately equal to
40 percent of hourly wages. Thus, to calculate total average hourly
earnings, BLS multiplies average hourly wages by 1.4. In May 2018,
average hourly wages for a Human Resources Specialist (BLS #13-1071)
were $32.11. The same figure for a lawyer (BLS #23-1011) was $69.34.
Accordingly, the Board multiplied each of those wage figures by 1.4
and added them to arrive at its estimate.
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Although the Board does not foresee any additional compliance costs
related to interpreting the definition of statutory employee to exclude
student assistants, this change would obviate the need to hold some
elections that may have been held in units with students. Arguably,
this would conserve resources for small employers and labor unions that
would otherwise be expended during organizing campaigns and election-
related litigation. The Board is not aware of a basis for estimating
any such cost-savings and welcomes any comment or data on this
topic.\17\
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\17\ The RFA explains that in providing initial and final
regulatory flexibility analyses, ``an agency may provide either a
quantifiable or numerical description of the effects of a proposed
rule or alternatives to the proposed rule, or more general
descriptive statements if quantification is not practicable or
reliable.'' 5 U.S.C. 607.
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D. Overall Economic Impacts
The Board does not find the estimated, quantifiable cost of
reviewing and understanding the rule--$71.08 for small universities,
colleges, and unions in the education sector--to be significant within
the meaning of the RFA. In making this finding, one important indicator
is the cost of compliance in relation to the revenue of the entity or
the percentage of profits affected.\18\ Other criteria to be considered
are the following:
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\18\ See SBA Guide at 18.
--Whether the rule will cause long-term insolvency, i.e., regulatory
costs that may reduce the ability of the firm to make future capital
investment, thereby severely harming its competitive ability,
particularly against larger firms;
--Whether the cost of the proposed regulation will (a) eliminate more
than 10 percent of the businesses' profits; (b) exceed one percent of
the gross revenues of the entities in a
[[Page 55267]]
particular sector, or (c) exceed five percent of the labor costs of the
entities in the sector.\19\
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\19\ See SBA Guide at 19.
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The minimal cost to read and understand the rule will not generate any
such significant economic impacts.
Since the only quantifiable impacts that the Board has identified
is the $71.08 that may be incurred in reviewing and understanding the
rule, the Board does not believe there will be a significant economic
impact on a substantial number of small entities associated with this
proposed rule. The Board welcomes input from the public regarding
additional costs of compliance not identified by the Board or costs of
compliance the Board identified but lacks the means to accurately
estimate.
E. Duplicate, Overlapping, or Conflicting Federal Rules
Agencies are required to include in an IRFA ``all relevant Federal
rules which may duplicate, overlap or conflict with the proposed
rule.'' \20\ The Board has not identified any such federal rules, but
welcomes comments that suggest any potential conflicts not noted in
this section.
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\20\ 5 U.S.C. 603(b)(5).
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F. Alternatives Considered
Pursuant to 5 U.S.C. 603(c), agencies are directed to look at ``any
significant alternatives to the proposed rule which accomplish the
stated objectives of applicable statutes and which minimize any
significant economic impact of the proposed rule on small entities.''
Specifically, agencies must consider establishing different compliance
or reporting requirements or timetables for small entities, simplifying
compliance and reporting for small entities, using performance rather
than design standards, and exempting small entities from any part of
the rule.\21\
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\21\ 5 U.S.C. 603(c).
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First, the Board considered taking no action. Inaction would leave
in place the interpretation of statutory employee under the Act that
includes students who perform services for compensation at a private
college or university in connection with their studies. However, for
the reasons stated in Sections I through IV of the Notice of Proposed
Rulemaking (84 FR 49691), the Board finds it desirable to revisit this
interpretation and to do so through the rulemaking process.
Consequently, the Board rejects maintaining the status quo.
Second, the Board considered creating exemptions for certain small
colleges, universities, and labor unions. This was rejected as
impractical, considering that exemptions for small entities would
substantially undermine the purposes of the proposed rule because such
a large percentage of colleges and universities (63.6 percent) and
unions (97.6 percent) would be exempt under the SBA definitions. In
this regard, exempting small universities and colleges from the
decision to exclude students from the Board's jurisdiction would
incongruously result in the exercise of Board jurisdiction over
students who attend small colleges and universities, but not larger
educational institutions. Similarly, if a large university employer
entered into a bargaining relationship with a small labor union (or
vice versa), both entities would be exempted. Drawing this distinction
appears to be an impermissible interpretation of the relevant statutory
provisions and one that would undermine the policy behind the proposed
rule. Moreover, given the very small quantifiable cost of compliance,
it is possible that the burden on a small entity of determining whether
it fell within a particular exempt category might exceed the burden of
compliance. As such, exempting small entities would be contrary to the
objectives of this rulemaking and of the NLRA.
Because no alternatives considered will accomplish the objectives
of this proposed rule while minimizing costs on small entities, the
Board believes that proceeding with this rulemaking is the best
regulatory course of action. The Board welcomes public comment on any
facet of this IRFA, including alternatives that it has failed to
consider.
Dated: October 9, 2019.
Roxanne Rothschild,
Executive Secretary.
[FR Doc. 2019-22436 Filed 10-15-19; 8:45 am]
BILLING CODE 7545-01-P
