OCTOBER 2020 WASHINGTON REPORT

Election Day in America is over two weeks away with the White House, Senate and House leadership hanging in the balance. Instead of COVID-19 relief, all eyes are on the Senate confirmation of Judge Amy Coney Barrett. 
 
In September and October, BakePAC made over twenty contributions to key House and Senate races. See Nick’s Picks below for recommendations on key races, you too can support. Polls are showing a tightening of the presidential race, as well as key Senate races, which hold the balance of power. 
 
The election will be exciting, and we don’t anticipate final results election eve. In some cases, ballots may be counted as late as mid-November. At IBA’s Post-Election Business Meeting on November 10, IBA will have a complete discussion of key events and election results, along with anticipated impacts on food policy for the next two years. 

 

REGISTER FOR IBA’S FALL BUSINESS MEETING

 

 


 

 

 

 

 

 

The Independent Bakers Association invites members to attend its Virtual Fall Business Meeting Tuesday, November 10, 2020 from 2-3:30 pm Eastern. This year’s program will focus on the 2020 elections – including a recap of important outcomes and an interactive session on how IBA plans to harness the election results in its advocacy. The meeting will be a virtual video conference. Be sure to register online to receive updates for the meeting! 

REGISTER NOW

 
 

 

FDA PROVIDES ADDITIONAL FLEXIBILITY REGARDING NUTRITION AND SUPPLEMENT FACTS LABELS

 

 

The U.S. Food & Drug Administration (FDA) is providing additional flexibility for manufacturers who need to comply with updated Nutrition and Supplement Facts label requirements by January 1, 2021. This upcoming compliance date applies to manufacturers with less than $10 million in annual food sales. Although the compliance date will remain in place, FDA will not focus on enforcement actions during 2021 for these smaller food manufacturers.  
 
FDA provided the same flexibility for manufacturers with $10 million or more in annual sales, who were required to comply with the Nutrition and Supplement Facts label requirements by January 1, 2020, by indicating it would not focus on enforcement actions during 2020.  

FDA announced its decision to provide additional flexibility after IBA and other members of the Food & Beverage Issue Alliance (FBIA) submitted a letter requesting FDA to grant small businesses additional flexibility for the new Nutrition and Supplement Facts labeling rules. This letter built upon FBIA's successful advocacy efforts last year, resulting in FDA granting one year of enforcement discretion to companies with greater than $10 million in annual sales. IBA applauds FDA for taking into consideration the time and complexity involved in making changes to product labels, in particular, for smaller companies. 



 

FDA ANNOUNCES FSMA FOOD TRACEABILITY PROPOSED RULE

 

 

The U.S. Food and Drug Administration (FDA) proposes to establish additional traceability recordkeeping requirements (beyond what is already required in existing regulations) for persons who manufacture, process, pack, or hold foods FDA designated for inclusion on the Food Traceability List. The proposed requirements help FDA rapidly and effectively identify recipients of those foods to prevent or mitigate foodborne illness outbreaks and address credible threats of serious adverse health consequences or death.
 
FDA scheduled a series of three virtual one-day public meetings to discuss the proposed rule. These public meetings facilitate and support the public's evaluation and commenting process on the proposed rule.
 
The Food and Beverage Issue Alliance (FBIA), in partnership with the Consumer Brands Association, will host a webinar on FDA’s proposed rule. During this webinar, Elizabeth Fawell, partner, Hogan Lovells U.S. LLP, will provide an overview of the scope of the proposed rule, what it could mean for companies and identify specific issues that could warrant comment to FDA. There will be a question and answer session following Elizabeth’s presentation. Participants are encouraged to send questions by October 30 to Sarah Brandmeier
 
The webinar will take place on November 2 from 11:30 a.m. – 1:00 p.m. Eastern. Register here. We hope you can join!



 

IBA COMMENTS ON NLRB EXCELSIOR RULE

 

 

IBA submitted a comment supporting the National Labor Relations Board's (NLRB) proposal to reconsider the extent to which employers must automatically provide private employee information to union representatives. The current Obama-era policy expanded the decades old standard determined in NLRB's Excelsior case, an already questionable requirement that employers provide unions with employee names and addresses. The 2014 addition also requires disclosure of more sensitive personal information, like home telephone numbers, cellphone numbers and e-mail addresses. 

NLRB's current Excelsior policy represents an entirely unwarranted and unacceptable invasion of employee privacy rights. IBA’s comment requests the Board eliminate any requirement that employers be required to provide its employees' cell phone and home phone numbers and e-mail addresses. 

Personal privacy is a genuine and growing concern for the vast majority of people. IBA’s comment notes that NLRB is the outlier among every other instrumentality of government, both foreign and domestic, which have responded to the public's near universal concerns regarding person privacy by making personally identifiable information more difficult for third parties to acquire and use. 

 

 

USDA RAISES TRQ TO BOOST SUGAR SUPPLY

 

 

The U.S. Department of Agriculture (USDA) is increasing the raw sugar tariff-quota (TRQ) imports, extending the sugar import entry period for fiscal year 2020 and reassigning surplus domestic sugar allocations. The USDA is taking these actions after determining that additional supplies of raw cane sugar are required in the U.S. market. For more information, see the USDA notice.
 
The USDA will continue to monitor sugar stocks, consumption and imports, among other variables, and may make other adjustments as needed. IBA will watch for any new changes and update members. 


 

 

DOL PROPOSES RULE TO CLARIFY INDEPENDENT CONTRACTOR STATUS

 

 
On September 25, 2020, the U.S. Department of Labor – Wage and Hour Division published a notice of proposed rulemaking (NPRM) and request for comments on a revision to the Department’s interpretation of independent contractor status under the Fair Labor Standards Act (FLSA). The NPRM adopts a variation of the economic reality test to determine a worker’s employee or independent contractor status. The following will summarize the NPRM, explain its components, and propose comments.
 
According to the Department, it issued the NPRM “to promote certainty for stakeholders, reduce litigation, and encourage innovation in the economy.” The NPRM would be Department’s sole and authoritative interpretation of independent contractor status under the FLSA, replacing the confusing patchwork of subregulatory guidance and case-by-case interpretations. The Department announced a 30-day period for public comment, signaling that it hopes to finalize the rule by the end of President Donald Trump’s first term. 
 
IBA will voice support for the NPRM in its comments.  IBA members are encouraged to submit feedback to Elizabeth Velander, elizabeth@ibabaker.com
The comment period ends October 26, 2020.
 
A.  Core Factors


Under the NPRM’s formulation of the test, the key question is whether workers are more closely akin to wage earners, who depend on others to provide works opportunities, or entrepreneurs, who create work opportunities for themselves. The focus is on two core factors: (1) the nature and degree of the worker’s control over the work; and (2) the worker’s opportunity for profit or loss. Other factors listed in the proposed rule, discussed below, are also relevant but should be evaluated in the context of the core factors. 
 
Given their greater weight, if both core factors point toward the same classification – whether employee or independent contractor – there is a substantial likelihood that the individual’s classification is accurate. The NPRM explains that this is because it is highly unlikely for the other, less probative factors to outweigh the combined weight of the core factors. 
 
The Department proposes a focus on these factors in light of the sharpened articulation of economic dependence in the NPRM. Together, the core factors shape the economic dependence inquiry of whether the individual is, as a matter of economic reality, in business for himself. The Department believes focusing on these two as the core factors would add much needed clarity and efficiency to the economic reality test. 

 

  1. “Nature and Degree of the Individual’s Control Over the Work” Factor 

This factor would weigh towards the individual being an independent contractor to the extent that the individual, as opposed to the potential employer, exercises substantial control over key aspects of the performance of the work. Examples in the proposed regulatory text of an individual’s substantial control include setting his or her own work schedule, choosing assignments, working with little or no supervision, and being able to work for others, including a potential employer’s competitors. In addition, the Department agrees with courts that have found that an individual worker’s “substantial control of the key aspects” of the work weighs in favor of the independent contractor classification even if the worker is not solely in control of the work. 
 
The NPRM clarifies that requiring an individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed-upon deadline or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) does not constitute control that makes the individual more or less likely to be an employee under the Act. These requirements frequently apply to work performed by employees and independent contractors alike; as such, they are not probative as to whether a working relationship is one of employment or independent contractor. 

 

  2. “Opportunity for Profit or Loss” Factor

The second core economic reality factor is the individual’s opportunity for profit or loss. As proposed, this factor would ask whether the worker has an opportunity to earn profits or incur losses based on his or her exercise of initiative or management of investments. The NPRM’s formulation of this factor chooses to combine “opportunity for profit or loss” and “investment” as one factor in order to minimize duplicative analysis of the same facts under different factors. 
 
Under this approach, the worker’s meaningful capital investments may evince opportunity for profit or loss. But investment is not the only way to satisfy this factor because workers who invest little may nonetheless have an opportunity for profit through the exercise of personal initiative. In short, meaningful investment is a sufficient by not necessary dimension of the opportunity for profit or loss. 
 
The combined factor would weigh towards the individual being classified as an independent contractor if he or she has an opportunity for profit or loss based on either or both: (1) the exercise of personal initiative, including managerial skill or business acumen; and/or (2) the management of investments in, or capital expenditure on, for example, helpers, equipment, or material. This factor would weigh towards the individual being an employee to the extent the individual is unable to affect his or her earnings through initiative or investment or is only able to do so by working more hours or more efficiently. 

 

B.  Other Factors 
 

In contrast to the two core factors, the other factors listed in the NPRM relating to skill, permanence, and integration are not always as probative to an inquiry into whether a worker is, as a matter of economic reality, in business for him- or herself or economically dependent on someone else for work. Rather, their relevance varies depending on the circumstances. Moreover, relevant aspects of the skill and permanence factors under the current test – i.e., initiative and exclusively, respectively, - are already part of the analysis with respect to the core factors. Since the NPRM would remove such confusing overlaps by removing initiative and exclusivity from the skill and permanence factors, respectively, the probative value of these two factors would become even more limited. 
 

  1. “Skill Required” Factor

The NPRM proposes to clarify that the “skill required” factor originally articulated by the Supreme Court in Silk should be used, as opposed to the “skill and initiative” factor currently used in some circuits, because considering initiative as part of the skill factor creates unnecessary and confusing overlaps with the control and opportunity for profit or loss factor.
 
The “skill required” factor weighs in favor of classification as an independent contractor whether the work at issue requires specialized training or skill that the potential employer does not provide. Otherwise, it weighs in favor of classification as an employee. The Department believes that this approach would sharpen the distinction between the economic reality factors by focusing on skill, as opposed to aspects of control. 

 

  2. “Permanence of the Working Relationship” Factor

The NPRM proposes to modify the six-factor economic reality test further by analyzing the exclusivity of the relationship as a part of the control factor only, as opposed to both the control and permanence factors. The control factor already considers whether a worker has freedom to pursue external opportunities by working for others. 
 
The permanence factor would weigh in favor of an individual being classified as an independent contractor where his or her working relationship with the potential employer is by design definite in duration or sporadic. The NPRM notes that the seasonal nature of some jobs does not necessarily suggest independent contractor classification, especially where the worker’s position is permanent for the duration of the relevant season and where the workers has done the same work for multiple seasons.

 

  3. “Integrated Unit” Factor 

The NPRM proposes to reframe the “whether the service rendered is an integral part of the alleged employer’s business” factor in accordance with the Supreme Court’s original inquiry in Rutherford of whether the work is “part of an integrated unit of production.” This factor is different from the concept of importance or centrality. 
 
The proposed factor focuses on whether an individual works in circumstances analogous to a production line. This factor weighs in favor of employee status where a worker is a component of a potential employer’s integrated production process, whether for goods or services. The overall production process need not be a physical assembly line, but it must be an integrated process that requires the coordinated function of interdependent subparts working towards a specific unified purpose. 

 

C.  Alternative Proposals 
 

The NPRM considers three alternative proposals in order from least to most restrictive of independent contracting: (1) codification of the common law control test, which applies in distinguishing between employees and independent contractors under various federal laws; (2) codification of the traditional six-factor “economic reality” balancing test, as recently articulated in WHD opinion letter FLSA2019-6; and (3) codification of the “ABC” test, as adopted by the California Supreme Court in Dynamex.
 

  1. Common Law Control Test

The least stringent alternative to the proposed rule is to adopt the common law control test generally used to determine independent contractor classification questions arising under the Internal Revenue Code and various other federal laws. 
 
Under this test, the overarching focus is the hiring party’s right to control the manner and means by which work is accomplished, but the Supreme Court has explained that other factors relevant to the inquiry include the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; the provision of employee benefits; and the tax treatment of the hired party. 
 
The Department notes that the Supreme Court has interpreted the “suffer or permit” language in section 3(g) of the FLSA as demanding a broader definition of employment than that which exists under the common law. Accordingly, the Department believes it is legally constrained from adopting the common law control test absent Congressional legislation to amend the FLSA.

 

  2. Traditional Six-Factor “Economic Reality” Balancing Test

The Department believes that this test would benefit from clarification, sharpening, and streamlining. For this reason, the Department believes that codifying such a test would not yield the perpetual benefits and cost savings as the proposed rule, such as improved clarity and reduced FLSA litigation. 
 
Additionally, the Department does not believe that codifying the six-factor balancing test would reduce initial regulatory familiarization costs or provide per-contract clarity cost savings, as interested establishments and independent contractors will likely spend the same amount of time learning about any new regulatory language addressing independent contractor status under the FLSA (no regulatory guidance on the topic currently exists). 

 

  3. California’s “ABC” Test

As described by the California Supreme Court in Dynamex, “[t]he ABC test presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business demonstrates that the worker in question satisfies each of three conditions: (a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.” 416 P.3d at 34 (emphasis in original). 
 
On its face, California’s ABC test is far more restrictive of independent contracting arrangements than any formulation of an “economic reality” balancing test, including the proposed rule. Whereas no single factor necessarily disqualifies a worker from independent contractor status under an economic reality test, each of the ABC test’s three factors may alone disqualify the worker from independent contractor status. Thus, adoption of an ABC test to govern independent contractor status under the FLSA would directly result in a large-scale reclassification of many workers presently classified as independent contractors into FLSA-covered employees. 
 
The Department believes adopting the ABC test as the FLSA’s generally applicable standard for distinguishing employees from independent contractors would be unduly restrictive and disruptive to the economy. In any event, the Department believes it is legally constrained from adopting California’s ABC test because the Supreme Court instituted the economic reality test as the relevant standard for determining workers’ classification under the FLSA as an employee or independent contractor. 
 

D.  IBA’s Proposed Comments 

 

IBA supports the Department’s proposed restatement of the economic reality test. The NPRM is a welcome step towards uniformity and clarity, as the Department has never promulgated a generally applicable regulation addressing the question of who an independent contractor is and, thus, not an employee under the FLSA. While IBA ultimately wants the FLSA’s definition of “employee” to be harmonized with other federal statutes, which use the common-law test, it believes the NPRM is an enormous improvement over the status quo. 
 
IBA’s proposed comments would express strong support for the NPRM’s focus on the core factors “control” and “opportunity for profit or loss.” IBA believes that the weight given to the core factors provides much-needed direction to the economic dependence inquiry that will be of practical use to putative employers. IBA's proposed comments will recommend additional changes to increase the practical significance of the NPRM. 

IBA members are encouraged to submit feedback to Elizabeth Velander, elizabeth@ibabaker.com
The comment period ends October 26, 2020.

 


 

TIME TO SUNSET GRAIN FOODS FOUNDATION “BREAD TAX” CHECKOFF?

 

 
IBA received the Grain Foods Foundation 2020 Update recapping the year’s efforts. It was a complete surprise to learn the Foundation is asserting they withdrew the Bread Tax proposal as it was about to publish in Federal Register, to make accommodation for the impact of COVID-19 on the baking industry. Frankly that’s only a version of the truth. The fact is that over a dozen bakers above the de minimis threshold subject to proposed Federal assessment wrote to Sonny Perdue, Secretary of Agriculture requesting that the tax be subject to an immediate upfront referendum not one deferred for three years. We know about this as IBA worked with several baker members coordinating the initial opposition. Regardless GFF clearly states in the update: “Bottom line: 
The commitment to the checkoff campaign is unwavering.”
 
To appease the opposition GFF now proposes to move forward carving out food service bakers, as they did with pasta, sweet goods and other segments of the industry. This change according to GFF will lead to a lowering of the de minimis threshold subjecting more of the industry to the assessment and paperwork burden of filing for annual exemptions with the complex calculations for determining taxable/non-taxable share of operations. Did we mention that in addition to the assessment bakers that contacted Secretary Perdue many others with commingled and exempt operations expressed by letter their concerns with the paperwork burden?
 
GFF maintains its budget is insufficient to fulfill its mission and be effective, therefore a checkoff is necessary. Over $2 million dollars, significant industry resources have already been spent on this proposed federal fee for the privilege of baking. It’s not clear where GFF took on a mandate to pursue a mandatory requirement for industry to fund its endeavors.  In Washington we call that “Mission Creep.” We already know much of the GFF program outreach is redundant to the Wheat Foods Council, a group doing great work with limited resources funded in most part by several state checkoff programs assessed to wheat growers. The Council in all likelihood would share, if not usurp, GFF role in operating a bread checkoff program.
 
IBA is holding off on its modest financial support for GFF and asks you do the same until it knows the Bread Tax proposal is supported by at least two-thirds of the bakers subject to assessment and reporting required for exemption. A third party should conduct a survey to gauge the true level of support before additional precious industry monies are squandered on a self-imposed industry Bread Tax.

 
 

2020 ELECTION: NICK’S PICKS

 


 

In keeping with time-honored tradition, Independent Bakers Association President Nick Pyle is pleased to share his 2020 Elections Handicap with active IBA members. Nick's Picks details congressional races with a clear pro-baking industry candidate. These include must-hold incumbents across the Senate, as well as several House challengers who are ready to support President Donald Trump's pro-manufacturing, regulatory reform agenda in his second term.  

IBA members may use the handicap to donate directly to races using the addresses provided, or through BakePAC*. Easily contribute to BakePAC online via IBA's election portal--be sure to note which race(s) you want to support. We encourage IBA members to check the portal frequently for updates. 

 

VISIT IBA'S ELECTION PORTAL

 
Please VOTE November 3rd!
 

2020 Congressional Races 

House – Republican Pick-up Races 

Minnesota 7th – Michelle Fischbach (R) former Lt. Governor against Agriculture Committee Chairman Colin Peterson – a major supporter of sugar programs – Red River valley. District is heavily Republican. Fischbach for Congress.

PO Box 190

Litchfield, MN 5535

Virginia 7th – Virginia Delegate Nick Freitas (R) challenges freshman incumbent in heavily Republican district. Freitas for VA-07
PO Box 113
Culpepper VA, 22701 

Virginia 2nd – Republican Scott Taylor is running for reclaim his former House seat. Taylor for Congress
PO Box 1284
Virginia Beach, VA 23451 

Utah 4th – Burgess Owens is running in the most Republican district in the US held by Democrat. Owens for Utah – 04
370 East South Temple #580
Salt Lake City, UT 84111 

NY-11 – NY Assembly woman Nicole Malliotakis (R) is running to retake this seat in Staten Island. Nicole for New York
PO Box 60487
Staten Island, NY 10306 

NY-22 – Former Congresswoman Claudia Tenney is running to reclaim her seat lost in 2018. Claudia Tenney for Congress
PO Box 244
Clinton, NY 13323 


Republican Must Hold 

Ohio – 1st Congressman Steve Chabot (R-OH) is longtime friend of IBA, first elected in 2010. Chabot for Congress
9856 Archer Lane
Dublin, OH 43107-8914 

Indiana 5th – Open seat must hold Indiana State Senator Victoria Spartz is a good candidate. Victoria Spartz for Congress
PO Box 505
Noblesville, IN 46061 

Arizona 6th – Rep. David Schweikert (R-AZ) is seeking re-election in the Phoenix district. Friends of Davis Scheikert
8175 East Evans Road #1317
Scottsdale, AZ 85267 


Longshot Republican Pickup 

Maryland 7th – Open seat where rising star Republican Kimberly Klacik in Baltimore is making waves. Kim Klacik for Congress
9618 Maxwell Road
Middle River, MD 21220 

US Senate – 
Republican Pick-up

Alabama – Former Alabama football coach Tommy Tuberville is favorite to beat Democratic incumbent. Tuberville for Senate
1401 Doug Baker Blvd – Ste 409
Birmingham, AL 35242 


Must Hold Seats 

Senator Susan Collins (R-ME) Collins for Senator
PO Box 1096
Bangor, ME 04402-1096 

Senator Tom Tillis (R-NC) Tom Tillis Committee
PO Box 97396
Raleigh, NC 27624 

Senator Cory Gardner (R-CO) Cory Gardner for Senate
92227 East Lincoln Ave #200-234 Lone Tree, CO 80124 

Senator Joni Ernst (R-IA) Joni for Iowa
PO Box 93441
Des Moines, IA 50393 

Senator Martha McSally (R-AZ) McSally for Senate
PO Box 19128
Tucson, AZ 85710 


Longshot Senate Pick-up 

John James for Senate
PO Box 2969
Farmington Hills, MI 48333 


*Contributions to BakePAC are not deductible as charitable contributions for federal income tax purposes. BakePAC can only accept personal contributions. Maximum annual individual contribution is $5,000. All contributions are voluntary and you have the right to refuse to contribute without reprisal. Federal law prohibits BakePAC from accepting contributions from foreign nationals. Contributions will be used for political purposes. Federal law requires BakePAC to use best efforts to collect and report the name, mailing address, occupation and name of the employer of individuals whose contributions exceed $200 in a calendar year.


 

FUTURE EVENTS
FBIA Webinar: FDA Proposed Rule for Traceability
Monday, November 2, 2020
Via webinar - 11:30 am - 1:00 pm Eastern
Register Now!
 
IBA Fall Business Meeting
Tuesday, November 10, 2020
Via webinar – 2:00 - 3:30 pm Eastern
Register Now!


CONTACT                                                    
Independent Bakers Association                   
316 F Street NE, Ste 206                               
Washington, DC 20002                                 
T: (202) 333-8190                                         
www.ibabaker.com 
 

IBA TEAM
Nicholas Pyle, President: nick@ibabaker.com
Alexis Fobes, Member Accounts: alexis@ibabaker.com
Liz Velander, Regulatory Affairs: elizabeth@ibabaker.com
Kayla Lunde-Kobilinsky, Communications: kayla@dcpyle.com

 
 
 
 
 
 
 
 
 

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