[Congressional Record Volume 145, Number 74 (Thursday, May 20, 1999)]
[Extensions of Remarks]
[Pages E1061-E1062]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        BRACKET CREEP OVERBURDENS NATIONAL LABOR RELATIONS BOARD

                                 ______
                                 

                       HON. ERNEST J. ISTOOK, JR.

                              of oklahoma

                    in the house of representatives

                         Thursday, May 20, 1999

  Mr. ISTOOK. Mr. Speaker, I rise today to urge my colleagues to 
cosponsor H.R. 1620, a bill to free the National Labor Relations Board 
from being overburdened because bracket creep that has forced them to 
accept cases from very small employers in this nation. Here is a copy 
of my ``Dear Colleague'' and a report from the Labor Policy Association 
that outlines the problem and why it is important to small businesses 
in America to correct this problem.

                                                U.S. Congress,

                                                   Washington, DC.


Free the National Labor Relations Board (NLRB): Help Reduce Unnecessary 
                        Burden on Small Business

       Dear Colleague: This Congress, Mr. Istook is introducing 
     legislation to help the NLRB manage their huge caseload. Each 
     year the NLRB requests additional funding to help them 
     administer and manage their caseload. This legislative reform 
     simply makes adjustments for inflation in the financial 
     jurisdictional thresholds of the NLRB, most of which were set 
     in 1959. The NLRB can still adjudicate special cases below 
     these thresholds, just as they can do today. It is crucial 
     that we provide the NLRB with this freedom. We urge you to 
     cosponsor this bill. Two former NLRB Chairs support this 
     change.
       The National Labor Relations Board (NLRB) is the government 
     agency designed to settle labor disputes between unions and 
     management. In 1959, Congress passed a law to give NLRB 
     jurisdiction over businesses based on gross receipts. Once a 
     business passes that threshold of gross receipts, it is 
     subject to intervention by the NLRB. Businesses below the 
     threshold are subject to actions brought in state courts, 
     instead of the NLRB.
       Without an adjustment for inflation, businesses and the 
     NLRB have been caught in ``bracket creep.'' as inflation has 
     increased since 1959, the NLRB has acquired jurisdiction over 
     much smaller businesses than was ever intended, escalating 
     the expense and workload for the NLRB as well as for 
     business. These now include very small businesses, for whom 
     the cost of such intervention is unbearable. Up to 20% of the 
     NLRB's workload now is these very small businesses. For 
     example, NLRB has jurisdiction over non-retail businesses 
     with gross receipts over $50,000, an inflation adjustment 
     would raise that threshold to $275,773. NLRB has jurisdiction 
     over retail business and restaurants doing more than $500,000 
     worth of business, but adjusting for inflation since 1959 
     would raise this to $2.7 million. Congress never intended to 
     subject small businesses to such a have regulatory hammer.
       The NLRB is powerless to change its jurisdiction without an 
     act of Congress. So this legislation will do exactly that. By 
     indexing the jurisdiction to the rate of inflation, the NLRB 
     could again focus upon the larger businesses for whom the law 
     was originally written. Small businesses have been severely 
     burdened by dealing with the far-off NLRB instead of their 
     local state courts (Examples on Reverse).
       This bill's simple adjustment both frees NLRB deal with 
     significant cases truly affecting interstate commerce, and 
     also removes the problems very small business have with NLRB 
     oversight (See Example on the Reverse). If you have any 
     questions, please call Mr. Istook`s office and speak with Dr. 
     Bill Duncan at (202) 225-2182.
         Tom DeLay, House Majority Whip; Bill Young, Chairman, 
           Appropriations Committee; John Boehner, Chairman, 
           Employer/Employee Relations Subcommittee; John Porter, 
           Chairman, Labor, HHS, Education Subcommittee; Jim 
           Talent, Chairman, Small Business Committee; Henry 
           Bonilla, Member, Appropriations Committee; Ernest 
           Istook, Member, Appropriations Committee; Dan Miller, 
           Member, Appropriations Committee; Jay Dickey, Member, 
           Appropriations Committee; Roger Wicker, Member, 
           Appropriations Committee; Anne Northup, Member, 
           Appropriations Committee; Randy ``Duke'' Cunningham, 
           Member, Appropriations Committee; John Hostettler; 
           Chris Cannon.


           
                                  ____
                 Examples of Small Business NLRB Cases

       Larry Burns, of Houston, Texas, (8 employees), had 2 
     charges filed against his business by the NLRB. One was 
     thrown out, the other settled for $160 (1 days pay). Larry 
     Burns spent $11,000 in attorneys fees and wasted time 
     fighting the NLRB when these problems could have been solved 
     cheaper and easier in state courts. Also, Mr. Burns, under 
     state law, could have recovered \1/2\ of his attorney's fees 
     under loser pays (which helps eliminate frivolous charges).
       Randall Borman, of Evansville, Indiana (4 employees). Three 
     charges were filed with the NLRB. All were dismissed. He 
     could have recovered all of his legal fees under Indiana 
     state law. Instead he lost $7,500 in attorney's fees and lost 
     revenue and had to lay off workers to cover this expense.


              examples of delays in processing nlrb cases

       Julian Burns, of Charlotte, North Carolina, (23 employees). 
     His case should be heard by the NLRB. However, the NLRB`s 
     workload is so overloaded with cases from very small 
     businesses that is took 2\1/2\ years to hear his case. Rather 
     than getting his day in court, he settled for $10,000 after 
     paying $35,000 in attorney's fees, and $250,000 for losses in 
     manpower and reduced workforce, for a total cost of $295,000.


     
                                  ____
Achieving NLRB Budget Savings by Updating Small Business Thresholds \1\
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     \1\ This analysis was prepared by the staff of the Labor 
     Policy Association.
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       The National Labor Relations Board (NLRB or Board) 
     exercises exclusive jurisdiction over all labor disputes that 
     are considered to be of significant national interest. The 
     Board, itself, has set the standards for determining which 
     labor disputes reach this threshold. Unfortunately, most of 
     these standards are based on 1959 dollar figures that have 
     not been adjusted for inflation over time. The result is that 
     the Board's method for asserting jurisdiction has become 
     outdated and should be changed to reflect present economic 
     realities. Such a change could result in substantial savings 
     to the U.S. Government.
       The NLRB's jurisdiction, in both representation and unfair 
     labor practice cases, extends to all enterprises that 
     ``affect'' interstate commerce. \2\ This expansive statutory 
     grant of authority has been held by the Supreme Court to mean 
     that the Board's jurisdiction extends to ``the fullest . . . 
     breadth constitutionally permissible under the commerce 
     clause.'' \3\
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     \2\ 29 U.S.C. Sec. 160.
     \3\ NLRB v. Reliance Fuel Oil Corp., 371 U.S. 224 (1963).
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       Traditionally, however, the Board has never exercised its 
     full authority. Since its establishment, the Board has 
     considered only cases that, in its opinion, ``substantially 
     affect'' interstate commerce. In 1959, Congress endorsed this 
     practice in the Labor-Management Reporting and Disclosure 
     Act. The act specifically allowed the Board to ``decline to 
     assert jurisdiction over any labor dispute . . . where . . . 
     the effect of such labor dispute on commerce is not 
     sufficiently substantial to warrant the exercise of its 
     jurisdiction.'' \4\ Congress did not leave the Board total 
     discretion, however. It instructed that the Board ``shall not 
     decline to assert jurisdiction over any labor dispute over 
     which it would assert jurisdiction under the standards 
     prevailing upon August 1, 1959.'' \5\
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     \4\ 29 U.S.C. Sec. 164(c)(1). Parties involved in labor 
     disputes that did not meet the Board's jurisdictional 
     requirements were not left without recourse by Congress. The 
     act specifically provided that agencies or state courts 
     jurisdiction over these claims. 29 U.S.C. Sec. 164(c)(2). Of 
     course, state courts would have to be empowered by state law 
     to do so.
     \5\ 29 U.S.C. Sec. 164(c)(1).
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       Thus, although Congress recognized that the Board needed to 
     exercise discretion in interpreting the term ``affecting 
     commerce,'' it clearly did not want the Board to establish 
     lower thesholds than were already in place. In 1959, however, 
     the Board's prevailing jursidictional thresholds were based 
     on raw dollar amounts. The difficulty with this 
     jurisdictional approach is that it fails to take inflation 
     into account.
       The problem with not adjusting jurisdictional thresholds is 
     clearly illustrated in the following example. In 1959, the 
     Board exercised jurisdiction over non-retail businesses that 
     sold or purchased goods in interstate commerce totaling 
     $50,000 or more annually. In other words, in 1959, $50,000 of 
     interstate business ``substantially affected commerce.'' 
     Today, the Board continues to exercise jurisdiction using the 
     $50,000 threshold, but the effect on commerce of $50,000 
     today is not nearly what it was in 1959. The value of $50,000 
     today is equivalent to $9,065 in 1959. Thus, just as $9,065 
     did not warrant the Board's jurisdiction in 1959, $50,000 
     should not warrant the Board's jurisdiction today.
       Since 1959, the Board has established separate thresholds 
     for particular types of businesses that did not fall into the 
     1959 categories. Although these thresholds are more recent, 
     they nonetheless suffer from the same major flaw--they fail 
     to consider inflation.
       Figure 1, below, list the Board's current jurisdictional 
     thresholds for various business sectors along with the year 
     in which those thresholds were established. These sums are 
     then converted into their present value--making it clear that 
     the Board's present procedure for asserting jurisdiction is 
     both unrealistic and outdated. Consequently, 29 U.S.C. 
     Sec. 164(c)(1) should be amended to reflect the present value 
     of these jurisdictional thresholds.
       A second flaw in basing jurisdiction solely on the volume 
     of the employer's business is that such a method fails to 
     consider the size of the bargaining units involved. As a 
     result, the Board spends scarce federal resources pursuing 
     relatively small benefits. Figure 2 clearly illustrates this 
     position. In 1994, the Board expended nearly 20% of its 
     representation effort on bargaining units of 9 persons or 
     less. Yet, this 20% effort reached less than 2% of the total 
     number of employees involved in representation elections that 
     year (3,393 out of a total of 188,899). In other

[[Page E1062]]

     words, the Board could have reduced its effort by 20% while 
     maintaining 98% effectiveness had it declined to assert 
     jurisdiction over these small units.
       What is even more surprising is that the NLRB conducts 
     elections in units as small as two workers. The Board refuses 
     to release statistics on this point to the public, but such 
     statistics would be available to the Appropriations 
     Committee.
       Leaving jurisdiction over these small business units to the 
     states would be most efficient use of federal resources and 
     could result in significant savings to the Federal 
     Government.


                 FIGURE 1--PRESENT VALUE OF NLRB JURISDICTIONAL THRESHOLDS BY BUSINESS ACTIVITY
----------------------------------------------------------------------------------------------------------------
                                                                              Jurisdictional
                             Business activity                                  threshold        Present value
----------------------------------------------------------------------------------------------------------------
Non-retail enterprises; enterprises that combine retail and wholesale; and        \1\ $50,000           $275,773
 architectural firms (1959)...............................................
Retail enterprises; restaurants; automobile dealers; taxicab companies;           \2\ 500,000          2,757,732
 country clubs; and service establishments (1959).........................
Instrumentalities, links, and channels of interstate commerce (1959)......         \3\ 50,000            275,773
Public utilities; transit companies (1959)................................         \4\250,000          1,378,870
Printing; publishing; radio; television; telephone; and telegraph                 \5\ 200,000          1,103,093
 companies (1959).........................................................
Office buildings; shopping centers; and parking lots (1959)...............        \6\ 100,000            551,546
Day care centers (1976)...................................................        \7\ 250,000            705,185
Health care facilities (1975):
    --nursing homes.......................................................            100,000            298,327
    --hospitals...........................................................        \8\ 250,000            745,818
Hotels and motels (1971)..................................................        \9\ 500,000          1,981,481
Law firms (1977)..........................................................       \10\ 250,000           662,129
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\1\ Figure represents annual interstate sales or purchase. Siemons Mailing Serv., 122 NLRB 81 (1958); Wurster,
  Bernardi and Emmons, Inc., 192 NLRB 1049 (1965).
\2\ Figure represents annual volume of business including sales and taxes. Red and White Airway Cab Co., 123
  NLRB 83 (1959); Carolina Supplies and Cement Co., 122 NLRB 723 (1958); Bickford's, Inc., 110 NLRB 1904 (1954);
  Claffery Beauty Shoppes, 110 NLRB 620 (1954); Wilson Oldsmobile, 110 NLRB 534 (1954); Walnut Hills Country
  Club, 145 NLRB 81 (1963).
\3\ Figure represents annual income derived from furnishing interstate passenger or freight transportation. HPO
  Serv., Inc., 202 NLRB 394 (1958).
\4\ Figure represents total annual volume of business. Public utilities are also subject to the $50,000 non-
  retail threshold. Charleston Transit Co., 123 NLRB 1296 (1959); Sioux Valley Empire Elec. Ass'n, 122 NLRB 92
  (1958).
\5\ Figure represents total annual volume of business. Belleville Employing Printers, 122 NLRB 92 (1958);
  Raritan Valley Broadcasting Co., 122 NLRB 90 (1958).
\6\ Figure represents total annual income. Mistletoe Operating Co., 122 NLRB 1534 (1958).
\7\ Figure represents gross annual revenues. Salt & Pepper Nursery School, 222 NLRB 1295.
\8\ Figure represents gross annual revenues. East Oakland Health Alliance, Inc., 218 NLRB 1270 (1975).
\9\ Figure represents total annual volume of business. Penn-Keystone Realty Corp., 191 NLRB 800 (1971).
\10\ Figure represents gross annual revenues. Foley, Hoag, & Eliot, 229 NLRB 456 (1977).