[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