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What’s Behind Obama’s Full Court Press?

obama-equal-opportunityRecent actions by the Equal Employment Opportunity Commission and other federal agencies vividly depict the Obama Administration’s haste to manipulate the regulatory system to the fullest extent possible right up until he leaves office.

Readers of this newsletter are well aware that since the Republicans took control of Congress it became much more difficult for the President to get the legislation he favors passed. But instead of negotiating with the opposition, he declared ideological war.

No matter what the issue, from immigration to gun control, he repeatedly asserts that the nation can’t afford to wait for Congress to act and has chosen to use his “pen and phone” to order what he thinks is needed.

Although the Supreme Court has unanimously struck down 13 of his executive orders, the President and his loyal followers in federal agencies and commissions have continued to push the legal envelope wherever they can.

But why are these actions being pursued so aggressively so early in the last year of Obama’s presidency? One reason is the Congressional Review Act passed by a Republican Congress in 1996 as part of its Contract With America, according to attorney Harold Coxson of the law firm of Ogletree Deakins.

Under that law Congress can vote to disapprove a “major” federal regulation (one with a cost of at least $100 million) within 60 legislative days of the regulation’s promulgation by a simple 51-vote majority in the Senate and a 218-vote majority in the House.

However, if vetoed by the President, a two-thirds majority is needed to overcome it. As a result, Congress has only succeeded in using the CRA to defeat a single regulation: OSHA’s ergonomics standard in 2001.

Given the uncertain outcome of the 2016 election, it would be risky for the administration to promulgate final regulations at a point late enough in the year that the 60-legislative day clock for issuance of a resolution of disapproval could extend beyond Obama’s current term, Coxson notes. In that case, a disapproval resolution could then be signed by a new president after entering office in 2017.

Piling on Pay Data Requirements

On Feb. 1 the EEOC proposed a rule requiring employers with 100 or more employees to collect extensive pay data revealing possible equal pay discrimination by race, gender and ethnicity.

The data is supposed to help the EEOC and Office of Federal Contract Compliance Programs identify pay disparities across industries and occupational categories. The data will be applied “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination,” EEOC said.

These same employers already must file pay data with EEOC on an annual basis, but the new rules for the first time will require a breakdown of that data by gender, race and ethnicity.

It also will require the data reported be broken into pay scales (called “pay bands”) ranging from $19,239 and under, up to more than $208,000. “It is difficult to overstate the impact that this could have on employers,” says the law firm of Seyfarth Shaw LLP. “The pay bands do not take into effect legally accepted variables, such as seniority, level of responsibility and education. We expect many false positive results with employers then needing to defend their compensation systems.”

Because the data is reported by enterprise (the parent company and all its subsidiaries), EEOC will be able to compare compensation within a location, across the organization and enterprise-wide. EEOC also said it will use the data to compare employers by industry and metropolitan area.

In a previous rulemaking, OFCCP indicated that it intends to use compensation data to create industry-
wide compensation standards to benchmark the federal contractor community, and to create standards for deciding which contractors will be selected for OFCCP audits.

The federal government isn’t alone. California, New York and Massachusetts recently enacted stringent equal pay laws and more states could follow.

Not surprisingly, employer groups reacted negatively to the proposed federal regulations.

“The EEOC’s proposal fails to recognize the substantial shortcomings of the resulting data,” says Kelly Kolb, government affairs vice president of the Retail Industry Leaders Association. “Requiring businesses to provide potentially thousands of data points for each location would obscure, not illuminate, relevant information.”

Randy Johnson, U.S. Chamber of Commerce senior vice president of labor, immigration and employee benefits, told the news media: “While we strongly support nondiscrimination in compensation, the type of reporting proposed by the administration would place unnecessary and onerous burdens on employers while providing no meaningful insight as to whether employer pay practices are discriminatory.”

Is Logistics Driving Amazon Store Plans?

amazon-storesNo sooner do we run two front page articles asking if ecommerce will kill bricks-and-mortar retailing when reports surface that Amazon plans to open hundreds of stores in malls around the country.

Although the company has not yet officially announced its intentions, a top commercial real estate company executive let slip that Amazon plans to open 300-400 bookstores.

Other reports said the stores will likely sell more than books, including the company’s Kindle Fire tablets and Echo voice-controlled speakers. Amazon operates one bookstore in Seattle and is hiring for a new store in the San Diego suburb of La Jolla, CA.

Why is Amazon choosing to move into physical retailing? One big reason is logistics. Amazon has built its ecommerce empire on the basis of free and cheap shipping, which was an essential building block of its Amazon Prime membership service which is estimated to have 54 million dues-paying customers in the U.S. alone.

But as we know, “free shipping” can turn out to be very expensive. Amazon’s shipping costs soared $4.5 billion in the fourth quarter, more than 24.4% over the same quarter in 2014..

Some of the bricks-and-mortar based retailers under assault by Amazon have enjoyed recent success in the ecommerce market by building pickup and return centers into their stores, an innovation that has turned out to be popular with customers.

Amazon could use store locations to serve the same purpose as well as to function as distribution warehouses. The company already has built smaller DCs throughout the country and recently bought truck trailers and obtained an NVOCC license.

The stores also could help expand its growing third- party Amazon Fulfillment business, which recent reports say it plans to build up in a big way.

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