Capitol Insights: New Federal Regulations Affecting Contractors: EPA, OSHA, and DOL

Posted on:

February 12, 2024

EPA’s AIM Act

In our last edition of Capitol Insights, we covered the Environmental Protection Agency’s (EPA) finalized Rule on Technology Transitions as well as the proposed HFC (or Refrigerant) Management Rule under the AIM Act. Since that time, ACCA scored a massive win in helping secure a one-year sell-through period for R-410a systems. You might recall that the Technology Transitions Rule would have banned the manufacturing and installation of these systems effective January 1, 2025. Thanks to ACCA’s unwavering advocacy, EPA has agreed to allow for the installation of these products through January 1, 2026.

ACCA also submitted comments to EPA regarding its Refrigerant Management Rule with our recommendations. Specifically, we opposed the mandate that would require all used HFC refrigerant cylinders to be returned to certified reclaimers. We opposed this mandate as it would create logistical and economic challenges for contractors by forcing them to spend additional manpower, time, energy, and capital to transport mostly empty tanks to certified reclaimers. Moreover, since there are only 63 certified reclaimers in the United States (and there are many states that have none), contractors in areas with few or no certified reclaimers would be disproportionately affected.

ACCA also recommended that EPA’s mandates regarding the use of reclaimed refrigerants for the initial charge and servicing of specific equipment beginning January 1, 2028 be contingent on the availability of reclaimed refrigerant at that time. We believe that the mandate should reflect the ability of the reclaimed refrigerant market to effectively service the industry, thus avoiding unnecessary supply chain constraints and facilitating a smooth transition. At current reclaim levels, the proposal would not be feasible.

As part of the Refrigerant Management Rule, EPA reintroduced several components of its previously proposed QR tracking system for cylinders which were thrown out by the courts last year when ACCA and other industry associations sued. We opposed these unnecessary requirements that would be difficult to implement and recommended that EPA reconsider them based on the previous court decision.

Regarding recordkeeping requirements for HFC refrigerants, ACCA recommended that EPA implement them in such a way that their compliance can align with existing infrastructures, such as CRM systems, to minimize the burden on contractors. This approach would facilitate compliance while leveraging current technologies and practices.

Finally, while this proposed rule did not include mandates on training and certification for new generations of refrigerants, they did seek feedback on whether it should be required and what it should look like. Our recommendations included the following:

Distinct certifications for different refrigerant types including A2Ls and A3s.
Certifications analogous to the existing 608 certifications (i.e. they could be modeled after the existing 608 program).
A universal certification option covering all generations of refrigerants.
Practical and accessible testing
Recertification every 3 to 5 years with a continuing education component.
New certification in addition to existing 608 requirements.
Streamlined certification for those that already have a 608 certification.
Program standardization and industry involvement.

ACCA’s priority throughout the refrigerant transition has been safety for HVACR professionals and consumers alike. We believe these recommendations are an important step in that process. 

You can reference the last issue of ACCA Now or the ‘blogs’ section of ACCA.org for more information on the specific mandates included in EPA’s finalized Technology Transition and proposed Refrigerant Management Rules. EPA is expected to finalize the Refrigerant Management Rule sometime in late 2024.

OSHA Walkaround Rule

In November, ACCA submitted formal comments to OSHA opposing its proposed ‘Walkaround’ Rule. This rule would allow non-employees, including union officials and other individuals, to accompany federal safety inspectors during workplace inspections. Notably, it introduces a change from the previous 2013 policy, where safety engineers and industrial hygienists were designated as employee representatives who could assist inspectors. However, the proposed rule would replace this provision with one allowing inspectors to approve a person they deem “reasonably necessary” to conduct a site visit. This expanded category could include attorneys, translators, union officials, and worker advocacy group representatives. Employer approval is not required for the participation of these non-employee representatives.

As proposed, this rule could lead to businesses being forced to permit individuals who may be hostile to the employer or trying to promote unionization onto their premises and could shift the focus of OSHA inspections from safety to serving as a tactic for unions and harassment of employers. It also raises concerns regarding liability, security of intellectual property, and privacy rights of employers. ACCA opposed this proposed rule due to the unnecessary and inappropriate challenges it would present to contractors. It is expected to be finalized later this year.

Department of Labor Overtime Rule

In November, ACCA submitted formal comments opposing the Department of Labor’s (DOL) proposed Overtime Rule. The new overtime rule would raise the white-collar/salary exemption threshold to federal overtime pay requirements. Currently, an employee must meet three criteria to qualify as “exempt” from overtime pay: first, they must be paid a salary; second, that salary must be more than $684/week ($35,568 annually); and third, their “primary duties” must be consistent with executive, administrative, or professional positions as defined by DOL. The DOL has proposed to raise the minimum salary threshold to $1,158 per week ($60,209 annually) – an increase of nearly 70 percent.

DOL is making this change despite the last increase occurring only four years ago. In addition to proposing a raise to the minimum salary threshold, DOL has also proposed automatically updating the minimum salary every three years going forward. Employers would need to track hours of nonexempt employees, so employees who are reclassified from exempt to nonexempt could lose workplace flexibility, including the ability to work remotely, and workforce development opportunities, such as the ability to attend conferences or classes outside of normal work hours.

ACCA opposed the rule because these major, unprecedented changes would impose significant and unnecessary costs on employers, including contractors. Like OSHA’s Walkaround Rule, it is expected to be finalized later this year.

National Labor Relations Board Joint Employer Rule

Issued in October 2023, the National Labor Relations Board’s (NLRB) Final Joint-Employer Rule institutes an unworkable, overly broad set of circumstances under which a company is considered a “joint employer” under federal law. The Final Rule poses severe negative risks to employers and the contracting industry, potentially exposing ACCA members to frivolous litigation, elimination of jobs, and slowing wage growth – just like it did when a similar standard was implemented in 2015. At a time of continued economic uncertainty, it is deeply concerning that the NLRB has chosen to move forward on such a divisive and damaging joint-employer rule.

Fortunately, in the coming weeks, legislators can vote to nullify the NLRB’s Joint-Employer Final Rule by utilizing the Congressional Review Act. House Joint Resolution 98 and Senate Joint Resolution 49 would overturn this misguided rule. On January 12, 2024, the House of Representatives voted in favor of overturning the rule. At the time this article was published, it was unclear if the Senate would be voting on the rule. President Biden has vowed to veto the resolution in the event it passes both houses of Congress. The rule is also being challenged in court. It is set to take effect February 26, 2024.

Independent Contractor Rule

In January, DOL released its final rule on the classification of independent contractors under the Fair Labor Standards Act (FLSA). The recent rule is a shift towards a previous standard that was used before 2021 and requires employers to weigh numerous factors in determining whether a worker is an employee or an independent contractor. The classification test includes six factors:

The degree to which the employer controls how the work is done.
The worker’s opportunity for profit or loss.
The amount of skill and initiative required for the work.
The degree of permanence of the working relationship.
The worker’s investment in equipment or materials required for the task.
The extent to which the service rendered is an integral part of the employer’s business.

Legal experts have noted that it may lead to a spike in misclassification lawsuits under the FLSA. It will also make companies less likely to hire independent contractors since it is more stringent than the DOL’s previous rule regarding classification under FLSA. Senator Bill Cassidy (R-LA) has already announced his intention to introduce a Congressional Review Act (CRA) resolution to repeal the rule. In addition, the rule is expected to be opposed in court. It is currently set to take effect on March 11, 2024.

Check out the entire January/February 2024 digital issue of ACCA Now here.