The Labor Issues Distributors Can’t Afford to Ignore
From collective bargaining to workplace safety and employer liability, new federal and state developments are changing the rules employers must follow.
Legislative sessions have been busy this year as lawmakers introduce and debate new measures affecting employee compensation and management. Federal and state agencies are also revising regulations, while the White House’s new executive orders are changing employment-related policies in areas like federal contracting and workforce rules.
Some of the proposals have bipartisan support and are advancing relatively quickly, but others are taking longer as lawmakers debate, revise, and negotiate their provisions. For distributors, tracking all this activity can feel like an all-consuming distraction that detracts from running the business. Yet falling behind carries real risk — from penalties and employee disputes to legal challenges that can be costly to resolve.
All this is taking place in an environment where smaller employers are already watching staffing expenses closely. In May, 14% of small business owners named labor costs as their single most important problem, up from 9% the prior month and the highest reading for labor costs in the 52-year history of the National Federation of Independent Business (NFIB) Small Business Optimism Index. For comparison, taxes ranked as the top concern at 19%, followed by inflation at 18%.
The NFIB’s data revealed that rising costs were a critical consideration in business decisions, especially when it comes to passing those costs along to customers. “More small business owners are struggling with significant and unpredictable hikes in fuel prices, which are more challenging for small businesses to pass on to their customers compared to their larger corporate competitors,” NFIB Chief Economist Bill Dunkelberg said in the report’s release.
For companies already struggling to keep costs in check, the latest labor proposals and regulations add another layer of concern. This article examines the key labor measures under consideration, their status, and how their implementation could impact distributors. Glenn Spencer, senior vice president of the Employment Policy Division at the U.S. Chamber of Commerce, provides additional perspective on the developments distributors should be watching and how they can prepare for regulatory changes ahead.
The Faster Labor Contracts Act
Among the labor issues drawing attention is the potential impact of changes to the collective bargaining process. Unionization is always a hot-button issue for employers, employees, and unions alike. This year, the Faster Labor Contracts Act (FLCA) added a new wrinkle by proposing strict deadlines for companies and newly formed unions to negotiate their first collective bargaining agreements.
The bipartisan bill would amend the National Labor Relations Act (NLRA) and require employers to begin bargaining within 10 days after a newly certified union calls for negotiations. The two sides would then have 90 days to reach an agreement before either party could request mediation through the Federal Mediation and Conciliation Service. If mediation fails after another 30 days, either side could send the dispute to a three-person arbitration panel appointed by the federal government.
The key concern for employers is that this panel would be empowered to establish a two-year contract whose terms might not be economically feasible for the business. The bill would change a process that currently requires employers and unions to bargain in good faith but doesn’t require them to reach an agreement. Under the FLCA, arbitrators could ultimately decide wages, benefits, and other working conditions if the parties can’t reach an agreement themselves.
Put simply, an employer that can’t reach a first contract with a new union within the required timeframe could ultimately lose control over some of the terms of that agreement. A panel of outside arbitrators who may have no experience with the industry or business in question could make those decisions instead and bind both sides to those terms for two years.
“Under current law, there are mandatory subjects of bargaining that you have to talk about,” Spencer said. “And then there’s non-mandatory subjects that I’m sure you want to put in the contract, depending on what it might be. This completely erases that line. Anything could wind up going into those contracts.”
Federal arbitration could force employers to negotiate over issues they’ve never had to include in a collective bargaining agreement (CBA) before, including bans on stock buybacks, full disclosure of political contributions, and the placement of workers on corporate boards. “That would be a really big concern for any employer who winds up getting stuck trying to negotiate their first CBA,” Spencer said.
In a recent white paper, the Coalition for a Democratic Workplace (CDW) raised concerns about what the FLCA could mean for small- and mid-sized employers. CDW warned that creating a bargaining timeline could incentivize newly formed unions to wait out the 120-day negotiating period in the hopes of achieving a more favorable initial collective bargaining agreement through federal arbitration. This would shift the union’s goal during negotiations from achieving a timely voluntary agreement to positioning itself for the best possible outcome in arbitration, CDW said. Additionally, the organization is worried that the lack of a small-business exemption in the FLCA will require smaller employers to meet the same bargaining deadlines and arbitration requirements as larger companies that have the legal and financial resources to handle an unfavorable arbitration award.
Although the FLCA was passed in the House of Representatives earlier this year, it has so far stalled in the Senate. Spencer doubts it will reach the 60-vote threshold it needs to overcome the filibuster before the upper chamber’s current session concludes. Still, he sees the FLCA as a long-term risk for employers because the measure has already attracted bipartisan support and could resurface in future sessions.
“Depending on how the elections shake out, you might get bigger numbers in favor of the bill if it were on the floor,” Spencer said. “A lot of people are spending a lot of time and energy — and that includes us — to try to keep any more Republicans from defecting on this, and to help Republicans understand what the real ramifications are of this bill.”
Courts Push Back on Cemex
While the FLCA focuses on what happens after a union is formed, another recent development has changed the rules governing how unions can gain recognition in the first place. Unionization rules have been in flux ever since the National Labor Relations Board (NLRB) issued its Cemex decision three years ago. The standard established by the labor case’s outcome made it easier for the NLRB to require an employer to recognize and bargain with a union after alleged misconduct during an organizing campaign, even when the union lost an election. It also changed the process when a union claims majority support through signed authorization cards and asks an employer for recognition, potentially allowing recognition without a secret ballot election.
In simple terms, Cemex altered what happens after employees attempt to unionize. Under the new standard, once a union presents an employer with authorization cards signed by an apparent majority of employees, the employer must either recognize the union or file a representation-management (RM) petition requesting a secret ballot election within two weeks. If an employer commits any unfair labor practice during the RM period, the NLRB can issue a bargaining order instead of rerunning the election. This new interpretation of the NLRA effectively lowered the threshold for issuing a bargaining order from the previous standard. Before Cemex, a bargaining order was used only as an extraordinary remedy when an employer’s misconduct was considered so severe that a fair election was unlikely. Examples included threatening to close a facility if employees voted for unionization or prohibiting employees from speaking with union organizers during company time.
Cemex is now facing pushback in the federal courts. The 6th U.S. Circuit Court of Appeals recently rejected the NLRB’s use of the standard in a case involving Brown-Forman Corp., a whiskey producer, where the union lost an election 45-14. The court agreed that the company committed unfair labor practices but said the NLRB couldn’t use the Cemex standard alone to require Brown-Forman to recognize and bargain with the union. The issue, the court said, was that the board had improperly engaged in rulemaking outside the formal notice-and-comment process when it adopted Cemex.
That ruling gives employers in the 6th Circuit more room to challenge union-recognition orders based on Cemex, but it doesn’t settle the broader issue. The 9th U.S. Circuit Court of Appeals later upheld a bargaining order in the original Cemex case under an older legal standard without deciding whether Cemex itself was valid. The legal challenges are likely to continue until the Supreme Court weighs in or the NLRB revises the bargaining standard yet again.
“It’s a very different way of doing elections and certifications than we’ve had for 70-plus years, which is why this is the big one everybody’s waiting to see if it gets overturned,” Spencer said. “The good news is there’s a clean case out there for them to pick up and run with, versus a lot of the Cemex cases that have moved forward and tended to be a bit messy.”
The case Spencer believes could provide that opportunity involves an Amazon warehouse in San Francisco. In 2024, representatives for the International Brotherhood of Teamsters approached Amazon claiming to have gathered signed authorization cards from about two-thirds of the facility’s 120 workers. Amazon did not file an RM petition within the two-week window required by Cemex, eventually leading an NLRB administrative judge to order the e-commerce giant to begin bargaining with the union. Amazon is appealing the decision and the case is expected to establish an important precedent for Cemex challenges.
With the recent confirmation of James Macy to the NLRB, giving Republicans a 3-1 majority on the board, the Amazon case is expected to be an opportunity for the Trump administration to reverse the Biden-era standard. “It’s an easy clean case,” Spencer said. “It purely revolves around the Cemex process and is one that the board could use to just go ahead and say, ‘That’s not how we do things.’”
Two OSHA Rules to Watch
While the NLRB is focused on employer-employee relations, other federal agencies are reviewing workplace conditions. The Occupational Safety and Health Administration (OSHA) is considering a proposed federal heat standard that would require employers to take specific steps when indoor or outdoor temperatures reach certain thresholds. Once the heat index reaches 80 degrees Fahrenheit, employers would have to provide water, cooling areas, and paid rest breaks, among other measures. The requirements expand when the heat index hits 90 degrees, as employers would have to offer mandatory paid breaks and monitor employees for signs of heat-related illness.
Lawmakers have proposed legislation that would block OSHA from finalizing and implementing the heat standard. Spencer said employers aren’t necessarily opposed to a federal standard. However, they do want OSHA to give companies enough flexibility to account for differences among workplaces. “We’d like to see a rule written from a perspective of making it actually workable and effective,” he added, “as opposed to just a purely prescriptive rule.”
California is also considering expanding its workplace inspection rules to allow third parties, including union organizers or other outside representatives, to accompany inspectors. The proposal mirrors OSHA’s federal walkaround rule, which expanded the types of representatives employees can choose to accompany inspectors during workplace safety inspections.
“The OSHA walkaround rule allows third parties to accompany OSHA inspectors,” said Spencer, noting that the Chamber would ultimately like OSHA to repeal the rule. “That rule has not actually been applied anywhere, but it’s still sitting out there on the books.”
Other Labor Rules to Monitor
The Department of Labor (DOL) is working on a new joint employer rule that would spell out when two businesses can both be held responsible for complying with federal wage and hour laws. The proposal, issued in April, is intended to provide employers with more consistent guidance and reduce differences among the standards used by federal courts.
Using a four-factor analysis, the final version of the rule is expected to bring the joint employer definition back in line with the standard set by the first Trump administration in 2020. At that time, the DOL narrowed the circumstances under which two businesses could be considered joint employers under the Fair Labor Standards Act. The Biden administration rescinded that rule in 2021, leaving the agency without generally applicable regulatory guidance on FLSA joint employment. The public comment period for the proposed new rule closed in June, and the DOL is currently reviewing feedback.
Beyond revising its policies, Spencer said the DOL is putting more emphasis on helping employers understand and follow the rules before problems turn into enforcement actions. “They want to be in compliance, they want to do the right thing,” he explained, “and the department is focusing on helping them understand how to do that.”
States are also taking action on so-called captive audience meetings, where employers gather employees to discuss issues like unionization. Thirteen states now restrict or prohibit these meetings, including New York, Illinois, Washington, and Rhode Island. In California, a federal district court blocked the law while the case moves through the courts.
The legal question now centers on whether states have the authority to impose those restrictions or if they are superseded by the NLRA. “The challenge has been getting into court and being able to establish standing,” Spencer said. “The exception is in California, where a district court did say that the law is preempted.”
What’s Next on the Agenda?
With the Trump administration directing federal agencies to adopt a deregulatory approach, more states are taking it upon themselves to address labor issues. One such example is a New York law that allowed the state to assume some of the NLRB’s authority during periods when the NLRB lacks a quorum — as it did during most of 2025 — or when it declines authority. The U.S. District Court for the Eastern District of New York struck down the law this past July in a case involving Amazon.
Other states are considering “fair-share laws” that could impose added costs on larger employers whose workers rely on state Medicaid or whose health plans don’t meet specified standards. Spencer said those measures could face challenges under federal benefits law.
Looking ahead, Spencer expects the current dynamic to remain the same in both this Congress and the next due to narrow majorities, regardless of who’s in charge. “In an ideal world, Congress could legislate more effectively and reach compromises,” he said. “It’s kind of wishful thinking at this point.”