Regulatory and Legal Reform

Unnecessary regulations and excessive red tape prevent us from reaching new levels of achievement and make it harder for small businesses to compete. We need regulatory and legal reforms that unleash our industry and supports the work of men and women nationwide.

Policy and Legal

The SEC Brings Sense to the Proxy Process

The Securities and Exchange Commission changed an important standard for publicly traded companies today—the amount of stock that a shareholder must have to put proposals on the proxy ballot (which the full shareholder base votes on every year).

It might sound like a small thing, but this “threshold” is a big deal. NAM Director of Tax and Domestic Economic Policy Charles Crain broke it down in a recent interview.

The previous standard: Previously, any shareholder holding $2,000 in stock for one year could put a question on the ballot, Crain explains. Since that’s a relatively low number, activists would go to dozens of companies and buy $2,000 of stock at each—not because they were interested in the companies’ performance, but because they wanted a platform on which to debate political issues.

Here’s a data point that illustrates the extent of the problem: In 2019, just three people sponsored 38% of all shareholder proposals at Fortune 250 companies, Crain says.

The resubmission problem: Once something was on the proxy ballot, it was also easy to resubmit it the following year, adds Crain. A ballot question only needed 3% support among shareholders to stay on the ballot for a second year. If it was voted down a second time, it had to get 6% to move forward the next year and just 10% after that. “Ninety percent of shareholders could reject a measure forever, and it could still get resubmitted every year,” Crain says.

What’s changed? The SEC’s new rule creates tiered thresholds, which will give more power to long-term shareholders.

  • To submit a proposal after holding stock for just one year, an investor now needs to hold $25,000 in stock.
  • If an investor holds stock for two years, the threshold drops to $15,000.
  • If an investor holds stock for three years, it drops to $2,000.

The rule also changes resubmission thresholds to 5% after one vote, 15% after two votes and 25% after three votes to keep a failing question on the ballot in consecutive years. Some measures take time to gain support, and the rule allows for that while taking a more commonsense approach, Crain says.

Why it matters: Holding repeated proxy votes can be time- and resource-intensive for companies, says Crain, and politically motivated proposals distract businesses and investors from the real issues that drive long-term value creation for shareholders.

The NAM’s actions: Crain says, “The NAM has called for proxy reforms for years, and we’ve engaged with both Congress and the SEC to highlight the need to modify the proxy ballot thresholds. Last November, NAM President and CEO Jay Timmons praised the SEC for proposing a rule to combat activists that ‘pressure manufacturers to focus on political issues at the expense of company growth,’ and our comments on the proposal helped lead to today’s final rule. We’ve pushed for this outcome for years—and we’re glad the SEC has come down on the right side.”

Policy and Legal

Trump Threatens Executive Actions for COVID-19 Relief

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President Trump threatened to use executive actions if Republicans and Democrats can’t reach a deal on the next round of stimulus, reports The Washington Post (subscription). How much he can accomplish unilaterally is unclear, however.

What he said: “We’re negotiating right now as we speak, and we’ll see how that works out,” Trump said. “In the meantime, my administration is exploring executive actions to provide protections against eviction . . . . As well as additional relief to those who are unemployed as a result of the virus. Very importantly, I’m also looking at a term-limited suspension of the payroll tax.”

Meanwhile, on Capitol Hill: Democrats and Republicans intended to come to a deal by the end of this week. The latest word is that it will happen “in the near future,” according to Senate Majority Leader Mitch McConnell.

NAM connection: The NAM has been urging Congress to include liability protections in the next stimulus package. To that end, it organized a “Day of Action” yesterday on social media, calling for “commonsense protection from opportunistic lawsuits in order to fuel our recovery and help creators respond to this crisis.” A range of groups and organizations participated in the Day of Action, including the Minnesota Chamber of Commerce, the Michigan Manufacturers Association and the Illinois Manufacturers’ Association.

Policy and Legal

How to Measure the Threat of Liability Lawsuits

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How many lawsuits have been filed over alleged COVID-19 exposure at businesses? That’s not the real question, say the NAM’s legal experts. The real question is: how many will be filed over the next three to five years?

A recent legal analysis shows that only 5% of lawsuits filed since March fall into the category of COVID-19 liability—but don’t be misled by that, says NAM Vice President of Legal and Deputy General Counsel Patrick Hedren.

Here are some pertinent facts to keep in mind:

  • The vast majority of states have a two- or four-year statute of limitations period for bringing tort lawsuits.
  • No state has a limitation of less than one year, and some allow lawsuits after four or even six years. Which means . . .
  • The flood of COVID-19-exposure litigation isn’t expected until spring 2022 when these claims start to expire.

In other words, focusing on today’s numbers obscures a coming wave that could overwhelm businesses at a time when they can least afford it.

And here’s the case for targeted liability protections, says Hedren:

  • Business leaders have been doing the best they can with the information they have in an evolving situation.
  • Guidelines from the early days of the pandemic have been refined, rewritten and sometimes replaced.
  • In many cases, local, state and federal guidelines have all conflicted with one another, creating a no-win situation for businesses that could face trouble no matter what they do.

The solution: Legislation offered by Senate Republicans—and vigorously pursued by the NAM—actually gives teeth to evolving safety measures by shielding businesses from liability if they make reasonable efforts to follow public health guidelines. (In many ways, it seems that Senate Majority Leader Mitch McConnell (R-KY) is reading from the NAM’s liability playbook.) If businesses engage in “gross negligence or willful misconduct that caused an actual exposure to coronavirus,” they remain open to lawsuits.

The last word: “The way to deal with safety is through thoughtful guidance that can stay fresh as the science evolves—not through a mess of court cases in thousands of jurisdictions across the country,” said Hedren. “Businesses across the country need commonsense liability protections that depend on adherence to safety standards, promote certainty and strengthen their ability to serve their community and the country.”

Press Releases

Manufacturers on SAFE TO WORK Act

Washington, D.C. – Manufacturers of all kinds have been called on to continue to operate as critical infrastructure to support our nation’s response to the COVID-19 crisis. For that reason, they risk becoming targets in a wave of COVID-19-related lawsuits or enforcement actions based on product liability, alleged workplace transmission and even Good Samaritan efforts. National Association of Manufacturers Senior Vice President and General Counsel Linda Kelly released this statement after lawmakers announced the Safeguarding America’s Frontline Employees To Offer Work Opportunities Required to Kickstart the Economy (SAFE TO WORK) Act:

“Throughout this crisis, we have seen clear bipartisan support for provisions like these that protect companies doing their very best to implement the latest guidance, even in a difficult and confusing environment. The SAFE TO WORK Act mirrors the liability recommendations proposed by manufacturers as part of our ‘American Renewal Action Plan’ in April.

“Importantly, the SAFE TO WORK Act also provides clear avenues for holding bad actors responsible for reckless behavior, while providing powerful incentives for all employers to do everything they can to prevent the spread of COVID-19. This is the type of thoughtful, responsible approach we need that will provide manufacturers and other frontline businesses with targeted protections limited only to the COVID-19 pandemic. It’s about supporting manufacturers that have risen to the challenge and supported our nation during this unprecedented crisis, finding solutions to make PPE for health care workers, to produce food and supplies for families and to develop vaccines and treatments for us all.”

NOTE: In April, manufacturers laid out their “Pandemic Liability Policy Recommendations” as part of the NAM’s “American Renewal Action Plan.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 11.7 million men and women, contributes $2.37 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Policy and Legal

Republicans Release $1 Trillion Stimulus Proposal

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The next round of stimulus is in the works, with Senate Republicans releasing their proposal and Democrats meeting with White House officials yesterday, reports The Washington Post (subscription). Some highlights of the new proposal:

  • Five-year COVID-19-related liability protections for businesses, health care providers and schools.
  • $100 billion or more for the Paycheck Protection Program, which benefits small businesses.
  • Another round of $1,200 checks for Americans and financial support for schools.
  • A reduction in emergency employment benefits from $600 to $200 per week, until states can set up their own unemployment programs to pay 70% of income. (A reminder: the current benefits run out very soon.)

The NAM says: NAM Vice President of Government Relations Jordan Stoick points out some of the advantages of the plan for manufacturers:

  • “Manufacturers were glad to see many of the priorities from our ‘American Renewal Action Plan’ included in this proposal, including targeted liability protections for manufacturers and other essential frontline businesses that have operated during the COVID-19 pandemic, and increased funding for the Paycheck Protection Program, which has provided critical liquidity for manufacturers.”
  • “The proposal also includes more funding for testing as well as tax incentives for manufacturers that keep their employees on payroll during the COVID-19 pandemic and to help manufacturers invest in PPE and other safety measures to keep their facilities clean and their employees and customers safe.”
  • “The NAM will remain fully engaged in the days ahead with members of the House and Senate to urge them to come together in a bipartisan way to finalize a plan that includes these important provisions.”
Policy and Legal

The NAM Takes Aim at Counterfeiting

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Business advocates and policymakers have a new tool for waging an aggressive effort against counterfeiting during the pandemic and beyond. The NAM has released a new report, “Countering Counterfeits,” which includes proposed solutions for Congress, the administration and the private sector to pursue.

The numbers: According to the NAM’s research, fake and counterfeit products cost the United States $131 billion and 325,000 jobs in 2019 alone.

The rising tide: The rise of e-commerce has caused an explosion in fake products, particularly from China. E-commerce has created a pipeline to consumers that counterfeiters can exploit while hiding their identities and evading oversight. Estimates now indicate that global trade in counterfeits exceeds $500 billion per year.

The plan: The NAM’s proposal pushes for a series of actions to help curb counterfeiting, including:

  • Requiring e-commerce platforms to reduce the availability of counterfeits;
  • Modernizing enforcement laws and tactics to keep pace with counterfeiting technology;
  • Streamlining government coordination to tackle counterfeit items;
  • Improving private-sector collaboration; and
  • Empowering consumers to avoid counterfeit goods.

The NAM says: President and CEO Jay Timmons said in his introduction to the report, “The prevalence of counterfeits in the COVID-19 response has brought new urgency to this long-simmering issue. So the National Association of Manufacturers is leading the charge against fake and counterfeit goods, bringing together diverse stakeholders and driving innovative policy solutions to address these issues once and for all and to ensure the long-term success of our sector and the safety and security of the people who rely on our products.”

Press Releases

Manufacturers Back Ambitious CO2 Standards for Aerospace Sector

EPA proposal strengthens the aviation industry against international competitors

Washington, D.C. – Following the EPA’s emissions standard proposal for airplanes to align U.S. standards with those set by the International Civilian Aviation Organization, NAM’s Vice President of Energy & Resources Policy Rachel Jones released the following statement:

Manufacturers are committed to smart, strong environmental protections, improving the lives of all Americans. The newest airliners are as fuel efficient as a hybrid electric car, all while making trips of a lifetime possible, and we are on the cutting edge of next-generation technologies. Modern aircraft are 80% more carbon efficient than the first airliners, and a flight today has half the carbon-footprint of the same flight in 1990. That’s why that the NAM has been pushing the EPA to set ambitious CO2 standards for the aerospace sector, to strengthen the aviation industry against international competitors, propel our economic renewal and continue leading the world in carbon reductions. We support the EPA’s proposal to set standards in line with international standards that will put the American aerospace sector in a position to continue leading on a global stage.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 11.7 million men and women, contributes $2.37 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Press Releases

Manufacturers Score “Major Win” on Final SEC Proxy Advisory Firm Regulations

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released this statement after the Securities and Exchange Commission issued final regulations on proxy advisory firms and supplemental guidance on asset managers’ use of these firms:

“The SEC has listened to manufacturers, and this announcement is a long-sought, major win for the industry and millions of manufacturing workers,” said Timmons. “These changes will protect the retirement savings of manufacturing workers and millions more American families from proxy firms’ errors and conflicts of interests. The SEC’s actions today will reduce proxy firms’ influence on important business decisions and instead empower manufacturers to prioritize investors’ long-term best interests, allowing us to better lead our country’s recovery and renewal at this critical time.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 11.7 million men and women, contributes $2.37 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Business Operations

SCOTUS Protects LGBT Workers’ Rights

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The United States Supreme Court Building at sunset in Washington DC, USA.

The Supreme Court ruled today that civil rights law protects employees from discrimination on the basis of their sexual orientation and gender identity, reports the Wall Street Journal (subscription).

The ruling: “The high court, in a 6-3 decision, said the broad language of the Civil Rights Act of 1964, which outlaws workplace discrimination on the basis of sex, should be read to cover sexual orientation as well.”

  • “Conservative Justice Neil Gorsuch wrote the opinion, which was joined by Chief Justice John Roberts in addition to the four more liberal members of the court.”

Here’s the legal reasoning behind it:

  • “[The] case was simple, Justice Gorsuch found. He focused on the text of the statute Congress passed in 1964, forbidding workplace discrimination against an individual ‘because of…sex.’”
  • “There was no getting around it, he said: ‘An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it wouldn’t have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.’”

NAM President and CEO Jay Timmons welcomed the news and said in a statement:

  • “This ruling, one of the most consequential since Obergefell, not only sends a powerful message of inclusion and equality to millions of Americans but also affirms that LGBT Americans cannot be fired just for being their authentic selves as work.
  • “Too many LGBT Americans go to work every day hiding who they are or whom they love because they believe that simply living authentically would mean losing their jobs and livelihoods. The Supreme Court has begun to lift that heavy emotional burden and made history by affirming that LGBT workers are entitled to federal protections too.
  • “For our part, manufacturers are committed to building diverse and inclusive workplaces, a mission that has taken on renewed importance in recent weeks. We will continue to be advocates for equal opportunity and champions for justice—because ultimately we know that diversity and inclusion makes our workplaces stronger, just as it makes our country stronger.”
Press Releases

Manufacturers Call on Iowa Policymakers to Protect Industry

Des Moines, IA / Washington, D.C. – On Tuesday, June 9, Iowa Association of Business and Industry President Mike Ralston and National Association of Manufacturers President and CEO Jay Timmons called for thoughtful liability protections to ensure the manufacturing industry can continue to drive the renewal of America’s economy. The organizations support policymakers’ efforts in Des Moines and Washington, D.C., to protect manufacturers from baseless bad-faith COVID-19 lawsuits.

In April, the NAM released its “American Renewal Action Plan,” which provides a comprehensive list of policy recommendations to guide the country through the stages of response, recovery and renewal. This plan includes a comprehensive set of pandemic liability policy recommendations.

“Everyone wants to get the economy open in a way that protects Americans’ health and well-being, which is why manufacturers have been leading the way to protect their workplaces and safeguard employees. Throughout this crisis, manufacturers have been working to do the right thing, providing vital supplies and essential products. Letting manufacturers now become the target of inappropriate lawsuits will stall our economic recovery,” said Timmons. “Iowa leaders can prevent this. Smart liability protections will ensure manufacturers can continue leading—and get more Iowans back to work.”

“Iowa manufacturers and their employees have been hard at work throughout this pandemic, doing all they can to keep themselves and Iowans healthy and to keep the economy moving.  To now have them be the victims of improper legal action is simply wrong. ABI calls on Iowa legislators to act on this issue important to manufacturers and all Iowa businesses,” said Ralston.

More information can be found at https://nam.org/liability.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 11.7 million men and women, contributes $2.38 trillion to the U.S. economy annually, has the largest economic multiplier of any major sector and accounts for 63% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the Manufacturers or to follow us on Shopfloor, Twitter and Facebook, please visit www.nam.org.

-ABI-

The Iowa Association of Business and Industry (ABI) has been the voice of Iowa business since 1903. Its mission is to provide a strong, unified voice to business and industry on issues affecting Iowa employers. ABI is comprised of 1,500 member companies of all types and sizes in all 99 counties employing more than 330,000 Iowans.

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