JULY REPORT
Save The Date: IBA Meeting at NEXUS
IBA Joins with Grain Chain to Submit Comments to the 2025 Dietary Guidelines Advisory Committee
FDA Proposal for Unified Human Foods Program New Role for the Office of Regulatory Affairs
NLRB’s Decision in Atlanta Opera, Inc. Perpetuates Uncertainty in Determining Worker Status Under the NLRA
The excitement in Washington over the 4th of July fireworks quickly passed. The attempts to blow (pun reference) up the White House with investigations turned out to be a giant dud. No one simply cares or wants to hear about circuitous business relations between the Biden Family, then Vice President Joe Biden, and several foreign actors. House and Senate Appropriations Committees are working on respective measures to fund all parts of the Federal Government for FY 2024. Some question if there is enough time to complete that
process in both chambers. Then for Congress to reconcile two versions into single bills for all the divisions of Appropriations before September 30th? Probably not at this rate, despite the lofty goals each chamber shared earlier this year. Realistically, the process will continue past the deadline with annual brinksmanship and threats of Federal Shutdown, especially acute with the bifurcated Republican/Democratic leadership of the House and Senate.
The real news comes from the Unified Regulatory Agendas issued by the White House and the FDA. They both are set on completing a rule for how to define “Healthy” and Front of Pack (FOP) labeling disclosures by the new year. That may not be possible as FDA is still studying FOP with a close eye on the Canadian model. The Food Industry questions FDA’s authority to mandate FOP, which should come from Congress in a similar fashion to Food Labeling Modernization Act. FDA also shared an update on the new Division of Human Foods, a part of their reorganization. The story follows.
In other real news – IBA is meeting in person in Dallas at Nexus. Also, frequent IBA speaker and leader of the Coalition for Independent Entrepreneurs, Russell Hollrah, Esq., shares his analysis of the Atlanta Opera decision by the National Labor Relations Board. Finally, there is a special treat for those who stick it to the end.
Save The Date: IBA Meeting at NEXUS
IBA will be meeting IN-PERSON for a breakfast meeting on September 28th . The Association breakfast will be from 8:00 to 9:30 in the FairPark Two meeting room on the third floor of the Nexus site, the Omni Hotel in Dallas, Texas.
Attendees can look forward to an interactive discussion of baking issues in Washington. Topics should include Dietary Guidelines, White House influence on nutrition issues, Commodity concerns, possible impacts of a government shutdown, and an extensive preview of the upcoming Senate, House, and Presidential Primaries in 2024. One “Allied Spotlight Presentation” will be available on a first-come basis. The meeting is free to attend for all industry participants thanks to the gracious support of IBA members and Allied industry sponsors. To RSVP and learn more about sponsorship opportunities, please contact Nick Pyle (Nick@ibabaker.com).
To register for NEXUS and start receiving event communications regarding programs and networking opportunities. https://nexusofbaking.com/
IBA Joins with Grain Chain to Submit Comments to the 2025 Dietary Guidelines Advisory Committee
IBA was among Grain Chain Members submitting comments to 2025 Dietary Guidelines Committee. The thirteen-page document (17 total with footnotes) is posted on the DGA regulatory docket. The full document link:
https://www.regulations.gov/comment/HHS-OASH-2022-0021-0375.
The comments addressed many aspects of the key role of grains in diet. Topics included:
- Key Definitions
- The relationship between dietary patterns consumed and growth, body composition, and risk of obesity.
- What is the relationship between dietary patterns consumed and risk of cardiovascular disease?
- What is the relationship between dietary patterns consumed and risk of type 2 diabetes?
- What is the relationship between consumption of dietary patterns with varying amounts of ultra-processed foods and growth, body composition, and risk of obesity?
- What is the relationship between consumption of dietary patterns consumed and risk of depression; and risk of cognitive decline, mild cognitive impairment, dementia, and Alzheimer’s disease?
- What is the relationship between:
Complementary feeding and growth, body composition, and risk of obesity?
Repeated exposure to foods and food acceptance?
- Parental and caregiver feeding styles and practices during childhood and
adolescence and 1) growth, body composition, and risk of obesity? 2) consuming a dietary pattern that is better aligned with the DGA?
- What are the current patterns of food and beverage intake?
- What are the current intakes of food groups, nutrients, and dietary components?
- Which nutrients and/or dietary components present a substantial public health concern because of underconsumption or overconsumption?
- What is the current prevalence of nutrition-related chronic health conditions?
- Should foods and beverages with lower nutrient density (i.e. those with added sugars, saturated fat, and sodium) contribute to item clusters, representative foods, and therefore the nutrient profiles for each food group and subgroup used in modeling the USDA dietary pattern?
FDA PROPOSAL FOR UNIFIED HUMAN FOODS PROGRAM
NEW ROLE FOR THE OFFICE OF REGULATORY AFFAIRS
The U.S. Food and Drug Administration updated its proposal to create a unified Human Foods Program (HFP), including a new Office of Regulatory Affairs (ORA) model. These additions to the FDA Commissioner’s proposal announced earlier this year will further enhance coordination, prevention, and response activities across the FDA, enabling the agency to support its public health mission better.
Over the past several months, a cross-cutting working group of agency officials with expertise in different functional and operational areas has been working to identify additional opportunities to bolster operations within the new HFP and ORA.
“With a human food landscape that is rapidly evolving as consumer preferences, products, and manufacturing processes grow increasingly complex, and public health needs increase, the FDA must build a stronger Human Foods Program and Office of Regulatory Affairs. Earlier this year, the FDA announced steps to modernize and streamline our food program, including field operations, to address these mounting challenges,” said FDA Commissioner Robert M. Califf, M.D. “Listening closely to feedback provided by employees and stakeholders, our thinking has significantly broadened. We know that in front of us is a once-in-a-generation opportunity to unify our fieldwork with the priorities of program offices and Centers. This is why I’m proposing several additional changes to ORA, including moving several of the office’s laboratories and merging its current compliance functions into those of the new HFP and other agency product Centers. These proposed changes are designed to help ensure the most strategic use of resources to meet the demands of our increasingly complex public health mission.”
Based on recommendations from the working group and from an external evaluation conducted by an expert panel of the Reagan-Udall Foundation, the FDA is proposing the following additional changes:
Establishing ORA’s core mission as conducting investigations, inspections and imports for all FDA-regulated products, with assignments planned in partnership with the HFP and other product programs or Centers. The new Deputy Commissioner for Human Foods will have oversight of all budget and resource allocations for the entire HFP, including ORA resources.
Merging compliance functions currently managed within ORA into the HFP and the product Centers’ existing compliance functions to streamline operations and expedite decision-making.
Realigning the eight Human and Animal Food laboratories that are currently managed by ORA into the HFP. These eight labs will team up with the four labs in the FDA’s current Center for Food Safety and Applied Nutrition to form a unified food laboratory enterprise under the HFP. The labs will report to a member of the executive leadership team under the Deputy Commissioner for Human Foods, who will work closely with the Chief Scientist and Center for Veterinary Medicine (CVM) director to coordinate on research priorities. These labs will remain open and in the same geographic location under the proposal.
Transitioning certain functions under the Office of Security and Emergency Management, currently in the Office of Operations, to ORA. This includes the Office of Emergency Management, which activates Incident Management Groups with augmented staffing from relevant Centers and Offices to monitor and manage coordinated responses to emergency situations, such as emergencies involving regulated products like recalls, hurricanes, fires, floods, etc.
As previously shared, unifying state and local food safety partnership functions and certain aspects of international food safety partnerships into an Office of Integrated Food Safety System Partnerships in the HFP. This office will report to a member of the executive leadership team under the Deputy Commissioner for Human Foods who will closely collaborate with the CVM director to advance a truly integrated food safety system.
Reviewing support functions across ORA and proposing realignment of certain resources and personnel to support these changes. This includes staff and resources in ORA’s Office of Regulatory Management Operations, Office of Information Systems Management, Office of Training, and Office of Communications and Project Management.
Prioritizing recruitment, retention and training opportunities for field-based employees with the availability of Title 21 hiring authority to support the agency’s ongoing efforts to increase its inspectional activities domestically and internationally.
These proposed changes align with many of the recommendations from the Reagan-Udall
Foundation evaluation and a separate internal review of the agency’s infant formula response completed last year. They also empower the Deputy Commissioner for Human Foods to have full authority over and set the strategic direction of all foods-related resources.
The agency is also providing high-level organization charts to reflect the changes being proposed as part of the unified HFP and new ORA model. To enhance clarity around the proposed core mission of ORA, the FDA is now considering a renaming effort for this office to align its title more appropriately to the structure and functional duties of the agency’s field operations.
“I am deeply grateful to our employees from across the agency who provided candid feedback on our proposal to date through submitted comments and more than 40 internal listening sessions. The changes proposed for Office of Regulatory Affairs today have taken this feedback into careful consideration alongside the recommendations provided through the Regan-Udall Foundation report,” said FDA Commissioner Califf. “I believe these proposed changes will result in a new structure that is more nimble, better equipped to prevent and respond to emergencies, like recalls and enhance the agency’s ability to align inspection resources with our Center and program priorities while also supporting our employees and the public we serve. We will continue to evaluate and make adjustments as we work closely with experts throughout the agency to revamp and enhance our field
operations.”
The FDA recently began a recruitment effort to fill the Associate Commissioner for Regulatory Affairs position, who will lead ORA through the proposed changes and assist the organizational evolution as envisioned in this proposal if approved. The FDA is in the final stages of the Deputy Commissioner for Human Foods recruitment process and will be providing an update soon. The FDA remains on target to finalize its reorganization proposal.
NLRB’S DECISION IN ATLANTA OPERA, INC. PERPETUATES UNCERTAINTY IN
DETERMINING WORKER STATUS UNDER THE NLRA
When determining an individual’s status, as an employee or independent contractor, for purposes of the National Labor Relations Act 1 (“NLRA”), there is no disagreement over the specific test to be used. But there is significant disagreement over how the test is to be interpreted and applied.
The disagreement was highlighted most recently by a June 13, 2023, split decision by the National Labor Relations Board (“NLRB”) in the much-anticipated Atlanta Opera, Inc. case. The principal issue in this case is whether certain makeup artists, wig stylists, and hair stylists were employees of the Atlanta Opera, Inc. for purposes of the NLRA. Notwithstanding the disagreement over the interpretation of the test, both the majority and the dissenting opinions agreed that – under either interpretation – these workers were employees.
This decision is almost certainly not the final word on this issue, however. Many believe the decision will be appealed. And if the case is appealed, it is possible that the losing party would seek review by the U.S. Supreme Court.
This decision should be of interest to businesses operating in any industry for at least two reasons. First, while a specific industry might not be a target of unionization at this time, that could change. Second, the interpretation given the common-law factors in one context, e.g., for purposes of the NLRA, can sometimes affect the interpretation given the common-law factors in a different context, e.g., federal employment taxes, state unemployment taxes, and the Affordable Care Act.
The applicable test for determining an individual’s status under the NLRA (which is not in dispute) is the common law test, as articulated in the Restatement (Second) of Agency. This test consists of a non-exhaustive list of 10 factors to consider in deciding whether a worker is an independent contractor: (1) the extent of control the employer has over the work; (2) whether the worker is engaged in a distinct occupation or business; (3) whether the kind of occupation is usually done under the direction of the employer or by a specialist without supervision; (4) the skill required in the particular occupation; (5) whether the employer or worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (6) the length of time for which the person is employed; (7) whether the employer pays by the time or by the job; (8) whether the worker’s work is a part of the regular business of the employer; (9) whether the employer and worker believe they are creating an employer-employee relationship; and (10) whether the employer is or is not in business. Lancaster Symphony Orchestra v. NLRB, 822 F.3d 563, 565–566 (D.C. Cir. 2016) (quoting Restatement (Second) of Agency § 220(2) (1957)).
1 The National Labor Relations Act is a federal statute governing employees’ right to form or join a union and to bargain collectively with their employer.
The U.S. Court of Appeals for the District of Columbia – in a 2009 decision holding that delivery drivers under contract with FedEx Home Delivery qualified as independent contractors under the NLRA – explained that when applying the 10-factor test in this context: while all the considerations at common law remain in play, an important animating principle by which to evaluate those factors in cases where some factors cut one way and some the other is whether the position presents the opportunities and risks inherent in entrepreneurialism. 2 But five years later, in a 2014 decision, the NLRB refused to follow this interpretation. It held that delivery drivers under contract with FedEx Home Delivery– but at a different location – were employees. 3 That decision was appealed to the D.C. Circuit, which, in a 2017 decision, reversed the NLRB’s decision
and reiterated its interpretation of the test. It also held that the delivery drivers – at the other FedEx location – were independent contractors as well under the NLRA. 4 Two years later, in SuperShuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019), the NLRB applied the D.C. Circuit’s interpretation.
Most recently, the NLRB in Atlanta Opera, Inc., once again refused to follow the D.C. Circuit’s interpretation and explicitly overruled its decision in SuperShuttle.
The principal difference between the two competing interpretations of the 10-factor common-law test involves the role of “entrepreneurship” in applying the test.
1. The Majority Opinion in Atlanta Opera, Inc.
A. The Role of Entrepreneurship Generally
The majority opinion in Atlanta Opera, Inc. – which rejects the D.C. Circuit’s interpretation –
argues that in the context of weighing all relevant, traditional common-law factors, including those identified in the Restatement, consideration should be given to whether the evidence tends to show that the putative independent contractor is, in fact, rendering services as part of an independent business. And evidence of entrepreneurial opportunity is to be considered when applying this factor.
The majority also asserts that when applying the independent business factor, consideration should be given not only to whether the putative contractor has a significant entrepreneurial opportunity, but also to three additional aspects of the relationship, namely, whether the putative contractor: (i) has a realistic ability to work for other companies; (ii) has proprietary or ownership interest in their work; and (iii)
has control over important business decisions, such as the scheduling of performance; the hiring, selection, and assignment of employees; the purchase and use of equipment; and the commitment of capital.
B. Determining Whether A Right of Entrepreneurship Exists
Both competing interpretations agree that weight should be given to actual (but not merely
theoretical) entrepreneurial opportunity, and that if a company offers its workers entrepreneurial opportunities that they cannot realistically take, then that does not add any weight in favor of the workers being independent contractors.
But the majority opinion – which rejects the D.C. Circuit’s interpretation – argues that if only a small percentage of workers in a proposed bargaining unit have pursued an opportunity, this tends to show that it is not, in fact, a significant aspect of their working relationship with the putative employer. And if the day-to-day work of most individuals in the unit does not have an entrepreneurial dimension, the mere fact that the individuals’ contracts with the employer would permit activity that might be deemed entrepreneurial is not sufficient to deny them classification as statutory employees.
2 FedEx Home Delivery v. N.L.R.B., 563 F.3d 492, 497 (D.C. Cir. 2009).
3 FedEx Home Delivery, 361 N.L.R.B. 610 (Sept. 30, 2014).
4 FedEx Home Delivery, 849 F.3d 1123, 1127 (D.C. Cir. 2017).
2. The Dissenting Opinion in Atlanta Opera, Inc.
A. The Role of Entrepreneurship Generally
By contrast, the dissenting opinion – which follows the D.C. Circuit’s interpretation – argues that entrepreneurial opportunity is an important “animating principle” by which to evaluate the traditional common law factors used to differentiate employees from independent contractors. The dissenting opinion asserts that entrepreneurial opportunity should not be limited to being just one aspect of the analysis of a single factor (as the majority argues); rather, it should be applied as a principle to help evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain.
B. Determining Whether A Right of Entrepreneurship Exists
The dissenting opinion agrees that weight should be given only to actual (not merely theoretical) entrepreneurial opportunity. But the dissent – which follows the D.C. Circuit’s interpretation – argues that if at least one person has seized an opportunity, this is sufficient to establish that an actual opportunity exists because “there is no unwritten rule or invisible barrier” preventing others from taking such opportunities.
3. Practice Pointers
The two competing interpretations of the test are concededly nuanced. Some commentators have argued that the differences are relatively insignificant. But in my view, the differences could have a profound impact on the outcome of certain cases. The different interpretations certainly resulted in different outcomes in the two cases involving delivery drivers under contract with FedEx Home Delivery. This suggests that the differences, indeed, are significant and can affect the outcome.
A. The Role of Entrepreneurship Generally
The majority opinion would restrict consideration of entrepreneurial opportunity to the limited context of one factor, namely, whether a putative independent contractor is rendering services as part of an independent business. And it would further diminish the impact of this consideration by combining entrepreneurial opportunity with three additional aspects. By contrast, under the dissenting opinion’s analysis, entrepreneurial opportunity would be the “animating principle” guiding the interpretation of the common-law factors.
Courts routinely observe that a multi-factor common-law test is not to be mechanically applied but is to be used as an analytical tool for evaluating a work relationship. But without a defined principle to guide the evaluation, the interpretation to be given the factors remains an open question. This can lead to unpredictable outcomes. The NLRB in its SuperShuttle opinion characterized its 2014 decision in FedEx Home Delivery as reviving the “economic realities” test, which measures “economic dependency.” This is a much broader test, which courts apply in worker-status determinations for purposes of the Fair Labor Standards Act. In essence, the NLRB in SuperShuttle argues that its 2014 FedEx Home Delivery decision adopted the concept of “economic dependency” as the principle guiding the interpretation of common-law factors. When applying the common-law factors in any context, it is arguably necessary that there be some principle to guide the analysis. For example, in the context of federal employment taxes, which applies a 20-factor common-law test, the principle guiding the interpretation of these factors is whether
the engaging entity retains the requisite right to control the worker with respect to the means and methods of performance.
It follows that when applying the 10-factor common-law test for purposes of the NLRA, some principle needs to be identified that will guide this analysis. The dissenting opinion asserts that the guiding principle should be entrepreneurial opportunity, while the majority opinion arguably suggests that the guiding principle should be economic dependency. The application of the 10 common-law factors to a specific set of facts could be materially different when analyzed under these two quite different guiding principles.
B. Determining Whether A Right of Entrepreneurship Exists
The different interpretations of a finding that only one individual, or only a few individuals, have taken advantage of an entrepreneurial opportunity that is available could materially affect the outcome in a case. The majority opinion would treat such a finding as indicating the absence of an entrepreneurial opportunity, whereas the dissenting opinion would treat such a finding as demonstrating the existence of an entrepreneurial opportunity. Thus, the same finding would lead to diametrically opposite conclusions under the competing interpretations.
The majority’s interpretation would increase the risk to a company that does business with
independent contractors, because a company seldom knows for certain the extent to which the individuals with whom it does business actually do seize the entrepreneurial opportunities that are available to them.
4. Not the Last Word on This Issue
As noted, it is probable that this decision will be appealed to the D.C. Circuit Court of Appeals. Many suspect that if the case is so appealed, the D.C. Court of Appeals will reaffirm – now for the third time – its interpretation of the test. Importantly, the D.C. Circuit noted in its 2017 decision that since the NLRB chose not to seek Supreme Court review of its 2009 FedEx Home Delivery decision, the NLRB cannot effectively nullify that decision by asking a second panel of the D.C. Circuit to apply the same law to the same material facts but give a different answer. Similar reasoning arguably would apply with respect to the D.C. Circuit’s 2017 decision. This suggests that the D.C. Circuit could feel bound to, once again, reaffirm its interpretation of the test.
The uncertainty that has been clouding this issue arguably makes a compelling case for the
Congress to codify a definitive interpretation of the common-law test for purposes of the NLRA – and all federal statutes.
* * *
An Englishman and an Irishman go to a bakery. The Englishman steals three buns and puts them into his pockets, and moves away. He tells the Irishman: “That took great skill and guile to steal those buns. The owner didn’t even see me.”
“That’s just simple thievery,” the Irishman replied. “I’ll show you how to do it honestly and get the same results.”
The Irishman then called out the bakery’s owner and said: “Sir, I want to show you a magic trick.” The owner was intrigued, so he came over to see the magic trick. The Irishman asked him for a bun, and then he proceeded to eat it.
He asked two more times, and after eating them again, the owner says: “Okay, my friend, where’s the magic trick?” The Irishman then said: “Look in the Englishman’s pockets.”