As Health Care in Congress Stumbles and Governors Exert More Influence, the Preemption Debate Has Emerged but So Too a Powerful New Advocate for Uniformity

7/7/17

Of the many reasons attributed to Senate Republicans having difficulty reaching agreement on health care, one is either the lack of support or the outright opposition coming from Governors of both parties to the proposed legislation.  Employers should be concerned with this, because a subtext in the debate has been the belief by many that the answers lie within the states, a view that chips away at the concept of federal preemption.  For multi-state employers, preemption means operating across state lines without the traps of conflicting state, county and local rules.  Unfortunately, preemption is viewed skeptically by both Governors and most everyone in Congress.  Good news, then, that a powerful new industry has emerged which has discovered the pitfall of 50 states going 50 different ways and is making its presence felt—the makers and users of autonomous vehicles.  And in speaking up, they are echoing many of the same themes that employers have been advocating for years with respect to employment policy.

Why is preemption important for employers?  Today, it is only necessary to deal with the federal National Labor Relations Act for union related matters and ERISA when administering health, welfare and pension plan benefits.  There are no similar restraints, however, for much of the remaining elements of employment policy, including compensation, overtime, leave and scheduling.  In those instances, each state, county and city is free to enact its own regulatory scheme.  One would think experience with this cacophony would encourage policymakers to work towards uniformity, but just the opposite is the case.

One example is a recent opinion piece co-authored by Republican Governor John Kasich of Ohio and Democratic Governor John Hickenlooper of Colorado, both of whom are strongly opposed to the Republican measures in Congress.  They articulate health care "guiding principles," one of which is the following: "As laboratories of democracy, states can develop innovative approaches with the potential to strengthen health insurance for all Americans.  Within broad standards, states should have appropriate flexibility to implement terms in a manner that is responsive to local and regional market conditions."  Note the absence of the word "national."  Despite all the industry lobbying on the need for uniformity in benefit administration, rarely is seen what should be a bedrock national policy: Because there are more than 170 million Americans who receive their health care through their employer, policymakers should ensure that they not only won't negatively impact that relationship, they will do whatever is necessary to support employer sponsored insurance.

Republicans and Democrats usually reach the same conclusion on preemption but for different reasons.  Republicans tend to be opposed to federal preemption because they prefer strong local government.  Democrats want to use state legislatures and city governments to enact policies ratcheting up regulation of the workplace that has been blocked in the nation's capital.  That's why Congress has a Bourbon Caucus and Boating Caucus, but will never have a Preemption Caucus.

So, what do employers administering employment and benefit policies have in common with Google, Ford and others of the autonomous auto industry?  One answer is found in an article in the 2016 Berkeley Technology Law Journal, entitled "Autonomous Vehicle Regulation: How an Uncertain Legal Landscape May Hit the Brakes on Self-Driving Cars."  It quotes the CEO of Volvo saying that "regulatory rather than technological hurdles are the biggest barriers to moving forward with self-driving tech."  It's all about liability.  In an accident, will the manufacturer be at fault or the driver who isn't really driving or the other driver/non-driver, and which state's law applies?  The author concludes, "It may be difficult to design a self-driving car that can comply with certain state laws, and many laws may be such a bad fit for autonomous vehicles that it would be impractical and illogical to ask drivers to adhere to them."

In Pennsylvania, for example, it’s unlawful to honk a horn at a bicyclist when passing while New Jersey requires it.  In most states, it's illegal to pass vehicles by crossing a double yellow line except in Vermont where it's legal.  California is the only state that allows motorcycles to lane-split around cars in traffic.  And there are the following-distance laws which differ by state.  Each would likely come into play in an accident situation.  In other words, a coder's nightmare.

Both the House and Senate Commerce Committees have taken up the call for a uniform, nationwide set of vehicle laws for autonomous vehicles and are doing so on a bipartisan basis.  In fact, legislation could be introduced and moved out of committees before the August recess.  As the President of the Alliance of Automobile Manufactures said at a Senate hearing, "When the car becomes the driver, regulatory chaos ensues.  A patchwork of different requirements across states is a recipe for delayed deployment and delayed utilization."

The same, of course, could be said about eliminating the ERISA preemption and turning regulation of benefit plans for multi-state employers over to the individual states—chaos.  That's why employers should watch carefully the coming debate over autonomous vehicle legislation.  It will be a powerful reminder to policymakers that while local regulation is important to address local needs, exceptions need to be made for national concerns.  As said by Sen. John Thune (R-ND), the lead Senate sponsor of the legislation, "Self-driving vehicle technology will have a transformational impact on highway safety" as bad drivers are replaced by self-driving cars.  We need that same kind of transformation in our employment policies as well.  Work in this century is increasingly virtual and can involve teams of people working simultaneously on the same project in a variety of legal jurisdictions, each with its own employment policies.  It is, to paraphrase the autonomous vehicle industry’s legal advocate, impractical and illogical to ask employers to adhere to them.