Labor Department Sets USMCA Labor Value Content Rules for Autos
The Labor Department is seeking comments on its interim rules for how automakers can establish that enough of their vehicles were produced with $16/hour labor. Stakeholders have until Aug. 31 to comment.
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“This ... explains how producers must calculate the average hourly base wage rate, including what kind of work must be included in the calculation and how to treat certain workers for purposes of the calculation,” the rule says.
The U.S.-Mexico-Canada Agreement had made it clear that benefits, such as health insurance, were not to be included in the base rate. The Labor Department now says: “In determining the hourly base wage rate for each worker, the producer must exclude all benefits, bonuses, premium payments, incentive pay, overtime premiums, and all other similar payments. 'Similar payments' include, for example, profit-sharing bonuses, tooling allowances, collective bargaining agreement ratification bonuses, and performance bonuses.”
If production workers (not engineers or managers) spend at least 85% percent of their work hours in setting up tooling and in producing parts or vehicles, then all of their wages can be used in the denominator, the rule says.
There are no special rules for part-time workers, because the average is not done individually, but rather is the number of production hours paid across the plant (or across many plants that make a model) divided into the total wages in production. Contract and temporary workers are also treated the same as direct hires.
Shipping, logistics and trucking workers can count toward the average if they weren't already included in purchase value calculations.
Wage data should be retained for five years for audits.
The federal government estimated it will cost 6,140 companies $6.1 million a year annualized over 10 years to comply, collectively.
(Federal Register 07/01/20)