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Changes in Employment Law and the Workplace Under Obama and New Congress

by Al Vreeland

As with old girlfriends, we don’t always appreciate what we have in life until we don’t have it anymore. Employers have enjoyed pretty smooth sailing for almost a decade now. The feds have imposed relatively few new regulations, the courts have looked at most employment lawsuits with a skeptical eye, and unions have had little success in expanding their reach and in fact have struggled to hold on to what they already have.

To ice the cake, an economic boom changed the employee mindset. In the tight labor market, when an in-demand employee thought his boss was a jerk, he jumped to the next job. Employees controlled their own destiny — without government agencies, lawsuits, or unions. The result was fewer legal headaches for employers.

A storm now looms on the horizon. Employees are no longer house- and 401(k)-rich. Those that still have jobs cling to them; they are no longer the self-reliant masters of their own destiny. Employees are looking to Washington and the courts for help. And not without coincidence, they will have a sympathetic ear in D.C. come January 20. Here’s what we see brewing.

Keep up with the latest changes in federal employment law legislation and regulations with the Federal Employment Law Insider

Judicial baby boom
Former President Ronald Reagan’s legacy in the employment arena was firing the air traffic controllers during the Professional Air Traffic Controllers Organization’s strike — stymieing union organizing for decades. President George W. Bush’s legacy has been his appointments to the federal bench — justices who have taken a skeptical view toward employment lawsuits, tossing a record number out of court and discouraging some from filing at all.

President-elect Barack Obama will likely have the opportunity to change that momentum through his judicial appointments. A number of judges at the federal circuit level are nearing retirement and several federal circuit courts have vacancies as well, creating the opportunity for a record number of new appointments.

Agency appointments
The National Labor Relations Board (NLRB) (which decides issues related to unions and union organizing) comprises five members, three of whom are from the party in power. It doesn’t take fancy schooling to divine that the Democratic appointments will be prolabor. And as with every change in power in the White House, the new Board will likely undo many of the decisions handed down by the previous Board. Buckle your seat belts.

The changes in other agencies, such as the Occupational Safety and Health Administration (OSHA) and the Office of Federal Contract Compliance Programs (OFCCP) (which oversees affirmative action plans), may not be as dramatic, but expect increased emphasis on enforcement activities and more aggressive rule making.

Thank you, unions
Organized labor was instrumental in helping Obama obtain the nomination and the presidency. Labor’s legislative “wish list” is topped by the ironically named Employee Free Choice Act (EFCA). In its current form, the Act eliminates secret- ballot elections and allows union representation based on signed cards. When an employer and a newly elected union are unable to reach an agreement on the terms of a first contract, the Act provides that the terms will be set by federal arbitrators. It also increases the damages provisions for violations of the National Labor Relations Act (NLRA).

From an employer’s perspective, the greatest risk isn’t the loss of the secret-ballot vote (if there are no cards signed, there can be no union). Rather, the biggest risk to the business community is the mandatory contract requirement. Under current law, a union trying to organize your employees can’t guarantee them a contract if they win. Thirty percent of the time, a newly elected union never gets a contract. Under the EFCA, in organizing your employees, a union could campaign on the promise of a contract and contrast that guarantee with the language in your handbooks stating that they are terminable at will and that your handbook is not a contract.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including labor unions and organizing

Other labor initiatives
Unions are pursuing a number of other initiatives as well, including:

  • increasing the opportunity for public-sector first responder employees to unionize under the Public Safety Employer-Employee Cooperation Act;
  • providing neutrality in union-organizing campaigns and voluntary recognition through the Patriot Employer Act;
  • repealing the “right-to-work” law of the NLRA, which makes union shop language illegal in several states; and
  • changing the statutory definition of “supervisor” under the NLRA to provide that a supervisor may be considered an eligible bargaining unit employee.

Because of the focus on the economic crisis and the divisiveness of labor legislation, we expect that this agenda will be pushed before the 2010 midterm elections, but it will not be pushed by the President early.

Employment legislation
In the Senate, Obama was a cosponsor of the Equal Remedies Act and the Independent Contractor Proper Classification Act (ICPCA). The Equal Remedies Act proposes to lift the caps on damages available to prevailing parties in employment discrimination claims. Currently, the damages cap is $300,000; there would be no ceiling under the proposed legislation. The ICPCA focuses on the requirements for an individual to be a bona fide independent contractor and the economic consequences for employers that misclassify independent contractors. This legislation extends broader workplace rights to independent contractors while increasing the tax revenue that would be generated by classifying contractors as employees.

Other legislative changes
We expect proposals to revise the Family and Medical Leave Act (FMLA). One proposal reduces the threshold of coverage from 50 employees to 25 employees. Additional changes include providing leave for eldercare and domestic violence, parent-teacher conferences, and child-related activities. One of the most drastic changes would require you to provide employees with up to seven paid sick days per year.

The Employment Non-Discrimination Act, which would prohibit discrimination based on sexual orientation, is likely to pass.

The Lilly Ledbetter Fair Pay Act addresses how much time an employee has to make a claim for gender-based wage discrimination. The legislation seeks to undo a U.S. Supreme Court case that concluded that the time for filing a claim begins to run when the initial wage disparity occurs, rather than when the employee discovers the disparity or every time the employee receives a paycheck affected by the initial disparity.

We also expect to see legislation that will propose minimum wage increases, even though the minimum wage is scheduled to increase to $7.25 per hour in July 2009. We do not expect legislative initiatives directed toward exempt and non-exempt status.

Wage and Hour Compliance Manual

Concluding thoughts
Until we’re well into the economic recovery, we expect to see employees resorting to the courts more often. Jurors — most of whom are employees also — will be more sympathetic to the plight of employees done wrong by their supervisors or left out in the cold by their employers.

The labor and employment legislative agenda during the first two years of the Obama administration will move rapidly through the House of Representatives but will run into filibuster difficulties in the Senate. The question is when, not if, President-elect Obama will push for labor and employment legislation. Compromises are likely on some of these legislative issues. However, you should be prepared for a change in the legislative and regulatory environment, and consider creative approaches for employee relations and risk management.