Changes Employers Can Expect

A recent article in Human Resource Executive Online provided this glimpse of what HR personnel can expect with a new administration in Washington, D.C. In this article, two experts offer a preview of the significant changes to the labor and employment laws that may occur with a Democrat in the White House and a democratically controlled Congress. The Employee Free Choice Act – pro-union legislation that has gotten the most media coverage – is only one of the workplace changes that can potentially come to pass in the coming year.

The 2008 presidential and congressional election campaigns were fueled by promises of "change" in Washington and those promises will certainly have an impact on the nation's labor and employment laws.

With the election of a Democratic president, the most Democrats in the House of Representatives since 1995, and a Senate with a near filibuster-proof Democratic majority, the avenues for advancing more liberal and pro-labor workplace legislation are wider than ever.

To administer many of these expected changes, President-Elect Barack Obama has appointed Rep. Hilda Solis, D-Calif., as his choice for Secretary of Labor, with a charge to protect workers' rights and to make "our unions strong."

This article highlights several significant changes to labor and employment laws that may occur as a result of this shift in political power.

Pending Legislation

A number of union-endorsed bills, many of which were sponsored or co-sponsored by then-Sen. Obama, are pending in Congress. Many of these bills have stalled due to the threat of a Republican filibuster or veto from President George Bush.

With the increase of Democrats in the Senate following the election, and no threat of veto from Obama, these bills, or similar versions, could easily become laws next year.  If they do, employers will have to make considerable adjustments to their existing workplace policies and practices.

Employee Free Choice Act of 2007

The Employee Free Choice Act of 2007 (EFCA) has received a great deal of press, as it should, considering its radical proposed change to labor law. EFCA would allow unions to gain automatic recognition as the exclusive bargaining representative for a group of employees when a majority of the employees sign union-authorization cards through what is known as the card-check process.

Under existing law, employees can request a secret-ballot election overseen by the National Labor Relations Board when 30 percent of employees in a proposed bargaining unit sign cards. Proponents of the bill argue that the card-check process is preferable to traditional NLRB elections because it minimizes the possibility of employer coercion that can accompany union organizing campaigns. Opponents of the bill contend that it takes away the fundamental democratic right of employees to vote by secret ballot election.

Opponents also fear the bill will permit greater union intimidation of workers.  Under current law, employees reluctant to join a union, but afraid of union or peer pressure, can sign a card to appease the union supporters, and then seek the safe haven of a voting booth to vote their conscience. This safe haven would be destroyed by EFCA.

EFCA would also amend current labor laws in several other significant respects.  For example, under the proposed legislation, employers lose the right to simply say "no" to a union's unreasonable demand and bargain to impasse.

Under EFCA's changes if the employer and union cannot agree on a contract within 90 days, either party can request federal mediation, which could lead to binding interest arbitration if an agreement is not reached after 30 days of mediation. This interest arbitration provision would result in a third party (an outside arbitrator) setting the wages, benefits, and working conditions for a company's employees - a dramatic intrusion into a company's right to run its business.

Finally, EFCA would provide for liquidated damages against employers who unlawfully terminate pro-union employees, and civil penalties against employers who do so willfully or repetitively.  EFCA does not, however, provide for penalties against unions for their unlawful threats or coercion.

In March 2007, the House of Representatives passed EFCA by a vote of 241 to 185.  In June of that year Senate Republicans filibustered the debate, preventing it from going to the floor for a vote.  Given the recent shift in power to the Democrats, we can expect to see EFCA, or something equally significant, become law in 2009.

Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers Act

The Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers Act (RESPECT Act) would dramatically alter the definition of "supervisor" under the National Labor Relations Act.

Under current law, supervisors are agents of, and owe a duty of loyalty to, their employer with respect to labor-management relations.  Consequently, they cannot vote for, or be included in, a union-represented bargaining unit.  The RESPECT Act would narrow the current list of duties associated with a supervisor.  The legislation would also dictate that employees cannot be classified as "supervisors" unless they engage in managerial duties "for a majority of [their] work time."

These amendments to the statutory definition of "supervisor" would make it much more difficult for employers to classify employees as supervisors, resulting in an increased number of union-eligible employees in the workforce.  From a practical standpoint, it would make it harder for a company to respond to union organizing efforts. Moreover, many individuals with managerial duties would become part of the bargaining unit thereby potentially affecting their loyalty to the company.

Bills concerning the RESPECT Act were introduced in both the House and Senate in March 2007 and referred to various committees. No vote has been taken on the House bill. The Senate bill is still pending.

Patriot Employers Act of 2007

The Patriot Employers Act of 2007 would amend the Internal Revenue Code to provide a federal income tax credit of 1 percent for "patriotic" employers who : 1) maintain their headquarters in the United States; 2) pay at least 60 percent of the health care premiums of their employees; 3) observe a policy requiring the company to refrain from explaining why it opposes unionization, known as neutrality, in union organizing drives; 4) maintain or increase the number of their full-time workers in the United States relative to their full-time workers outside of the United States; 5) provide full differential salary and insurance benefits for all National Guard and Reserve employees called to active duty; and 6) provide their employees with a certain level of compensation and retirement benefits.

The Patriot Employers Act of 2007 was introduced in the Senate in August 2007 and referred to the Senate Committee on Finance, where it is currently pending.

Lilly Ledbetter Fair Pay Act of 2007

The Lilly Ledbetter Fair Pay Act of 2007 (Fair Pay Act) would amend existing employment discrimination laws to clarify the point in time at which an unlawful employment practice occurs for purposes of determining when the statute of limitations begins to run.

The bill was introduced in response to the United States Supreme Court's decision in Ledbetter vs. Goodyear Tire & Rubber Co., which held that the statute of limitations on a pay discrimination claim begins to run from the date of the actual discriminatory pay decision and does not begin anew each time the employee receives an unequal paycheck resulting from the discriminatory decision.

The Fair Pay Act would reverse the Ledbetter decision by defining an unlawful employment practice as occurring when: 1) a discriminatory compensation decision or other practice is adopted; 2) an individual becomes subject to the decision or practice; or 3) an individual is affected by application of the decision or practice, including each time compensation is paid.  The proposed law further provides that individuals can receive back pay as compensation for discrimination that occurred up to two years preceding the filing of a charge.

It is unclear how far courts will extend this revised definition since virtually every employment decision either directly or indirectly affects compensation. It would not be surprising, for example, if a court were to find that the statute of limitations on a claim arising out of an allegedly discriminatory promotion begins anew with each subsequent paycheck the employee receives because he or she would have made more had there been no discriminatory promotion decision to begin with.

Bills concerning the Fair Pay Act of 2007 were introduced in both the House and Senate in the summer of 2007.  The House bill passed by a vote of 225 to 199 in July 2007.  But the Bill was filibustered by Republican senators in April 2008, preventing it from going to the floor for a vote.

Working Families Flexibility Act

The Working Families Flexibility Act would impose significant administrative obligations on an employer when their employees request a change in the number of hours, time or place where they are required to work in order to better balance the demands of their job and home life. If such a request is made, this Act prohibits the employer from simply declining the request.

Instead, the employer would be legally required to meet with the employee within 14 days of the request and provide a written decision on the request within 14 days of the meeting.

If the employee's request is rejected, the employer must state the grounds for the rejection in writing, which must include the following information: 1) the cost to the employer of the requested change, including the costs of lost productivity, retraining, hiring, or transferring employees; 2) the overall financial resources involved; 3) the geographic separateness or administrative or fiscal relationship between facilities for employers with multiple facilities; 4) the effect on the employer's ability to meet customer demands; and 5) any other factors that may be specified by the Department of Labor in newly promulgated regulations.

If the employee is dissatisfied with the employer's decision, he or she may request reconsideration within 14 days, following which the employer must provide a written "justification" for denying the request for reconsideration and a "sufficient explanation" of the grounds for the decision, which may later be reviewed by the Department of Labor.

If the employer grants the request for reconsideration, the employer must schedule a meeting with the employee and a representative of the employee within 14 days of the employee's request.

The proposed legislation also establishes various civil penalties and authorizes damage awards if employers interfere with or retaliate against employees for making a request or otherwise exercising their rights under the Act.

Bills concerning the Working Families Flexibility Act were introduced in both the House and Senate in December 2007.  Those bills were referred to various House and Senate committees, where they are currently pending.

Paycheck Fairness Act of 2008

The Paycheck Fairness Act, co-sponsored by Sen. Hillary Clinton, would amend the Equal Pay Act of 1963 to offer stronger protection for employees against compensation discrimination on the basis of sex.

The Equal Pay Act prohibits sex discrimination in the form of unequal pay for equal work.  Under current law, employers can avoid liability if they can prove that the alleged discrimination comparison was a result of any factor other than sex.  Under this new Act, employers can only rely on this affirmative defense where the factors other than sex are job-related or serve a legitimate business interest.

Additionally, the proposed legislation clarifies that, for the purpose of demonstrating discrimination, a plaintiff can use compensation comparisons of employees who do not even work at the same physical place of business as the plaintiffs.  Courts do not construe the current Equal Pay Act so broadly.

The Act also prohibits employers from retaliating against employees who share salary information. Finally, the Act increases civil penalties against employers who violate it, makes it easier to bring class actions, and authorizes the Secretary of Labor to seek additional compensatory or punitive damages.

Related bills concerning the Paycheck Fairness Act of 2008 were introduced in both the House in Senate in March 2007. The House bill passed by a vote of 247 to 148 in July 2008. It has been referred to the Senate Committee on Health, Education, Labor, and Pensions, where it is currently pending.

Equal Remedies Act of 2007

The Equal Remedies Act of 2007 would amend the Civil Rights Act of 1991 by removing the $300,000 cap on damages for intentional employment discrimination.

A bill concerning the Equal Remedies Act of 2007 was introduced in the Senate in August 2007.  It was referred to the Senate Committee on Health, Education, Labor, and Pensions, where it is currently pending.

Arbitration Fairness Act of 2007

The Arbitration Fairness Act of 2007 would prohibit any pre-dispute arbitration agreement with respect to "an employment, consumer, or franchise dispute," or a dispute arising "under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power."

Under existing law, parties to a contract, including one establishing an employer/employee relationship, may agree to arbitrate any dispute that might arise between them in the future. The Act would preclude most parties from entering into such agreements, which are aimed at avoiding the costs and expenses that come from the already clogged courts in our legal system.

The Act notably exempts from its proscription mandatory arbitration provisions in collective bargaining agreements. The Act is retroactive, which means that arbitration agreements entered into before the Act is passed are invalidated as to any claim or dispute arising thereafter.

Related bills concerning the Arbitration Fairness Act of 2007 were introduced in both the House and Senate in July 2007, and referred to various committees, where they are currently pending.

Employment Non-Discrimination Act of 2007

The Employment Non-Discrimination Act of 2007 would provide gay, lesbian, and bisexual individuals protection against employment discrimination similar to the protections provided under Title VII of the Civil Rights Act of 1964, based on race, sex and national origin. The Act is different from Title VII in that it contains exemptions for religious organizations and specific provisions about employee dress codes.

A bill concerning the Employment Non-Discrimination Act of 2007 was introduced in the House in September 2007.  The Bill passed the House by a vote of 235 to 184 in November 2007. It has been referred to the Senate, but no action has been taken.

FMLA Expansion Act

The FMLA Expansion Act would amend the Family and Medical Leave Act to extend coverage to employees working for employers who employee at least 25 employees. The current law applies only to employers employing 50 or more employees.

Such a revision would dramatically expand the law to smaller employers, many of whom do not have human resources staffs.  The Act would also extend leave eligibility to employees who miss work to deal with the effects of domestic violence.

Additionally, the Act would allow eligible employees to take up to 24 hours in a twelve-month period to participate in a school academic activity for their child or literacy training under a family literacy program.

A bill concerning the FMLA Expansion Act was introduced in the House in March 2007, and referred to various House committees.  Other bills expanding other parts of the FMLA have been introduced, including one that would create a federal insurance fund to provide paid leave.

Healthy Families Act of 2007

The Healthy Families Act of 2007 would require employers with 15 or more employees to provide seven days of paid sick leave per year to employees working more than 30 hours per week and a pro-rated amount for employees working less than 30 hours.  The paid leave could be used to care for a sick family member.

Bills concerning the Healthy Families Act of 2007 were introduced in both the House and Senate in March 2007, and referred to various committees, where they are currently pending.

Civil Rights Act of 2008

The Civil Rights Act of 2008 is a comprehensive piece of legislation amending a number of employment discrimination laws. The Act would allow individuals to seek relief against federally-funded entities for practices that have an unjustified discriminatory effect without having to prove discriminatory intent.

For example, a pre-employment test that has a disparate impact on a particular minority group may be challenged by individual employees of that group who are not hired notwithstanding the complete absence of evidence that the employer intended for the test to exclude those minorities.  Under the Supreme Court's current interpretation of the law, only the federal government can bring such claims.

The Act also clarifies that the standard for proving an age discrimination claim under the Age Discrimination in Employment Act is the same as the standard for proving other discrimination claims under Title VII.  Additionally, the Act would make most state employers liable for back pay and other monetary damages when they violate the ADEA.

The Supreme Court currently holds that the ADEA is not a valid abrogation of states' sovereign immunity under the Eleventh Amendment, and therefore, private individuals are barred from suing their state employers for age discrimination.  The Civil Rights Act of 2008 attempts to reverse that interpretation by incorporating an express waiver of the states' 11th Amendment immunity.

The Act would prohibit pre-dispute arbitration agreements between employers and employees, which the Arbitration Fairness Act of 2007 seeks in part to do; it will repeal provisions limiting the amount of compensatory and punitive damages that may be awarded in cases of intentional discrimination, which the Equal Remedies Act of 2007 seeks to do; it will amend the Equal Pay Act of 1963 in the same manner the Paycheck Fairness Act of 2008 seeks to do; it will authorize an award of attorney's fees and expert fees in all employment discrimination cases; and it will amend the Immigration and Nationality Act of 1952 to prohibit denying back-pay or other monetary relief for unlawful employment practices against undocumented immigrant workers.

Bills concerning the Civil Rights Act of 2008 were introduced in both the House and Senate in January 2008 and referred to various committees, where they are currently pending.

Additional Anticipated Changes

NLRB Decisions

The legislative branch is not the only branch of government that can affect labor laws. Obama will select the members of the National Labor Relations Board and can appoint a majority of members from his party. A new Democratic board will have significant leeway in its interpretation of the labor laws and how they apply to employers. As a result, we can expect the new board to reverse or modify many decisions from the last eight years that have been viewed as favorable to business.

The decisions may address the inclusion of temporary workers in the regular bargaining unit, strictly limit the ability of an employer to withdraw union recognition, ease the burdens on unions to boycott companies doing business with a targeted employer, increase damages for unfair labor practices, increase an employer's duty to provide financial information pursuant to requests for information during collective bargaining, and restrict an employer's ability to limit employee electronic communications in the workplace. The board's ability to shape the labor laws should not be underestimated.

Minority Unions

In 2007, a number of unions filed a petition with the NLRB for "Rulemaking Regarding Members-Only Minority-Union Collective Bargaining," which would permit unions to demand that an employer bargain with a group of employees even when a majority of the workers have not elected union representation.

Under existing interpretations of the law, a union that gains representation through election by a majority of employees in a bargaining unit becomes authorized to bargain collectively with the employer on behalf of all the employees in the unit, regardless of whether the employees voted for the union or not.

Minority-union advocates propose that the NLRB change its current interpretation of the law and require employers to bargain collectively with groups that comprise less than a majority of a unit for terms and conditions that would apply only to members of the minority union.

For example, if a company has 100 employees and 40 want to unionize, an Obama-appointed board may very well require companies to recognize and negotiate a collective bargaining agreement with that group, despite the fact that they would not comprise a majority of the bargaining unit.  The board as it currently sits is unlikely to act on the unions' petition; Obama will likely appoint board members who will.