President Trump said he’d be an instant disrupter, and our lives will certainly be disrupted over the next few years. Here are some labor law predictions from our panel of experts at the 2017 CUE Spring Conference.
Trump got elected to drain the swamp, but he’s finding out that DC is the Atlantic Ocean. The initial Trump inner circle ran into the gears of government. We saw that with Andrew Puzder’s failed nomination as Secretary of Labor.
With respect to the NLRB, help for employers is on the way, but it’s going to take time. There are two vacancies right now, and many cases that have been pending for over 2 years. We need a full board to render decisions.
We also must wait until the NLRB’s General Counsel, Richard Griffin, exits the agency. His term runs out in November 2017. Until then, there will continue to be a wall between the General Counsel and board members. The General Counsel controls what happens in regions, and has issued guidance that the board was unaware of until it was published. However, we’ve heard about a few cases that he settled when he knew that they would require years of resources, and that the new board wouldn’t align with his decision to assign the requisite assets.
In the long term the board will likely overturn as many regulations as possible until a new General Counsel is appointed. Until then, employers should:
This was enacted by rulemaking, so the process will have to restart in order to reverse this decision. This means that new rules will have to be proposed, followed by a public comment period, and a notice period of the final rule. It usually takes a year, at a minimum, to complete the process.
In the meantime, the General Counsel can issue guidelines for regions to interpret the rules more loosely. In the future, it’s possible that time limits and compliance will become more flexible. However, the unions will probably litigate these interpretations, and it’s possible that they will win.
Ivanka Trump is a proponent of women’s rights issues and paid family leave. Thus far, Trump hasn’t overturned Obama’s executive orders regarding affirmative action, sex discrimination, or paid sick leave. It remains to be seen what will happen with the EEO 1 form and pay equity issues.
In March, the DC Circuit heard appellate arguments on the NLRB’s joint employer decision. Both sides reported that the hearing went well. In theory, the court could say that the decision was bad and should be overturned. It’s more likely that the court will rule that the Board changed the rules and didn’t adequately explain the need for the change, remand it to the lower court, and the Board will revise the rule and make it go away. Alternatively, the court could give deference to the Board and allow it to stand. If this happens, though, the new Board will probably come up with an altogether new standard.
Employers will see changes in the Section 7 analyses, but they will take time. Right now, rules that prohibit revealing proprietary company information and the use of company logos violate the NLRA. This gives employees the right to put a company logo on signs when they’re picketing. Acting NLRB Chair Miscimarra recently wrote a dissent in a case that sets forth a more reasonable standard.
National Right to Work Legislation
The is an area where politics makes strange bedfellows. The US Chamber of Commerce says that states with existing right to work laws will oppose a national right to work rule because they want to keep their competitive advantage. Meanwhile, Missouri recently became the 29th state to enact a right to work law. At the federal level, it’s probably low on the GOP’s agenda since healthcare, tax reform, and national infrastructure appears to be front and center, at least until the 2018 midterm elections.
This rule would have required annual filings by companies that disclosed contractors used for labor advice. At this point, the rule is enjoined and probably dead in the water. The American Bar Association lobbied hard against it since it violated attorney-client privilege.
The Department of Labor (DOL) is charged with enforcing this rule, along with the FLSA, OFCCP, and OSHA regulations. Expect bureaucratic inertia at the DOL, and a continuation of Obama-era enforcement, until more political appointments are made.
Trump proposed a 21% budget cut at the DOL and the elimination of 19 agencies. Under Obama, the OFCCP had active case enforcement, which meant that audits went on for years and remained open. In contrast during the Bush era the OFCCP had active case management, which meant that they quickly reviewed records and ended compliance reviews. We can probably expect the OFCCP to revert to case management and compliance assistance versus enforcement.
FLSA Overtime Rule
This rule expanded the salary test for the overtime exemption from $23,600/year to $47,476/year. The duties test didn’t change, but most employers changed job descriptions, employee classifications, and salaries, in anticipation of the rule’s effective date of December 1, 2016.
The rule was enjoined and is not on appeal. The government has asked for an extension, twice, because they don’t know what their position is. The latest extension is until June 30, 2017. We can probably bet that the Trump administration will let the injunction stay in place, but that new rules will be proposed. This may include a higher salary threshold for an overtime exemption, but it probably won’t be as high as the one enacted under the Obama administration. Our panel expects to see a threshold of around $40,000. The Court also found the indexing process in the original rules troubling, so we’ll probably see a change to that rule.
We all know that the FLSA, which was originally enacted in the 1930’s, needs an overhaul, but no one seems willing to spend the political capital to change it. Instead, we’ll see changes to the minimum wage and scheduling laws at the local level. Most major metropolitan areas and 29 states have minimum wages that are higher than the federal minimum wage of $7.25/hour.
This is an area where the GOP, which is traditionally in favor of state’s rights, is considering a federal law to pre-empt state minimum wage rules. It’s an interesting battle of philosophies within the party. Much like the right to work issue, it’s an area that takes a lot of political capital and there doesn’t appear to be much willingness to spend it.
There’s a new Acting Chair at the EEOC, but it will take time for the agency to transition from Obama era policies. The President has stated that the EEOC will continue with their current strategic 5-year enforcement plan that concentrates on, among other things, pay inequality and vulnerable workers (immigrants). It’s too early to tell if the EEO 1 form will be still be required in the distant future, but it’s likely that until the EEOC has a majority of commissioners on its five-member panel, it will remain in force. Companies should plan to produce it in March 2018.
With the GOP in control in DC and the majority of state governments, there probably won’t be a lot of new legislation in the paid leave/pay equity areas. But that may change. Public opinion is already pretty far down the line in these areas. Plus, Ivanka Trump is leading on these issues. Companies should get their house in order so they can tell their story in a favorable light.
In his budget, Trump proposed 500 more border agents, 1000 more customs agents, and $15 million to fund E-Verify. Under this administration, it’s very likely that E-Verify will become a national requirement. The RAISE Act was introduced in the Senate on February 7, and proposes cutting legal immigration in half by ending future chain migration (family based immigration) and the diversity visa lottery.
Immigration is a hot topic for this administration, and it’s critical for business leaders to watch and be mindful of this issue. The President is learning that even with a majority, it’s hard to get legislation through Congress. Trump doesn’t have to go through Congress to deliver to his base and own this issue through administrative actions such as workplace raids, headlines, Twitter, and workforce enforcement.
As we stated at the outset of this article, the President likes to consider himself to be a disrupter. He’s also unpredictable, since he’s changed positions on many issues since being sworn in. Keep in mind that these are merely predictions, and are subject to change at a moment’s notice.
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One of many issues with this agreement is that it increases the risk on employers being named a joint employer under the still developing standard promulgated by the NLRB and adopted by several other government agencies.
IFA STATEMENT ON VOLUNTARY AGREEMENT BETWEEN SUBWAY AND U.S. DEPARTMENT OF LABOR WAGE & HOUR DIVISION
International Franchise Association Vice President of Government Relations & General Counsel Elizabeth Taylor released the statement below following the announcement that the U.S. Labor Department Wage & Hour Division and SUBWAY have entered a voluntary agreement to encourage compliance with the Fair Labor Standards Act by its franchise owners.
“Educating franchisee owners and facilitating compliance with all applicable laws is a top priority of the International Franchise Association. We commend franchisors’ efforts to further that goal by providing guidance to their franchisees to help them comply with applicable labor laws. However, these initiatives have been dramatically complicated by the expanded National Labor Relations Board issuance of a new, vague joint employer standard.
“Legitimate concerns now exist as to which franchisor actions cross the line and could serve as evidence of a joint employment relationship in future litigation or a government enforcement action. Without assurances that their compliance efforts will not be used against them by another government agency, or plaintiff attorneys, franchisors are caught in an inevitable catch-22. Further, these concerns are not limited to franchise businesses; the NLRB’s new standard has created uncertainty in all supplier and independent contracting relationships.
“These concerns underscore the need for Congress to act quickly to clarify the definition of joint employment and provide a bright-line standard for businesses. Doing so will not only increase economic growth and facilitate the creation of jobs, but also will ensure greater compliance with wage and hour laws and benefit millions of employees nationwide.”
The Employee Free Choice Act didn’t get passed by Congress in 2009, but it’s coming our way in April courtesy of our friends at the National Labor Relations Board. On April 14, the National Labor Relations Board’s Final Rule governing representation case procedures goes into effect.
The new rule makes major changes in the way representation case elections are handled, significantly shortening the time period of the election, making it easier for unions to win elections. Employer will also be required to provide more detailed information about their employees to the union, including home address, phone numbers and personal e-mail, if available.
If your organization doesn’t have a union, and a goal of remaining that way, you should already be developing or revising response plans. With the advent of these new rules, you can’t afford to assume that you won’t be impacted. Unions have been waiting a long time for these changes, and are poised to take advantage with increased union organizing.
How significant can a rule change be?
The answer is potentially devastating for employers. According to newly published data from the Labor Relations Institute, the union win rate for short elections conducted from 2004-2014 was almost 30 percent higher than those elections conducted in a normal election cycle of 36-42 days. No wonder unions pushed so hard for the rule changes!
Labor unions are backing efforts like the Fight for 15 campaign aimed at organizing restaurants and other so called “low wage workers” like in business sectors like home health care workers, adjunct faculty and hotel service staff. These efforts receive technical and financial support from unions like the Service Employees International Union, which is providing finance and support to the groups. And they are getting an even bigger boost from the National Labor Relations Board.
Here are some of the recent Board actions that effectively create an agency version of the old Employee Free Choice Act.
Protected concerted activity – the Board has raised their level of attention on all kinds of protected, concerted activity but have exerted special focus on non-union employees working in industries like Quick serve restaurants where much of the protected concerted activity is occurring right now.
“Quickie elections” – rules are being implemented on April 14th, one day before the latest protests in the Fast Food campaign. These new election rules are designed to shorten the time it takes to hold elections, making it easier for unions to organize employees and win representation elections. This should be very concerning to those experiencing Fight for 15 actions, as it is not a big stretch to imagine that some employers may see filings for elections on April 15th demonstrating at least symbolic progress for the strikers.
Joint employer – the Board is reviewing 13 complaints involving 78 charges against McDonald’sUSA, LLC, McDonald’s USA franchisees, and/or McDonald’s franchisees and their franchisor, McDonald’s USA, LLC as joint employers. The concern here is that under the NLRB ruling, corporate entities are now jointly liable for employment matters along with franchise owners.
Handbooks, Overbroad Confidentiality Policies – illegal to prohibit discussion of wages, many other types of confidential info. NLRB is looking for these kinds of violations, which many franchises make due to lack of training on labor matters.
Micro-unions – in which a small group of employees inside tour business are allowed to form a union without including all employees. Imagine the counter clerks having a union, while the kitchen staff doesn’t.
This is something that is happening right now. You can’t afford to ignore it. You can’t let some other company be the target and hope to avoid it. You can’t appease the protesters. You can’t afford to let your industry be fragmented. You have to prepare.