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President-elect Obama and potential historic changes in labor & employment law
November 17, 2008
Employment Law Alert
Author(s): Stephanie M. Caffera, Christopher G. Gegwich, Eric Paley, Jeffrey M. Tanenbaum

The historic election of Barack Obama and the gains made by Democrats in both the U.S. House of Representatives and Senate may well lead to profound and dramatic changes in the landscape of labor and employment law, and may transform the American workplace.

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The historic election of Barack Obama and the gains made by Democrats in both the U.S. House of Representatives and Senate may well lead to profound and dramatic changes in the landscape of labor and employment law, and may transform the American workplace.

President-elect Obama has received strong union support and has openly expressed his intent to work with labor organizations to revamp current labor laws. Twenty-five percent of the delegates at the Democratic National Convention either were union members or lived in the same household as a union member. (By comparison, 7.5 percent of private sector employees are members of a union) and  the AFL-CIO, AFSCME, and other labor organizations have made it clear that they expect President-elect Obama to push labor legislation forward. We can expect to see activity in the following areas:

  • Perhaps number one on the union agenda is the Employee Free Choice Act (EFCA), which would amend the National Labor Relations Act (NLRA) to eliminate the need for employees to use a secret ballot vote to decide whether to be represented by a union. The EFCA would establish a “card check” procedure, under which a union could be certified if a majority of employees signed union authorization cards. A union could demand an employer begin bargaining 10 days after the union is certified as the exclusive bargaining representative by the National Labor Relations Board (NLRB). The EFCA would also impose more stringent penalties for unfair labor practices committed by employers during an organizing campaign or during bargaining over a first contract. President-elect Obama has expressed support for the EFCA.  The EFCA is now running into strong opposition from employer organizations and this should make for an interesting legislative battle.  Some parties have already started to set forth potential compromise positions.
  • President-elect Obama has proposed that the Family and Medical Leave Act (FMLA) be expanded to include businesses employing 25 to 49 people. An expanded FMLA under an Obama presidency may also: (1) provide leave for elder care and domestic violence, and (2) provide parents up to 24 hours of leave each year to attend school activities for their children.
  • President-elect Obama has also stated his support for granting seven days of paid sick leave per year to each employee.
  • The Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers (RESPECT) Act, supported by President-elect Obama would narrow the definition of “supervisor” under the NLRA. This change to the NLRA would enable more employees to become members of unions. Specifically, the act would amend the NLRA’s definition of supervisor to provide that individuals could only be excluded from a bargaining unit as supervisors if they: (1) have authority over employees for a majority of their work time and (2) have the power to assign that authority to other employees and to responsibly direct employees.
  • The Patriot Employers Act, co-sponsored by President-elect Obama, would amend the Internal Revenue Code to permit a taxpayer certified as a “Patriot employer” by the Secretary of the Treasury to receive a tax credit for 1 percent of such employer’s taxable income.
  • President-elect Obama supports amending the Worker Adjustment and Retraining Notification Act to expand the statute’s protections. Specifically, the Forewarn Act of 2007 would: (1) require a 90-day written notice of plant closures or layoffs, instead of the current 60-day notice; (2) double the penalties for employers who violate the law; and (3) apply to employers of 50 or more employees instead of 100 employees, as under the current act.
  • The Employment Non-Discrimination Act of 2007 (ENDA) would prohibit employment discrimination on the basis of sexual orientation.
  • President-elect Obama has stated his intent to increase the federal minimum wage, index the minimum wage to inflation, and increase the Earned Income Tax Credit.
  • The Equal Remedies Act of 2007, co-sponsored by President - elect Obama, would remove the limits on the dollar amount of punitive damages, as well as damages for pecuniary and non-pecuniary losses, in cases brought pursuant to Title VII of the Civil Rights Act of 1964 (Title VII).
  • The Lilly Ledbetter Fair Pay Act, supported by President-elect Obama, would amend Title VII and the Americans with Disabilities Act, Age Discrimination in Employment Act, and Rehabilitation Act of 1973 to declare that an unlawful employment practice occurs 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 practices, including each time wages or benefits are paid. The Fair Pay Act also provides relief for a discriminatory compensation decision or other practice that occurs on the date on which the aggrieved person knew, or should have known, that the individual was affected by the decision.
  • There are also likely changes in store for OSHA under an Obama administration. President-elect Obama has expressed support for an ergonomics regulation, increased civil fines and criminal penalties, and increased funding for OSHA enforcement activity.
  • The Public Safety Employer-Employee Cooperation Act would provide collective bargaining rights for public safety officers, such as firefighters, emergency medical services personnel, and public safety officers, employed by states or their political subdivisions.
  • The Independent Contractor Proper Classification Act, proposed by President - elect Obama in 2007, would address the practice of employers denying benefits and cutting their payroll costs and taxes when they classify workers as independent contractors instead of employees.
  • With regard to health care, President-elect Obama has called for the following:
    • establishing a National Health Insurance Exchange with a range of private insurance options, as well as a new public plan based on the benefits available to members of Congress;
    • creating a Small Business Health Tax Credit, to help small employers provide health benefits;
    • lowering costs for businesses by covering a portion of catastrophic health costs they pay in return for lower premiums for employees;
    • requiring insurance companies to cover pre-existing conditions, regardless of health status or history;
    • requiring large employers that do not offer coverage or make a meaningful contribution to the cost of quality health coverage for their employees to contribute a percentage of payroll toward the costs of their employees’ health care; and
    • permitting the re-importation of drugs and increasing the availability of generic drugs.
  • On retirement issues, President-elect Obama has suggested the following:
    • eliminating income tax for seniors making less than $50,000 a year;
    • increasing the Social Security payroll tax ceiling to incomes of $250,000 instead of the current $102,000;
    • creating automatic workplace pensions so that employers that do not offer retirement plans must enroll their employees in direct-deposit IRA accounts.(employees may opt-out if they choose);
    • providing savings incentives by matching 50 percent of the first $1,000 of savings for families earning less than $75,000; and
    • permitting families to withdraw 15 percent of their tax-qualified retirement savings, not to exceed $10,000, without incurring a tax penalty in 2008 or 2009. (Note: Two Congressional Democrats recently sponsored legislation to permanently suspend the 50-percent withdrawal penalty when an account holder does not take the required distribution at age 70½ for anyone who has less than $200,000 in a 401(k))
  • On same-sex benefits, President-elect Obama has stated that he does not support same-sex marriage, but he supports full civil unions that “give same-sex couples equal legal rights and privileges as married couples, including the right to assist their loved ones in times of emergency as well as equal health insurance, other employee benefits, and property and adoption rights.”
  • President-elect Obama introduced the “Shareholder Vote on Executive Compensation Act” in 2007 to permit shareholders to hold nonbinding votes on executive compensation.

(For an extended discussion of the candidates’ health-care policies, please see our recent Health Law Alert at http://www.nixon
peabody.com/publications_detail3.asp?ID=2453
.)

The impact of the financial crisis

The financial crisis has stirred a populist anger over executive compensation and golden parachutes on Wall Street. The bailout package contains some new provisions to regulate in this area, and it seems inevitable that still more attempts at regulation on these issues will follow. (See our recent Benefits Alerts at http://www.nixon
peabody.com/publications_detail3.asp?ID=2434
and http://www.nixonpeabody.com/publications_detail3.asp?ID=2444 for more information.)

Those who believe the financial crisis was caused, or exacerbated, by lax regulations or lax regulatory enforcement are likely to support additional regulation and stricter enforcement of existing regulations in other fields as well. The need for Congress to focus on the financial crisis may, however, affect the plans of the Obama administration in other ways. It may cause a delay in consideration of some of their desired employment law changes—or, conversely, may result in one or more employment law changes being slipped into a financial crisis response bill with little or no debate.

Other considerations

The ability of President-elect Obama to push his agenda will be increased by the “down ticket” success of the Democrats. The additional gains of the Democrats in both the House and Senate certainly improve his chances for legislative success. However, the Democrats fell short of obtaining a veto proof majority in the Senate.
The judicial and agency appointments under the Obama administration may be felt for years. As just one example, Obama may well have the opportunity to appoint two or three Supreme Court justices. Given the closely divided nature of the current court, even one new appointment could make a significant difference.

Conclusion

An Obama administration will likely mean significant changes for employers and expansion of the current scope of labor and employment law.


The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.