This year’s presidential election may be one of the most important in recent memory, and its significance has been further heightened by the current global financial crisis. This is particularly so with labor and employment law. The next president of the United States will have the opportunity to profoundly and dramatically affect the landscape of labor and employment law, and may well transform the American workplace for years to come. Not surprisingly, Senator John McCain (R-Ariz.) and Senator Barack Obama (D-Ill.) have fundamentally different views on a wide number of labor and employment law issues.
What to expect from an Obama administration
Throughout his campaign, Senator Obama has openly expressed his intent to work with labor organizations to revamp current labor laws. Twenty-five percent of 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). With endorsements from the AFL-CIO and AFSCME, labor leaders have made it clear that they expect Senator Obama to push labor legislation forward if they successfully help him clinch the presidency. Changes may occur in some or all of the following areas.
- The Employee Free Choice Act (EFCA) would amend the National Labor Relations Act (NLRA) to eliminate the need for employees to decide by secret ballot vote whether to be represented by a union. 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.
- Senator Obama proposes 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 also would: (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.
Senator Obama also supports granting seven days of paid sick leave per year to each employee. (Senator McCain supported passage of the FMLA in 1993, but he currently opposes any changes to FMLA unless the expansion is fully supported by the business community.)
- Senator Obama is a supporter of the Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers (RESPECT) Act, which 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 worktime and (2) have the power to assign that authority to other employees and to responsibly direct employees.
- The Patriot Employers Act, co-sponsored by Senator 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.
- Senator 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. (Senator McCain has opposed ENDA because he believes it will lead to increased litigation in our courts.)
- Senator Obama has stated that, if elected president, he would increase the federal minimum wage, index the minimum wage to inflation, and increase the Earned Income Tax Credit. (While stating his support for a living wage for Americans, Senator McCain has repeatedly voted against proposed increases to the federal minimum wage.)
- The Equal Remedies Act of 2007, co-sponsored by Senator 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 the Title VII of the Civil Rights Act of 1964 (Title VII).
- The Lilly Ledbetter Fair Pay Act would amend Title VII, 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.
- 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 Senator 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, Senator 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 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, Senator 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 – 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, Senator 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.”
- Senator 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.nixonpeabody.com/publications_detail3.asp?ID=2453.)
What to expect from a McCain administration
Senator McCain has proposed a number of changes in labor and employment law, and has made a number of related policy statements.
- The Family Friendly Workplace Act (FFWA), co-sponsored by Senator McCain, would amend the Fair Labor Standards Act and provide employees with flexible work schedules to balance the demands of work and family obligations. The FFWA specifically provides private sector employees opportunities for: (1) time-and-a-half compensatory time off in lieu of overtime payments, (2) biweekly work programs, and (3) flexible credit-hour programs.
- Additionally, Senator McCain proposes the creation of a commission of bi-partisan leaders that would examine:
- mandated flexible scheduling arrangements;
- promotion of telework to decrease the amount of time spent commuting between work and home;
- portable health insurance and retirement benefits; and
- employee choice in selecting retirement plans and job training assistance.
- Concerned that intimidation and coercion to join organized labor would threaten the rights of workers, Senator McCain proposed the Secret Ballot Protection Act (SBPA) in strong opposition to the Employee Free Choice Act discussed above. The SBPA would amend the NLRA to make it an unfair labor practice for (1) an employer to recognize or bargain collectively with a labor organization that has not been selected by a majority of the employees in a secret ballot election conducted by the NLRB; and (2) a labor organization to cause or attempt to cause an employer to recognize or bargain collectively with a representative that has not been selected by secret ballot.
- With regard to health care, Senator McCain has called for the following:
- Increasing competition to provide a greater variety of health insurance options, including the ability to purchase insurance across state lines;
- Allowing the use of health status in setting premiums;
- A $2,500 refundable tax credit for individuals and a $5,000 refundable tax credit for families, to offset the cost of insurance;
- A tax on employees’ employer-provided health benefits, where currently health benefits are excluded from income;
- Increasing portability to allow insurance to carry over from job to job;
- Encouraging the use of health savings accounts;
- Working with states to establish a Guaranteed Access Plan to ensure access to health care; and
- Permitting re-importation of drugs and increasing the availability of generic drugs.
- On retirement issues, Senator McCain has suggested the following:
- Lowering Medicare premiums for seniors;
- Privatizing Social Security, but also vowing to protect Social Security; and
- Ending tax penalties for one year for retirees who fail to make the required minimum withdrawals from 401(k) accounts at age 70½.
- On same-sex benefits, the McCain-Palin ticket has said the following:
- They oppose same-sex marriage, but believe states should set their own marriage policies.
- “No one would ever propose, not in a McCain-Palin administration, to do anything to prohibit, say, visitations in a hospital or contracts being signed, negotiated between parties” (Sarah Palin , during the vice-presidential debate).
- As governor of Alaska, Palin supported a ban on same-sex marriage, but vetoed a bill that would have denied same-sex health benefits to state employees, on the grounds that it was unconstitutional.
- Senator McCain has stated that he believes CEO compensation has become outrageous and has suggested capping the salaries of executives at firms participating in the economic bailout at $400,000. He has also stated that he believes shareholders should be able to vote on executive compensation.
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.nixonpeabody.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. Such additional regulatory activity certainly seems more likely with an Obama administration, but, under either administration, it seems we will see a more aggressive regulatory environment than we have experienced in the last eight years.
The need for Congress to focus on the financial crisis may, however, affect the plans of either administration. This 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.
The ability of either administration to push its agenda will be affected by “down ticket” success. If either candidate proves to have strong coattails, the greater the likelihood that candidate will ultimately have legislative agenda success.
The prospective Obama and McCain administrations also would likely take very differing approaches to judicial and agency appointments. In both cases, the impact of their appointments may be felt for years. As just one example, the next president 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.
An Obama administration would likely mean significant changes for employers and expansion of the current scope of labor and employment law. While not as dramatic, the changes proposed by Senator McCain would also significantly alter 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.