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Business As Usual Despite Republican Control of Congress?

The midterm elections returned the Republicans to control of the Senate after an 8 year hiatus.  Not surprisingly, the Republicans were elected on platforms opposing President Obama’s policies.  The surprise may be that the Democratic agenda may continue to prevail.

President Obama continues to have veto power over any bills passed by Congress.  Because Republicans do not have enough votes to override a Presidential veto, President Obama will still be able to block any bills with which he disagrees.  Therefore, we can expect Congress to continue to be ineffective and remain at an impasse.

Even though it is unlikely congressional Democrats will be able to pass any bills, President Obama will be able to pursue his platforms and policies through executive action and increased enforcement of existing labor and employment laws.  This is nothing new – this has been a major part of President Obama’s administration since he was first elected six years ago.  But as a lame duck no longer worried about reelection or political ramifications, and with Congress controlled by the other party, President Obama may become unrestrained and he may use his executive powers and influence to implement his liberal policies – possibly even more than in the past.  Thus, paradoxically, the last two years of his administration may be his most liberal yet.

Executive Orders

Contrary to popular perception, President Obama is not our most prolific issuer of Executive Orders.  So far, he has only issued 194 executive orders, 97 fewer than the second President Bush and 187 fewer than President Reagan.  However, some of his executive orders within the realm of labor and employment law have dealt with significant issues.  This year alone, President Obama issued executive orders increasing the minimum wage for federal contractors to $10.10 per hour, prohibiting retaliation against employees who share their salary information, requiring federal contractors and companies bidding on federal contracts to disclose their own and their subcontractors’ labor law violations, and prohibiting LGBT discrimination against federal employees and employees of federal contractors.  He also issued a Presidential Memorandum ordering the Department of Labor to reevaluate and overhaul the white collar minimum wage and overtime exemptions.

The scope of all of these orders (except the white collar exemption overhaul) will be limited.  This is because, as Executive Orders are issued directly by the President without going through the legislative process, they apply only to employees of the federal government or federal contractors.  While the effect of such actions are therefore limited, they were likely an attempt by President Obama to get the corresponding issues into the public eye, effect broader change by swaying public opinion, and force Congress to act in response.  With both houses of Congress now controlled by the Republicans, President Obama could continue to use Executive Orders on issues unlikely to pass in Congress.  For example, the proposed rule regarding who can qualify as exempt from minimum wage and overtime laws which is scheduled to be announced in February, would probably not receive Congressional support.  However, thanks to the President’s guidance, this issue will see a major review just as the dust from the last election settles.

Increased Enforcement

President Obama is likely to continue to seek tightened enforcement of existing labor and employment laws through his Executive agencies.  The United States Department of Labor (“DOL”) is one of the cabinets within his Executive Branch and has a monumental impact on employers.  The Secretary of Labor is nominated and can be dismissed and replaced by the President.  Therefore, the President wields substantial influence and authority over the DOL and his guidance will prevail.

President Obama has relied on the DOL to more strictly enforce existing laws to overcome Congressional gridlock during the first six years of his Administration.  This trend is now likely to accelerate.  One area of particular focus has been and will likely continue to be wage and hour laws.  The DOL has, in recent years, increasingly cracked down on worker misclassification – the practice of treating a worker as an independent contractor when the nature of this relationship with the employer is really that of an employee.  This trend has not stopped with Federal employees or even federal contractors.  Through the influence of the President, state wage and hour agencies have joined this fight.  Millions of dollars – both state and federal – have been spent on investigating this issue.  But this is just the start.  Federal investigations of all wage and hour issues have also spilled over to the states.  Today, more than any time in recent history, wage and hour is the hottest area of governmental investigations.  The next two years will continue this trend.

Wage and hour laws are not the only ones facing increasingly strict enforcement.  For example, the Occupational Safety and Health Administration (“OSHA”) just adopted more stringent regulations regarding when employers must report workplace-related incidents directly to OSHA.  Previously, employers only had to report work-related fatalities and hospitalizations of three or more employees within eight hours of the employer finding out about the incident (if the fatality or hospitalization occurred within 30 days of the incident).  Under the new stricter reporting rule set to go into effect on January 1, 2015 (except in states who administer their own OSHA-approved state plan, which have until January 1, 2016 to implement the changes), employers must also report hospitalizations of one or more employees, amputations, and losses of an eye which occur within 24 hours of a workplace-related incident within 24 hours of finding out about them.  OSHA has also issued an internal guidance advising its investigators to refer claimants who miss OSHA’s short statue of limitations to other agencies with longer limitations periods.  As it turns out, the National Labor Relations Board (“NLRB”) will be the beneficiary of this policy.

President Obama’s influence also extends to the Equal Employment Opportunity Commission (“EEOC”). In recent years, the EEOC has adopted novel positions.  It sued CVS Pharmacy, Inc. (a part of CVS Caremark Corporation) claiming language in its standard employee separation agreement unlawfully interfered with employees’ rights to file charges and otherwise cooperate with the EEOC.  What made the case surprising was the CVS agreement contained very typical language.  Given how common these types of provisions are, this lawsuit could have greatly impacted employers throughout the country.  Luckily for employers, the Northern District of Illinois dismissed the case, but President Obama may push the EEOC to try again.

The EEOC has also expanded which groups of individuals are protected by employment discrimination laws.  In 2012, it adopted the position that transgender discrimination is a type of sex discrimination and therefore transgender employees are protected by Title VII of the Civil Rights Act of 1964.  This year, it filed lawsuits based on this position for the first time, alleging discrimination by employers against transgender employees.  Not only may transgender litigation become a trend for the EEOC, but President Obama could prompt it to continue to look for new directions in which to extend employment law protections.

All of this shows how the Obama administration uses its powers to enforce existing laws.  This kind of increased administrative action is likely to continue in light of the recent election and President Obama having nothing to lose politically.  President Obama has always been the “President of enforcement” – tightening up and more strictly enforcing existing laws rather than passing new ones.  We expect this strategy to intensify in the last two years of his presidency.

Increased Support for Unions and National Labor Relations Board Actions

With no risk for personal political fallout, President Obama could seek to increase his support of unions.  This was his promise when he was first elected and his words continued to support this agenda item.  In particular, President Obama may seek to revive certain changes to the so-called “persuader” rules.  Under the Labor Management Reporting and Disclosure Act of 1959, employers, labor counsel and other consultants, and unions must report “persuader activities,” such as speaking to employees about their rights to unionize, to the government.  The law as currently in force exempts advice provided by labor attorneys and consultants from this reporting requirement where they do not deal directly with employees.  In 2011, the Department of Labor attempted to narrow its interpretation of “advice,” thereby expanding what activities must be reported.  If enacted, the proposed interpretation would have required employers to disclose many kinds of communications with their attorneys and other labor consultants, even where there was no direct contact between the attorneys/labor consultants and employees.  Though no formal announcement has been made, it is believed the DOL dropped its effort to adopt these changes earlier this year.  However, President Obama may encourage the DOL to reconsider.

President Obama will also likely continue to influence members of the NLRB to adopt very liberal policies which have been contemplated for several years.  For instance, the NLRB could revisit its Notice Posting rule which was struck down by federal courts.  The Rule would have required employers to post a notice explaining employees’ rights under the National Labor Relations Act (“NLRA”) to, among other things, organize, form, join or assist a union, collectively bargain with an employer, and discuss wages, benefits and other terms and conditions of employment.  The notice also listed various actions which employers are prohibited from taking against union supporters and the prohibition against inducing employees not to join a union.

Two different federal Courts of Appeal found this rule invalid.  In National Association of Manufacturers v. National Labor Relations Board, 717 F.3d 947 (D.C. Cir. 2013), the Court of Appeals for the District of Columbia Circuit held the Board’s rule was invalid primarily because it made noncoercive employer speech an unfair labor practice in violation of § 8(c) of the NLRA (which prohibits the Board from considering noncoercive employer speech as an unfair labor practice).  The Court explained there is no First Amendment distinction between creating your own speech and disseminating others’ messages, and § 8(c) applies to the “‘dissemination’ of ‘any [noncoercive] views, argument[s], or opinion[s]…”  Id. at 956 (emphasis added).  Because the Rule eliminated the employer’s option not to disseminate the Board’s Notice, it violated § 8(c).  In Chamber of Commerce of the United States v. National Labor Relations Board, 721 F.3d 152 (4th Cir. 2013), the Fourth Circuit Court of Appeals also ruled against the NLRB, explaining the NLRB’s powers under the NLRA only allowed it to react to prohibited conduct (such as by investigating an unlawful labor practice charge) and it had no authority to affirmatively issue notice requirements.

Interestingly, the NLRB chose not to appeal either decision to the Supreme Court.  It has since made the information in the Notice available in other ways, such as through its website and mobile app.  Nevertheless, President Obama could encourage the NLRB to revisit the issue, perhaps by redrafting the Rule in a manner which would pass judicial scrutiny.

Another “hot topic” on which President Obama could seek to influence the NLRB is its proposed “quickie election” rules.  Earlier this year, the Board reissued a notice of proposed rulemaking regarding the timing and procedures for union elections (commonly known as “quickie election” rules) which it had originally passed several years before but which had been struck down at the time by the Court of Appeals for the District of Columbia Circuit.  These rules, among other changes, would have dramatically decreased the time between when a union representation petition is filed and the union election is held.  They also would have required employers to provide unions with additional employee contact information, such as telephone numbers and email addresses, which they did not have to provide in the past.  President Obama may use his influence to ultimately push the rule through.  Whether President Obama will decide to support this only time will tell.

What Does This Mean For Employers?

Despite the fact the Republican Party, which is generally viewed as more pro-business than President Obama and the Democratic Party, now controls both houses of Congress, employers should not expect to see drastic changes to the government’s labor and employment policy in favor of employers.  Employers may actually find themselves under increasing scrutiny as, freed from most political concerns, President Obama steps up his efforts to achieve his pro-labor aims through non-legislative means.  Employers should expect more executive orders, stricter labor and employment rules and regulations, and an increased likelihood of audits and investigations as government agencies step up enforcement efforts.  Employers should regularly consult with counsel to ensure they are in compliance with existing laws (and can demonstrate this to government agencies in the event of an audit or investigation) and stay abreast of stricter rules, regulations and executive orders as they are modified or enacted.


Reprinted with permission from the January issue of Employment Law Strategist. ©2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.