On February 14, the Obama administration unveiled a $108.5 billion proposed budget for the Department of Labor for fiscal year 2012. The proposed budget would reduce DOL’s total budget by $40 million from the fiscal year 2011 budget, which is currently being funded by a recently enacted continuing resolution that will expire early next month.

The administration’s FY2012 budget calls for a significant increase for worker protection programs, including $240 million for the Wage and Hour Division (WHD), up from its current budget of $227.6 million. The budget allocates almost $50 million to a new multi-agency misclassification initiative aimed at coordinating federal and state efforts to combat the misclassification of employees as independent contractors. WHD’s budget includes $15 million for such misclassification investigations.

Notably, the budget requests $583.4 million for the Occupational Safety and Health Administration, an increase of a $24.8 million, or 4.4 percent, from fiscal year 2011. OSHA’s standard-setting directorate would receive $26 million, an increase of $36.8 percent from current funding levels. This $7 million increase includes $2.4 million to continue developing OSHA’s Injury and Illness Prevention Program rule, which aims to assist employers reduce workplace injuries by increasing their responsibilities for proactively identifying and fixing hazards in their workplaces.

In addition, the President’s budget requests $227 million for OSHA’s federal enforcement activities, an increase of 5.8 percent. The proposal would allocate $21 million for whistleblower protections, which would be separated out from enforcement, a change which OSHA claims would enable it to more easily track and report the resources used in the whistleblower program. According to OSHA, the funding would provide resources for 45 whistleblower investigators and 25 new inspectors.

Additional information concerning the President’s proposed FY2012 budget for the Department of Labor is available on the DOL’s website.

On January 31, 2011, federal Judge Roger Vinson of the Northern District of Florida issued his widely anticipated ruling in the litigation brought by the attorneys general or governors of 26 states, along with other plaintiffs, challenging the 2010 health care reform legislation.  Judge Vinson held unconstitutional the individual mandate provision.  That provision, section 1501 of the Patient Protection and Affordable Care Act, requires everyone (with limited exceptions) to purchase federally approved health insurance, or pay a monetary penalty, beginning in 2014.

Judge Vinson’s ruling brings to two the number of district courts that have held the individual mandate unconstitutional.  (Two other district courts have held the law constitutional).  Unlike Judge Henry E. Hudson of the U.S. District Court for the Eastern District of Virginia, however, whose decision invalidating the individual mandate was issued on December 13, 2010, Judge Vinson found that the individual mandate could not be severed from the Act’s remaining provisions and, thus, declared the entire health care reform law unconstitutional.  Judge Vinson reasoned that there are “simply too many moving parts in the Act and too many provisions dependent (directly and indirectly) on the individual mandate … for me to try and dissect out the proper from the improper, and the able-to-stand-alone from the unable-to-stand-alone.”  To attempt such a task would be “tantamount to rewriting a statute in an attempt to salvage it;” better to leave to “the watchmaker” the task of redesigning and reconstructing the “defectively designed watch.”  Thus, although Judge Vinson upheld the Act’s expansions of the Medicaid program against constitutional challenge by the states, in the end his opinion holds that those provisions must fall-along with the entire Act-because, in the court’s view, they are not severable from the individual mandate.

In holding the individual mandate unconstitutional, the district court made two subsidiary holdings.  First, Congress’s power under the Commerce Clause extends only to regulating activity, not inactivity.  Judge Vinson reasoned it would be a “radical departure” from existing case law to hold that Congress can regulate inactivity; every Supreme Court case addressing the Commerce Clause, even the expansive ones, has involved “clear and inarguable activity.”  Second, the district court held that the failure to purchase health insurance is not “activity.”  Judge Vinson in particular rejected the argument, accepted by both district courts that have upheld the law, that an uninsured’s economic decision to forgo health insurance constitutes activity, because that rationale “would essentially have unlimited application.”  In discussing whether the failure to buy health insurance is activity, Judge Vinson reasoned that “the status of being uninsured” has “absolutely no impact whatsoever” on interstate commerce.  But if the uninsured took the steps that the government argued amounted to an impact on interstate commerce-getting sick, seeking medical care, being unable to pay and, thereby, shifting costs onto others-then Congress “plainly has the power to regulate them … even at the time that they initially seek medical care.”  Until then, however, Congress may not act.

The immediate impact of Judge Vinson’s ruling is being hotly debated.  Judge Vinson denied the plaintiffs’ request for an injunction in one paragraph and, thus, did not issue an order commanding the federal government to halt enforcement or implementation of the statute.  Judge Vinson reasoned, however, that a declaratory judgment directed toward the federal government was the functional equivalent of an injunction because federal officials are presumed to adhere to the law as declared by the court.  Judge Hudson applied the same kind of reasoning in denying an injunction in the Eastern District of Virginia case, but his ruling struck down only the individual mandate, which does not take effect until 2014.  Because Judge Vinson’s ruling held the entire Act to be unconstitutional, his opinion suggests that the government should halt enforcement of those provisions that are currently in effect.

The result of the decision has been dueling assertions by the state plaintiffs-many of which have said they no longer believe the law to be enforceable in any respect and that they are entitled to halt compliance-and the federal government, which has made clear its intent to continue enforcement of the law pending appellate review.

In that regard, Judge Vinson’s supposition that a declaratory judgment is the same as a nationwide injunction is quite debatable.  They, in fact, are different procedurally and require different legal showings to be made.  Indeed, the whole point of a declaratory judgment is that it can provide anticipatory relief without the plaintiff demonstrating the exceptional need for immediate, equitable relief that an injunction requires.  This case illustrates the point.  To obtain a declaratory judgment against the entire statute, the plaintiffs persuaded the court only that their constitutional argument with respect to one provision-the individual mandate-was correct and that the entirety of the law should then fall on severability grounds. 

Injunctive relief, however, requires a quite different showing.  A party’s proof that it is correct on the merits is just one prong of the injunctive relief analysis.  Even then, courts “must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.”   ”In exercising their sound discretion, courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction.”  That same test applies to permanent injunctions at the end of a case.  Furthermore, if a district court intends that its declaratory judgment be the functional equivalent of an injunction, the very cases relied upon by Judge Vinson indicate that the court must then make the same findings needed to issue an injunction.  A declaratory judgment, in other words, is not a “get out of the heightened showing for injunctive relief free” card.

Yet, in obtaining a declaratory judgment, the plaintiffs in Florida did not have to show that immediate relief was needed nationwide, that other legal remedies would not suffice or that the competing public interests favored a nationwide injunction notwithstanding contrary rulings in other jurisdictions.  Because the individual mandate provision does not take effect until 2014, it would appear hard to show that an immediate nationwide injunction against that provision is needed.  Furthermore, it must be remembered that the enforceability of the balance of the Act turned, in Judge Vinson’s opinion, not on constitutional injury, but on statutory severability analysis.  A constitutional injury is one thing when arguing for an injunction; a hotly debated severability analysis that no other court in the country has joined is something else altogether.  That is because severability is just an issue of statutory construction and discerning congressional intent; it does not identify or redress constitutional injury.  That type of interest is unlikely to support the immediate issuance of nationwide injunctive relief.  Beyond that, when, as here, there are conflicting district court judgments, there is no sound reason why the federal government would be compelled to comply nationwide with the one adverse declaratory judgment, rather than adhere nationwide to the two favorable declaratory judgments upholding the law.

The Justice Department has already announced plans to appeal Judge Vinson’s ruling to the 11th Circuit and, if necessary, to seek a stay.  The enforceability of the Act, thus, may be clarified in very short order.  Currently pending at the 4th Circuit is an appeal of Judge Hudson’s ruling striking down the mandate and the decision out of the U.S. District Court for the Western District of Virginia upholding the law.  That case is slated for oral argument in early May 2011.  A decision by the U.S. District Court for the Eastern District of Michigan upholding the law is on appeal in the 6th Circuit and being briefed.

On February 3, 2011, in response to President Obama re-nominating Craig Becker to a full five-year term as a member of the National Labor Relations Board, all 47 Republican Senators have co-signed a letter calling upon the White House to rescind his nomination.  Becker, who has served on the Board via recess appointment since March 2010, had previously been nominated by President Obama on multiple occasions in 2009 and 2010, but each time failed to overcome Republican-led filibusters. The Senators allege that Becker has polarized the Board since receiving his recess appointment and criticized the Board’s case decisions and rulemaking since Becker began sitting on the panel. The Senators also reiterated their intent to continue filibustering his nomination.

Becker, the former associate general counsel for the Service Employees International Union (SEIU), has drawn fire from business groups and Senate Republicans since first being nominated by President Obama in July 2009. After the Senate returned his nomination without acting upon it at the end of the 2009 session, was re-nominated him in January 2010. In February 2010, in a rare NLRB nomination hearing before the Senate HELP Committee, Becker was aggressively questioned about his prior pro-labor writings, alleged conflicts of interest relating to his previous employment with the SEIU and the AFL-CIO, and allegations that he would administratively implement pro-labor regulations while serving on the board, including elements of the proposed Employee Free Choice Act (”EFCA”). Becker’s testimony did not assuage Senate Republicans and a cloture vote on his nomination failed on February 9, 2010.

With the Board down to two members, President Obama on March 27, 2010 provided recess appointments to Becker and Democratic labor lawyer Mark Pearce, who has since been confirmed to a full term. As a Board member, Becker has been a consistent pro-labor vote, but has not pursued sweeping EFCA-style policy changes via rule-making, as some critics alleged he would. Becker also has recused himself from a number of cases involving SEIU, its locals, and the AFL-CIO, but his critics have urged recusals from more cases involving SEIU and AFL-CIO affiliates.

The NLRB currently has a 3-1 Democratic majority, including Becker. As a recess appointee, Becker will leave the Board at the end of 2011. Senate confirmation to a full term would extend his term through the end of 2014.  In January, President Obama nominated Republican NLRB lawyer Terence F. Flynn to the fill the Board’s final vacancy. Flynn’s nomination awaits Senate action.

In a February 2, 2011 letter, NLRB Acting General Counsel Lafe Solomon appeared to back down from a previous threat to bring suit against four states that recently passed state constitutional amendments banning the use of the card check process and requiring secret ballot elections for union recognition. In his letter, he expressed an interest resolving apparent conflicts between the state amendments and federal law without “the necessity of costly litigation.”

Previously, on January 13, Solomon had sent the state attorneys general a letter threatening legal action to halt implementation of the amendments. He warned the attorneys general of those states that such amendments were contrary to federal labor law and preempted under the U.S. Constitution. Solomon also warned that the amendments would pressure employers who previously agreed to voluntary recognition agreements to withdraw recognition from labor organizations representing their work forces and could lead to unnecessary litigation by workers challenging unions with majority support. Solomon asked the four state attorneys general to voluntarily halt the amendments from becoming law or to prevent reliance on those amendments, warning that the NLRB would be filing suit to overturn or otherwise void the amendments.

The response of Attorneys General Tom Horne of Arizona, Alan Wilson of South Carolina, Marty J. Jackley of South Dakota, and Mark L. Shurtleff of Utah in a joint letter on January 27 claimed that the amendments could be reconciled with federal law, and pledged to defend them. In urging resolution of the matter, Solomon’s February 2 letter agreed that he hoped that the amendments could be reconciled with the NLRA.

In November, voters Arizona, South Carolina, South Dakota, and Utah passed constitutional amendments requiring secret ballot elections in all union elections. Currently, Section 7 of the NLRA permits workers to choose a union through two pathways: NLRB-conducted secret ballot elections and voluntary recognition after a showing of majority support through the use of the card check process. The state amendments are an outgrowth of the defeat of the Democratic-sponsored Employee Free Choice Act in the 111^th Congress, which would have permitted the use of the card check process for union selection even outside the context of voluntary recognition.

By a 3-1 margin, the NLRB upheld the tactic of “bannering,” in which unions display large banners at construction sites of neutral employers proclaiming the existence of a labor dispute with a primary employer. Southwest Reg’l Council of Carpenters (New Star Gen. Contractors Inc.), 356 N.L.R.B. No. 88 (February 3, 2011). This tactic is intended to pressure or shame neutral, secondary employers engaging in business with the primary employer.

The three Democratic appointees constituting the majority, Chairwoman Wilma Liebman and Members Craig Becker and Mark Pearce, concluded that bannering did not constitute an unlawful secondary boycott. The majority held that the tactic 1) did not amount to signal picketing (urging employees of the neutral employer to stop work) in violation NLRA Sec. 8(b)(4)(i)(B), and 2) was not a prohibited threat, restraint or coercion of a neutral employer under NLRA Sec. 8(b)(4)(ii)(B). The Board based its decision on Carpenters & Joiners of America (Eliason & Knuth of Arizona Inc.), 355 N.L.R.B. No. 159 (2010), in which the same majority held that bannering did constitute unlawful secondary picketing because, unlike unlawful secondary picketing, the practice was not confrontational. The majority noted that the banners and related handbills at the construction sites did not call for a strike or job action, with the handbills explicitly clarifying that the union was not urging work stoppages or slow downs at the job sites of the neutral employer.

In dissent, Member Brian Hayes, the lone Republican on the Board, argued that bannering amounted to a secondary boycott and could not be distinguished from confrontational picketing. He said the majority applied an overly narrow reading of NLRA Sec. 8(b)(4) and was contrary to Board precedent and NLRA principles.