Part IV - Changing National Labor Policy through Executive Branch Action

In this fourth installment of our examination of the effect of the changing political landscape on federal labor and employment law, we review the potential changes that might be in store for National Labor Relations Board precedent and administration policy affecting labor-management relations.

In the 2008 elections, press reports suggest that organized labor expended a huge amount of cash and deployed its foot soldiers in support of President-elect Obama and Democrat congressional candidates.  Some estimates put labor’s total spending at nearly $400 million and suggest that unions mobilized nearly half a million members in voter-turnout efforts.  The combination of a president-elect who has been overtly supportive of unions with more significant Democrat majorities in both the House and Senate indicates that there are likely to be a number of changes in both law and policy affecting labor-management relations in the United States.

The National Labor Relations Board is the primary adjudicative body that shapes the interpretation and application of the country’s main labor law affecting private-sector employers-the National Labor Relations Act (NLRA).  Because the five-member Board consists of two Democrats, two Republicans, and a chairman selected from the president’s party, Board decisions and legal interpretations on important issues tend to shift with the political winds.  Since 2001, the Board has issued a number of decisions that have drawn the ire of labor unions and Democrats.  Frustration peaked in September 2007, when the Board issued a number of controversial decisions that were collectively described by organized labor as the “September massacre.” 

In response to these and other Board decisions, the Senate and House held a joint hearing in December 2007 to examine the impact of these decisions on workers’ rights.  At the hearing, current Board member Wilma Liebman testified that “virtually every recent policy choice by the Board impedes collective bargaining, creates obstacles to union representation or favors employer interests.”  AFL-CIO general counsel Jonathan Hiatt accused the Board of “embark[ing] on a systematic and insidious effort to radically overhaul [] federal labor law” by “narrowing [the NLRA’s] coverage, withdrawing its protections, and weakening its already ineffective remedies.”

Although the Board’s membership has been equally divided in its political affiliation since December 2007, that stalemate is expected to break early in President-elect Obama’s administration with the appointment and Senate confirmation of at least one additional Democrat.  Once this deadlock is broken, the Board will undoubtedly chart a new course for national labor policy.  Among the areas where change is most likely are (1) organizing and recognition; (2) employee coverage; (3) employee rights; (4) striker protection; (5) remedies; and (6) organizing campaign regulation. 

Organizing and Recognition

On his campaign Web site, President-elect Obama promised “to strengthen the ability of workers to organize.”  While the Employee Free Choice Act discussed in Part I of this series is one way that President-elect Obama can deliver on this campaign promise, reversal of some key recent Board decisions involving organizing and recognition will also further his stated goal.  In a reconfigured NLRB, the precedents discussed below are at significant risk of reversal.

Salting

In labor relations parlance, “salting” is a practice where union members (salts) apply for employment with a non-union employer for the primary purpose of organizing that employer’s workplace.  Whether salts enjoy the same rights under the NLRA as other employees has been the topic of a number of hotly contested decisions in recent years.  In Toering Electric Co., 351 NLRB No. 18 (2007), the Board altered the standard for applicants claiming discrimination based on union status to establish hiring discrimination claims.  The decision eliminated the Board’s presumption under the framework announced in FES, 331 NLRB 9 (2000), supplemented 333 NLRB 66 (2001), enf’d, 301 F.3d 83 (3d Cir. 2002), that all applicants (including salts) were bona fide employees under the statute and, instead, placed the burden on the NLRB General Counsel (who prosecutes violations of the NLRA) to show that (1) there was an application for employment and (2) the applicant maintained a “genuine interest in employment” with the employer.  Toering Electric potentially limits “salting” by allowing employers to refuse employment to applicants who do not have a bona fide interest in working for the company.  In dissent, Board member Liebman claimed that the Board’s decision was “impossible to reconcile with the National Labor Relations Act, its policies, and with Supreme Court precedent,” and that “without the benefit of briefs, oral argument, or even a request to reconsider precedent, it legalizes hiring discrimination in some, perhaps many, cases involving salts.”

In 2007, the Board also altered the burden of proof in backpay cases in which an employer was found to have discriminated against an employee or applicant on the basis of that individual’s union affiliation.  Oil Capitol Sheet Metal, Inc., 349 NLRB No. 118 (2007).  Prior to Oil Capitol, the General Counsel was entitled, under Dean General Contractors, 285 NLRB 573 (1987), to a rebuttable presumption that a salt would have remained indefinitely employed with the employer.  Oil Capitol changed this framework, requiring instead that the General Counsel show how long a salt would have stayed on the job to establish the amount of backpay to which a claimant would be entitled.  Thus, the Oil Capitol decision made it easier for employers to limit costly backpay awards in cases in which the employer either terminated or refused to hire a suspected salt.  As she did in Toering Electric, Member Liebman filed a vigorous dissent, arguing that the Board had “overturn[ed] Board precedent endorsed by two appellate courts and rejected by none . . ., without any party having raised the issue, without the benefit of briefing, and without a sound legal or empirical basis.”  

Recognition-Bar 

In Dana Corp., 351 NLRB No. 28 (2007), the Board modified the “recognition-bar” doctrine in situations where the employer recognized the union through a voluntary card-check procedure.  The recognition bar precludes challenges to a union’s majority status for a specified period of time.  In Dana Corp., the Board held that employees should have a 45-day period, following the issuance of notice of a voluntary recognition, to file a petition for an election or decertification, before the recognition-bar would take effect. 

Reversing NLRB policy dating back to Keller Plastics Eastern, Inc., 157 NLRB 583 (1966), which held that a union’s status as the recognized collective bargaining representative could not be challenged for a reasonable period of time after gaining recognition through demonstrating majority support via card-check, the Board in Dana adopted a rule providing that any voluntary recognition of a union will be vulnerable to challenge by a petition for decertification or election of a rival union for up to at least 45 days following the voluntary recognition.  However, in that 45-day period, the employer must still bargain with the voluntarily-recognized union, that union has the right to represent employees and pursue grievances and the union and employer may even execute a collective bargaining agreement, although all will be done with the risk that the union could lose its recognized status if an employee files a successful petition for decertification or for recognition of a rival union.

Employees seeking to file such a post-recognition petition can do so under the prior rule that they demonstrate that at least 30 percent of the bargaining unit seeks decertification or representation by a rival union.  The 30 percent showing may be based on signatures gained before and after notice of the voluntary recognition of the union. 

Member Liebman argued in dissent that the Board’s decision radically departs from “well-settled, judicially approved precedent” and “subjects the will of the majority to that of a 30 percent minority, and destabilizes nascent bargaining relationships.”  Indeed, the Board itself held that, because the decision marked a “significant departure from preexisting law,” and in order to avoid disruption of established bargaining relationships, the new rule applied only prospectively.

Withdrawal of Recognition

A union that is recognized as the collective bargaining representative of a group of employees receives a presumption that it enjoys the support of a majority of those employees.  In Levitz Furniture Co. of the Pacific, 333 NLRB 717 (2001), the Board held that an employer may voluntarily withdraw recognition only where a union has “actually lost the support of the majority of the bargaining unit employees.”  Levitz reversed prior Board precedent that had allowed an employer to voluntarily withdraw recognition based on a good faith doubt as to the union’s majority status, even if the union actually still enjoyed majority support.  Under Levitz, the Board held that an employer bore the burden of showing, through objective evidence, the union’s actual loss of majority status at the time recognition was withdrawn.  

In 2007, the Board applied Levitz in two cases that eased the evidentiary burden on employer withdrawal of recognition.  In Wurtland Nursing & Rehabilitation Center, 351 NLRB No. 50 (2007), the Board accepted a petition signed by a majority of workers seeking a “vote to remove the union” as proof of a loss of majority status, without requiring a decertification election.  In Shaw’s Supermarkets, 350 NLRB No. 55 (2007), the Board permitted an employer to withdraw recognition of the union, following the third year of a five-year collective bargaining agreement, after receiving signed slips from a majority of bargaining unit members stating that they did not wish to be represented any longer by the union, without requiring an election on a pending decertification petition.  In her Shaw’s Supermarkets dissent, Board member Liebman stated that the Board had “arbitrarily depart[ed] from longstanding precedent and procedure-and reach[ed] a result that serves neither of the [NLRA’s] goals” of protecting the right of employees to self-determination and promoting the interests of labor stability. 

As part of their frustration with the September 2007 Board decisions, labor groups noted that, on the same day that the Board decided Dana, which made it more difficult for unions to achieve voluntary recognition based on employee signatures without having to face an election, it also decided Wurtland, which eliminated the requirement of such an election for employers who sought to withdraw recognition of a union based solely on employee signatures.

Prohibitions on Use of Employer E-mail

In Register-Guard, 351 NLRB No. 70 (2007), the last decision by the Board when its membership consisted of a majority of Bush appointees, the Board held that employers could legally prohibit employees from using company e-mail systems for personal and other non-job-related reasons, including union solicitations, as long as the restriction or its enforcement is not discriminatory. 

By reaching this conclusion, the Board declined to evaluate e-mail communication the same way it does face-to-face communication between employees.  As a result, the Board did not apply its well-established body of law that generally prohibits any restrictions on solicitations not occurring during work time and, instead, evaluated the issue the same way it had in situations dealing with employee use of employer-provided equipment, such as bulletin boards, telephones and televisions.  Under this body of law, the Board has found that employees have no inherent right under the Act to use equipment provided by an employer for union-related communications, and therefore employer restrictions on the use of its equipment are lawful as long as they are not discriminatory.  Because Register-Guard prohibited the use of its e-mail system for all solicitations that were not business related and was therefore not facially discriminatory against union-related solicitations, the Board held that the employer’s policy was lawful.

In addition, the Board also held that the employer’s enforcement of a policy against union solicitations was not discriminatory, even though it had allowed other personal use of its e-mail system, because the employer had not allowed any other e-mail solicitations for outside organizations, except for an employer-sponsored solicitation on behalf of the United Way. The Board therefore suggested that an employer could lawfully permit certain types of solicitations based on their content (i.e., charitable solicitations) while prohibiting other types (i.e., noncharitable or commercial solicitations), so long as the distinction made is not based on any activity protected under section 7 of the NLRA. 

Once again, Member Liebman, along with Member Walsh, dissented in the decision, stating that the ruling “confirms that the NLRB has become the Rip Van Winkle of administrative agencies.”  Member Liebman argued that “[o]nly a Board that has been asleep for the past 20 years could fail to recognize that email has revolutionized communication both within and outside the workplace” and that, as a result, “[i]n 2007, one cannot reasonably contend, as the majority does, that an email system is a piece of communications equipment to be treated just as the law treats bulletin boards, telephones and pieces of scrap paper.” 

Notice of Beck Rights under Executive Order 13201

In February 2001, President Bush issued Executive Order 13201, which requires nonexempt federal contractors to post a notice informing employees of their “Beck rights,” including that they (1) cannot be required to join a union or maintain membership in a union to keep their jobs; (2) can be required under certain conditions to pay uniform periodic dues and initiation fees to unions as a result of union-employer security agreements; and (3) can object to use of their payments for certain purposes and can only be required to pay the portion of dues and fees used to support collective bargaining, contract administration or grievance adjustment.  The decision represented the Bush administration’s effort to inform workers of their rights to not join a union or pay certain fees and dues unrelated to collective bargaining, as enunciated by the Supreme Court in Beck v. Communication Workers of America, 487 U.S. 735 (1988).  In February 1993, President Clinton revoked a similar executive order issued by President George H.W. Bush in April 1992.  It is reasonable to assume that President-elect Obama will likely follow President Clinton’s example early in his administration.

Employee Coverage

As a cosponsor of the Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers (RESPECT) Act (H.R. 1644, S. 969) (see Part I of this series), President-elect Obama has supported reversing the “Kentucky River trilogy,” a series of 2006 Board decisions that provided for a broad definition of who could qualify as a supervisor and, therefore, be ineligible for participation in a union under the NLRA.  See Oakwood Healthcare, Inc., 348 NLRB No. 37 (2006) (charge nurses); Golden Crest Healthcare Center, 348 NLRB No. 39 (2006) (charge nurses); Croft Metals, Inc., 348 NLRB No. 38 (2006) (lead persons). 

Even if the RESPECT Act does not become law, the Obama Board will be positioned to abandon the Kentucky River trilogy in favor of a more restrictive definition of “supervisor.”  Indeed, current Democrat Board member Wilma Liebman noted in dissent to Oakwood Healthcare that the majority’s decision “reflect[ed] an unfortunate failure to engage in the sort of reasoned decision-making that Congress expected from the Board.” 

The Obama Board may also revisit coverage principles applied in other recent Board decisions that characterized workers as “non-employees,” “managers” or “independent contractors,” thus excluding them from coverage under the NLRA.  See, e.g., LeMoyne-Owen College, 345 NLRB No. 93 (2005) (faculty members); St. Joseph News-Press, 345 NLRB No. 31 (2005) (newspaper carriers and haulers); Pennsylvania Academy of Fine Arts, 343 NLRB 846 (2004) (artists’ models); Brevard Achievement Center, 342 NLRB 982 (2004) (disabled individuals working as janitors); Brown University, 342 NLRB 483 (2004) (teaching assistants). 

Employee Rights

At the joint congressional hearing, the AFL-CIO’s general counsel complained that the Board during the Bush administration had diminished employees’ rights through its decisions, with those rights being “forced to yield [] to employer property interests, however miniscule, to employer discretion, to national security, to deferral to arbitration, and to other statutes.”  It is foreseeable that the Obama Board will strike a different balance of these various interests in its decision-making, tilting back in favor of greater protection of employee conduct.

The Board’s vacillations in the last 25 years on the issue of “Weingarten rights” for non-union employees provide another illustration of the influence of the political slant of the Board on national labor policy.  In 1975, the Supreme Court recognized, in NLRB v. J. Weingarten, Inc., 420 U.S. 251, that unionized employees had a right to representation at investigatory interviews that could result in disciplinary action.  In the 1980s, the Board first extended Weingarten rights to non-union employees and then, three years later, reversed itself.  In Epilepsy Foundation of Northeast Ohio, 331 NLRB 92 (2000), the Clinton Board finally restored Weingarten rights to non-union employees.  However, in IBM Corp., 341 NLRB No. 148 (2004), the Bush Board overruled Epilepsy Foundation. 

Striker Protection

Permanent Replacements

On his campaign Web site, President-elect Obama promised to “work to ban the permanent replacement of striking workers, so workers can stand up for themselves without worrying about losing their livelihood.”  In Jones Plastic & Engineering, 351 NLRB No. 50 (2007), a Republican Board majority found that striker replacements whose job applications said they were at-will employees could be considered permanent replacements who would block the reinstatement of workers seeking to return to work after an economic strike.  This decision overruled the Clinton-era rule in Target Rock, 324 NLRB 373 (1997), which stated that at-will disclaimers undermined an employer’s attempt to show that the replacements were permanent. 

Partial Lockouts

In 2004, the Bush Board issued two decisions that permitted employers to lock out some workers while permitting others to continue working.  See Midwest Generation, 343 NLRB 69 (2004), rev’d and remanded sub nom. Local 15, IBEW v. NLRB, 429 F.3d 651 (7th Cir. 2005); Bunting Bearings Corp., 343 NLRB 479 (2004), remanded, 179 LRRM (BNA) 2896 (D.C. Cir. 2006).  In the view of organized labor, these decisions undermined the right to strike.  However, in both cases, the courts of appeal refused to enforce the Board decisions.

In Midwest Generation, the Board allowed an employer to lock out strikers who had unconditionally offered to return to work, while it allowed those who had crossed the picket line to continue working.  In reversing the Board, the Seventh Circuit found that there was no proof that the partial lockout was justified by operational needs, and that the partial lockout was not justified as a lawful means of putting economic pressure on holdouts.

In Bunting Bearings Corp., the Board permitted an employer to lock out only non-probationary employees (all of whom were union members), while allowing its probationary employees (all of whom were non-union) to continue working.  The Board justified the partial lockout on the basis that the non-probationary employees had more of an interest in the outcome of contract negotiations.  Because there was a perfect correlation between union membership and lockout status, the D.C. Circuit remanded to the Board for the employer to demonstrate that the partial lockout was motivated by legitimate objectives.  On remand, the Board found that the partial lockout tainted the decertification petition later circulated by a majority of employees and issued an affirmative bargaining order.

Remedies

Backpay

In 2007, the Board issued several decisions that either limited backpay relief or made proof of such relief more difficult for claimants.  For example, as discussed above, Oil Capitol eliminated the presumption of continuing employment for salts.

In St. George Warehouse, 351 NLRB No. 42 (2007), a Republican Board majority held that the General Counsel bears the burden of production on the issue of whether an illegally discharged employee took reasonable steps to apply for available jobs in order to mitigate damages.  The Board reasoned that the General Counsel, as advocate for the former employee, was more likely to have information regarding the former employee’s job search efforts.  In dissent, the Democratic Board members noted that the majority had departed from 45 years of precedent in relieving the wrongdoer-employer of its burden of production on this issue. 

In Grosvenor Resort, 350 NLRB No. 86 (2007), the Board held that employees who wait more than two weeks to seek interim employment will be denied backpay for that period because such delay was unreasonable and would “reward idleness.”  In his dissent, Member Walsh complained that the majority had only paid “lip service” to well-established Board principles and created “bad policy” that produced inadequate remedies and would “embolden others to commit violations that would otherwise result in more substantial backpay obligations.” 

Bargaining Orders, Injunctive Relief, and Other Extraordinary Remedies

At the December 2007 joint congressional hearing, the AFL-CIO’s general counsel asserted that the Board’s past efforts to craft effective remedies beyond backpay and notice posting have “virtually disappeared under the Bush Board.”   He further argued that under the Bush administration the Board “virtually eliminated the bargaining order as a remedial tool,” and that section 10(j) injunctive relief has also “all but disappeared.”  Under the Obama Board, employers are likely to see a renewed emphasis on special and extraordinary remedies, including an increased use of bargaining orders and authorization of section 10(j) injunctive relief proceedings.

Employer Regulation During Organizing Campaigns

The Obama administration may also reinstitute Department of Labor regulations that would drastically expand the Labor Management Reporting Disclosure Act (LMRDA) to require consultants and attorneys to register under the LMRDA and file reports if they prepare a speech, handout, letter or video for use by the employer during a union organizing campaign. 

The LMRDA currently requires all entities acting as “persuaders” in the context of a union organizing campaign to register with the federal government.  Entities who enter into agreements with employers to provide persuader services are also required to file reports within 30 days detailing the amount paid by the employer and containing “a detailed statement of the terms and conditions” of the arrangement or planned services to be provided.  There is an exemption in section 203(c) of the LMRDA that exempts from the reporting requirements the services of “such person by reason of his giving or agreeing to give advice to such employer.”  This “advice” exemption to the reporting requirements of the LMRDA historically has included persuasive material prepared by consultants or attorneys for use by the employer.

In January 2001, at the tail end of the Clinton administration, a regulation was introduced that would have altered the longstanding interpretation of “advice” under the section 203(v) of the LMRDA.  Under the new regulation, lawyers and consultants who simply review and revise persuasive material prepared by the employer would not have to report that activity.  However, the regulation stated that if a “consultant or lawyer or their agent communicates directly with employees in an effort to persuade them,” then the “advice” exemption would not apply, and there would be a reporting requirement.  The regulation further provided that the duty to report would be triggered even without direct contact between the consultant or lawyer and employees, as long as persuading employees was a direct or indirect object of the activity by the consultant or attorney. 

In April 2001, the Bush administration rescinded the new LMDRA regulation promulgated by the Clinton administration.  The Obama administration’s Department of Labor will likely reinstitute the Clinton administration regulation.  Such a regulation, particularly coupled with the passage of the Employee Free Choice Act, may limit the ability of employers to successfully oppose a union organizing campaign. 

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In the final chapter of our five-part series, we will explore expected changes in national trade policy under the Obama administration.

  Part III - Federal Workplace Regulation

This is the third installment in our series on potential changes ahead in the labor and employment area as a result of the 2008 election.  In addition to pursuing the legislative priorities described in Parts I and II, President-elect Obama has expressed a desire to increase the enforcement and inspection roles of various labor-related agencies with responsibility for regulating the workplace, including the Occupational Safety and Health Administration, the Wage and Hour Division of the Department of Labor and the Equal Employment Opportunity Commission.  Today, we examine the possible agendas of these three key agencies. 

Occupational Safety and Health Administration

The Occupational Safety and Health Administration (OSHA) is the main federal agency responsible for providing employees with a safe and healthy workplace.  With an expansive legislative mandate from the Occupational Safety and Health Act (”OSH Act”), OSHA promulgates and enforces detailed health and safety regulations for nearly all working men and women. 

Since Democrats took control of Congress in 2006, both the House and the Senate have pressured OSHA to become more aggressive in its enforcement activities.  Congress has held hearings and introduced legislation intended to encourage OSHA to issue more stringent citations and penalties on employers for violations of safety rules.   

We expect that President-elect Obama will continue this trend during his administration.  In an April 2008 statement issued to the International Brotherhood of Boilermakers, then-Sen. Obama declared that “Congress must play a greater role in improving workplace health and safety.”  In addition, President-elect Obama supported increased funding levels for OSHA to improve the agency’s ability to reduce workplace injuries and fatalities.  President-elect Obama has also endorsed a number of substantive and procedural changes to OSHA policy that will materially increase the steps an employer must take to comply with federal health and safety laws.

A New Ergonomics Rule

President-elect Obama has promised to issue a new ergonomics regulation.  This regulation is likely to provide the same stringent requirements and broad scope of the controversial ergonomics standard that was issued near the end of the Clinton administration and then repealed almost immediately by President Bush and the Republican Congress. 

After a long, protracted debate, on November 14, 2000, OSHA issued its Ergonomics Program Standard, which became effective on January 14, 2001.  This standard attempted to minimize musculoskeletal disorders engendered by low-impact, repetitive movements.  It broadly defined a “musculoskeletal disorder” as a disorder of the muscles, nerves, tendons, ligaments, joints, cartilage, blood vessels or spinal discs that affect the neck, shoulder, elbow, forearm, wrist, hand, abdomen, back, knee, ankle and foot.  In addition, the standard provided that musculoskeletal disorder injuries could be manifested by diagnoses including, but not limited to, carpel tunnel syndrome, rotator cuff syndrome, lower back pain, trigger fingers, tarsal tunnel syndrome, sciatica, tendinitis and herniated spinal discs. 

On March 20, 2001, President Bush signed a congressional resolution that repealed the ergonomic regulations because of the substantial costs and compliance challenges it imposed on employers.  Businesses estimated that compliance with the new regulations would have cost as much as $100 billion.

Because the vote enacting the resolution fell along party lines during a period in which the Republicans controlled Congress, it is likely that President-elect Obama, with a Democratic Congress, will successfully issue a new ergonomics regulation.  

Increased Civil Penalties 

President-elect Obama supports increasing the level of penalties OSHA can impose on employers who violate its regulations.  In his April 2008 statement to the International Brotherhood of Boilermakers, President-elect Obama stated “OSHA systematically imposes small fines on employers, even in cases where safety violations led to a worker’s death.  And it almost immediately discounts a fine if the employer contests it.”  Instead, President-elect Obama wants to reduce an employer’s ability to challenge the most severe penalties.  For example, he supports codifying OSHA’s egregious penalty policy, pursuant to which OSHA issues a penalty for each instance of noncompliance, instead of combining all instances into one citation, in situations where an employer flagrantly disregards its responsibilities to provide a safe and healthy workplace.  Currently, employers often successfully argue that the egregious penalty policy exceeds OSHA’s authority because neither the OSH Act nor any of the OSHA’s regulations mentions the policy.   Codification of this policy would hamstring employers’ ability to challenge OSHA’s enforcement efforts in cases where OSHA has used the egregious penalty policy.   

In addition, President-elect Obama cosponsored the Protecting America’s Workers Act (S.1244), which would increase the limits on employer fines from $70,000 to $100,000 for “repeat” and “willful” violations.  Under the bill, the fines for “serious” and “other than serious” violations would increase from $7,000 to $10,000.      

Enhanced Criminal Penalties 

President-elect Obama would like to amend the OSH Act to strengthen OSHA’s criminal penalties in order “to enable the Department of Justice to prosecute a felony when an employer willfully causes death or serious bodily injury to a worker.”  Currently, the OSH Act allows for companies’ management employees to be imprisoned for up to six months for a “willful” violation that results in the death of an employee.  President-elect Obama supports a drastic increase to the maximum prison term for such violations.  For example, the pending Protecting America’s Workers Act would increase the term of imprisonment for these violations to ten years.

Increase in Workplace Inspections 

President-elect Obama also wants to improve OSHA’s process of inspecting workplaces.  He will encourage Congress to provide OSHA with funding to hire additional enforcement personnel to increase the number of workplace inspections, including inspections against repeat offenders under the Enhanced Enforcement Program, which OSHA uses to target its enforcement activities on employers with prior citations that have arisen out of inspections involving workplace accidents or fatalities.

Wage and Hour Division

The Department of Labor’s Wage and Hour Division (WHD) is responsible for enforcing federal law on minimum wage, overtime pay, recordkeeping, family and medical leave and child labor.  Under the Obama administration, the WHD would likely be more aggressive in its enforcement actions.

In a July 27, 2008 letter to the Department of Labor, President-elect Obama set forth his vision for a WHD that listens to worker advocacy organizations and more actively initiates its own investigations.  President-elect Obama also indicated his desire to expand the scope of WHD’s activities, criticizing the Bush administration’s emphasis on only four industries (agriculture, accommodation and food services, manufacturing, and health care and social services).  He also indicated his desire to increase funding for the WHD in order to actualize the enhanced role he envisioned for it.  With the support of a Democratic Congress, the Obama administration could make this vision a reality.

In addition to increasing the role of WHD, President-elect Obama will also likely push for two wage and hour-related legislative initiatives: increasing the minimum wage and instituting paid sick leave.

Minimum Wage Increase

President-elect Obama has written that “[e]ven though the minimum wage will rise to $7.25 an hour by 2009, the minimum wage’s real purchasing power will still be below what it was in 1968.”  Consequently, he wants to further raise the minimum wage to $9.50 an hour by 2011.  In addition to raising the minimum wage, President-elect Obama endorses a “living wage” where the minimum wage would be indexed to inflation.  Under a “living wage” paradigm, the minimum wage could then rise without subsequent Congressional action.

Paid Sick Days 

Under the Family Medical Leave Act, employers are required to give employees up to 12 weeks of unpaid leave to deal with serious health conditions.  As a senator, President-elect Obama cosponsored the Healthy Families Act (H.R. 1542, S. 910), which would amend the FMLA to require employers to provide 7 days of paid sick leave for full-time employees (30 hours or more) and pro-rated paid sickleave for part-time employees.

Equal Employment Opportunity Commission

Under the Obama administration, the Equal Employment Opportunity Commission (EEOC) may affect employers in at least four ways: (1) increasing employer recordkeeping obligations, (2) adopting employee-friendly policies through interpretive guidance or litigation positions, (3) engaging in agency rulemaking and (4) increasing the focus on its “Systemic Initiative” for developing high-impact cases that identify systemic discrimination.

Expansion of Recordkeeping Obligations

Most employers are required to submit an Employer Information Report (EEO-1) to the EEOC on an annual basis.  The EEOC uses the data to support civil rights enforcement and to analyze employment patterns, such as the representation of female and minority workers within companies, industries or regions.  In 2003, the EEOC proposed revisions to the racial and ethnic reporting requirements, including expansion from five to seven identification categories.  Approved by the Office of Management and Budget (OMB) and made effective with the September 2007 reporting cycle, the EEO-1 form now requires an employer to provide race and ethnic information for the following categories:  White (not Hispanic or Latino), Hispanic or Latino, Black or African-American (not Hispanic or Latino), Native Hawaiian or other Pacific Islander (not Hispanic or Latino), Asian (not Hispanic or Latino), American Indian or Alaska Native (not Hispanic or Latino); and Two or More Races (not Hispanic or Latino). 

The Two or More Races category, however, does not conform to OMB’s 1997 Standards for the Classification of Federal Data on Race and Ethnicity, which states that multirace responses should take the form of multiple responses rather than a multiracial category.  The EEOC may revisit the multiracial category issue in the coming months, as the EEO-1 form is scheduled for reauthorization by OMB in January 2010.  In addition, it is possible that OMB and the EEOC may seek to include additional ethnic categories.  Any change in the EEO-1 form or information collection processes would likely increase the recordkeeping burden on employers, who only recently adapted to the revised EEO-1 form.

The recordkeeping requirements with regard to Internet job applicants is another area where the burden on employers may be increased during the Obama administration.  The EEOC’s current guidance on employer obligations to retain applicant flow data and validation studies is contained in the Uniform Guidelines on Employee Selection Processes (UGESP), a 30-year old rule jointly issued with several other agencies, including the Office of Federal Contract Compliance (OFCCP), Department of Justice, and Office of Personnel Management.  In 2001, these agencies began considering whether additional recordkeeping guidance was needed in light of the growth of the Internet as a job search mechanism.  Although the agencies published a joint proposal in 2004 consisting of five draft questions and answers, the proposal was never finalized due to lack of consensus among the agencies.  In 2005, the OFCCP on its own published a final rule that addressed recordkeeping by federal contractors and subcontractors about the Internet hiring process and the solicitation of race, gender and ethnicity information from Internet applicants. 

In March 2008, the EEOC took steps to ensure that the UGESP remained in effect through 2011.  However, Democratic Commissioners Stuart Ishimaru and Christine Griffin have both indicated their interest in having the EEOC address the Internet applicant issue on its own in the near future and expressed that the standards adopted by the OFCCP may not suffice for EEOC’s purposes, potentially putting employers in the difficult position-in which they are now with the Family and Medical Leave Act and the Americans with Disabilities Act-of having to comply with two overlapping standards that are either conflicting, inconsistent or, at least, inconsistently interpreted by different enforcement agencies.  As an example of the gap between agency rules, while the OFCCP rule addresses mining of databases (e.g., that of monster.com) for candidates, the UGESP rule probably does not reach so far. 

Adoption of Employee-Friendly Policies and Litigation Positions

The EEOC has responsibility for interpreting and enforcing Title VII, the Americans with Disabilities Act, and certain other employee rights statutes.  In this role, the EEOC offers subregulatory guidance in such forms as the Compliance Manual, Enforcement Guidance and Policy Guidance documents, and takes policy positions in litigation through amicus briefs.  During the Bush administration, the EEOC has taken some aggressive positions in litigation, such as challenging releases as per se retaliatory, filing a pattern or practice suit for a retaliation claim, and espousing a new theory of “anticipatory retaliation” in the arbitration and retaliation context.  Under the Obama administration, the agency may expand litigation against employers who conduct pre-hire background investigations.  In addition, the EEOC may pursue more expansive retaliation claims, such as attacking no-rehire clauses as per se retaliatory.  Furthermore, in a more aggressive EEOC, the field offices may be subject to less oversight on their litigation decisions.

We have identified at least three specific areas that may be of interest to employers during the Obama administration: (1) discrimination based on caregiver status, (2) consideration of conviction records, and (3) use of credit checks.

In May 2007, the EEOC issued Enforcement Guidance regarding the circumstances under which discrimination against individuals with caregiving responsiblities for children, the elderly and individuals with disabilities might constitute unlawful disparate treatment.  The EEOC noted that caregiving responsibilities for children and the elderly disproportionately affect working women, and that their effects may be even more pronounced among some women of color.  The EEOC advised that employment decisions based on sex-based stereotyping about caregiving responsibilities violated Title VII.

On May 2, 2008, in Chadwick v. Wellpoint, Inc., No. 07-70-P-H (D. Maine), a District Court granted summary judgment to an employer who had allegedly denied a woman a promotion in favor of another lesser qualified woman based on the plaintiff’s parental caregiving obligations.  The court concluded that the plaintiff did not have sufficient evidence from which a jury could conclude that her supervisors considered her caregiving role as a female in their decision not to promote her.  Under the Obama administration, the EEOC may take the litigation position that, because women are overwhelmingly the primary caregivers for children, a decision with respect to a woman based on her caregiving status is evidence of unlawful sex stereotyping sufficient to defeat summary judgment.

The EEOC is presently examining two issues of importance to employers during the hiring process.  Employee advocates have challenged the use of conviction records and credit checks during the hiring process on the theory that such practices have a disparate impact upon minorities.  The EEOC has long taken the position that an employer may only disqualify an applicant or employee based on previous convictions if it takes into account the nature and gravity of the offenses, the time that has passed since the convictions or completion of the sentence and the nature of the job sought or held.  However, in El v. Southeast Pennsylvania Transport Authority, 479 F. 3d 232 (3d Cir. 2007), the Third Circuit declined to give the EEOC’s guidance deference because it had not substantively analyzed the statute in issuing its guidance and then found that the employer’s bright line policy did not violate Title VII.  During the Obama administration, the EEOC may issue guidance that makes it more difficult to use conviction records and credit checks as screening devices in employment decisions.  

Rulemaking

In its rulemaking capacity, the EEOC can impact how an employer must implement new employment laws.  For instance, the recently passed ADA Amendments Act and the Genetic Non-Discrimination Act both require the EEOC to issue implementing regulations. 

The ADA Amendments Act, which becomes effective on January 1, 2009, altered the definition of “disability” by rejecting certain Supreme Court decisions and portions of the EEOC’s ADA regulation.  While the legislation retains the basic definition of a disability as an impairment that substantially limits one or major life activities, the statute expressly directs the EEOC to revise the portion of regulations that defines “substantially limits.”  Although one would reasonably expect that the EEOC will issue some regulation by the end of the year to avoid having no position on the new definition, this definition may be further revised once the Democrats control the Commission.  Congress also directed the EEOC to issue, by May 2009, a final rule implementing the Genetic Information Non-Discrimination Act, which becomes effective in November 2009. 

In March 2008, the EEOC published a notice of proposed rulemaking to address issues related to the Supreme Court’s ruling that disparate impact claims are cognizable under the Age Discrimination in Employment Act (ADEA).  That liability is precluded, however, when the impact is attributable to a “reasonable factor other than age,” a different and lower standard than the job-relatedness and business necessity test used in, for example, Title VII cases.  In its notice, the EEOC invited comments on whether it should issue regulations to provide more information on the meaning of “reasonable factors other than age.”  The EEOC has not issued any guidance, but in Meacham v. Knolls Atomic Power Laboratory, a case decided by the Supreme Court in June 2008, the EEOC took the position in an amicus brief that the “reasonable factor other than age” standard should be that “the challenged employment practice was reasonably designed to further or achieve an important and legitimate business purpose and was administered in a way that reasonably advances that purpose.”  Although the EEOC acknowledged that the reasonable factors test provides “narrower” disparate impact coverage for claims based on age than Title VII provides for claims based on race or sex, it nevertheless contended that its proposed reasonable factors standard is similar to the articulation of the business necessity standard in Wards Cove Packing Co. v. Atonio.

Finally, a Democrat-controlled EEOC may also revisit its December 2007 final rule under which it exempted from coverage of the ADEA the practice of altering, reducing or eliminating employer-sponsored retiree health benefits when retirees become eligible for Medicare or comparable state retiree health benefits.  Commissioner Ishimaru voted against the rule.

Expansion of  the Systemic Initiative

In 2005, the EEOC established its Systemic Task Force, which was charged with reassessing how the EEOC addresses systemic discrimination.  Systemic cases were defined as “pattern or practice, policy and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic location.”  Although the EEOC reiterated its belief in the value of the Systemic Initiative earlier this year, the scope of the initiative is limited in part by the funding of the agency.  If the Democratic Congress expands the commission’s resources as part of its overall agenda to expand and enforce the nation’s anti-discrimination employment laws, there will likely be an increased emphasis on the Systemic Initiative.

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In our next installment, we will focus on changes in traditional labor law which may occur at the agency level in the Obama administration, either through new DOL regulation or NLRB decisions.

On Thursday, October 23, 2008, the Department of Homeland Security (DHS) issued a supplemental final rule to the department’s No-Match Rule that became effective in August 2007.  The proposed rule was initially published March 26, 2008, and the comment period closed April 25, 2008.  The supplemental final rule clarifies an employer’s responsibilities to resolve discrepancies identified in no-match letters issued by the Social Security Administration (SSA).

The No-Match Rule details steps employers may take when they receive a no-match letter from the SSA.  SSA informs employers by letter when specific employees’ names and corresponding Social Security numbers provided on the employers’ Form W-2 wage reports do not match SSA’s records.  These no-match letters may be used as evidence of an employer’s constructive knowledge that specific employees may be unauthorized workers. 

An employer that follows the safe harbor procedures detailed in the No-Match Rule in good faith will be considered to have acted reasonably, and the U.S. Immigration and Customs enforcement will not use the employer’s receipt of a no-match letter as evidence that the employer had constructive knowledge that it violated the employment provisions of the Immigration and Naturalization Act (INA) by knowingly employing unauthorized workers.

The supplemental rule is intended to address concerns raised by Judge Charles Breyer (United States District Court of the Northern District of California) when he preliminarily enjoined implementation of the No-Match Rule in October 2007.  In the supplemental proposed rulemaking, DHS reviewed past government communications about SSA no-match letters to clarify the history of the Department’s policy on the significance of those letters, and supplied additional “reasoned analysis” in support of the policy set forth in the rule.  DHS also clarified that the authority to interpret and enforce the anti- discrimination provisions of the INA rests with the Department of Justice, and provided an initial regulatory flexibility analysis, including a small entities analysis.

The supplemental proposed rule required employers seeking safe harbor to “promptly” notify affected employees identified in a no-match letter of the employee’s need to resolve a no-match.  In the supplemental rulemaking, DHS clarified that ”promptly” meant within five days of the employer being unable to resolve a no-match through internal investigation.  The supplemental rule also clarified that employers are not liable on a constructive knowledge theory for failing to follow safe harbor procedures when employees hired prior to November 6, 1986 are identified in a no-match letter.  The supplemental rule recognized that the INA included a grandfather clause that specifically stated that the Act did not apply to workers hired before its enactment.  Thus, the no-match rule does not apply to any workers employed before 1986 that may be identified in a SSA no-match letter.

After receiving nearly 3,000 comments on the proposed rule, DHS made adjustments to the cost calculations in the Initial Regulatory Flexibility Analysis and prepared a Final Regulatory Flexibility Analysis, finalized the additional legal analysis set out in the supplemental notice of proposed rulemaking, and determined that the rule should issue without change.

OSHA has announced a National Crane Safety Initiative to address safety hazards during crane operations. This initiative coincides with OSHA’s proposed rule on Cranes and Derricks in Construction. 

The initiative plans to increase and hazard awareness and provide information for how to avoid crane hazards. Furthermore, OSHA will launch a National Emphasis Program that increases the number of targeted inspections of construction worksites to identify crane hazards and ensure compliance with workplace crane safety requirements.

On October 20, 2008, OSHA published a Request for Information on permitting the use of a Supplier’s Declaration of Conformity (”SDoC”) as an alternative to the National Recognized Testing Laboratories (”NRTLs”) product-approval process. NRTLs are OSHA-approved third-party laboratories that perform safety testing and certification of electrical and other products. An SDoC is a written statement from an equipment manufacturer or supplier that a product meets or conforms to a specified standard or requirement. 

The SDoC is a currently accepted practice in the European Union. The European Commission (”EC”) proposed that OSHA adopt the SDoC because the NRTL system “imposes unnecessary additional costs and market-entry barriers on exporters of these goods.” In addition, the EC conducted a risk-assessment of the SDoC and found that “risks [posed by non-compliant products] are at a level that they can be satisfactorily managed.”

OSHA believes that the EC has failed to support this conclusion with evidence to ensure that the SDoC would satisfy the standard-setting requirements of the Occupational Safety and Health Act. Therefore, OSHA has requested information and comments regarding potential risks associated with the SDoC. In all, OSHA has issued thirty-eight specific requests for information regarding the EC’s proposal on the following topics:

• Product safety in an SDoC system
• Product risk and specifications
• Administration of an SDoC system
• Costs of an SDoC system
• Enforcement of an SDoC system
• Effects on trade
• Implementation suggestions by certain industries

OSHA will examine all responses received and determine whether to initiate a rulemaking or to take any other actions with respect to the SDoC. 

OSHA has also asked for public comments in connection with this proposed standard. The comment period will remain open until January 20, 2009. Comments may be submitted in three ways:  1) post the comments electronically through the Federal eRulemaking Portal at http://www.regulations.gov/, 2) send three copies to the OSHA Docket Office, Room N-2625, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C., 20210, or 3) fax the comments to 202-693-1648. Comments must include the Agency name and Docket Number for this rulemaking:  OSHA-2008-0032.

On October 7, 2008, the Employee Benefits Security Administration (EBSA) released two final rules related to the selection of annuity providers.

The first rule limits the application of the “safest available” standard of Interpretive Bulletin 95-1 to defined benefit plans. Bulletin 95-1 states that plan fiduciaries must attempt to obtain the safest annuity available, unless it would be in the best interest of the participants and beneficiaries to do otherwise.  The Bulletin initially applied equally to both defined benefit plans and defined contribution plans. The final rule limits the scope of the bulletin to only defined benefit plans. 

The second rule establishes a safe harbor for the selection of annuity providers for benefit distributions from individual account plans. The proposed rule stated that fiduciaries should engage in an objective, thorough, and analytical search when identifying annuity providers, while avoiding self-dealing, conflicts of interest, or other improper influence.  The final rule clarified the proposed rule by noting (a) that the regulation does not establish a minimum requirement for satisfying the responsibilities of selecting an annuity provider; and (b) an independent expert is not required in all cases.

On October 9, 2008, OSHA published an 1,100-plus-page proposed rule to protect employees from the hazards associated with hoisting equipment, including cranes and derricks, used in construction activities.  OSHA estimates that 89 crane-related fatalities occur per year in construction work. The leading causes of crane-related fatalities include electrocution, crushing during assembly/disassembly, failure of a boom or cable, tip-over, falls, and being struck by the load or counterweight.  The proposed rule addresses these major causes of fatalities.

Under the proposed rule, which would modify 29 C.F.R. Part 1926, employers must first determine if the ground is sufficient to support the anticipated weight of the hoisting equipment and associated loads.  Next, the employer must assess hazards within the work zone that would affect the operation of the equipment, such as power lines and personnel.  Finally, the employer must ensure that the equipment is in safe operating condition by both inspections and employees in the work zone who are trained to recognize hazards associated with the use of the equipment. 

The proposed rule also requires certification of crane operators through one of four options, including certification by (1) an accredited crane/derrick operator testing organization; (2) an employer’s own audited qualification program; (3) the U.S. military; or (4) a licensed government entity.

The proposal is the culmination of an effort begun in 1998 with an OSHA advisory committee.  In 2002, OSHA initiated negotiated rulemaking, a process by which a proposed rule is developed by a committee comprised of members who represent interests that will be significantly affected by the rule.  In July 2004, a 23-member federal Cranes and Derricks Negotiated Rulemaking Advisory Committee reached consensus on a draft document that formed the basis of the proposed rule, but it took another four years for a proposed rule to be issued.

Comments and requests for a public hearing should be sent to OSHA by December 8, 2008 through the federal e-Rulemaking portal at http://www.regulations.gov/ , using Docket ID OSHA-2007-0066. 

On October 2, 2008, the Department of Labor, Office of Labor-Management Standards (”OLMS”), published a Final Rule that increases annual financial disclosures required of unions by the Labor-Management Reporting and Disclosure Act (”LMRDA”).  

The new Final Rule implements Form T-1, entitled the Trust Annual Report.  Form T-1 requires a covered labor union to provide financial information about various “trusts” affiliated with the union, such as assets, liabilities, receipts and disbursements.  Form T-1 will give employees and employers a more robust picture of a union’s financial situation. 

The new Final Form T-1 Rule only applies to labor unions with total annual receipts of $250,000 or more.  This limited scope continues OLMS’s recent history of targeting larger unions for increased financial transparency.  In addition to the new Form T-1 Final Rule, OLMS recently increased the amount of disclosure in the Form LM-2 filled out by large unions and established procedures for revoking a small union’s privilege of filing the streamlined LM-3 financial disclosure form.  OLMS explained that these changes are meant “to deter potential misuse of union trusts that have occurred in the past and allow union members to know exactly where their hard-earned dollars are being spent.”

In order for an organization or fund trigger a labor union’s duty to file a T-1, the organization or fund must (1) be established by the labor union or have a governing body that includes at least one member appointed or selected by the labor union, (2) one of the trust’s primary purpose must be to provide benefits to the members of the labor union or their beneficiaries, and (3) the labor union, alone or in combination with other labor unions, must appoint or selects a majority of the members of the trust’s governing board or the labor union’s contribution to the trust, alone or in combination with other labor unions, represents more than 50% of the trust’s receipts. 

The Form T-1 final rule will take effect on January 1, 2009.

OSHA recently released an August 26, 2008 interpretation letter regarding its “Recording Occupational Injuries and Illnesses” part 1904.  The standards in this part help employers determine which injuries and illness they should record and report to OSHA.  The interpretation letter considers whether injuries to employees are considered “recordable” and how they should be recorded under this part when confronted with the following four scenarios:

1.   If an employee’s surgery requires her to work at home instead of the office while she recovers, is the employer required to record it as “days away from work” under § 1904.7 even if the employee is able to perform all routine job functions?

§ 1904.7(b)(3) and (b)(4) require employers to record an injury or illness that either involves one or more days away from work or involves restricted work or a job transfer. In particular, §1904.7(b)(4)(i) states that “restricted work” occurs when an employer keeps “the employee from performing one or more of the routine functions of his or her job, or from working the full workday that he or she would otherwise have been scheduled to work.” OSHA concluded that if the employee does not work from home as part of her normal work schedule, the employer must record the case as days away from work. If, however, the employee’s normal work schedule did include working from home at least one day a week, the employer must record the case as restricted work because the employee did not work the full 8-hour day.

2.  If an employee parks his car in the company parking lot and injures himself by inadvertently slamming the car door on his finger, is this injury considered work-related under § 1904.5(b)(2)(vii)?

Under § 1904.5(b)(2)(vii), an injury or illness “caused by a motor vehicle accident and occurs on a company parking lot or company access road while the employee is commuting to or from work” is not a “work-related” injury that is recordable.  OSHA clarified that three factors must exist for an injury or illness to qualify for this exception: (1) it must occur during an employee’s commute; (2) it must occur in the employer’s parking lot or access road; and (3) it must result from a motor vehicle accident.  OSHA concluded that, because the injury did not involve a motor vehicle accident during the employee’s commute, the third requirement for § 1904.5(b)(2)(vii) does not exist.  Therefore, the employer must record this accident on its establishment log.

3.  If an employee suffers a knee injury because of a work-related fall on March 15, is diagnosed with a contusion, retires from her job for reasons wholly unrelated to the injury on April 15, continues to have pain from the March 15 fall, and has surgery to treat this pain on July 15, is this injury recordable? If so, how should the injury be recorded?

Under § 1904.7(b)(1), employers must record a work-related injury or illness if it results in death, days away from work, restricted work or transfer to significant injury or illness by a physician or other licensed health care professional.  Because the employee received the injury while employed and met the § 1904.7(b)(1) criteria when the employee received medical treatment in July, the employer must record the injury.

4.  If an employee who is on restricted work activity for a work-related injury is terminated because of that injury, should additional hours be added to the OSHA Form 300 when calculating the “total hours worked by all employees” so the number of hours can correspond to the number of restricted work activity days or days away from work that are estimated and added to the Form 300?

OSHA concluded that employers should not add additional hours to the total hours worked figure because neither OSHA nor the Bureau of Labor Statistics calculates its rates based on the number of days.  Instead, they calculate rates based on the number of cases.

On October 6 and 7, 2008, OSHA will hold a public hearing to receive comments on its new proposed rule designed to clarify that noncompliance with the personal protective equipment and training requirements in the general industry, construction, and maritime standards will expose employers to liability and penalties on a per-employee basis.  The hearing will be held in the Frances Perkins Building, U.S. Department of Labor, 200 Constitution Avenue, N.W. Conference Room 6, Room C-5320, Washington, D.C. 20210.  The hearing will commence at 10:00 a.m. on October 6, 2008 and, if necessary, will continue on October 7, 2008 at 9:00 a.m.

If a party is interested in providing testimony during the hearing, it must notify OSHA in writing no later than September 26, 2008.  OSHA has also asked for each party’s testimony to be no more than 10 minutes.  If a party needs more than 10 minutes, it must submit a written request with its notice of intention stating: (1) how much time it seeks, (2) the topics it will cover, and (3) why it cannot cover these topics in 10 minutes.  The notice of intention to appear at the hearing may be submitted in three ways: 1) post the comments electronically through the Federal eRulemaking Portal at http://www.regulations.gov/, 2) send three copies to the OSHA Docket Office, Docket No. OSHA-2008-0031, Technical Data Center, Room N-2625, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C., 20210, or 3) if less than 10 pages, fax the comments to 202-693-1648.  Each submission must include the Agency name and Docket Number for this rulemaking: OSHA-2008-0031.