On August 30, 2010, the U.S. Department of Labor’s Employee Benefits Security Administration (”EBSA”) published a proposed rule in the Federal Register that would update and clarify exemption procedures for ERISA’s prohibited transactions provisions.

ERISA generally prohibits plan fiduciaries from causing their plans to engage in certain transactions that could potentially lead to conflicts of interest or self-dealing. However, Congress has provided certain limited exceptions to ensure that this prohibition does not prevent plans from engaging in harmless customary business practices, including loans to plan participants, payment of reasonable compensation for services necessary for the operation of the plan, loans to employee stock ownership plans, and routine deposits of plan funds in certain financial institutions.

Additionally, the current rules provide that the Secretary of Labor may grant administrative exemptions on an individual or class basis if the Secretary or her delegate finds that such an exemption is administratively practical and would benefit the plan and protect the interests of its participants and beneficiaries. The recently proposed rule would streamline and modernize the process for granting such administrative exemptions, by consolidating the procedures for exemptive relief in a single, comprehensive final regulation, and clarifying the types of information and documentation generally required for an exemption filing. It further aims to improve transparency for plan participants and other interested parties, while removing outdated disclosure requirements.

The proposed rule also accounts for technological developments which have arisen since the establishment of the original procedures in 1990. This includes providing for electronic filing and the use of email for certain required submissions.

The deadline for public comments is October 14.

Signaling that reversal of two employer-friendly precedents of the George W. Bush-era NLRB is a serious possibility, the NLRB released a series of split decisions granting review over two groupings of cases concerning union recognition. In a series of 3-2 decisions dated August 27, but released on August 31, the full Board opened the door to revisiting two key precedents of the Bush-era NLRB:  Dana Corp., 351 NLRB No. 298 (2007) and MV Transportation, 337 NLRB No. 129 (2002), which themselves reshaped the recognition bar doctrine and the successor bar doctrine, respectively.

In its Dana Corp. decision, the then-majority Republican Board determined that under the “recognition-bar” doctrine, employees possessed a 45-day window to file a petition for an election or decertification after being notified that the employer has voluntarily recognized a union based on a union’s showing of majority support through union-authorization cards signed by employees (i.e., “card-check”). This represented a departure from a 1960s-era precedent that limited challenges after voluntary recognition for a reasonable period of time.

In Dana Corp., the Board held that a petition for a formal Board election is barred only where (1) unit employees have been notified via a Board-authorized posting of the employer’s recognition of the union and have been notified of their right to file decertification petitions or to support petitions of rival unions, and (2) no valid petition is filed within 45 days from the date of notice.  It is possible that the current majority Democratic Board would seek to return to the pre-2007 standard.

In its MV Transportation decision, the then-majority Republican Board held that, a rival union, the successor employer, or the employees themselves may challenge an incumbent union’s majority status in successorship situations. Under this decision, which overturned a Clinton-era NLRB precedent, St. Elizabeth Manor, Inc., 329 NLRB No. 36 (1999), the majority status of the incumbent union in a successorship situation is tenuous, receiving nothing more than a rebuttable presumption going forward.  The majority Democratic Board could return to the St. Elizabeth Manor, Inc. standard, in which employees of a newly-acquired unionized employer could not seek to decertify the union until after “a reasonable period of time for bargaining” with the new employer has passed.

Democratic Members Craig Becker and Mark Pearce, and Chairman Wilma Liebman voted in favor of the decisions to review, which were issued over the vigorous dissents of Republican Members Peter Schaumber (on the final day of his term) and Brian Hayes. In advance of its review, the NLRB has invited interested parties to file amicus briefs to address both lines of cases.

After eight years of service on the NLRB, including a year as its chairman, Member Peter C. Schaumber left office upon the expiration of his second term on August 27, 2010.

Confirmed to the NLRB as a Republican appointee of President Bush in 2002, and reconfirmed for a second term in 2005, Schaumber, a Washington, D.C. labor arbitrator, served as chairman of the panel from March 2008 until January 2009. His term was notable for the prolonged 27-month period in which he served on a depleted two-member Board with Democrat Wilma B. Liebman, who succeeded him as chairman. The roughly 600 decisions issued by the two-member Board were invalidated by the Supreme Court in June 2010 in New Process Steel LP v. NLRB.  Schaumber, along with Liebman and President Obama’s three recent NLRB appointments, have begun to review and resolve these decisions.

Schaumber’s departure reduces the Board’s composition to four members, and leaves Member Brian Hayes as the sole remaining Republican Board member. 

The Wage and Hour Division of the U.S. Department of Labor recently issued an Administrator’s Interpretation expanding the definition of “son” or “daughter” under the FMLA. The FMLA entitles an eligible employee to take up to 12 work-weeks of leave for “the birth of a son or daughter,” “the placement of a son or daughter with the employee for adoption or foster care,” or “because of the son or daughter’s serious health condition.” 29 U.S.C. § 2612 (a)(1). The FMLA defines “son or daughter” to include the child of a person standing “in loco parentis.” 29 U.S.C. § 2611(12). In the recent Interpretation, the Administrator expands the definition of “son or daughter” by broadly interpreting who qualifies as acting “in loco parentis.”

The Administrator concluded that an employee acts “in loco parentis” by having day-to-day responsibilities to care for the child or by financially supporting the child.  The FMLA regulation concerning the definition of “son” or “daughter” suggests that standing in loco parentis requires both the responsibilities of care and the financial responsibility. 29 C.F.R. § 825.122(c)(3).  In requiring that only of these two factors be met, the Administrator crafted the Interpretation with an eye toward the non-traditional family, such as, for example, “an employee providing day-to-day care for an unmarried partner’s child” or “an employee who will share equally in the raising of an adopted child with a same sex partner” who lacks a legal relationship to the child.  

The Administrator noted that that while a grandparent who assumes responsibilities for a grandchild while the parents are incapable of providing care would meet the definition, a employee who cares for a child while the child’s parents are away on vacation would not be considered to in loco parentis to that child.  Should an employer question the parental status of an employee, the employee will only be required to give the employer a simple statement of the family relationship as documentation.  

While benefitting the non-traditional family, this new Interpretation might produce incongruous results for the “traditional” family. FMLA regulations limit a husband and wife who work for the same employer to a total of 12 weeks of leave. Since no similar regulations exist for “non-traditional” parents, such parents may have access to twice the amount of leave.

Although the Administrator’s Interpretation purports to limit itself to employees standing “in loco parentis” who seek leave to care for minors, the definition of “son” and “daughter” being interpreted is the general definition for the FMLA statute. Thus, this new Interpretation could apply not only to non-traditional parents caring for minors, but also to other actions encompassed by the FMLA, such as children taking leave to care for their elderly and ailing “in loco parentis” parents.

On July 15, 2010, the Employee Benefits Security Administration (”EBSA”) of the U.S. Department of Labor announced an interim final rule governing disclosure of conflicts of interest and fees to 401(k) and retirement plan fiduciaries. The rule will assist fiduciaries in determining both the reasonableness of compensation paid to plan service providers and any conflicts of interest that may impact a service provider’s performance under a service contract or arrangement.

The interim final rule implements ERISA, Section 408(b)(2) and requires disclosure of direct and indirect compensation received by 401(k) and pension plan service providers receiving or expecting to receive $1,000 or more for fiduciary and investment services. The interim final rule applies to service providers receiving such compensation in connection with investment advisory services for specified 401(k) and pension plans, brokerage or recordkeeping services related to such plans, and indirect compensation received in providing other related services. Additionally, the interim final rules include a class exemption from ERISA’s prohibited transaction provisions for plan fiduciaries entering into service contracts without knowledge of non-compliance by service providers.

The interim final rule is a result of collaboration between House and Senate legislators, who highlighted the risks of nondisclosure and offered improvements, and the Department of Labor.

The interim final rule was published in the Federal Register on July 16, 2010 at 29 C.F.R. Part 2550 and the final rule will be effective within one year of publication. The Department of Labor is accepting public comments through August 30, 2010.

On June 22, 2010, the Senate, by voice vote, approved Mark G. Pearce (D) and Brian E. Hayes (R) for full terms as members of the NLRB, along with 63 other of President Obama’s stalled nominees. The deal followed a year-long impasse over the nomination of union attorney Craig Becker (D), who was initially nominated to the Board by President Obama in July 2009, along with Pearce and Hayes.

Becker, who, along with Pearce, was provided a recess appointment by President Obama in March 2010, was excluded from the package of 65 nominees after Senate Minority Leader Mitch McConnell (R-KY) and Senate Republicans raised objections to his inclusion. Pro-labor Senate Democrats initially balked at Becker’s exclusion, but eventually relented to the compromise package.

Becker’s nomination previously stalled in the Senate after opposition by Senate Republicans and business groups. His nomination for a full term on the Board is still pending, but his exclusion from the compromise likely ends any chance of overcoming a Republican-led filibuster to that nomination.

Pearce, a labor lawyer in private practice in Buffalo, New York, had not drawn significant opposition, but his nomination had been held up by the impasse over Becker’s nomination.  Hayes, a Republican Senate staffer whose nomination has been pending since July 2009, did not receive a recess appointment.

The compromise follows last week’s Supreme Court decision in New Process Steel L.P. v. NLRB, striking down hundreds decisions by the depleted two-member Board. The confirmations of Pearce and Hayes, along with the recess appointment of Becker, returns the Board to its full compliment of five members.

The terms of Hayes and Pearce run until Dec. 16, 2012 and Aug. 27, 2013, respectively. Becker’s recess appointment expires when the Senate adjourns its 2011 session.

The Department of Labor has issued a final rule implementing President Obama’s Executive Order 13496 of January 30, 2009, which aims to ensure that “workers employed in the private sector and engaged in activity related to the performance of Federal government contracts are informed of their rights to form, join, or assist a union and bargain collectively with their employer.” Effective June 21, 2010, federal contractors and subcontractors are required to post a new DOL notice informing employees of their rights as employees under the National Labor Relations Act.

The notice informs employees of their rights under the NLRA to organize and bargain collectively with their employers and to engage in other protected concerted activity, provides examples of illegal conduct by employers and unions, and provides contact information for the National Labor Relations Board.  Federal contractors and subcontractors must post the notice in “conspicuous places in and about its plants and offices” where employees covered by the NLRA perform contract-related activity, including all places where notices to employees are customarily posted both physically and electronically. 

An employee performs contract-related activity if the duties of the employee include work that fulfills a contract obligation, is necessary for fulfillment of the contract’s provisions, or the cost or portion of the cost of the employee’s position is an allowable cost of the contract. Employers with a significant number of employees who are not proficient in English must post a version of notice in the languages spoken by employees. The Office of Labor-Management Standards (OLMS) has provided versions of the notice that comply with the physical and electronic posting requirements in English, Spanish, and Mandarin Chinese.

Recess Appointments and Pro-Labor Agenda
the Focus in 2010

Finally, in reviewing the administration’s labor initiatives, we turn to the potential changes that may emanate from the National Labor Relations Board (NLRB) in the coming year.

Contrary to expectations at the start of 2009 of an aggressive, labor-friendly NLRB agenda, political gridlock paralyzed the NLRB and prevented a pro-labor agenda from progressing. Rather than a Democrat-majority Board revisiting a series of management-friendly decisions issued by the Board during the Bush administration, 2009 saw the Senate fail to move on President Obama’s three nominees to the Board, which entered 2010 facing a third year with a depleted two-member panel. This panel, consisting of Democratic Chairwoman Wilma Liebman and Republican member Peter Schaumber, continued to issue decisions where bipartisan agreement was possible.

Not surprisingly, however, the two-member panel was forced to set aside contentious matters for later consideration. Complicating matters, the legitimacy of the hundreds of decisions issued by the Liebman-Schaumber panel since early 2008 has been called into question by at least one federal appellate court creating a split among the circuits as to whether the two-member panel has the statutory authority to resolve cases. The Supreme Court will ultimately decide the validity of these decisions in New Process Steel L.P. v. NLRB.

Consideration of Obama NLRB Nominees Stalls in 2009; Forces Recess Appointments in 2010

In 2009, President Obama announced he would nominate Democratic lawyers Craig Becker and Mark Pearce and Republican Senate staffer Brian Hayes to fill the three NLRB vacancies. Consideration of these nominees, however, stalled in 2009 due to partisan disputes over the make-up of the Board dating back to the Bush administration.

Senate Democrats, entering into the majority in 2007, refused to confirm President Bush’s NLRB nominees in 2007 and 2008 after a series of landmark pro-management Board decisions. The stated reason for the Senate Democrats’ stance was the administration’s and the nominees’ pro-management slant. Thus, following the expiration of the terms of several Board members, in January 2008 only Liebman and Schaumber remained on the Board. The impasse over nominees continued through the remainder of the Bush administration, with the Republicans rejecting Democratic calls for compromise nominees and Democrats preventing these and other contested recess appointments by holding the Senate out of recess through pro forma sessions. Once Obama entered the White House, Republicans returned the favor by slowing consideration of the Obama appointments, successfully heading off a potential pro-labor Board agenda for the first year of Obama’s term.

On March 27, 2010, Obama put an end to the political gridlock, however, by naming Becker and Pearce as recess appointments to the NLRB.

Recess Appointee Becker Causes Controversy from Outset

It was Obama’s nomination of Becker that created partisan rancor in 2009. Becker, associate general counsel for the Service Employees International Union (SEIU) came under fire from Republicans on the Senate Health, Education, Labor and Pensions (HELP) Committee. Committee Republicans cited Becker’s union ties and prior writings that indicated that he supported “card-check” elections for union representation and favored limiting the role of the employer in representation elections as the basis for their objections. Following the Senate HELP Committee vote to send all three nominations to the Senate floor for consideration in a bloc, Sen. John McCain, R-Ariz., immediately placed a “hold” on Becker’s nomination, effectively barring a vote before the full Senate. Sen. McCain requested a hearing on Becker’s nomination due to “concerns regarding Mr. Becker’s written views,” but the request was rejected by HELP Committee Chairman Tom Harkin, D-Iowa. As a result, 2009 ended with the NLRB nominations in limbo.

President Obama renominated Becker to the Board in early January 2010 at which time Sen. Harkin agreed to hold a hearing on the nomination. During the February 2, 2010, hearing, Republican committee members raised concerns regarding Becker’s prior writings and his belief that NLRB has the authority to make some of the dramatic changes included in the EFCA without congressional action. Becker responded, however, that the National Labor Relations Act (NLRA) “clearly precludes” certification of a union “in the absence of a secret ballot election” and that he would not attempt to administratively implement a “card check” process as proposed in EFCA. Becker also acknowledged that current law clearly provides employers the right to free speech under the NLRA and the First Amendment and emphasized that employers have the “indisputable right to express views on whether employees should unionize.” On February 9, 2010, Republican senators, joined by two Democrats, blocked a floor vote on Becker’s nomination and Senate Democrats fell short of the 60 votes necessary to move Becker’s nomination to a floor vote.

Obama Announces Recess Appointments

With limited options following the failed cloture vote, Obama announced the recess appointments for Becker and Pearce on March 27, 2010, after the Senate went out of session for the Passover and Easter holidays. In making these recess appointments, Obama cited the procedural delays employed by Senate Republicans and claimed that Republicans had refused to exercise their responsibility and permit the nominees an up-or-down vote. These recess appointments will permit the Board to return to traditional three-member panels and will also likely allow the Democratic-leaning Board to pursue a pro-labor agenda. On April 21, 2010, President Obama also submitted new nominations in the Senate for Becker and Pearce.

Supreme Court to Rule on the Legality of the Two-Member Board

As referenced above, this political gridlock over NLRB nominations has brought into question the validity of hundreds of NLRB decisions issued since January 25, 2008, when Liebman and Schaumber became the sole remaining members of the Board. The Supreme Court has accepted certiorari in order to resolve this question in New Process Steel L.P. v. NLRB, and heard oral arguments on March 23, 2010.

On May 1, 2009, two dueling federal appellate court decisions brought the legality of the two-member Board to the forefront, with the U.S. Court of Appeals for the D.C. Circuit ruling the two-member Board unlawful in Laurel Baye Healthcare v. NLRB, 564 F.3d 469 (D.C. Cir. 2009), and the U.S. Court of Appeals for the 7th Circuit upholding its validity in New Process Steel, L.P. v. NLRB, 564 F.3d 840 (7th Cir. 2009). Explaining that a valid statutory delegation to a three-member panel cannot be satisfied by a two-member “quorum,” the D.C. Circuit called all unanimous two-person decisions into question. Since then, four other federal appeals courts, including most recently the 10th Circuit, in December 2009, have sided with the 7th Circuit in upholding the legality of the two-member Board.

The New Process Steel case hinges on seemingly contradictory language in the NLRA that states that “three members of the Board shall, at all times, constitute a quorum of the Board,” but authorizes the Board to delegate its power to any group of three or more of its members “except that” two members of any such delegated group “shall constitute a quorum” of that delegated group. During the March 23, 2010, oral arguments, Deputy Solicitor General Neal Katyal defended the two-member NLRB, focusing on the “except that” language, which he argued permitted two-member quorums where the Board’s membership was depleted. Katyal also pointed to the hundreds of pre-1947 decisions issued by two members when the NLRB’s regular membership was only three. New Process Steel-which was on the losing side of a two-member panel decision-argued the delegation to the two-member panel was an evasion of the NLRA and represented delegation to a “phantom group” unable to engage in the robust debate intended under the statute.

The Supreme Court is expected to reach a decision this summer. Should the Supreme Court adopt the position of the D.C. Circuit, such a decision would create chaos among hundreds of representation, unfair labor practice, compliance and other proceedings that contain a Board decision issued by the two-member panel. For this reason, many commentators believe that the Supreme Court will not overturn the Liebman-Schaumber decisions. Should the Supreme Court take such action, however, Congress can, and likely would, override the decision, which it can do because the case concerns a matter of statutory interpretation. Unlike a constitutional matter, an adverse decision can be overridden by statute. Alternatively, the newly constituted Board might issue an order ratifying the prior Board decisions.

The NLRB Agenda for 2010 and Beyond

Now that President Obama has used recess appointments for two of his Board nominees, thus breaking the deadlock, the Board will most certainly take up a pro-labor agenda. The reconstituted Democratic-majority NLRB is likely to move in a labor-friendly direction, including making it easier for unions to organize and achieve recognition.

Obama Board Likely to Revisit Union Salting

The Obama Board will likely look to reverse Toering Electric Co., 351 NLRB No. 18 (2007), a September 2007 decision that dramatically scaled back the ability of unions to engage in “salting.” Salting is a practice where union members (also known as salts) apply for employment with a non-union employer for the primary purpose of organizing that employer’s workplace. In Toering Electric Co., the Bush Board reversed a longstanding precedent presuming that all applicants, including salts, were bona fide employees able to bring hiring discrimination claims under the NLRA.

The Obama Board will also likely reconsider Oil Capitol Sheet Metal, Inc., 349 NLRB No. 118 (2007). This case 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. Specifically, in instances where the claimant was a union salt, the Bush Board reduced the damages that could be claimed by these salts due to the short period of time salts typically remain employed.

Other Areas of Labor Policy Likely to be Revisited by a Democratic Board

The Obama Board should also be expected to move in a labor-friendly direction regarding the definition of supervisor under the Act, e-mail solicitations, remedies, employee rights (notably “Weingarten rights,” which govern the right of representation of employees during employer investigations) and the regulation of employer conduct during organizing campaigns.

The NLRB is likely to revisit the so-called “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). Similar decisions that characterized workers as “non-employees,” “managers” or “independent contractors,” thus excluding them from coverage under the NLRA, will also likely be evaluated by the Board. The Obama Board will likely create a more-restrictive definition of “supervisor” in these types of cases, essentially returning the law to its position prior to the Kentucky River cases.

Another Board decision, Dana Corp., 351 NLRB No. 28 (2007), that altered the standard of the “recognition bar” doctrine is a likely candidate for reversal. The recognition bar precludes challenges to a union’s majority status for a specified period of time. Dana Corp. reversed decades of precedent modifying the “recognition bar” doctrine in voluntary card-check situations, providing employees with a 45-day period to file a petition for an election or decertification following the issuance of notice of a voluntary recognition before the recognition bar would take effect.

The Obama Board may also revisit Register-Guard, 351 NLRB No. 70 (2007). This decision, the last issued by the Board when its membership consisted of a majority of Bush appointees, 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 does not discriminate on the basis of the exercise of Section 7 rights. It is widely believed that the Obama Board will follow the position of Chairman Liebman’s dissent in Register-Guard, which would greatly expand a union’s ability to use employer e-mail systems for union-related solicitations.

Two important venues for the administration’s plan to reshape the regulatory landscape vis-à-vis labor and employment are the Equal Employment Opportunity Commission (EEOC) and the Department of Homeland Security.

While the administration has been hampered by a slow nomination process at the EEOC, it has announced plans to try to tackle its growing inventory of pending charges and to produce new regulations with respect to the Age Discrimination in Employment Act, the ADA Amendments Act of 2008 and the Genetic Information Nondiscrimination Act. On the immigration front, in 2009 the Obama administration rescinded the controversial “no-match” letter regulation issued by the Bush administration and expanded the use of the federal government’s E-Verify program, which is likely to continue in 2010 as well.

Equal Employment Opportunity Commission

The administration has gotten off to a slow start at the Equal Employment Opportunity Commission. Until only recently, the EEOC consisted of only two members: Acting Chairman Stuart Ishimaru (D) and Commissioner Constance Barker (R). The Senate failed to confirm President Obama’s three commissioner nominees: Jacqueline Berrien (D), Chai Feldblum (D) and Victoria Lipnic (R), as well as P. David Lopez, the nominee for general counsel. As a result, on March 27, 2010, President Obama issued recess appointments to Berrien, Feldblum, Lipnic and Lopez. Under of the rules of recess appointments, these individuals will be eligible to serve through the end of 2011, when the next Senate finishes its term. On April 21, 2010, President Obama also submitted new nominations to the Senate for Berrien, Feldblum, Lipnic and Lopez.

Delegation of Authority

Until the recent recess appointments, with only two commissioners, the EEOC lacked a quorum for the first time since 1981. However, on December 18, 2009, the EEOC temporarily delegated its administrative authority to commissioners Ishimaru and Barker. Under the terms of the delegation, there needed to be consensus between Ishimaru (D) and Barker (R) before actions were taken by the Commission. The delegation ended upon the swearing-in of commissioners Berrien, Feldblum and Lipnic.

The EEOC’s delegation of authority mirrored the delegation of National Labor Relations Board (NLRB) authority to two board members. The legality of the NLRB’s delegation has generated disagreement among federal courts. The issue is before the Supreme Court in New Process Steel L.P. v. NLRB, which will consider the validity of hundreds of decisions issued by the two-member NLRB.

Recess Appointments Resolve Pending Nominations

As noted above, President Obama issued recess appointments for the stalled nominations of Berrien, Feldblum, Lipnic and Lopez. On December 10, 2009, the Senate Committee on Health, Education, Labor and Pensions (HELP) approved all four nominations. However, the Senate adjourned on December 24, 2009, without voting on the nominees and then carried over the nominations to the current Congress.

On April 7, 2010, Ms. Berrien became the EEOC’s chair. Berrien, a Democrat, has served as associate director-counsel of the NAACP Legal Defense and Education Fund since 2004. She previously worked as a program officer in the Ford Foundation’s Peace and Social Justice Program and as a staff attorney with the Lawyers’ Committee for Civil Rights and the American Civil Liberties Union.

Ms. Feldblum, a Democrat, was also sworn in on April 7. She previously served as a professor of law at the Georgetown University Law Center. She played a leading role in drafting the Americans with Disabilities Act of 1990 (ADA), as well as in passing the ADA Amendments Act of 2008. Feldblum has long been an advocate of workplace flexibility; disability rights; lesbian, gay, bisexual and transgender rights; and AIDS-related issues.

Ms. Lipnic, a Republican who previously served from 2002 until 2009 as U.S. assistant secretary of labor for employment standards, where she oversaw the Employment Standards Administration, was sworn in on April 20. Lipnic worked to revise the Family and Medical Leave Act regulations, modify certain overtime regulations under the Fair Labor Standards Act and increase the department’s responses to wage and hour opinion letter requests. Lipnic previously served as workforce policy counsel to the House Republican members of the Education and Labor Committee and was in-house counsel to the U.S. Postal Service.

Finally, Mr. Lopez, who served as a supervisory trial attorney at the EEOC’s Phoenix District Office, was sworn in as general counsel on April 8. He previously worked as a special assistant to then-EEOC Chair Gilbert F. Casellas, as well as an attorney in the Employment Litigation Section of the Civil Rights Division of the U.S. Department of Justice.

Outlook for 2010

Addressing a Pending Backload of Charges

The EEOC faces a growing inventory of charges. This inventory was one of the main topics discussed at the Senate HELP Committee’s confirmation hearing on the nominations. A recent appropriations bill, H.R. 3288, would provide additional funding to the EEOC. The EEOC stated in its Fiscal Year 2010 Congressional Budget Justification that it intended to use increased funding to hire 224 additional investigators, mediators, attorneys and staff support “to reduce agency private sector charge backlog.”

Additionally, the agency estimated “filing 300 new lawsuits in fiscal year 2010, which is a 7% increase from the previous fiscal year.” It is likely that these lawsuits will focus on more systemic discrimination, as opposed to individual cases of discrimination that have been emphasized in recent years.

Similarly, the federal budget that President Obama proposed on February 1, 2010, for the 2011 fiscal year includes an $18 million budget increase for the EEOC that the administration stated would allow for more staff to reduce the backlog of private sector charges.

Likely Areas of Focus

The EEOC is likely to continue its recent focus on employee selection procedures, potentially expanding litigation against employers who conduct pre-hire background investigations, including criminal history and credit checks. The EEOC is also expected to focus on claims of retaliation, hostile work environment and age discrimination. Undoubtedly, the recent amendments to the Americans with Disabilities Act will produce more cause findings under the ADA and an increase in the EEOC’s ADA litigation.

Regulatory Priorities for 2010

The EEOC has announced several regulatory initiatives for President Obama’s second year in office. On April 26, 2010, the EEOC released its Semiannual Regulatory Agenda and its Regulatory Plan. This plan largely mirrors the Commission’s prior regulatory agenda, issued in May and December 2009. The top items on the EEOC’s agenda for 2010 include: (1) finalizing regulations about the “reasonable factors other than age” defense under the Age Discrimination in Employment Act (ADEA); (2) finalizing regulations to implement the equal employment provisions of the Americans With Disabilities Act Amendments Act; and (3) issuing a final rule implementing Title II of the Genetic Information Nondiscrimination Act (GINA).

Issuing NPRM Concerning the RFOA Defense in the ADEA

On February 18, 2010, the EEOC issued the NPRM to address the scope of the “reasonable factors other than age” (RFOA) affirmative defense for employers under the ADEA. The proposed regulations complement the Commission’s proposed regulations concerning the burden of proof regarding disparate impact under the ADEA, published on March 31, 2008. The EEOC has pushed back the anticipated date for a final rule on both subjects from October 2010 to March 2011.

In light of the Supreme Court’s decision in Meacham v. Knolls Atomic Power Lab., 128 S. Ct. 2395 (2008), the EEOC decided to issue a new proposal to address the RFOA defense before issuing its final rule on ADEA disparate impact claims. The NPRM adopts a “reasonable employer” standard, similar to the “reasonable person” of tort law. To present a RFOA defense, an employer will be required to present evidence that the challenged practice was reasonably designed to further or achieve a legitimate business purpose and was reasonably administered to achieve that purpose. This standard is lower than Title VII’s “business necessity” test, but higher than the Equal Pay Act’s “any other factor” test.

The EEOC has proposed a non-exhaustive list of relevant factors to be considered when evaluating whether an employment practice is “reasonable,” including, among others, (1) the extent to which the employment practice is a common business practice; (2) the extent to which the factor is related to the employer’s stated business goals; (3) the severity of the impact of the practice on individuals within the protected age group, both in degree of injury and scope of impact; (4) the extent to which the employer took steps to apply the factor fairly and accurately; (5) the extent to which the employer took steps to assess and ameliorate the adverse impact of the practice on older workers; and (6) whether the employer had other options available and why it selected the option it did. The 60-day public comment period closed on April 19, 2010.

EEOC’s proposed regulations are likely to draw substantial comments and, if implemented, require substantial legal and statistical analysis in any reduction in force engaged in by an employer. First, EEOC’s proposal includes a requirement to evaluate if the employer took steps to ameliorate any adverse impact and, if the employer had other options, evaluate why it chose the option it did. The Supreme Court, in Smith v. City of Jackson, 544 U.S. 228 (2005), held that an employer relying on the RFOA defense does not have to examine less-discriminatory alternatives, unlike Title VII’s business necessity defense. See id. at 243 (”Unlike the business necessity test, which asks whether there are other ways for the employer to achieve its goals that do not result in a disparate impact on a protected class, the reasonableness inquiry includes no such requirement.”). Although EEOC is careful to say in the NPRM’s preamble that “the availability of a less discriminatory alternative does not by itself make a challenged practice unreasonable,” the practical distinction between EEOC’s provision and the consideration of other less-discriminatory alternatives may be hard to discern for employers actually conducting an age-based disparate impact analysis.

Second, EEOC’s imposition of a multifactor analysis based on the tort standard for reasonableness appears to require an employer to engage in a substantially more complicated analysis than employers may have expected after reading Smith, in which the Supreme Court was able to determine that a practice was “reasonable” under the RFOA provision without apparent resort to analysis that EEOC proposes. As a result, employers may want to begin to examine any current baseline standards they rely on (or expect to rely on) in conducting reductions in force in order to prepare for defending those standards in an EEOC investigation.

Finally, although EEOC in its NPRM describes the RFOA defense as “the appropriate standard for determining the lawfulness of a practice that disproportionately affects older individuals,” employers feeling overwhelmed by EEOC’s multifactor reasonableness test may decide to take a closer look at Smith and evaluate whether they can effectively rely, instead, on the Wards Cove Packing interpretation of disparate impact liability, which the Court held still applies to the ADEA. See Smith, 544 U.S. at 240 (”Wards Cove’s pre-1991 interpretation of Title VII’s identical language remains applicable to the ADEA.”).

Finalizing Regulations Implementing the ADA Amendments Act of 2008

Second, the Commission intends to finalize its regulations and accompanying interpretive guidance implementing the ADA Amendments Act of 2008. These revised regulations are necessary to bring the Commission’s regulations into compliance with the ADA Amendments Act of 2008, which explicitly invalidated certain provisions of the existing ADA regulations. The primary effect of these changes will be to make it easier for an individual seeking protection under the ADA to establish that he or she has a disability within the meaning of the ADA. The Commission published its NPRM on this issue on September 23, 2009, in the Federal Register.

The proposed regulations broaden the scope of what is considered to be a “disability” under the ADA in a number of ways. First, the proposed regulations expand the definition of “major life activities” to include “major bodily functions,” such as breathing, cell reproduction and immune system function. Second, they provide that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active. Third, the proposed regulations provide that mitigating measures other than ordinary eyeglasses or contact lenses should not be considered when assessing whether an individual has a “disability.” Fourth, the proposed regulations revise the definition of “substantially limits” a major life activity and “regarded as” disabled in an effort to make it easier to satisfy the definition of “disability.” The comment period on these proposed regulations has closed, and the EEOC states that it expects to issue the final regulations in July 2010.

The impact of the ADA Amendments Act and EEOC’s implementing regulations will likely broaden the coverage of the ADA. Although it is unclear whether the changes would impact the number of charges filed by individuals-because it is not clear individuals consider coverage when they decide to file a charge-the changes may very well impact employers’ ability to win summary judgment in litigation on issues of coverage. Additionally, the proposed regulations would have the effect of shifting the focus of ADA litigation away from the disability analysis and more on whether discrimination occurred, although individuals still have to prove that they are qualified. The lower threshold for coverage, in particular under the “regarded as” prong of the definition, may embolden EEOC to challenge more employers’ practices that impact disabled (or regarded as disabled) individuals on a group basis, if EEOC believes that the individuating circumstances have been mitigated. Indeed, EEOC has initiated and/or settled some high-profile lawsuits involving employer policies related to disability in the past year, and, now that the ADA Amendments have been in effect for over a year, with a concomitantly larger number of charges potentially subject to the amendments’ coverage standards, EEOC may give additional focus to such cases.

Issuing Genetic Information Nondiscrimination Act Regulations

Finally, EEOC has stated that it intends to issue a final rule implementing Title II of the Genetic Information Nondiscrimination Act (GINA) in May 2010. GINA, which was signed into law on May 21, 2008, prohibits health insurers and employers from discriminating against someone on the basis of their genetic information. The EEOC is responsible for developing implementing regulations for Title II, which (1) prohibits employers from discharging, refusing to hire or otherwise discriminating on the basis of genetic information; (2) bars employers from intentionally acquiring genetic information about applicants and employees; and (3) imposes strict confidentiality requirements regarding genetic information. Title II went into effect on November 21, 2009. The Commission issued proposed regulations in March 2009, receiving more than 40 public comments on the proposal. EEOC submitted a final rule to the Office of Management and Budget’s Office of Information and Regulatory Affairs on August 7, 2009, where the rule remains pending.

Although GINA has not raised much concern because most employers report that they do not use genetic information to make employment decisions, some areas of the statute and proposed regulations merit closer attention. Notably, the proposed rule defines genetic information to include family medical histories, defined as “information about the manifestation of disease or disorders in family members of the individual.” 29 C.F.R. § 1635.3(b)(Proposed). This definition may have an impact on employers who conduct post-offer, pre-employment medical examinations or routine physicals, because such examinations may include inquiries about family medical history. Under EEOC’s proposed rule, this request raises potential risks under GINA to the extent the examination is construed as an employer requesting genetic information from the individual. Further, GINA permits collection of genetic information as part of a voluntary wellness program, but EEOC, as it has done under the ADA, may define voluntariness in a way that imposes restrictions on the use of the health risk assessments that are part of many wellness programs, requiring employers to examine the structure of those programs.

Department of Homeland Security-Immigration Policy

2009 saw significant developments from the Obama administration in the area of immigration law that affected employers with a resolution to the fate of the so-called “no-match” rule and expanded application of the E-Verify system.

Rescission of the No-Match Rule

In October, 2009, the Department of Homeland Security (DHS) issued its final rule to rescind the no-match regulation. The rescission, which took effect in November 2009, reinstated the language of 8 CFR 274.1(l) as it existed prior to issuance of the no-match rule.

The no-match rule, initially issued by the Bush administration in August 2007 (72 FR 45611) and supplemented in October 2008 (73 FR 63843), required the Social Security Administration (SSA) to detail the legal obligations of employers when they received a no-match letter from the SSA and outlined safe harbor procedures for such employers upon the receipt of a letter. SSA informed employers by letter when specific employees’ names and corresponding Social Security numbers provided on the employers’ Form W-2 wage reports did not match SSA records. These no-match letters potentially constituted evidence of an employer’s constructive knowledge that specific employees may be unauthorized workers. Under the controversial no-match rule, employers who received such letters were required to resolve discrepancies or face a finding of constructive knowledge based on receipt of the letter in a future proceeding seeking penalties against the employer for immigration violations.

The rule was never put into effect because it was blocked by a Northern District of California court order shortly after its issuance. See AFL-CIO v. Chertoff, No. 07-4472-CRB (N.D. Cal.). In proposing the rescission, DHS explained that it decided to rescind the no-match rule in favor of focusing immigration enforcement efforts and community outreach on increased compliance through enhanced employment verification programs, such as E-Verify, and voluntary programs, such as ICE Mutual Agreement Between Government and Employers (IMAGE).

As a result of the rescission of the rule, employers are left with continued uncertainty about what action should be taken upon receipt of a no-match letter from SSA. Although the no-match safe harbor rule has been rescinded, SSA continues to send no-match letters to employees to inform them of their no-match status and to put them on notice that they are not receiving proper credit towards SSA benefits. It is still unclear if and when SSA will resume sending employer no-match letters.

E-Verify

As of September 8, 2009, all federal contractors were required to use the E-Verify system to verify their employees’ eligibility to work in the United States if their contract includes the Federal Acquisition Regulation (FAR) E-Verify Clause (73 FR 67704). All affected federal contracts and subcontracts awarded, or solicitations issued, after September 8 are to include a clause committing government contractors to use E-Verify.

E-Verify is a free Internet-based system administered by U.S. Citizenship and Immigration Services (USCIS), in partnership with the SSA, that compares information from an employee’s I-9 Form against federal government databases to verify employment eligibility. Under the final rule, all federal contractors holding a contract with a performance period over 120 days and a value over $100,000, as well as subcontractors providing services or construction with a value above $3,000, must verify the employment eligibility of new hires and re-verify the employment eligibility of employees hired after November 6, 1985. Agencies must also amend, on a bilateral basis, any existing indefinite delivery/indefinite quantity contracts to include the clause for future orders if the remaining period of performance extends beyond March 8, 2010.

With the October 28 signing of the DHS Appropriations Act of 2010 by President Obama, E-Verify was extended until September 30, 2012. In its fiscal year 2011 budget request, the Obama administration has sought $137.4 million “to enhance and expand immigration related compliance programs,” including E-Verify. Expected Changes to E-Verify in 2010.

Self-Check

In 2010, the Department of Homeland Security plans to launch a self-check option in E-Verify to allow workers to check their work authorization prior to applying for a job. Currently, employees are not run through E-Verify until after they are hired. If an employee receives a “tentative non-confirmation” from the E-Verify system, it indicates that his or her immigration documents do not match the information in the DHS or Social Security databases. The employee is then given only eight business days to resolve the discrepancy or be subject to termination.

Allowing a worker to “self-screen” will put some on notice before they even apply for a job that their employment status in the E-Verify system is tentatively “unauthorized.” This will give workers sufficient time to resolve mismatches or “tentative non-confirmations” prior to starting the hiring process without the eight-day constraint.

Compliance Monitoring

USCIS plans to increase its compliance efforts by expanding the use of its Compliance Tracking and Management System (CTMS). CTMS is used by USCIS’ Verification Division to monitor E-Verify compliance.

DHS has announced that its monitoring and compliance efforts will focus on a variety of activities, including the fraudulent use of alien numbers and Social Security numbers by E-Verify users; termination of an employee because of a tentative non-confirmation; failure to notify DHS when an employee who receives a final non-confirmation is not terminated; verification of existing employees or job applicants as opposed to new hires; failure to post the notice informing employees of participation in E-Verify; and failure to use E-Verify consistently, or at all, once registered. USCIS will obtain information about potential noncompliance or violations by monitoring transactions on the E-Verify system.

Focusing on Enforcement and Rolling Back the Regulatory Legacy of the Bush Administration

While running for the office of president and during his first year holding that office, Barack Obama set forth a vision of the federal government’s approach to labor and employment issues that differed starkly from that of the Bush administration. One of the fora most critical to actualizing this vision is the U.S. Department of Labor (DOL) and its agencies.

The main ideological shift in the Obama DOL is an increased focus on stricter enforcement of existing laws and a regulatory agenda that is more pro-worker and pro-labor. In its first year, the Obama administration laid the groundwork for this new, more aggressive approach to workplace regulation. Having secured larger budgets for key agencies and reoriented its focus from compliance assistance to enforcement, the administration enhanced its investigative and enforcement capabilities and has initiated a number of high-profile enforcement initiatives. Such initiatives are likely to continue, as DOL seeks out violators of whom it can make examples.

The administration is taking the same aggressive approach with its regulatory agenda. While it did not issue any significant new workplace regulations in its first year, the administration has signaled its intention to tackle some important and controversial regulatory issues in 2010, in an attempt to roll back what the administration has labeled the “anti-labor” policies of the Bush administration.

A New Sheriff in Town

With the bulk of the department’s leadership team in place, Secretary of Labor Hilda L. Solis has attempted to clarify this ideological shift by drawing a sharp contrast with the previous administration, announcing that there was “a new sheriff in town” and that the Department of Labor was going to drastically increase its enforcement efforts.

Solis started to take steps to support this enforcement rhetoric by requesting $104.5 billion for the DOL’s FY 2010 budget. This represented a 10 percent increase from FY 2009, which Solis said is meant to amplify DOL’s ability to police employers’ compliance with wage and hour and occupational safety and health laws. DOL has used this enhanced budget to hire 250 wage and hour investigators in 2009, increasing the number of investigators by 33 percent. DOL also hired 250 occupational safety and health inspectors and has promised to hire 100 more in 2010.

The federal budget that President Obama proposed on February 1, 2010, for FY 2011 is set to continue this trend by including $117 billion for the DOL, with $25 million set aside to combat employee misclassification, as well as funding for an additional 177 investigators and enforcement staff.

The Solis-led DOL has already begun to show results from its greater emphasis on enforcement. From July to October 2009, the Department of Labor collected nearly $2 million in back wages for more than 500 workers. Also in October, OSHA issued a record-breaking $87 million fine that was more than four times the previous high.

Occupational Safety and Health Administration

The overarching shift in emphasis from compliance to enforcement in the Solis-led DOL is evident in the actions of DOL’s constituent departments and agencies. Since Democrats took control of Congress in 2006, both House and Senate Democrats have pressured OSHA to become more aggressive in its enforcement activities. This trend continued during the Obama administration’s first year, with congressional hearings and government agency reports criticizing OSHA’s enforcement and oversight efforts during the previous administration.

OSHA has responded to these criticisms by laying the groundwork for a more aggressive approach to enforcement. In 2009, the administration secured a $41.6 million increase in OSHA’s FY 2010 budget and, with this additional funding, hired new investigators, with plans to hire more in 2010. The FY 2011 budget recently proposed by President Obama would increase OSHA’s budget by an additional $14 million. Under this expanded budget, funding would increase for OSHA’s enforcement and standards-setting divisions, but would decrease for the Voluntary Protection Program (VPP), a compliance program recognizing work-sites with exemplary safety and health programs. The Government Accountability Office report recently criticized VPP because OSHA was not ensuring that only qualified worksites participated. In its proposed budget for 2011, OSHA plans to hire 25 new investigators and transfer an additional 35 from compliance assistance officers to its enforcement divisions.

OSHA has further responded to criticism of its prior enforcement efforts by replacing its maligned Enhanced Enforcement Program (EEP) with a new Severe Violators Enforcement Program (SVEP). OSHA created EEP in 2003 to “target those employers who are indifferent to their obligations under the OSH Act.” However, in 2009, the Office of Inspector General published a report criticizing OSHA’s efforts under EEP, finding that it had failed to protect workers from “recalcitrant” employers. The new SVEP enables OSHA to conduct more aggressive multi-worksite inspections, work more closely with OSHA state plans and establish a nationwide referral program. Employers will become subject to the SVEP where inspections find: (1) fatality or catastrophe situations; (2) two or more willful, repeat or failure-to-abate violations due to “high-emphasis hazards” (e.g., fall hazards, amputation hazards, combustible dust hazards, crystalline silica hazards, lead hazards, trenching/excavation hazards and ship-breaking hazards); (3) three or more willful, repeat or failure-to-abate violations relating to the release of highly hazardous chemicals; and (4) all “egregious” enforcement actions.

In addition to these other indicia of greater enforcement emphasis, under the Obama administration, OSHA has started to levy greater monetary penalties against employers, including a record-breaking $87-million fine against BP in October. This penalty was more than four times the previous largest total penalty-a $21 million fine in 2005. Also, in the first two months of the 2010 fiscal year (October and November 2009), OSHA cited six employers with “egregious” violations, which is two more than OSHA issued during the previous fiscal year in its entirety. Under its egregious penalty policy, OSHA can assess a separate penalty for each instance of a violation, rather than proposing a single penalty for all violations of a specific OSHA regulation. Based on recent enforcement actions, OSHA seems to be focusing its egregious penalty policy on cases involving hazardous substances, underage workers and daily exposure to serious hazards like trenches and excavation cave-ins, as well as on employers that have ignored prior incidents or have obstructed OSHA investigations.

In conjunction with its greater emphasis on enforcement, OSHA has also indicated it will be focusing on recordkeeping. OSHA Administrator David Michaels stated that he believes companies “dramatically underestimate” the actual incident rates of workplace injury or illnesses. Accordingly, OSHA has announced a National Emphasis Program on recordkeeping that will look at whether employers underreport work-related injuries or illnesses. As part of this program, OSHA will conduct targeted inspections involving detailed record reviews, employee interviews and an analysis of the possible impact of employers’ safety incentive programs on the reporting recordable incidents.

Wage and Hour Division

Further evidence that the Department of Labor has shifted its focus from compliance assistance to investigation and enforcement comes from the DOL’s Wage and Hour Division (WHD). The Wage and Hour Division is responsible for enforcing the DOL’s wage and hour laws, as well as issuing interpretative guidance to assist employers in their efforts to comply with those laws. During the Bush administration, WHD issued numerous opinion letters to help employers understand the WHD’s interpretation of wage and hour regulations. However, in the first year of his presidency, the Obama administration’s WHD did not issue a single opinion letter.

At first glance, this appeared related to the difficulty the administration encountered in filling top positions at DOL. While most of the major positions within the Department of Labor were filled during Obama’s first year in office, the position of Wage and Hour Administrator has remained vacant. President Obama’s original candidate, Lorelei Boylan, asked that her nomination be withdrawn for family reasons. Republicans had also objected to Boylan’s nomination because of her involvement in the controversial New York Wage Watch Program.

However, as the Obama administration’s second year commenced, it became clear that the WHD’s failure to issue opinion letters was part of a concerted shift in the way the administration plans on providing compliance guidance. In March 2010, the WHD announced that it would no longer issue definitive fact-specific opinion letters submitted by individuals and organizations. Instead, WHD will now issue Administrator Interpretations, which are intended to be “general interpretations of the law and regulations, applicable across-the-board to all those affected by the provision in issue.” In response to requests for opinion letters, WHD will now provide only “references to statutes, regulations, interpretations and cases that are relevant to the specific request but without an analysis of the specific facts presented.” While this shift to more general compliance guidance will likely consume fewer resources at WHD, as a result, employers will lose an important avenue for receiving assurances that their specific practices comply with WHD’s view of the law. This move is indicative of the department’s overall shift of resources away from compliance efforts and toward enforcement and investigative initiatives.

Indeed, this shift in emphasis is borne out by the FY 2011 budget proposed by President Obama. Under that budget, the WHD would receive $244 million, an increase of almost $20 million from its FY 2010 budget, including funding to hire 100 new enforcement personnel. This $20-million budgetary increase is part of the $25-million “Misclassification Initiative,” which is a joint proposal of the DOL and Treasury Department aimed at reducing employers’ incentives to misclassify employees as “independent contractors.” Not only would the Misclassification Initiative provide funding for more enforcement personnel, it would also provide funding for competitive grants that would boost the states’ abilities to deal with this issue.

In addition, the WHD recently unveiled a new initiative titled “We Can Help,” which is aimed at educating workers about their rights under various wage and hour laws, and encouraging them to report violations. In her remarks announcing the program on April 1, 2010, Solis stated that the WHD would be “working with international consular officials, community and faith-based organizations, and advocacy groups throughout the country” in connection with the initiative. The WHD announced its intention to use public service announcements, workers’ rights videos, posters, publications and billboards to publicize the program, and Solis stated that her staff “will conduct outreach to stakeholders and vulnerable workers” in a variety of industries, including construction, apparel, manufacturing, restaurants, home health care, and hotels and motels. This initiative is further evidence of the DOL’s increased emphasis on investigative and enforcement measures.

Major Regulatory Initiatives for 2010

In addition to its increased emphasis on enforcement, the Department of Labor is poised to engage in a more pro-worker and pro-union regulatory agenda in 2010.

Within a week of his inauguration, President Obama issued several orders that, according to remarks the President made when issuing the orders, were aimed at reversing “many of the policies toward organized labor” promulgated by the Bush administration with which he “sharply disagreed.” To effectuate these executive orders, the Department of Labor is in the process of issuing and implementing regulations. On March 19, 2010, the DOL issued a notice of proposed rule making in connection with Executive Order 13495. That rulemaking, once it takes effect, will require contractors and subcontractors who succeed a federal contract worth $100,000 or more for the same or similar service at the same location of a predecessor to offer individuals employed by the predecessor, not including managers or supervisors, a right of first refusal to employment. The Department of Labor also plans to finalize regulations in connection with Executive Order 13496 that prescribe the size, form and content of the notice that contractors must post to describe the rights of employees under federal labor laws.

These regulations to enact the pro-worker orders that Obama issued at the start of his presidency are just the tip of the iceberg. Secretary Solis has indicated that the DOL will seek to enact up to 90 new rules and regulations in 2010 to give more power to workers and unions. To that end, the DOL has formally established a variety of regulatory goals for the second year of the Obama administration.

Regulation of “Persuader” Activity under the Labor-Management Reporting and Disclosure Act

One such goal for 2010 will be developing a regulation that revises the interpretation of Section 203(c) of the Labor-Management Reporting and Disclosure Act (LMRDA). The LMRDA requires all entities acting as “persuaders” in the context of a union organizing campaign to register with the federal government. Entities that 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. Section 203(c) of the LMRDA creates an “advice” exemption from reporting requirements that apply to “such person by reason of his giving or agreeing to give advice to such employer.” The “advice” exemption to the reporting requirements of the LMRDA historically has included persuasive material prepared by consultants or attorneys for use by the employer.

The new LMRDA regulation will resemble the regulation issued in January 2001 by the Clinton administration that was subsequently rescinded by President Bush in April of that year. The Clinton-era regulation did not require lawyers and consultants who simply review and revise persuasive material prepared by the employer to report that activity. However, that proposed regulation stated that, if a “consultant or lawyer or their agent communicates directly with employees in an effort to persuade them,” the “advice” exemption would not apply, and there would be a reporting requirement. A duty to report would also trigger even if the consultant or attorney did not communicate directly with the employees as long as the direct or indirect object of the consultant or lawyer’s activity was to persuade employees.

Ergonomics Reprise

The DOL has also laid out an aggressive regulatory agenda for 2010 on workplace safety issues. In what seems to be a first step in issuing a new ergonomics regulation, OSHA issued a proposed rule on January 29, 2010, that includes a definition of work-related musculoskeletal disorders in its recordkeeping regulations in 29 C.F.R. Part 104. This rulemaking also adds a separate column on the OSHA 300 Log used to record work-related injuries, so that employers and OSHA can track these disorders. These requirements were previously introduced as part of a 2001 rulemaking, but OSHA removed them from that rulemaking in 2003 before it became final. OSHA may use the data collected under such recordkeeping regulations to support a new ergonomics regulation.

Any ergonomics regulation that OSHA issues will likely provide the same stringent requirements and broad scope as 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. That Clinton-era Ergonomics Program Standard, which became effective on January 14, 2001, 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. It also provided that musculoskeletal disorder injuries could be manifested by diagnoses including, but not limited to, carpal 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. Because the vote enacting the resolution fell along party lines during a period in which the Republicans controlled Congress, it is possible that President Obama, with a Democratic Congress, might successfully issue a new ergonomics regulation. However, critics of such a new ergonomics standard argue that it is a job killer. As such, the administration might have trouble promulgating this type of new standard given the current economic climate.

DOL’s regulatory agenda also includes taking final action on a 2005 proposed rulemaking that would update the existing standards for the construction of electrical power transmission and distribution installations and make them consistent with the general industry standards. OSHA also plans to issue a final rulemaking on its cranes and derricks standard. Both are likely to have a significant impact on the construction industry.

EBSA Rulemaking in 2010

As recently detailed in the Department of Labor’s Semi-Annual Regulatory Agenda, DOL’s Employee Benefits Security Administration (EBSA) will also be engaging in extensive rulemaking in 2010. EBSA recently has promulgated, or is in the process of promulgating, rules implementing portions of the Genetic Information Nondiscrimination Act (GINA), the Mental Health Parity and Addiction Equality Act (MHPAEA) and the Health Insurance Portability and Accountability Act (HIPAA).

EBSA’s interim final rule implementing GINA, among other things, provides guidance regarding individual and group market prohibitions against health plans and health insurers denying coverage or raising premiums for those predisposed to genetic diseases. The rule also implements statutory prohibitions against the collection of genetic information by health plans and insurers.

The interim final rule implementing MHPAEA prohibits group health plans from treating mental health or substance abuse conditions differently than general medical conditions in terms of increasing out-of-pocket costs or limiting benefits. EBSA continues to receive comments on this rule.

Together with the departments of Labor, the Treasury, and Health and Human Services, EBSA is in the process of supplementing final rules implementing HIPAA, issuing further regulatory guidance addressing health care access, renewability and portability provisions affected by recent amendments to HIPAA under the Children’s Health Insurance Program Reauthorization Act of 2009.

Additionally, EBSA is in the process of issuing final rules establishing a safe harbor period under Title I of ERISA and related tax provisions that would exclude moneys withheld by employers or paid by participants from the definition of “plan assets” and will issue a notice of proposed rulemaking to clarify the definition of “fiduciary” under section 3(21) of ERISA, bringing it in line with the current practices of plan managers, individual plan participants and investment advisors. Later this year, EBSA plans to issue a final rule clarifying the required disclosure of plan fee and expense information to plan participants and beneficiaries.