With the election of Donald Trump as the 45th president of the United States, the business community can almost certainly look forward to a new era. Although many of Trump’s policies on labor and employment-related laws and regulations have yet to be fully developed, there are many Obama-era initiatives that could face significant changes under the new Republican administration.
In some instances, the courts may become involved, and several judges have already weighed in with injunctions against some recent Obama regulations. Other changes could take effect soon after Trump assumes office in January. But some changes may take longer as Congress looks at a slew of issues, cases work their way through the court system, and Trump considers his priorities.
REGULATIONS THAT MAY BE ROLLED BACK
Over the course of the last eight years, the Obama administration has made a series of changes that have led to more economic and regulatory burdens for businesses while often strengthening unions. Many of those changes could be undone, rolled back, or at least revised by the Trump administration.
Those might include:
WHITE COLLAR SALARY EXEMPTION
On Nov. 22, a federal judge blocked a U.S. Department of Labor rule that would have taken effect on Dec. 1 and extended mandatory overtime pay to more than 4 million salaried workers. U.S. District Judge Amos Mazzant of the Eastern District of Texas agreed with 21 states and an assortment of business groups that the rule was unlawful.
Under the previous regulations, bona fide professional, administrative, or executive (white collar) workers who made less than $23,660 per year were entitled to overtime. Under the new rule, most white collar workers who earn less than $47,476 annually would have had to be paid time-and-a-half when they work more than 40 hours a week. Judge Mazzant’s recent order stops this rule from going into effect, at least for the time being. The Labor Department has appealed the ruling to the 5th Circuit Court of Appeals.
Many organizations had already changed employee salaries and job classifications to comply with the new rule. On a practical level, it could be difficult for employers who proactively instituted changes to cut salaries or rearrange work schedules for employees. However, if competitors did not adjust salary levels, some employers may find it necessary to roll back any salary changes.
On Nov. 16, another federal judge in Texas issued a permanent nationwide injunction blocking the so-called “persuader rule.” The rule, which the Department of Labor put forward as part of the Labor Management Reporting and Disclosure Act of 1959, would have required “indirect service providers” such as consultants and law firms to publicly disclose any work they do for employers that relate to union organizing activities. This Obama Administration rule was designed to assist unions, as it would have required management-side law firms and employers to engage in complicated and onerous reporting requirements and possibly would have limited the ability of employers to elicit legal advice when faced with a union organizing campaign.
The permanent injunction by U.S. District Judge Sam Cummings of the Northern District of Texas followed a preliminary injunction that he issued in June. The injunction has already been appealed to the 5th Circuit.
CHANGES BY THE NATIONAL LABOR RELATIONS BOARD
Over the last eight years, the National Labor Relations Board (NLRB) has made many significant rulings that have often been pro-union. Among the rulings that could be targeted for change:
- “Quickie” Election Rules
The NLRB’s so-called “quickie” union election rules, which took effect in April 2015, accelerated the time between the filing of a petition to unionize and a union election. Despite concerns that the new election rules would lead to more union wins, it appears those concerns have not yet been realized.
According to a Wall Street Journal article published in April 2016, union elections have taken place 40 percent faster under the new rule. However, unions have continued to win at about the same rate as they did before the new rule took effect — about two-thirds of the time. This may mean that the rule is not a high priority for the new administration. Furthermore, Trump cannot unilaterally change the election rules. Instead, the NLRB would need to propose new rules, elicit public comment on the rules, and follow the administrative regulation process. Currently, however, there are two empty NLRB positions. If filled by Trump, it would likely swing the board composition to a management-friendly majority.
- Purple Communications Decision
In 2014, the NLRB ruled that employers could open their corporate email to union organizing by employees, except in very limited situations. The decision involving Purple Communications overturned a 2007 NLRB decision that found that corporate email systems are the employer’s property, so employers could ban all non-business email communications.
There is still some confusion over the ruling, so it could be one that the NLRB targets for reconsideration sooner rather than later.
- Specialty Healthcare Decision
In August 2011, the NLRB adopted a new standard for determining appropriate union bargaining units in Specialty Healthcare. The new standard found that the NLRB would presume the union-designated bargaining unit was appropriate. If an employer sought to argue that a unit should include more employees, the employer needed to show that employees in a larger unit share an “overwhelming” community of interest with those in the petitioned unit. The board has consistently applied the Specialty Healthcare micro-unit rule in recent years, with an NLRB regional director even recently approving a 28- worker bargaining unit at an Ohio manufacturing complex, when the employer had argued that another 115 workers should have been included. With a new NLRB majority, this union-friendly rule could be on the chopping block.
- Electronic Authorization Cards
In 2015, the NLRB general counsel issued a memo allowing union representatives and employees to submit electronic signatures in support of a showing of interest rather than requiring handwritten authorization cards. Starting in September 2015, the cards could be completed electronically and online.
In order to be accepted, the electronic access cards must include: the signer's name, email address or social media account information, phone number, preferred language, employer’s name, and signature date.
Unions have their own requirements when submitting electronic signatures, including a declaration that identifies what electronic signature technology was used, an explanation as to how that technology ensures the authenticity of the signature, and verification that the employee actually signed the document. Given that this rule seems solely designed to facilitate a union’s ability to gain sufficient signatures to petition for a union election, it may be subject to review under a new administration.
- Joint Employer Rulings
Recently, some of the most far-reaching actions by the NLRB have been around joint-employer standards.
In August 2015, in a ruling involving Browning-Ferris Industries, the NLRB found that an “indirect relationship” between two companies was enough to make both companies joint employers. The relationship between joint employers extends to temporary employees as well as franchisors and franchisees. This ruling overturned 30 years of precedent and has faced sharp criticism from management, business groups including the Chamber of Commerce, and many Republicans in Congress.
Once Obama is out of office, and the threat of his veto disappears, a Republican-controlled Congress could take action to pass legislation that revises the definition of a joint employer. Additionally, the NLRB could reconsider its decision in Browning-Ferris. Finally, Browning-Ferris is currently appealing the decision to the District of Columbia Circuit, which has yet to issue an opinion.
- Arbitration Agreements
Under Obama, the NLRB has aggressively challenged agreements between companies and workers that require employment-related disputes to be settled in arbitration.
For example, in February 2016, the NLRB threw out an arbitration agreement utilized by Ralph’s Grocery Co. Ralph’s had a four-page mediation and binding arbitration policy that required employees, as a condition of employment, to waive their rights to pursue class or collective actions in employment-related claims. In July 2013, an administrative law judge invalidated the policy. The case was then appealed to the NLRB, which ruled 2-1 that Ralph’s policy violated Section 8(a)(1) of the National Labor Relations Act (NLRA).
Appeals courts have been split over the NLRB’s decisions regarding mandatory arbitration agreements, with three circuit courts finding such agreements enforceable and two circuit courts agreeing with the NLRB. It’s possible the U.S. Supreme Court may have to resolve the issue.
FEDERAL CONTRACTOR RULES
Another Obama order, Fair Pay and Safe Workplaces, has also been partially enjoined by a preliminary injunction, issued by U.S. District Court Judge Marcia A. Crone, from the Eastern District of Texas, before it was scheduled to take effect. The rule would require companies working on federal contracts to disclose information about labor violations when participating in the bidding and selection process. The Department of Labor has the option to appeal the decision, and it is currently unclear what position the Trump Administration will take on this rule.
AFFORDABLE CARE ACT
During the election campaign, Trump didn’t provide many specifics on a range of issues. However, he did address the Affordable Care Act. Trump has said he will repeal Obamacare, but he does plan to keep several aspects, such as providing protections for pre-existing conditions and allowing children up to the age of 26 to stay on their parents’ policies. Repealing or replacing Obamacare is widely expected to be one of the first major undertakings of the new administration and Congress in January.
While there will be many changes in the regulatory, legislative, and enforcement environment under President-elect Trump, employers need to be aware that changes may not come about immediately. It’s likely that regulators will continue enforcement for the foreseeable future. However, over the next several years, many of the Obama-era administrative regulations may be subject to repeal and reversal.
Employers must be vigilant about the potential for enforcement actions and work carefully with legal and HR experts until it becomes clear what a Trump Administration will focus on and how regulations will be revised. There is no doubt that most employers are looking forward to less regulation and less red-tape.
Publication date: 12/19/2016