- Sea Change: A Very Different Congress Sets Its Labor and Employment Law Agenda, While the President Explores Regulatory Options
- April 11, 2011 | Author: Rebecca E. Ivey
- Law Firm: Troutman Sanders LLP - Richmond Office
Following the midterm elections, many pundits predicted that Congress would overlook labor and employment legislation in the lame duck session, and that the Democratic legislative agenda would screech to a halt in the 112th Congress.
As to the first, the pundits were right - the lame duck session achieved a repeal of Don’t Ask, Don’t Tell and renewal of the Bush tax cuts, but employment issues fell by the wayside. As to the second, the GOP hit the ground running. On January 5, 2011, the very first day of the Congressional session, Republican representatives introduced a flurry of employment-related legislation, and Democratic representatives were not far behind.
Republicans also changed the name of the primary House committee with jurisdiction over employment issues from the Education and Labor Committee to the Education and the Workforce Committee, a symbolic move that echoes the remarks of the committee chair, Rep. John Kline, that the Republicans’ top priority is to provide employers with “certainty and simplicity” in federal law, rules, and regulations. In response to the Democrats’ loss of control of the House, however, some experts speculate that they will push their agenda in the arena of regulation rather than legislation. For this reason, this update includes some key legislation and proposed regulations, which employers should follow closely.
Dodd-Frank Repeal (H.R. 87)
CURRENT STATUS OF THE LAW: The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), signed into law on July 21, 2010, contains various employment-related provisions dealing with executive compensation, arbitration, and whistle-blower protections, some of which were described in our Financial Institution Practice Group’s October 25, 2010 article, “Dodd-Frank Act Increases Protections and Incentives for Whistle-blowers,” available at http://www.troutmansanders.com/dodd-frank-act-increases-protections-and-incentives-for-whistleblowers-10-25-2010/.
WHAT WOULD CHANGE: This bill would repeal the whole enchilada.
WHY YOU CARE: Those employers covered by Dodd-Frank sure wouldn’t mind a return to the time of lesser regulation and a whistle-blower scheme without problematic incentives.
LIKELIHOOD OF BECOMING LAW: Highly unlikely. With Democrats still in control of the Senate and White House, Dodd-Frank isn’t going anywhere. Affected businesses, however, are still awaiting the SEC’s final regulations, due April 17, 2011, which will fully implement certain aspects of Dodd-Frank.
Davis-Bacon Repeal Act
(H.R. 746, H.R. 745)
CURRENT STATUS OF THE LAW: The Davis-Bacon Act, enacted by Herbert Hoover in 1931, established the requirement for paying prevailing wages on public works projects. All federal government construction contracts, and most contracts for federally assisted construction over $2,000, must include provisions for paying workers no less than the locally prevailing wages and benefits.
WHAT WOULD CHANGE: This bill would repeal the Act in its entirety.
WHY YOU CARE: To the extent your business involves government construction or federally assisted construction contracts, this would mean that you may no longer need to worry about the prevailing wage rules for covered employees.
LIKELIHOOD OF BECOMING LAW: Very slim. This Act has been around for a very long time, and has survived multiple attempts at repeal or revision - in 1993, 1995, 1994, and 2004. The latest effort, however, is part of the Republican Party’s effort to cut $2.5 trillion from the budget over the next 10 years, with $1 billion in annual savings from repeal of Davis-Bacon alone. While budget cutting is fashionable, Davis-Bacon is a historical survivor.
Right to Know under the FLSA
(Department of Labor Regulation)
CURRENT STATUS OF THE LAW: There is no requirement under the FLSA that employers undergo a classification analysis to determine whether workers are exempt from FLSA coverage.
WHAT WOULD CHANGE: This rule, included in the Department of Labor’s (DOL’s) regulatory agenda in the spring of 2010, would require any business that claims workers to be exempt from FLSA coverage to perform a classification analysis and disclose that analysis to its workers. The rule would also require the employer to retain the analysis, in case the DOL wants to review it.
WHY YOU CARE: Regardless of who performs this analysis, it is unlikely to be cheap, particularly for larger employers with many levels of employees. The rule could cause a spike in employment litigation.
LIKELIHOOD OF BECOMING A FINAL RULE: Fairly likely. The notice of proposed rule making is slated for April, but the rule’s form then (and its final form) is up in the air. A good strategy for employers is vocal participation in the rule making process.
Injury and Illness Prevention
Programs Rule (DOL Regulation)
CURRENT STATUS OF LAW: Traditionally, the Occupational Safety and Health Administration (OSHA) has identified specific hazards first. After the rule making process produces a specific standard, employers must comply with this standard.
WHAT WOULD CHANGE: The Injury and Illness Prevention Programs Rule (I2P2) would require employers to identify hazards in the workplace and take steps to mitigate or eliminate them, shifting the responsibility for finding and addressing workplace hazards from OSHA to employers.
WHY YOU CARE: Not only does this impose a duty (and the associated additional costs) on employers, but it also raises the concern that OSHA will fault employers for not recognizing and dealing with problems before an injury or illness occurs, regardless of how unusual the circumstances of any individual accident may be.
LIKELIHOOD OF BECOMING A FINAL RULE: This rule has not yet been proposed, but OSHA has repeatedly indicated that the I2P2 rule is at the top of its list of priorities. While the clock is not yet ticking on this measure, and while employers will undoubtedly have their say in the rule making process, it is likely that I2P2 will become part of the regulatory scheme in some way.
Employer and Labor Relations
CURRENT STATUS OF LAW: The DOL’s Office of Labor-Management Standards broadly interprets the Labor-Management Reporting and Disclosure Act (LMRDA) provisions regarding the advice exception to disclosure, such that lawyers working with companies in the context of union-organizing drives or collective bargaining do not trigger a disclosure requirement.
WHAT WOULD CHANGE: The scope of the advice exception would be narrowed, which could very well result in a requirement that these attorneys be disclosed.
WHY YOU CARE: This disclosure would also require that the affiliation between the company and the lawyer or law firm be made public, and the financial aspects of that relationship, which many companies prefer to keep confidential.
LIKELIHOOD OF BECOMING A FINAL RULE: It is highly likely that some narrowing of the advice exception will occur, although the scope is much less certain. The notice of proposed rule making is slated for June. Again, employer participation in the rule-making process is essential.
Equal Employment For All Act (H.R. 321)
CURRENT STATUS OF THE LAW: The Fair Credit Reporting Act (FCRA) restricts the use of consumer credit checks by employers and requires that employers that use credit checks make a specific disclosure to employees, and obtain employee authorization. The FCRA also requires notifications to employees if an employer takes an adverse action on the basis of information in the employee’s credit information.
WHAT WOULD CHANGE: The Equal Employment For All Act would amend the FCRA to prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions, with some relatively narrow exceptions. Those exceptions would apply to positions that implicate national security concerns or FDIC clearance, to state or local government employees, and to managerial, executive, professional, or supervisory positions at a financial institution.
WHY YOU CARE: If you routinely obtain consumer reports on your potential and existing employees, this may impact you, unless you fall within a specific exception.
LIKELIHOOD OF BECOMING LAW: This is not the first time we’ve seen this bill. It died in committee in 2009 when the House was controlled by the Democrats. The Act is on course to meet the same fate this Congress.
Jobs Recovery by Ensuring a
Legal American Workforce Act
CURRENT STATUS OF THE LAW: The Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA) established the voluntary Internet-based pilot program known as E-Verify, through which employers verify the work authorization of new hires, whether U.S. citizens or not. The government amended the Federal Acquisition Regulation (FAR) in 2009 to require contractors with the federal government to agree, through language inserted into their federal contracts, to use E-Verify to confirm the employment eligibility of all persons hired during a contract term, and to confirm the employment eligibility of federal contractors’ current employees who perform contract services for the federal government within the United States. The rule included exceptions for contracts for amounts less than $100,000 and contracts for commercially available off-the-shelf items.
WHAT WOULD CHANGE: The Jobs Recovery by Ensuring a Legal American Workforce Act of 2011 (the E-LAW Act) is the most expansive of these bills, and would make the E-Verify Program permanent and mandatory. Employers would need to comply based on size over the course of a phased-in timeline. The E-LAW Act would mandate penalties for noncompliance and create tax disincentives.
WHY YOU CARE: Under the E-LAW Act, you would be required to use E-Verify within the next few years.
LIKELIHOOD OF BECOMING LAW: The bill does not appear to be highly controversial, and use of E-Verify is supported by the Obama administration, but the bill is at the beginning of the journey toward becoming law.
Healthcare Incentive Act (H.R. 42)
CURRENT STATUS OF THE LAW: The FLSA establishes a national minimum wage of $7.25 per hour with no offset for healthcare benefits received.
WHAT WOULD CHANGE: The Healthcare Incentive Act would require the Secretary of Labor to promulgate a rule requiring that, for any employer required by federal or state law to pay a minimum wage at a rate that is higher than the federal minimum in effect on September 1, 1997 ($5.15), the employer will be permitted to include the value of creditable healthcare benefits it provides to an employee in determining the wage the employer is required to pay that employee. However, the credit permitted by this rule may not exceed the difference between $5.15 and the wage rate otherwise applicable.
WHY YOU CARE: If passed, this would alter the way minimum wage is calculated for those employees who earn an hourly amount close to the minimum wage and receive healthcare benefits from their employer. If you employ these workers, it would save you money.
LIKELIHOOD OF BECOMING LAW: As with many other bills this cycle, previous versions have died in committee, which suggests that there is little likelihood of the bill becoming law.
Labor Relations First Contract
Negotiations Act of 2011
CURRENT STATUS OF THE LAW: The National Labor Relations Act (NLRA) establishes the current standards for collective bargaining, which include the obligation on the parties to meet at reasonable times and places, to bargain in good faith, and to bargain to reach a consensual agreement.
WHAT WOULD CHANGE: This bill would amend the NLRA to require the mediation and, ultimately, the binding arbitration of initial contract negotiation disputes if they are not resolved within a prescribed period of time.
WHY YOU CARE: For employers with a newly unionized workforce, this dramatically changes the collective bargaining process. If the newly certified union and the employer fail to reach agreement by the sixtieth day after bargaining commences, this bill requires mediation if either party requests it. And, if no agreement is reached by the thirtieth day following the request for mediation, the matter may be referred to binding arbitration.
LIKELIHOOD OF BECOMING LAW: The Employee Free Choice Act (EFCA), which failed to advance during the 111th Congress, contained similar provisions. Those provisions were a controversial portion of the EFCA. We doubt this bill will ever make it out of committee.