Donald Trump and the Republicans in Congress love to refer to regulations as “job crushing.” When Trump spoke recently at the Conservative Political Action Conference he not only said that companies can’t hire because of regulations, but he also said that “we’re going to put the regulation industry out of work and out of business.” Trump has already taken steps to make it much harder for government agencies to do their jobs. When he came into office, he imposed a hiring freeze, and he issued an executive order decreeing that the cost of all new regulations issued by each department or agency for fiscal year 2017 can’t be greater than zero regardless of the benefits to be gained from the regulations. Now, Trump has proposed a budget that would dramatically slash the budgets of most federal agencies. Government “regulators” do a great deal of important work to help sand some of the harshest edges off of our capitalist economy. I’ll leave it to others to talk about the importance of environmental and food safety regulations, but workers desperately need a vigilant Occupational Safety and Health Administration (OSHA) to protect them from injuries and chemical exposure on the job. To take just one example, in the last days of the Obama Administration, OSHA issued citations to a manufacturing company after two workers suffered severe hand injuries within ten days due to the company’s failure to install proper safety guards on its machines. While the consequences of inadequate wage and hour regulation are less dramatic, a recent Tenth Circuit case illustrates why there is such a pressing need for the government to monitor workplaces.
The New Rule
In May 2016, the Department of Labor, under the direction of President Obama, issued a final rule updating the overtime provisions of the Fair Labor Standards Act. The Department raised the minimum annual salary for employees exempt from overtime pay from $23,660 to $47,476. The Department set December 1, 2016 as the effective date for the new rule, implementation of which would have affected over 4 million employees.
Underlying the new overtime rule is the desire to protect workers from being over-worked and under-paid. As the United Food and Commercial Workers union stated in 2015, the previous threshold of $23,660 is below the poverty line, and reflects only one salary threshold increase since 1975. As long as employers could classify their workers as “managers,” they could avoid paying them overtime. The new rule would have required employers to either raise the salaries of low-level managers to meet the $47,476 threshold, or reclassify them as hourly employees entitled to overtime pay. It was intended to encourage employers to spread employment, and hire multiple workers to perform a job rather than forcing a single worker to work 70 hours a week. Critics argue the rule would hurt small businesses and reduce jobs.
As many employers were making changes to come into compliance with the new rule by the approaching December 1 deadline, a federal judge in Texas ordered a preliminary injunction barring nationwide enforcement of the rule. A number of private business groups and 21 states had challenged the rule as an overreach of executive power. The district judge agreed, claiming Congress, not the Department of Labor, should be responsible for making changes to the minimum salary requirement.
2017 could be a tough year for labor unions at the state level. According to NPR, Kentucky has become the nations’s 27th “right-to-work” state, and Missouri and New Hampshire could join it in February. New Hampshire would become the first “right-to-work” state in the Northeast. Advocates in New Hampshire claim that “right-to-work” will entice businesses to relocate to the state, while opponents assert that “right-to-work” creates free rider problems and constitutes political reprisal against unions for supporting Democrats.
At the federal level, things might not be much better. The Washington Examiner reports that two Republicans will introduce national “right-to-work” legislation tomorrow. President Trump’s purported support has “right-to-work” advocates optimistic, despite previous failures in Congress.
With respect to President Trump’s agenda, unions are prepared to fight. Per Bloomberg BNA, “labor groups representing immigrants, women, blacks, Latinos and Asian-Americans vowed collective action against President Donald Trump at a rally in Washington Jan. 27” and “[Representatives from AFL-CIO constituency groups] promised grass-roots organizing with regional union chapters to protect immigrants and union workers and to ensure sanctuary cities remain.”
Now that Republicans in Congress are about to get a President who will sign their bills into law, they are eager to overturn even the most modest pro-worker measures that President Obama’s appointees were able to implement. One of the top items on the chopping block is the “joint employer” standard that the NLRB announced in 2015 in its Browning-Ferris Industries decision. What’s unfortunate is that rather than debate the Board’s decision on the merits, Republicans in Congress insist upon misrepresenting the decision and its effects.
Consider a recent column by Representative Bradley Byrne, who sits on the House Education and the Workforce Committee. He wrote, “[t]here may be no regulation that threatens to crush small businesses and working people more than a recent ruling from the National Labor Relations Board relating to the definition of a ‘joint employer.’” Byrne asserts that the ruling will make big firms liable for the actions of small firms, and thus they are “unlikely to do business with them anymore.” This is simply wrong. Joint employers are not automatically liable for each other’s actions. Instead, under long-settled Board law, a non-acting joint employer is only liable where it knew or should have known that the other employer acted for unlawful reasons. Apart from being wrong as a matter of law, the claim is absurd as a matter of common sense. It’s like saying no homeowner would ever hire an electrician because there are some circumstances where the homeowner could be liable for actions taken by the electrician. In fact, the Browning-Ferris decision wasn’t about liability, but rather about the right of workers to bargain with actual decision-makers. The workers in Browning-Ferris were employed by a staffing agency, but Browning-Ferris retained the right to dictate who could work at the facility, it set schedules, controlled the speed of the production line, and imposed a maximum wage rate for the agency’s employees. When the workers formed a union, they wanted the right to bring Browning-Ferris to the table, so that they could bargain about these vital issues. Byrne also makes the unsupported claim that 600,000 jobs “could be either lost or not created” because of the Browning-Ferris decision. But, at most, the decision might lead big firms to follow a different business model – if big firms choose to hire workers directly rather than through intermediaries, the workers’ jobs won’t disappear.
This post is the first in a two-part series.
When Kent Hirozawa’s term ended last month, the NLRB was reduced to three members – two Democrats and one Republican. By tradition, it takes three Board Members to reverse precedent, and since no proposed rules are pending, it’s fair to say that President Obama’s NLRB will not be breaking any new ground for the duration of his term. As a result, this seems like a good time to look back on the Obama Board. During President Obama’s two terms, the NLRB has been as noteworthy for the partisan wrangling it has generated in Congress as for substantive labor law. The first part of this review will look at how Republican hardball tactics led to three Supreme Court cases and a change in the filibuster rules and the next installment will focus on some of the decisional highlights.
One of the most notable aspects of President Obama’s NLRB is the difficulty the President has had filling the seats of the five Board Members. As a result, at the end of President Obama’s eight years in office, there will have been only 41 months where the Democrats had a three-person majority on the Board. When President Obama came into office there were three vacant seats. In April 2009, he announced his intent to nominate Craig Becker and Mark Pearce and he waited for Republicans in Congress to recommend a Republican to fill the third empty seat. Finally, on July 9, 2009, President Obama formally sent three nominations to the Senate. The Republican Senators on the Health, Education, Labor & Pension (HELP) committee submitted 280 questions for Becker to answer in writing. Then Senator McCain (who you may remember lost to President Obama) insisted on holding the first hearing on an NLRB nominee since 1994. Even after the hearing, the Republicans still would not allow an up or down vote on Becker’s nomination. Instead, the Democrats had to file for cloture and that vote failed when 52 Senators voted for cloture and 33 voted against. These Republican obstructionist tactics ultimately led the Senate Democrats to reform the filibuster rules so that (except for the Supreme Court) it no longer takes 60 votes to confirm a Presidential nominee.
Jonathan R. Harkavy, a lawyer, arbitrator and mediator, has taught labor and employment law at Wake Forest School of Law and corporate finance at Duke Law School and the University of North Carolina at Chapel Hill School of Law. He has written and lectured widely on employment law and alternative dispute resolution.
Citing the plight of employees ranging from female Goldman Sachs bankers to African-American Taco Bell restaurant workers, The New York Times lamented earlier this year that a double whammy of compelled arbitration and class action waivers is effectively disabling employees from enforcing their statutory rights. Around the same time, Senators Leahy, Franken and others introduced legislation to limit forced individual arbitration of various employment and consumer disputes. (S.2506 – Restoring Statutory Rights and Interests of the States Act of 2016) That legislation has promptly gone nowhere. But, are the Times’ lament and the proposed legislation necessary to protect class litigation of Title VII claims? Maybe not, if the Supreme Court heeds its own words.
Common wisdom has it that, in the wake of AT&T Mobility, LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant, the Court effectively foreclosed class arbitration of consumer and employment claims. To be sure, Italian Colors enforced a class arbitration waiver in an agreement used by American Express with merchants who honor its charge cards. Justice Scalia’s opinion for the Court concluded that the Federal Arbitration Act’s mandate to enforce arbitration agreements according to their terms required upholding the waiver in the absence of a “contrary congressional command.” Moreover, Justice Scalia noted that the antitrust laws on which the merchants’ claim was based “do not guarantee an affordable procedural path to the vindication of every claim.” But Title VII does for employees what the antitrust laws failed to do for merchants: It provides an affordable procedural path for vindicating every employment discrimination claim and thus supplies the “contrary congressional command” missing in Italian Colors.
Look first at a rarely-cited obscurity in the Civil Rights Act of 1964 – one that has largely been ignored by judges and lawyers alike. Sections 706(f)(4) and (5) require that Title VII suits – alone among other civil actions – are to be expedited and advanced on the district courts’ dockets, even to the point of using Circuit Judges as trial judges and appointing special masters under Rule 53 to ensure prompt trials. Also, section 706(f)(1) commands that in appropriate cases an employee need not pay a filing fee, need not pay costs and need not advance security to vindicate her rights. Trial judges may also appoint counsel for employees and permit intervention by the EEOC or the Attorney General. Congress has thus singled out Title VII claims for expedited and affordable treatment.
In this era of divided government, Republicans in Congress understand that if they want to enact legislation, they need to compromise. But, the Republicans in the House of Representatives seem to have little interest in compromising. So, instead of trying to write bills that have a chance of becoming law, they prefer to spend their time holding grandstanding hearings. The latest hearing conducted by the Education and the Workforce Committee was called “The Persuader Rule: The Administration’s Latest Attack on Employer Free Speech and Worker Free Choice.”
The persuader rule is an attempt by the Department of Labor to close a loophole in the reporting scheme authorized by the 1959 Labor Management Reporting and Disclosure Act. That law requires consultants to file reports with the DOL if they enter into an agreement “where an object thereof is, directly or indirectly, to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing.” With the exception of a regulation enacted on the last day of the Clinton Administration and quickly repealed by the Bush Administration, the DOL has only required reporting where consultants communicate directly with workers, but not where they draft scripts or otherwise prepare materials for an employer’s anti-union campaign. In other words, the DOL had effectively rewritten the statute to delete the reference to “indirect” persuasion. In fairness to the DOL, the statute is not a model of clarity since it contains an exemption for giving advice. The Obama DOL issued its initial Notice of Proposed Rulemaking in June 2011, and then spent the last four years trying to figure out where “advice” ends and “indirect persuasion” begins.