Today’s News & Commentary — January 31, 2017

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.”

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When They Talk About Joint Employers, Republicans Are Either Lying or Confused

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.

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The Obama Board’s Legacy – Part 1 of 2

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.

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Guest Post: Title VII’s Protection Against Class Action Waivers

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.

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The House Hearing on the New Persuader Rule Didn’t Persuade Anyone

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.

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On Worker Benefits, the Question is One of Moral Probity, Not Fiscal Prudence

Fiscal considerations are at the forefront of contemporary policy debates.  We often hear some version of the “can we afford this?” question coupled with a reference to our nearly $20 trillion debt—particularly when we debate the merits of social programs.  Of course, in order to know whether we can “afford” a social program, we must take account of both other spending decisions and tax policies.  Put differently, affordability questions are always resource allocation decisions. And, resource allocation decisions necessarily implicate value judgments as we decide (1) to whom we want to allocate resources and (2) what proportion of our resources we will devote to a certain group, cause, or program.

Senator Elizabeth Warren (D-MA) deserves credit for  making these considerations clear to the American people by introducing the Seniors and Veterans Emergency Benefits Act (SAVE Benefits Act) (bear with me while I explain the bill so we can better understand the Senator’s adroitness).  The bill would give all recipients of Social Security, veterans benefits, and the disabled a one-time payment in of $581 in 2016, as they would not receive a cost-of-living adjustment (COLA) this year.  Social Security is indexed to inflation, and the inflation formula Congress uses shows no consumer inflation over the past year, mainly due to a steep decline in gas prices—a commodity which seniors tend not to use.  Items that make up a large portion of seniors’ expenses—food and healthcare—have, in fact, increased in price.  Moreover, the lack of a COLA presents an enormous problem as for over 15 million Americans as Social Security is all that stands between them and poverty.  To remedy the lack of a COLA while not increasing the deficit, Senator Warren proposed that we obtain the funds from eliminating a tax loophole that subsidizes pay increases for CEOs, know as the “Performance Pay” loophole.

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What’s Going on with LGBT Discrimination in the Workplace?

Three years ago, a HuffPost/YouGov poll found that 69% of Americans (incorrectly) believed that firing an employee for being gay was already illegal.  Now, in a post-Obergefell legal regime, those Americans would likely find it even more incredible that the federal government and most states still have not passed anti-discrimination laws, nor has the Supreme Court ruled such discrimination to be illegal.  Unlike the right to interracial marriage, which the Supreme Court upheld after Congress banned race discrimination, gay marriage came with no such analog.  The EEOC has interpreted Title VII to prohibit sexual orientation or transgender (gender identity) discrimination, but EEOC protection alone is inadequate.  This post examines what protections currently exist for LGBT workers and some possible paths forward for more comprehensive anti-discrimination protections.

Summary of Existing Protections for LGBT Workers

Federal/Federal Contract Workers

All federal employees and contract workers are protected from workplace discrimination based on sexual orientation and gender identity, due to a progression of Executive Orders and EEOC decisions spanning almost two decades.  Initially, President Clinton’s 1998 Executive Order prohibited sexual orientation discrimination only.  Then, in 2012, the EEOC expanded the protection to transgender individuals under Title VII in Macy v. Holder, which is binding on all federal agencies.  Two years later, President Obama’s Executive Order extended both protections to workers employed under federal contracts, which impacted about 20% of the American workforce.  Finally, in 2015, the EEOC decided Baldwin v. Foxx, in which it found that discrimination based on sexual orientation, and not just gender identity, categorically violates the Title VII prohibition on sex discrimination.

State Legislation

Currently, 18 states and D.C. have laws that prohibit discrimination based on sexual orientation and gender identity in the private sector.  Four additional states prohibit employment discrimination based on sexual orientation.  But fifty-two percent of LGBT people still live in states that do not prohibit either type of discrimination, and new state laws are preempting local non-discrimination measures.

Private Protections

Some businesses have self-imposed anti-discrimination policies.  The large majority (89%) of Fortune 500 companies prohibit sexual orientation discrimination and two-thirds prohibit gender identity discrimination.  Interestingly, these companies are not only procuring goodwill: having non-discrimination policies has been found to increase corporate profits.  Private corporations have also threatened to boycott states with legalized discrimination (more on this below).

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