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 this month. But some changes may take longer, as congress looks at a slew of issues, cases work their way through the courts, and Trump establishes his priorities.
Regulation Roll Back
Over the course of the last eight years, the Obama administration made a series of changes that 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 incoming Trump team.
Those might include:
“White Collar” Salary Exemption
On Nov. 22, a federal judge blocked a U.S. Department of Labor (DOL) 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 at least $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 worked more than 40 hours each week. Judge Mazzant’s recent order stops this rule from going into effect for the time being while the DOL 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 didn’t 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 DOL put forward as part of the Labor Management Reporting and Disclosure Act of 1959, would’ve 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’ve required management-side law firms and employers to engage in complicated and onerous reporting requirements, and likely would’ve 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 Fifth Circuit.
National Labor Relations Board Changes
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:
1) “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 materialized.
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 may not be among the first priorities for the new administration. Furthermore, President 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. There are, however, two empty NLRB positions currently, which if filled by President Trump would likely swing the board composition to a management-friendly majority.
2) 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’s still some confusion over the ruling and it could be one that the NLRB targets for reconsideration sooner rather than later.
3) 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-for 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 argued that another 115 workers should’ve been included. With a new NLRB majority, this union-friendly rule could be on the chopping block.
4) Electronic Authorization Cards
In 2015, the NLRB general counsel issued a memo that allowed 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; the language the signer agreed to; employer’s name; and date the electronic signature was completed.
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 that the signature is that of the employee; and that the employee actually signed the document.
5) Joint Employer Rulings
Some of the most far-reaching actions by the NLRB recently have been around joint-employer standards.
In August 2015, in a ruling involving Browning-Ferris Industries, the NLRB found that in a relationship between two companies, an “indirect relationship,” was enough to make both companies joint employers. The relationship between joint employers extends to temporary employees and franchisors and franchisees. This ruling overturned 30 years of precedent, and has faced sharp criticism.
Once Obama is out of office and the threat of his veto disappears, a Republican-controlled congress could 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.
6) 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.
Appeals courts have been split over the NLRB’s decisions regarding mandatory arbitration agreements, with three judges finding such agreements enforceable and two courts agreeing with the NLRB. The issue could possibly end up being resolved by the U.S. Supreme Court.
7) Federal Contractor Rules
Another Obama order, The 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 DOL has the option to appeal, and it’s unclear what position the Trump administration will take on this rule.
8) The Affordable Care Act
During the election campaign, Trump didn’t provide many specifics on a range of issues. However, he did address the ACA. 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. Appealing or replacing Obamacare is widely expected to be one of the first major undertakings in Washington D.C. as the new administration settles in.
Not so Status Quo
While there will be many changes in the regulatory, legislative, and enforcement environment under the new president, 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 human resources experts until it becomes clear what a Trump administration will focus on and how regulations will be revised. There’s no doubt that most employers are looking forward to less regulation and less red tape.