Partisan Gridlock Cripples Legislation, Regulation Abounds Without Check, And All Hopes Rest On the 2012 Elections
With Congress split along partisan lines in 2011, the number of bills passed was lower in 2011 than in at least two decades, at least by some measures. Will 2012 be different? With the battle for control of Congress and the presidency at center stage in the 2012 elections, the partisan gridlock shows no sign of abating.
In light of the gridlock, it comes as no surprise that most of the significant labor and employment legislation has seen little or no progression since our last update, though some significant bills (as highlighted below) have been introduced. With most legislation at an impasse in 2011 and early 2012, the administration has resorted to introducing significant new regulation, with various agencies pushing through major changes (See our article “New Year’s Checklist for Employers: Did You Miss Anything in 2011?” for the highlights of the major regulatory changes in 2011 at http://www.troutman.com/new-years-checklist-for-employers--did-you-miss-anything-in-2011-01-11-2012/) and proposing others. In some cases, pro-business leaders and Congressional Republicans have been outraged by the regulatory action or proposed action and have introduced legislation to counter those changes. However, with a Congress divided, these legislative efforts stand little chance of checking the administration’s regulatory changes and all hopes for significant legislative progress seem to rest on the 2012 Elections.
WORKFORCE DEMOCRACY AND FAIRNESS ACT (H.R. 3094)
CURRENT STATUS OF LAW: Employees have the right to file a petition with the National Labor Relations Board (NLRB) to hold an election to vote on whether a group of employees (a “bargaining unit”) should be represented by a union. The NLRB promulgates the rules and procedures that govern these elections. The NLRB also adjudicates disputes regarding the validity of the election or the appropriateness of a particular bargaining unit for union representation. This past year, the NLRB made important changes to the criteria for determining the appropriateness of a bargaining unit and election procedures.
First, under a new test set forth in the NLRB’s Specialty Healthcare decision, which was made public on April 30, 2011, it is now much easier for smaller units of workers to be considered appropriate bargaining units. In particular, under the new test, in order to demonstrate that a bargaining unit is inappropriate, an employer will be required to prove that the excluded employees share “an overwhelming community of interest.”
Second, about two months after the Specialty Healthcare decision, the NLRB published proposed amendments to election rules (Proposed Rules) that would, among other things, permit what some have termed “quickie elections.” (See our June 2011 article on the Proposed Rules at http://www.troutman.com/nlrb-publishes-rules-to-change-the-election-process-06-28-2011/). On December 22, 2011, the NLRB issued its Final Rules, which become effective April 30, 2012. The Final Rules are a limited version of the more controversial rules proposed on June 21, 2011. However, businesses will still find the Final Rules disconcerting. Under current and past practice, an election could not occur sooner than 25 days after the petition for representation is filed, giving employers valuable time to present their position on union representation and to challenge the appropriateness of the bargaining unit. The Final Rules have eliminated the “no sooner than 25 days” recommendation, thereby permitting the quickie election – an election held before the 25-day period elapses.
WHAT WOULD CHANGE: On October 5, 2011, Congressional Republicans introduced this legislation in response to the Proposed Rules regarding quickie elections and the Specialty Healthcare decision. This legislation would require at least a 35-day waiting period after a petition is filed before an election could be held. It would also eliminate the criteria used to determine an appropriate bargaining unit under Specialty Healthcare and substitute an eight factor test designed to make it more difficult for smaller units of workers to be considered an appropriate bargaining unit and therefore “to avoid the proliferation or fragmentation of bargaining units.”
WHY YOU CARE: For those who do not think that a unionized workforce is appropriate for their business or are concerned about the potential proliferation of more distinct bargaining units within their unionized workforce, this bill is obviously of interest to you.
LIKELIHOOD OF BECOMING LAW: This bill moved quickly through the House and passed by a vote of 234-188 on November 30, 2011, about a month before the NLRB approved the Final Rules. Although it passed the House, it is not expected to survive when taken up by the Senate. Also, with the President’s recent recess appointments to the NLRB (See our January 2011 article discussing these controversial appointments http://www.troutman.com/president-obamas-controversial-recess-appointments-to-the-nlrb-foreshadow-a-lively-year-for-labor-law-01-18-2012/), we anticipate that the Final Rules will be implemented as planned on April 30, 2012.
EMPLOYEE MISCLASSIFICATION PREVENTION ACT (H.R. 3178)
CURRENT STATUS OF LAW: The Fair Labor Standards Act (FLSA) requires employers to keep various wage and hour related records of its employees. The FLSA does not currently require employers to maintain records for independent contractors or other non-employees.
WHAT WOULD CHANGE: Some of the more significant changes proposed by the Employee Misclassification Prevention Act include:
Employers would be required to keep records of not only its employees, but also any non-employees, such as independent contractors, who perform labor or services for remuneration.
The bill would create a new cause of action for both intentional and unintentional contractor misclassification with expanded monetary damages for workers. The bill would also create a schedule of fines from $1,100 for the first violation to $5,000 for repeat or willful violations.
Employers would be subject to stricter penalties for failing to keep the required records for non-employees. For example, if employers do not keep the required records for non-employee workers, then the non-employee would be presumed to be an employee and the employer would be subject to a heightened standard (“clear and convincing”) of proving that the worker was not an employee.
Employers would be required to provide written notice to all of their employees and non-employees containing, among other things, (1) notice of the person’s classification as an employee or non-employee, (2) a statement directing the person to the Department of Labor (DOL) website for the purpose of providing further information about the rights of employees under the law, and (3) the address and telephone number for the applicable local office of the DOL. In addition, for non-employees, the notice must also contain the following language, “Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.”
WHY YOU CARE: Aside from the fact that it would add to your paperwork, this legislation would significantly increase the penalties for misclassification and the likelihood of litigation. Also, for what it’s worth, the Department of Labor estimates that 30 percent of U.S. companies have misclassified workers who are actually employees as non-employees. Employers should consider if they may have misclassified workers as non-employees or whether they could be vulnerable to challenges, as this area appears be a growing concern, with supporters from both sides of the aisle.
LIKELIHOOD OF BECOMING LAW: The current bill, introduced in the House in October of 2011, is similar to legislation introduced in the Senate in April of 2011. Many pundits are starting to believe that this or similar legislation is gaining traction.
OFCCP PROPOSES CHANGES TO RULES GOVERNING CONTRACTOR NON-DISCRIMINATION AND AFFIRMATIVE ACTION REQUIREMENTS FOR INDIVIDUALS WITH DISABILITIES
CURRENT STATUS OF LAW: The Office of Federal Contractor Compliance Programs (OFCCP) is the federal agency responsible for auditing and enforcing Section 503 of the Rehabilitation Act of 1973, among other things. Under Section 503, qualifying government contractors are required to take affirmative action to hire individuals with disabilities.
WHAT WOULD CHANGE: The Proposed Regulations, introduced on December 9, 2011, would significantly increase the burden on government contractors to track, document, and perform other actions in relation to individuals with disabilities. Some of the more significant proposed changes include:
Contractors would be required to solicit disability status from applicants and even referrals, not just at the post-offer stage of employment as it is now.
The OFCCP would establish, for the first time, a national hiring goal for individuals with disabilities of 7% for each job group in the contractor’s workforce. The OFCCP has also suggested requiring 2% of the workforce to be made up of those with severe disabilities.
Contractors would have to document the reasons why any individual with a disability was not hired or promoted and what accommodation was considered prior to making such a decision.
Contractors would have to develop relationships and agreements with organizations that link individuals with disabilities to job opportunities.
Contractors would have to inform employees of their affirmative action policies at employee orientation.
Contractors would have to develop written procedures for processing requests for accommodations.
WHY YOU CARE: For those of you who are doing business with the federal government, directly or indirectly, you may be subject to the OFCCP and will obviously want to follow this Proposed Regulation.
LIKELIHOOD OF BECOMING LAW: The most controversial part of the Proposed Regulations is the imposition of a 7% national utilization goal. The 7% goal would provide the OFCCP with a benchmark for enforcing and penalizing contractors who fail to take appropriate affirmative action measures. Assuming no change in direction at the OFCCP, these Proposed Regulations will likely become law in substantially the form that they are proposed, with perhaps – and hopefully – some of the more controversial aspects of the Proposed Regulations, such as the national utilization goal, not making the final cut.
FAIR WAGES FOR WORKERS WITH DISABILITIES ACT OF 2011 (H.R. 3086)
CURRENT STATUS OF LAW: Many employers may not know about Section 14(e) of the FLSA. Section 14(e) permits the Secretary of Labor to give employers special certificates that permit employers to pay disabled workers at rates below minimum wage.
WHAT WOULD CHANGE: This bill would eliminate the ability of the Secretary of Labor to provide these special certificates and would require existing certificates to be phased out. For private employers, the existing certificates would have to be phased out within one year.
WHY YOU CARE: Companies that employ disabled workers under a special certificate should monitor the status of this bill.
LIKELIHOOD OF BECOMING LAW: This bill has been controversial, even within groups who advocate for the rights of disabled workers. Proponents of the bill argue that the special certificates make it more difficult for disabled workers to gain jobs and compensation equivalent to non-disabled workers and also incentivize employers to take advantage of disabled workers. Others argue that the special certificates should remain because they incentivize employers to hire disabled workers and that without this incentive employers will be less likely to hire disabled workers, especially when the disabled worker is unable to compete with the productivity of a non-disabled worker.