Significant New Obama Regulations, Including Overtime, Are Blocked
Judd H. Lees, Sebris Busto James
After waking up to the news of a Trump victory, a number of clients have asked whether the long list of pending Obama regulatory labor and employment changes, which were assumed to be “safe” under the expected Clinton win, will be rescinded under a Trump administration. In addition to potential administrative changes under the new Trump presidency, there have been a flurry of injunctions entered over the past days and weeks directly impacting implementation and enforcement of Obama administrative changes. Here is the latest rundown.
Of most widespread interest are Labor Department administrative regulations passed under the Obama administration—specifically the overtime rule slated to take effect in just a few days. Under the new rules, the so-called “salary levels” test was doubled, thus throwing millions of formerly exempt employees into the non-exempt pool. Employers were in a quandary as to whether to comply with the new regulations (e.g., raise salaries or make employees hourly) or not comply and hope that the new President would rescind the rule. That quandary was just cleared up when, on November 22, 2016, a federal judge entered a nationwide injunction blocking the new overtime regulations in the case of Nevada vs. DOL. Even if the court ultimately sets aside the injunction, the Trump administration may revise or rescind the regulation through rulemaking or legislation.
Also of interest is the proposed change to the “persuader rule” which would have created reporting requirements for law firms when providing employers labor law advice with potential union organizing implications. Opponents deemed the proposed change to the bright line “advice” rule as an attempt to hamstring attorneys from providing any type of guidance that could result in a reporting requirement regarding clients served and fees paid in the labor and employment arena. On November 16, 2016, a federal judge in Texas entered a permanent injunction halting the DOL’s implementation of the change based on First Amendment and other grounds.
Creating the possibility of even greater long-term change, President Trump will have the opportunity to nominate a new Labor Secretary to replace current Secretary Thomas Perez. Perez has aggressively pursued many enforcement initiatives including joint employer status and loss of independent contractor status in order to increase the pool of employees eligible for overtime as well as the pool of “deep pockets” to pay the resulting amounts owed. The new Labor Secretary may rein in some of these aggressive enforcement efforts and positions by DOL.
In 2016, the five-member EEOC voted 3-2 along party lines to revise the annual employer information report, known as the EEO-1 form, to require employers with 100 or more employees, to provide compensation data categorized by race, gender, and ethnicity. The proposed revisions, which are slated to take effect on March 31, 2018, were vigorously opposed by employers and business groups. The first opportunity for President Trump to effect the makeup of the EEOC, which, in turn, could potentially rescind the revised rule before it takes effect, would be in 2017 when the President will be able to designate a new EEOC chair and thus change the agency’s makeup to a 3-2 Republican majority.
The new President will also have the opportunity to nominate a new EEOC General Counsel, as the current General Counsel is departing in December of this year. The agency, as it has in the past with political sea changes, could reverse course and rein in the aggressive theories and enforcement policies that marked the Obama administration.
Another federal agency that may come under fire is the Occupational Safety and Health Administration or “OSHA.” Under President Obama, unpopular OSHA requirements involving silica emission rules and incentive programs were implemented. OSHA has also questioned uniform testing by employers for all employees involved in workplace accidents. The stridency of OSHA may be tempered by a Trump administration responsive to employer complaints about over-regulation.
Based on the fact that businessman Trump once found his business ensnared in unfair labor practice charges before the National Labor Relations Board, one can assume that he is not a fan of the NLRB. The Board consists of five members and the fifth and deciding member has typically been of the affiliation of the President appointing him or her. Thus, Board decisions tend to reflect the political beliefs of the person in office. The current Obama Board only has three members, consisting of Chair Mark Pearce, a Democrat whose term expires in August of 2018, Member Philip Miscimarra, a Republican whose term expires in December of 2017, and Member Lauren McFerran, a Democrat whose term expires in December of 2019. The term of a fourth Member, Democrat Kent Hirozawa, expired in August of 2016 and the Republican-controlled Senate has not acted on his renomination.
Some pundits have posited that when Member Miscimarra’s term is over in 2017, the new President could simply fail to nominate a replacement. This would lead to a two-member Board, which, under the U.S. Supreme Court’s recent decision in Noel Canning, would lack a quorum to lawfully take final action on unfair labor practice proceedings and union elections. While this would not preclude action on the part of the various regional offices of the NLRB it would prevent the appointment of Regional Directors and Regional Attorneys in the event of vacancies as well as final decisions by the NLRB itself.
Perhaps of most significance in changing the NLRB’s direction, controversial General Counsel Richard Griffin, a Democrat who oversees the issuance of unfair labor practice complaints when those matters come to Washington DC, will see his term run out on November 4, 2017. It is unlikely that the new President will replace Griffin with another former union attorney. A new General Counsel could have a significant impact on the NLRB’s prior willingness to expand its scope and reach into issues such as “quickie elections”, joint employer definitions, class action waivers, and social media policies and other employer handbook rules. All could be subject to change under a Trump Board.
The Office of Federal Contract Compliance Programs, part of the Department of Labor, will also be affected by a Trump Presidency. Federal contracts often come with many strings, including affirmative action and nondiscrimination obligations pursuant to directives from the OFCCP. Federal contractors could face some easing in the number of regulations and the vigor with which noncompliance is pursued under the Trump administration, especially in the area of pay equity—a major
focus of the OFCCP under its current Director who stepped down on November 6. The OFCCP’s mandate that federal contractors provide paid sick/safe leave to all employees on federal contracts could face retooling and two other Obama executive orders outlawing pay secrecy policies and providing protections to lesbian, gay, bisexual and transgender individuals in the workplace could also be in jeopardy. The Fair Pay and Safe Workplaces or “Blacklisting” rule as it is known, was the subject of a successful preliminary injunction entered on October 24, 2016, and could also potentially be rescinded during the Trump administration. Under this controversial executive order, employers seeking federal contracts were required to report whether they had violated any labor and employment laws within the last three years.
As these developments demonstrate, between the courts and the new Trump administration, many of the Obama regulatory changes have either been halted in their tracks or will face major changes in 2017.
This Employment Law Note is written to inform our clients and friends of developments in labor and employment relations law. It is not intended nor should it be used as a substitute for specific legal advice or opinions since legal counsel may be given only in response to inquiries regarding particular factual situations. For more information on this subject, please call Sebris Busto James at (425) 454-4233.
Judd H. Lees is a member of AGC's Legal Affairs Committee