By Gerald T. Hathaway
We continue to analyze and assess what the 2016 election results mean in the Labor & Employment Law space, and what we can expect from a GOP White House, House and Senate. The last two times that this GOP alignment was present were 1929 and 2007 (let’s hope that the financial events that followed those two occasions – the Great Depression and the Great Recession – do not repeat themselves this time around).
It is difficult to predict what President Donald J. Trump’s actual agenda will be, because his campaign was long on broad concepts and very short on serious, detailed policy presentation. While Candidate Trump said many things, including contradictory things, about many topics, some themes can be discerned from pre-election and post-election comments. Also, some issues have been on the GOP wish list for some time, but until they could have the alignment of White House and Congress that will be in place in January, those wish list items, as a practical matter, were just wishes. Here are our impressions about what changes will occur.
- Affordable Care Act (Obamacare)
There will be a change, but it is not clear as to what the extent of the change will be, nor is the timing. Candidate Trump promised repealing and replacing the entire law. But President Elect Trump has indicated that he wants to maintain coverage for dependents up to age 26, and to continue the mandate that previously existing conditions be covered. If the statements of President Elect Trump are the desired results, the altering of the ACA then becomes quite complicated, because fundamental rules of underwriting will have to be respected (because the mandate for coverage was put into place to offset the costs of insuring pre-existing conditions, by having many healthy people in the pool of the insured). This may be the subject of negotiation, but it will be within the GOP, to the exclusion of the Democratic Party (who may want nothing to do with any amendment, anyway).
There likely will be a push to allow insurance companies regulated in one state to offer insurance to residents of a different state, without being subject to regulation by the other state whose residents are being insured. Under that scheme, states desiring tax revenues from hosting insurance companies will lower their regulatory schemes, and the least regulated companies will be offering the insurance. (The Democratic Party may try and filibuster this particular issue).
- Public Works: Possible Repeal or Major Modification of the Davis-Bacon Act
In his victory speech, President-Elect Trump made the following statement, which is similar to statements he made during the campaign:
We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.
We think that this initiative would invigorate the U.S. economy, particularly if there is a mandate for the use of materials made in the USA. This initiative, however, may be opposed by the party he joined to run his Presidential campaign. We think that if they conclude that they must go along with this initiative, the GOP will realize that they may be in a place to do what was not so long ago unthinkable, and that is the repeal of the Davis-Bacon Act (or a substantial modification of it). The Davis-Bacon Act requires “prevailing wages” to be paid for federal construction projects – which as a practical matter means union wages, which almost always results in the public projects being built by union contractors. Prevailing wages are typically in the range of $50-$60 per hour, for wages and benefits. If that requirement is removed, and non-union market wages are paid, the cost of constructing the new projects would be drastically reduced. We think it likely that the GOP will make that trade, and the obvious benefit of spending so much money on local economies may well deter a Senate filibuster. Given the drastic drop in union membership over the last few decades, it seems unlikely that the AFL-CIO has the muscle anymore to stop this.
Every year, the EEOC requires employers having 100 or more employees (50 if a government contractor) to file an EEO-1 form, which is a numerical census of the work force broken down by types of jobs, and the sex and race characteristics of those who hold them. Over the last year or so, the EEOC has been preparing a much more detailed form, which would require employers not only to give information about types of jobs, but salary bands of workers, broken down by sex and race. Management interests have widely criticized the new form, both because of the magnitude of the task of collecting the data, and the low value of the data collected. If the White House exercises its influence over the EEOC, which we expect it will, President-Elect Trump will likely direct that this new form be killed.
- Increase in Race, Sex and Religious Discrimination Cases
Many were surprised by the rhetoric of the campaign, which included incendiary racial commentary that would be actionable if the commentary were tethered to workplace speech. Indeed the Trump campaign was openly supported by the KKK and other racial hate groups. Since the election results were announced, both the FBI and the Southern Poverty Law Center have announced that hate crimes are being committed at new levels of frequency, and there is fairly widespread open and notorious anti-racial speech. In this environment, one can expect open racial, sexual and religious hostility to reveal itself in the workplace, which will result in an increase of claims in response to that hostility, which may well include pattern and practice claims, and the return of race class actions. Harassment training is the best answer for this problem, but the trainers had better be prepared for open push-back against notions of diversity.
- Arbitration of Employment Claims and Class Action Waivers
There has been over the last three decades much back and forth as to what kind of employment claims can be forced into private arbitration, and whether there can be waivers of class action claims. The Congress can address this without fear of veto, and as a consequence there may be a legislative initiative to strengthen the Federal Arbitration Act with respect to employment and wage & hour claims, as well as some legislation permitting class action waivers.
- Federal Regulations Review
Congress has had the power for twenty years to engage in filibuster-proof review of recently implemented federal regulations. Under the technical provisions of the Congressional Review Act (“CRA”) (enacted as part of Newt Gindrich’s “Contract with America” that followed the mid-term elections that occurred during President Bill Clinton’s first term), any regulation published as “final” after May 30, 2016 can be subject to review. This date is estimated to be the cut-off date based on Congressional schedules currently in effect, and the actual cut-off date is subject to change. An explanation of that the complicated process for determining the cut-off date for CRA review is here.
Rarely used in the past, because the President would likely veto any attempt to set aside a regulation put into effect by that President’s administration, the CRA likely will be used to set aside the August “blacklisting” rule applicable to government contractors, which requires federal contractors and bidders to disclose their labor violations to the government, as well as the sick-leave mandates applicable to federal contractors.
On the other hand, and apart from action on the part of federal courts, the new DOL Regulations elevating the salary levels for exempt, white-collar employees will remain in effect. Since they were published as final on May 23, 2016, it currently appears that they will not be subject to the Congressional Review Act when the next Session of Congress takes place. There is some wide-spread litigation seeking to block those regulations, and an update on that litigation is here. As of November 23, 2016, a federal court injunction is in place blocking the implementation of the rule.
- No Anti-Bullying Legislation
Despite the incoming First Lady’s recently announced campaign against cyber bullying, we are of the view that contemplated federal anti-bullying legislation will not happen. This website likely will disappear: https://www.stopbullying.gov/laws/. Many states will fill in the gap, likely led by California.
Employers must obtain I-9 forms from new employees to ensure that they are eligible to work in the United States. A streamlined way to verify the information given on an I-9 is E-Verify, the use of which is required for certain federal contractors. It may well be that the requirements to use E-Verify will be expanded to include almost all employers.
In 2018, 33 senators will be up for re-election, but only eight of them are Republicans, and seven of those eight are in states that have long histories of voting the Republican slate. The other 25 senators are Democrats, or caucus with Democrats. Many of those are from states that have been traditionally “blue,” but went “red” in 2016, among them:
So it is possible that in 2019, the Republican President will have a filibuster-proof Senate. If that happens, deregulation and repeal of a lot of labor & employment legislation will occur. It is too early to tell which laws will be targeted.
In the meantime, states that have been deeply and historically blue will be passing laws to give protections that the federal government rolls back. While federal laws are generally pre-emptive, in the labor & employment space most laws are exempt from pre-emption, allowing states to provide greater benefits than the protections that are available under federal law. The laws that are pre-empted relate to unionization and union affairs, and to ERISA pension & welfare benefits.
If there is indeed a filibuster-proof GOP Senate, and there is a roll-back of labor & employment laws, we can expect employees to return to unionization, seeking protections from unions in the absence of protective federal laws.
We will update this list as our review of issues continues.