'Change Will Happen' - The Future of Workplace Law under President-Elect Barack Obama

December 11, 2008

As President-elect Barack Obama selects members of his Cabinet and prepares for his transition into the Presidency, he and a sweeping Democratic majority in both the House and the Senate will be pursuing a number of significant pieces of federal workplace legislation.  Many of these employment law measures successfully passed the House of Representatives in 2007 and again in 2008, only to be blocked in the Senate.  Moreover, appointments by President-elect Obama to the Supreme Court, the federal judicial bench, and administrative agencies such as the Equal Employment Opportunity Commission are likely to impact dramatically the cost of resolution of employment disputes. 

Civil Rights Act of 2008

In late January 2008, Senator Edward Kennedy, along with Senator Hillary Clinton and then-Senator Obama, introduced a bill entitled the Civil Rights Act of 2008 (H.R. 5129/S. 2554).

Basic Provisions

In its present form, the Civil Rights Act of 2008 would:

• Amend the Equal Pay Act to stiffen penalties for violations (adding compensatory and punitive damages as potential damages) and to make it more difficult for employers to use the “bona fide factor other than sex” defense by limiting the defense to instances where the employer can show that the differential treatment truly is caused by a factor other than sex and is related to job performance, such as differences in education, training, or experience;

• Add compensatory and punitive damages to the Fair Labor Standards Act so that an employee can recover those damages in addition to back pay (which is doubled by liquidated damages if an underpayment is not in “good faith”);  

• Amend the Federal Arbitration Act to prohibit mandatory pre-dispute arbitration of federal constitutional or statutory claims unless an employee knowingly and voluntarily consents to this clause after a dispute has arisen or the arbitration provision is part of a collective bargaining agreement;

• Make it easier for employees who prevail in part to recover expenses (like expert witness fees);

• Amends the Immigration and Nationality Act to prohibit denying back pay or other monetary relief for unlawful employment practices against undocumented immigrant workers.   Applies specified provisions of this act to violations pending as of the enactment or occurring prior to enactment; 

• Provide individuals (as opposed to solely the federal government) standing under Title VI (which prohibits discrimination on the basis of race, color, and national origin in programs and activities receiving federal financial assistance) and Title IX (which prohibits discrimination on the basis of sex in educational programs and activities that receive federal financial assistance) of the Civil Rights Act, the Rehabilitation Act of 1973, and the Americans with Disabilities Act to challenge the policies of recipients of federal funding that have discriminatory impact on race, color, national origin, disability, age or gender;

• Require disparate impact claims under the Age Discrimination in Employment Act to be analyzed under the same standard as Title VII claims, by making the standard of proof in cases alleging an unjustified discriminatory effect based on age the same as in cases alleging an unjustified discriminatory effect based on race, gender, national origin or religion (unlike Title VII, where employers must show a policy or practice that has a disparate impact on protected groups is a necessity, the present ADEA standard is that the employment practice be reasonable); and

• Condition states’ receipts of federal funds on their waiver of sovereign immunity against individual claims for monetary damages under the ADEA, the FLSA, and the Uniformed Services Employment and Reemployment Rights Act. This would reverse U.S. Supreme Court decisions that have barred these lawsuits against state governments.

Eliminating Caps on Damages

The most immediate change will be elimination of the caps that Congress imposed upon punitive and compensatory awards under Title VII of the Civil Rights Act of 1964 (Title VII) and the Americans with Disabilities Act.  Senator Edward Kennedy previously introduced legislation on August 1, 2007, to eliminate caps on the amount of damages recoverable under the Civil Rights Act of 1991, declaring an end to “the glaring inequality in the current federal antidiscrimination laws.”  CRA 1991 permits plaintiffs suing under Title VII and the ADA to recover compensatory and punitive damages for intentional employment discrimination, but imposes a four-tier program of limited caps based upon the size of the employer.  In contrast, plaintiffs suing under 42 U.S.C. §1981, which principally covers discrimination on the basis of race or color, can recover unlimited damages.  According to Senator Kennedy, “capped” damages do not serve as a significant deterrent because employers are aware that liability is limited.  This argument ignores the disproportionate burden of such awards on small and midsize businesses. 

The Equal Remedies Act would make recoveries higher, litigation costlier and jury trials more risky.  President-elect Obama co-sponsored the Equal Remedies Act of 2007 and is on record as stating that caps on compensatory and punitive damages under Title VII “presently impede the ability of victims of racial and gender discrimination to fully recover for the wrongs they have suffered.”  He has promised to sign the Act into law.   

Lilly Ledbetter Fair Pay Act

The Lilly Ledbetter Fair Pay Act (H.R. 2831/S. 1843) would overturn the Supreme Court’s 5-4 decision in Ledbetter v. Goodyear Tire & Rubber Co., which held that the deadline for filing pay discrimination claims with the Equal Employment Opportunity Commission is measured from the date of the first allegedly discriminatory pay decision, unless there was intentional conduct.  The proposed law would toll that filing deadline each time an employer issues the plaintiff a paycheck that was the product of a past discriminatory pay decision.  After passing the House, the Ledbetter bill died in the Senate in 2008.  President-elect Obama co-sponsored this bill and discussed his support for the bill during the Presidential debates.

Employment Non-Discrimination Act

Employers also can expect continued interest in federal legislation banning sexual orientation discrimination.  The Employment Non-Discrimination Act (H.R. 3685) (“ENDA”) would amend Title VII to prohibit sexual orientation discrimination.  ENDA passed the House, but failed in the Senate.  President-elect Obama has made clear his support for the bill on his website.  If passed, ENDA would join such laws in twenty states, the District of Columbia and approximately 140 cities and counties.    

Working Families Flexibility Act

The “Working Families Flexibility Act” (S. 2419/H.R. 4301), if enacted, would provide employees with an annual right to apply to his or her employer for a modification of the employee’s work hours, schedule, or work location.  An employer then would be required to meet promptly with the employee to discuss the requested modification and, within fourteen days of the meeting, provide a written decision regarding the requested modification.  If the modification is denied, the employer would be required to state the grounds for the denial and propose an alternative modification.

If the employee is dissatisfied with the employer’s decision, the WFFA allows the employee to require reconsideration and a further meeting to discuss the request.  The WFFA also gives employees the right to a representative of his or her choosing at both the initial meeting and the reconsideration meeting.  The Act would make it unlawful for an employer to interfere with an employee’s attempt to exercise his or her rights under the Act or to retaliate against any individual for, among other things, requesting a modification or assisting another in requesting a modification.   

The Act would have a dramatic impact on the workplace by doing away with significant management authority over working conditions.  Most employers see the WFFA’s requirements as placing added strain on human resources departments.  Additionally, employers will be burdened by the administrative and legal remedies available to dissatisfied employees.  President-elect Obama co-sponsored the bill and repeatedly discussed his support for expanding flexible work arrangements throughout his campaign. 

FMLA Changes

Obama has expressed his support for legislation that would expand the Family and Medical Leave Act to cover businesses with 25 or more employees (currently, the FMLA covers employers with 50 or more employees).  He also supports expanding the FMLA to require employers to provide at least seven days of mandatory sick leave a year (currently only San Francisco, Washington D.C. and Milwaukee, Wisconsin mandate sick days).    

Employee Free Choice Act

Of the current bills pending in Congress, the Employee Free Choice Act (S. 1041/H.R. 800), which Mr. Obama also supports, is the most contentious.  Among other things, EFCA would amend the National Labor Relations Act to eliminate secret ballot elections for selection of union representation.  In place of NLRB-supervised elections, EFCA would substitute a “card-check”, to determine whether a majority of employees in the collective bargaining unit have signed cards selecting the union as their collective bargaining agent.  Currently, unions prevail in over 75 percent of card check counts.

In many instances, unions also prevail at an NLRB election, but cannot negotiate a first collective bargaining agreement.  The Act would make it significantly easier for unions to obtain initial labor contracts by requiring binding arbitration of first contracts if an agreement is not reached within 120 days of certification of a union.  The House passed EFCA on March 1, 2007, with 241 votes, well short of the number required to overcome a veto.  President-elect Obama co-sponsored the bill before the Senate on March 29, 2007.  This bill fell short of the 60 votes to bring it up for a full Senate vote.  He has promised to sign EFCA if it is passed in the new Congress.

Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers (RESPECT) Act

The RESPECT Act would limit the definition of a “supervisor” under the NLRA and, thus, include many present supervisors in collective bargaining units.  Currently, Section 2 (11) of the National Labor Relations Act defines a “supervisor” to include all employees with the authority to “hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or to responsibly direct them, or to adjust their grievances, or effectively to recommend such action” so long as this authority requires the use of “independent judgment.”  By law, supervisors are aligned with the management of the company they help run (they are considered agents of the employer), and unions have no right to organize them or bargain on their behalf.  The National Labor Relations Board’s 2006 decision in Oakwood Healthcare, Inc., 348 NLRB No. 37, said that supervisors include employees who assign other employees to overall duties, are held accountable for directing subordinates to undertake specific tasks, and have the discretion to do so without close direction from management. 

By eliminating the ability to “assign” and “responsibly direct” work from the NLRA’s statutory definition of supervisors, and by requiring that a majority of the individual’s working time be spent on the remaining duties contained in Section 2(11), RESPECT would remove front-line, working supervisors from the Act's supervisory exclusion (H.R. 1644).  They would be subject to unionization and could be included in the same bargaining units with the employees they supervise.  This is especially problematic for employers who frequently use first line supervisors as management’s voice in union organizing campaigns.  President-elect Obama co-sponsored the bill when it was introduced on March 22, 2007.

Supreme Court and Federal Bench Appointments

President-elect Obama certainly will play a role in shaping the future of the United States Supreme Court.  A number of justices are likely to retire during Mr. Obama’s Presidency.  For example, Justice John Paul Stevens is 88, and Justice Ruth Bader Ginsberg is 75.  Given President-elect Obama’s pro-labor, pro-employee stance, he likely will propose new Justices who share his views on statutory interpretation.  Depending upon the timing of retirements and confirmations, change may come in the near-term.

President-elect Obama also will be responsible for appointing judges to preside over federal trial courts across the country.  Appointments will be most striking on the Richmond-based U.S. Court of Appeals for the Fourth Circuit, long a conservative bastion, where four vacancies will lead to a clear Democratic majority.  Democrats are expected to soon gain a narrower plurality on the New York-Connecticut-Vermont-based Second Circuit, vital for business and terrorism cases, a more even split on the influential D.C. appeals court and control of the Third Circuit, which covers Pennsylvania and New Jersey.  As more Obama Administration nominees are confirmed, we are likely to see more expansive interpretations of federal employment laws, greater deference to plaintiffs and fewer employer-friendly summary judgment rulings. 

EEOC Changes

During the presidential campaign, President-elect Obama criticized the Bush administration for cutting the EEOC’s budget, resulting in charge backlogs.  To remedy this, he promised that once in office he would increase staffing.  President-elect Obama also announced his intent to appoint a Chair and to nominate Commissioners who are committed to enforcing anti-discrimination laws aggressively.  The EEOC currently is operating with only four Commissioners, so Obama will have the opportunity immediately to nominate a fifth.  By law, the Commission can be made up of no more than three members of a single party.  Presently, there are two Republicans and two Democrats.  Commissioner Christine Griffin’s term expires in 2009; Commissioner Naomi Earp’s term expires in 2010; Commissioner Constance Baker’s term expires in 2011; and Commissioner Stuart Ishimaru’s term expires in 2012. 

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Although it is impossible to predict when and in what form the proposed legislation will pass Congress—especially in light of the overarching financial crisis—the future resolution of employment disputes undoubtedly will become more difficult and costly for employers.  Those appointed to enforce and interpret federal employment laws almost certainly will share President-elect Obama’s views.