Obama's Approach to Labor, Employment Seen as Aggressive, but 'Pragmatic'

Daily Labor Report
August 4, 2009
Chicago, IL

Employers are facing a “perfect storm” of political and legislative forces that will trigger labor relations and employment compliance obligations for years to come, speakers at an American Bar Association-sponsored panel discussion said Aug. 3.

Speakers noted that President Obama signaled this shift within days of taking office with his endorsement of the Lilly Ledbetter Fair Pay Act. A few days later the president signed several executive orders designed to “level the playing field”for unions and workers in their relationships with employers holding federal contracts.

Looking forward on the employment front, legislation is expected that would enhance workers' rights under Title VII of the 1964 Civil Rights Act. Obama is also expected to push for workplace policies aimed at helping American workers balance work and family issues. On the labor front, employers will likely see some reforms to the National Labor Relations Act that would permit workers to more quickly and efficiently form and join unions.

“We are about to go through one of the biggest shifts in workplace law that we will see in our lifetimes,” said Jeff Nowak, a partner with the firm Franczek Radelet in Chicago. “This really is a perfect storm. We've got a Democratic president. We have clear, solid majorities on the Democratic side in Congress. So the time is right for a lot of change, particularly with respect to workplace law.”

Nowak's comments came during a panel discussion entitled “Labor and Employment Legislation Impacting Federal Construction Under the New Administration.” The discussion was part of the ABA's annual meeting in Chicago.

Nowak tempered his comments about the Obama administration's agenda and tactics by pointing to Obama's career as a lawyer and state legislator, and his pragmatism as a politician. Nowak said Obama was never regarded as a labor firebrand while serving in the Illinois Senate. And while candidate Obama touted his experience as a community organizer in Chicago, Nowak noted that he also worked for two management-oriented law firms during his legal career.

Aggressive Approach Predicted on Work-Family Issues

More importantly, Nowak said Obama has surrounded himself with key advisers from the Chicago area with strong backgrounds in business and government who have demonstrated the ability to choose their battles and resist the demands of the labor movement to achieve their political goals. In this context, Nowak said Obama would ultimately demonstrate a “pragmatic”approach on labor and employment issues. On those two fronts, he predicted Obama would act much more aggressively on work-family issues than labor issues.

“There clearly will be a paradigm shift in the balance between work and family, with the administration offering employees additional rights to permit them to better balance their workplace duties and their personal and family lives,” he said.

Michael Zimmer, a professor of law at Loyola University in Chicago, said Obama's commitment to fairness for workers in employment disputes was demonstrated within days of taking office with his endorsement of the Lilly Ledbetter Fair Pay Act. The law sought to undo the U.S. Supreme Court's 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. Inc., which held that the statute of limitations for presenting an equal-pay claim commences on the date the offending pay scheme was established, rather than the date of the most recent paycheck.

Zimmer called the Ledbetterdecision “irrational,”adding that it ignored the original intent of Congress. Without Obama's signature on the fair pay statute, he said employees would have been left with an incentive to file charges with the Equal Employment Opportunity Commission or a state anti-discrimination agency every time an employment decision was made.

“Congress did not intend to cut off claims before the victim knew of the discrimination and that's really the core of the irrationality in the Ledbetter decision,”Zimmer said. “Whatever Congress had in mind, it wasn't that. The court's decision gives every employee an incentive to challenge every employment decision that is made about them. You don't know if you're a victim because most employers keep salaries confidential.”

Zimmer said the new law attempts to manage this problem by codifying the “paycheck rule.” On this point, he said a plaintiff who suffers discrimination in compensation is viewed as having filed a timely charge if it comes within the 180/300 days of receiving a paycheck that is lower than it would have been but for the discrimination. He noted, however, that back pay under the act is limited to the two years preceding the date on which the charge is filed.

Zimmer said that while the fair pay statute fixes this critical question over the timely filing of pay discrimination claims, Congress did not fix the much broader filing system problems affecting employment discrimination litigation. As a result, he predicted additional litigation on these issues.

“Now we have this statute with different rules for seniority systems and maybe different rules for compensation system claims,” Zimmer said. “So it's even more of a mess now than before the Lilly Ledbetter case. But the Supreme Court got what it deserved for its absurd decision. Now, overturned, it presents the court with its worst nightmare.”

Re-Examination of Wage Systems Urged

With the revisions created under the Fair Pay Act, Nowak said employers need to re-examine their wage systems and check for any disparities that might be viewed as discriminatory by a member of a protected group. In some cases, he said employers may want to make compensation adjustments to eliminate such disparities. He said the adjustments would be much less expensive and embarrassing than the problems associated with litigation.

In addition, Nowak said employers need to do a better job of documenting personnel decisions and ensuring that such decisions are free of any issues that might be seen as discriminatory. This documentary process is essential in an environment in which employers will have to defend their actions for years into the future.

Robert Orelup, a partner with Drewry Simmons Vornehm LLP in Indianapolis, pointed to three executive orders signed by President Obama Jan. 30 and a fourth signed Feb. 6. Orelup said the orders provide new degrees of leverage to organized labor and in many cases reverse Bush administration labor policies with respect to federal contractors. In many cases, rules and regulations pertaining to the executive orders must still be issued by the Federal Acquisition Regulatory Council.

Executive Order 13494 restricts federal contractors from spending taxpayer funds to influence employees with respect to their choice of union representation. The order bars employers from spending such funds when associated with “holding meetings” or “preparing and distributing materials”regarding union organizing.
Executive Order 13496 requires nonexempt federal departments and agencies to include in their contracts provisions that require contractors and subcontractors to post notices informing employees of their rights under federal labor laws including the NLRA. The order notes that industrial harmony is best achieved when workers are apprised of their rights under federal law. On Aug. 3, the Labor Department's Office of Labor-Management Standards released proposed rules governing the executive order.
Executive Order 13495 addresses the continuity of employment for workers under service contracts with the federal government. The order guarantees an opportunity for continuity to workers in the event a particular contract is awarded to another contractor. Under this order, the successor contractor would be obligated to extend a right of first refusal to the predecessor's employees.
Executive Order 13502 encourages the use of “project labor agreements” on all large federal contracts. The order, which repeals a previous Bush order, declares that executive agencies awarding contracts on “large scale construction projects” with a total cost of more than$25 million “may, on a project by project basis, require the use of a project labor agreement.”

As regulations pertaining to each of the executive orders have not been finalized, Orelup encouraged federal contractors to pay attention to notices appearing in the Federal Register.

“Be on the lookout for these regulations because you will be held to comply with them,” Orelup said.

By Michael Bologna