By Sean R. Gallagher and Mary Kapsak
President Trump has been presented with a number of regulatory issues that could change the labor and employment landscape. Congressional and administrative action is not required to effect all such changes in the way that the federal government regulates private employers. Rather, the new administration can make significant and lasting changes in employment enforcement at certain federal agencies, including the Equal Employment Opportunity Commission (EEOC), the Department of Labor (DOL), the Occupational Safety and Health Administration (OSHA), and the National Labor Relations Board (NLRB) without congressional action. In this article, we will examine ways in which the new administration might quickly and dramatically pivot the landscape of labor and employment laws by simply changing enforcement and litigation priorities.
U.S. Department of Labor (DOL)
Many observers expect major change at the DOL. Under new leadership, the DOL could alter course for key priorities of the prior Obama administration: the Fair Labor Standards Act (FLSA) overtime rules, the “persuader rule” and the fiduciary duties for retirement advisors.
FLSA Overtime Rule
On May 18, 2016, the DOL published a new final rule updating the nation’s overtime regulations, which would automatically extend overtime pay protection to more than 4 million workers if fully implemented. In November 2016, a federal judge in Texas issued a nationwide injunction halting enforcement of the rule. The new administration could effectively terminate the litigation underway and end the overtime rule by withdrawing the government’s appeal, thereby leaving the lower court’s decision intact.
Mr. Puzder has expressed his dislike of the new rule and “has argued that the Obama administration’s recent rule expanding eligibility for overtime pay diminishes opportunities for workers” (nytimes.com/2016/12/08/us/politics/andrew-puzder-labor-secretary-trump.html?_r=0). The U.S. Court of Appeals for the Fifth Circuit granted an expedited appeal on the issue. The DOL, under new leadership, could reverse its position and withdraw the appeal before the court hears the oral argument. If so, the injunction would stand, and the new overtime rule would not take effect.
Similarly, the DOL currently faces an injunction barring the “persuader rule” from taking effect. The persuader rule “requires that employers and the consultants they hire file reports not only for direct persuader activities — consultants talking to workers — but also for indirect persuader activities — consultants scripting what managers and supervisors say to workers.” The U.S. District Court for the Northern District of Texas issued a preliminary injunction on June 27, 2016 and a nationwide permanent injunction against the rule on November 16, 2016. The DOL can appeal the permanent injunction to the Fifth Circuit, but even if it does, the new administration will have time to withdraw the appeal before it reaches a decision by the appellate court.
The new administration could also change course for the DOL’s new fiduciary rule, which requires financial advisors to act in the best interest of their clients with respect to retirement accounts. The DOL issued the final rule on April 6, 2016, to be applicable on April 10, 2017. Although at the time of this writing the new Secretary of Labor has not yet voiced an opinion concerning the fiduciary rule, his general remarks about less government regulation make some experts believe the new administration “will kill or significantly weaken the fiduciary rule.” Edward Mills, an analyst at FBR & Co., “predicts the new administration will first delay the implementation of the rule through an administrative action and then repeal or overhaul it” (nytimes.com/2016/12/08/us/politics/andrew-puzder-labor-secretary-trump.html?_r=0). Since the DOL has already issued a final rule, the new administration would have to go through the onerous public notice and comment process prior to making any changes. Although the fiduciary rule was not directly addressed during the campaign, an advisor to Mr. Trump suggested that the president could seek to reverse it. Republicans in Congress have expressed their desire to do so as well.
Occupational Safety and Health Administration (OSHA)
The new administration could appoint new OSHA leadership with officials who are less enforcement-minded. In addition, these new appointments could advocate for the adoption of less stringent regulations and could direct their focus to compliance assistance as opposed to enforcement and litigation. The Obama administration’s Severe Violator Enforcement Program (SVEP), launched in 2010, currently concentrates “OSHA’s resources on inspecting employers who have demonstrated indifference to their OSH Act obligations by committing willful, repeated, or failure-to-abate violations” (osha.gov/pls/oshaweb/owadisp.show_document?p_table=DIRECTIVES&p_id=4503). Pursuant to the SVEP, enforcement actions for severe violator cases include, among other things, mandatory follow-up inspections, corporate-wide agreements (where appropriate) and enhanced settlement provisions (osha.gov/dep/enforcement/svep_white_paper.pdf). Given President Trump’s repeated campaign promises to decrease regulation and create a “business-friendly” atmosphere, OSHA may not prioritize follow-up inspections and could impose lower fines or less severe penalties upon employers that violate the Act.
Equal Employment Opportunity Commission (EEOC)
Similarly, the new administration could alter the EEOC’s current employment priorities regarding systemic discrimination, binding arbitration agreements and LGBT rights.
Systemic Discrimination Enforcement
Currently, one of the EEOC’s major priorities is to investigate and file systemic discrimination cases as a means of enhancing recoveries to larger groups (eeoc.gov/eeoc/systemic/review/). Systemic investigations increased by 250 percent from 2011 to 2015, and the EEOC has successfully prosecuted 94 percent of its systemic lawsuits over the past ten years (eeoc.gov/eeoc/systemic/review/). In addition, the EEOC tripled the amount of monetary relief recovered for victims of systemic discrimination between 2011 and 2015 when compared to the relief recovered from 2005 through 2010 (eeoc.gov/eeoc/systemic/review/). However, President Trump suggested that he will also appoint individuals to the EEOC who are less concerned with investigation and enforcement and who are more focused on compliance assistance.
Binding Arbitration Agreements
The EEOC currently takes the position that forcing an employee to agree to arbitrate any discrimination claims against their employer is unlawful (See, e.g., Equal Employment Opportunity Comm’n v. Doherty Enterprises, Inc., 126 F. Supp. 3d 1305 (S.D. Fla. 2015)). The commission’s position stems from a policy statement issued in 1997: “agreements that mandate binding arbitration of discrimination claims as a condition of employment are contrary to the fundamental principles evinced in [the employment discrimination] laws” (eeoc.gov/policy/docs/mandarb.html). In a bid to appear more “employer friendly,” the new administration may de-emphasize the EEOC’s focus on binding arbitration agreements, which would allow employers more freedom to determine the best way to resolve disputes with their employees.
The EEOC’s Strategic Enforcement Plan makes clear that applying the protections of Title VII to lesbian, gay, bisexual and transgender individuals is a “top Commission enforcement priority.” Over the past eight years, the EEOC’s attorneys have repeatedly litigated cases in support of this position, and have had success at the ALJ level (eeoc.gov//eeoc/litigation/selected/lgbt_facts.cfm?renderforprint=1). For example, in Macy v. Holder, the EEOC ruled that transgender bias is a form of gender discrimination prohibited by Title VII. In addition, in Baldwin v. Foxx, the EEOC “issued an administrative opinion that held for the first time that Title VII extends to claims of employment discrimination based on sexual orientation” (law360.com/articles/742937/5-eeoc-enforcement-trends-to-watch-in-2016). Moreover, the EEOC filed its first-ever federal court Title VII suits over transgender rights in 2015, asserting that Title VII’s prohibition on sex discrimination includes discrimination based on gender stereotyping (See, e.g., EEOC v. R.G. & G.R. Harris Funeral Homes Inc.). While the new administration has not made its enforcement priorities entirely clear, it is possible that the EEOC could be directed to temper its focus on LGBTQ protections in the workplace, particularly because at least one circuit court is currently considering whether Title VII’s protections apply to LGBTQ individuals.
National Labor Relations Board (NLRB)
The NLRB has been criticized by some for being pro-union under the Obama administration, and the General Counsel of the NLRB is a key player in the agency, bringing cases to the board for consideration and guiding litigation practices (nlrb.gov/who-we-are/general-counsel). Richard F. Griffin, Jr. (D) currently serves as the General Counsel of the NLRB, but President Trump will be able to appoint a new NLRB General Counsel in November 2017. By appointing a new General Counsel, the new administration may be able to alter litigation practices and change the national landscape for labor relations. For example, on October 3, 2016, the Office of the General Counsel asked the NLRB to clarify and broaden the protection afforded to employees who engage in strikes (apps.nlrb.gov/link/document.aspx/09031d4582231e89). While he promised to protect jobs and workers during the election, a pro-business administration might be reluctant to pursue broad protections for unions.
In addition, President Trump might be able to appoint pro-business individuals to NLRB Board positions during his term, thereby potentially changing its composition to a more conservative tenor. The NLRB is considered an independent agency, with a traditionally bipartisan five-member board. President Trump will select individuals to fill two vacancies right away, as well as a third spot in December 2017, when the term of Republican Philip Miscimarra ends. The terms of the two current Democratic members expire in 2018 and 2019.
Sean Gallagher is a shareholder and member of Polsinelli’s Labor and Employment practice, where he assists employers in implementing proactive employment policies that help minimize the risk of litigation. He can be reached at email@example.com.
Mary Kapsak is an associate and member of Polsinelli’s Labor and Employment Practice, where she provides counsel and, when needed, aggressive defense in a broad range of legal services. She can be reached at firstname.lastname@example.org. This post originally appeared in The Docket.