With the election of Donald J. Trump as the 45th president of the United States, the business community can almost certainly look forward to a new era. Although many of Trump’s policies on labor and employment-related laws and regulations have yet to be fully developed, there are many Obama-era initiatives that could undergo significant changes under the new administration.
In fact, one of President Trump’s first moves was to sign an executive order requiring that two regulations be eliminated for every new one created, as well as capping the cost of new regulations. This is expected to significantly cut down on the number of regulations enforced by administrative agencies.
Furthermore, in some instances, the courts may become involved—and several judges have already weighed in with injunctions against some recent Obama regulations. But some changes may take longer to take effect, as Congress looks at a bevy of issues, cases work their way through the court system and Trump considers his top priorities in office.
Regulations that May Be Rolled Back
Over the course of the last 8 years, the Obama administration has made a series of changes that have led to more economic and regulatory burdens for businesses, while often strengthening unions. Many of those changes could be undone, rolled back or revised. Those might include the following three regulations:
- White-Collar Salary Exemption—In November 2016, a federal judge blocked a United States Department of Labor rule that would have taken effect in December 2016, and extended mandatory overtime pay to more than 4 million salaried workers. U.S. District Judge Amos Mazzant of the Eastern District of Texas agreed with 21 states and an assortment of business groups that the rule was unlawful. Many organizations had already changed employee salaries and job classifications to comply with the new rule. On a practical level, it could be difficult for employers who proactively instituted changes to cut salaries or rearrange work schedules for employees. However, if competitors did not adjust salary levels, some employers may find it necessary to roll back any salary changes. The Labor Department has appealed the ruling to the Fifth Circuit Court of Appeals.
- The Persuader Rule—Also in November 2016, another federal judge in Texas issued a permanent, nationwide injunction blocking the so-called “persuader rule.” The rule, which the Labor Department put forward as part of the Labor Management Reporting and Disclosure Act of 1959, would have required “indirect service providers,” such as consultants and law firms, to publicly disclose any work they do for employers that relates to union organizing activities. The permanent injunction by U.S. District Judge Sam Cummings of the Northern District of Texas followed a preliminary injunction that he issued in June 2016. The injunction has already been appealed to the Fifth Circuit.
- Changes by the National Labor Relations Board—Over the last 8 years, the National Labor Relations Board (NLRB) has made many significant rulings that often have been pro-union. Among the rulings that could be targeted for change are:
- “Quickie” election rules—The NLRB’s so-called “quickie” union election rules, which took effect in April 2015, accelerated the time between the filing of a petition to unionize and a union election. Despite concerns that the new election rules would lead to more union wins, it appears those concerns have not yet been realized, which may mean that the rule will not be among the administration’s top priorities.
- Purple Communications Decision— In 2014, the NLRB ruled that employers could open their corporate email to union organizing by employees, except in limited situations. The decision involving Purple Communications overturned a 2007 NLRB decision that found that corporate email systems are the employer’s property, so employers could ban all nonbusiness email communications. There is some confusion over the ruling, so it could be one that the NLRB targets for reconsideration soon.
- Specialty Healthcare Decision—In August 2011, the NLRB adopted a new standard for determining appropriate union bargaining units that found that the NLRB would presume a union bargaining unit was appropriate. If an employer sought to argue that a unit should include more employees, the employer needed to show that employees in a larger unit share an “overwhelming” community of interest with those in the petitioned-for unit. This is likely to be rolled back.
- Joint employer rulings—Some of the most far-reaching actions by the NLRB recently have been around joint-employer standards. In August 2015, in a ruling involving Browning-Ferris Industries, the NLRB found that in a relationship between two companies, an “indirect relationship” was enough to make both companies joint employers. The relationship between joint employers extends to temporary employees and franchisors and franchisees. The current, Republican-controlled Congress could take action to pass legislation that revises the definition of a joint employer.
- Arbitration agreements—Under Obama, the NLRB has aggressively challenged agreements between companies and workers that require employment-related disputes to be settled in arbitration. Appeals courts have been split over the NLRB’s decisions regarding mandatory arbitration agreements, with three Circuit Courts finding such agreements enforceable and two Circuit Courts agreeing with the NLRB, so the issue could possibly end up being resolved by the U.S. Supreme Court.
- Federal contractor rules—Another Obama order, Fair Pay and Safe Workplaces, has also been partially enjoined by a preliminary injunction, issued by U.S. District Court Judge Marcia A. Crone, from the Eastern District of Texas, before it was scheduled to take effect. The rule would require companies working on federal contracts to disclose information about labor violations when participating in the bidding and selection process. Recently, the House of Representatives started the process to overturn this rule through the Congressional Review Act, which allows a majority in both houses of Congress to overturn agency rules passed in the last 60 legislative working days. The Republican-controlled Congress intends to use this act to overturn many of President Obama’s regulations.
While there will be many changes in the regulatory, legislative and enforcement environment under President Trump, employers need to be aware that changes may not happen immediately. It is likely that regulators will continue enforcement for the foreseeable future. However, over the next several years, many of the Obama-era administrative regulations may be subject to repeal and reversal.
Employers must be vigilant about the potential for enforcement actions and work carefully with legal and human resources experts until it becomes clear how regulations will be revised.
