Secretary of Labor Perez Addresses 2013 AFL-CIO Quadrennial Convention And Lays Out Progressive Agenda

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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AFL-CIO RESOLUTION ATTACKS OBAMACARE

On September 10, 2013, U.S. Secretary of Labor Thomas E. Perez, to a standing ovation from assembled labor leaders, addressed the AFL-CIO’s 27th quadrennial constitutional convention in Los Angeles, CA, claiming to feel quite “at home” with his “brothers and sisters” at the convention.

Although short on details, Secretary Perez left no doubt that the U.S. Department of Labor (DOL) will pursue an aggressive, pro-union agenda of labor and employment law reforms.

Another highlight of the convention was the closely-watched battle to pass a resolution calling for reform of the Affordable Care Act (ACA)—a law that organized labor initially strongly backed, but to which it has recently called on the Obama administration to significantly change. Despite heavy lobbying from the administration, including from Secretary Perez, against the resolution, the AFL-CIO resoundingly passed a resolution demanding that the ACA be “fixed” by the administration or Congress to create a special carve-out for union multi-employer health care plans (Taft-Hartley plans) and to prevent business from reducing hours worked so as not to trigger coverage. (See the discussion below in the section, “Resolution On The Affordable Care Act” for more details.)

The convention also called for significant steps to revitalize the AFL-CIO by creating stronger alliances with progressive groups such as the National Association for the Advancement of Colored People (NAACP), the Sierra Club, and the National Council of LaRaza by giving them a formal role within the AFL-CIO Executive Council. Also, the convention approved an outreach to non-union workers without granting them formal representation or collective bargaining rights. Both changes had detractors from within organized labor, but were adopted as an attempt to stem organized labor’s decline in union density. (See the discussion below in the section, “Other Convention Highlights—Reinventing The AFL-CIO?” for more details.)

LABOR DEPARTMENT AGENDA = UNION AGENDA

In his remarks, Secretary Perez laid out the administration’s progressive agenda for labor and employment law, calling for comprehensive immigration reform, an increase in the minimum wage, strong enforcement of independent contractor misclassification laws, promulgation of workplace safety and health standards such as those on silica, and stronger protections for union organizing and collective bargaining.

1. Workers’ Rights

With regard to labor protections, Secretary Perez stated:

… the President’s support and my support for a strong labor movement is not about nostalgia for the glory days. This is about what workers need today. We are not going to restore the American middle class if workers fear for jobs if they organize, if they face harassment and delays that make their legal rights a hollow promise. Workers’ right to join together and form a union to improve their lives remains essential to a thriving middle class, and together we must defend that right.

Unstated, but clearly included in the concept of  “workers’ rights” are the forthcoming “persuader activity” reporting requirements under the Labor-Management Reporting and Disclosure Act (LMRDA), which would eviscerate the current “advice” exemption and mandate reporting of attorney-client confidences during union organizing and collective bargaining. By making it more difficult for employers to find outside labor counsel, smaller employers especially (that don’t have in-house legal or labor relations expertise) would be at a significant disadvantage under the National Labor Relations Board’s “ambush election” rules where representation elections would be scheduled in as little as 14 days from the date of the union’s petition for election.

According to the most recent regulatory agenda, the DOL is scheduled to release the final “persuader activity” regulation in November.

2. “Workplace Fraud” = Misclassification of Independent Contractors

Secretary Perez also reemphasized his support for stronger enforcement of independent contractor classification, stating:

We expand opportunity when we combat the unfair, illegal practice of misclassifying employers as independent contractors. Some people call the practice “misclassification.” I call it what it is: workplace fraud. Workplace fraud has three victims: the worker of course; the employers who do the right thing but find themselves undermined by an un-level playing field; and the government, which gets cheated out of unpaid taxes. I made combatting workplace fraud a priority when I was Maryland’s Labor Secretary, and I will continue to support the Department’s efforts in this area.

 3. Enforcement of Wage and Hour Laws

Also, with regard to the aggressive enforcement of wage and hour laws, Secretary Perez stated:

Expanding opportunity means ensuring a level playing field for workers and employers in every industry through fair and aggressive enforcement of our wage and hour laws. Last year alone, we recovered a record $280 million dollars in back wages, and we will continue to make use of liquidated damages provisions in cases involving egregious offenders.

Secretary Perez singled out enforcement of the Davis-Bacon Act for special attention, stating:

We expand opportunity by enforcing laws designed to ensure a level playing field for workers. We are cracking down on Davis-Bacon violators, so that construction workers and contractors can receive the local prevailing wage instead of being undercut and undermined. Nationally, we are doing more than four times as many Davis Bacon investigations as we did in 2008. And now we’re debarring egregious offenders who don’t play by the rules.

4. Increase the Minimum Wage

Rejecting business community criticism to the contrary, Secretary Perez also strongly supported raising the minimum wage:

The president is committed to raising the minimum wage because he believes, as I do, that in the United States of America . . . in the wealthiest nation on earth . . . hard-working people who put in 40 hours a week and take responsibility for themselves and their families should not live in poverty.

Is this a moral imperative? Yes. Is it a fundamental matter of social justice? Of course it is. But it’s not just the right thing to do for working people; it’s the smart thing to do to grow our economy.

5. Workplace Safety and Health

On safety and health, Secretary Perez stated:

We must also take the necessary steps to ensure that our workplaces are safe—that is a centerpiece of our opportunity agenda. No worker should have to choose between their job and their health.

Well now, finally, we’ve taken an affirmative step towards change. A few weeks ago, after consultation with all stakeholders, we issued a proposed rule that would limit silica exposure and ultimately, if fully implemented, save lives.

 6. Laundry List of Labor and Employment Goals

Finally, in a rhetorical flourish, Secretary Perez summarized his list of “reforms”:

The stakes are high again, my brothers and sisters. We have to rise to major challenges:

To create good jobs and complete this economic recovery…

To invest in our people’s skills and raise the minimum wage…

To save lives through safer workplaces and fix our broken immigration system…

To work together to protect and restore collective bargaining…

To ensure pay equity for women and work together to pass ENDA so our LGBT brothers and sisters can’t be fired for who they are…

And to strengthen the middle class and ensure that every working family can live up to its highest and best dreams.

ANALYSIS—NEW FACES AT LABOR DEPARTMENT

Secretary Perez will be ably assisted in pursuing his reform agenda by current political appointees at the Labor Department along with several new senior officials, including newly-named senior counsel to the Secretary Sharon Block (most recently a member of the National Labor Relations Board whose appointment was found to be invalid). The new official in charge of enforcing the proposed “persuader activity” regulations is Director of the Office of Labor-Management Standards (OLMS) Michael J. Hayes (formerly a law professor who co-edited a leading union manual on organizing the construction industry). The White House also recently nominated David Weil to be the Administrator of the Department’s Wage and Hour Division (WHD). Notably, Weil was the Principal Investigator on “Improving Workplace Conditions Through Strategic Enforcement: Report to the Wage and Hour Division,” which served as a roadmap for the WHD’s enforcement efforts over the past several years. Also, Portia Wu is expected to be named as the new Assistant Secretary for Policy. Wu is currently White House Advisor on Labor and Employment and formerly was a long-time Senate Health, Education, Labor and Pensions (HELP) Committee staffer for Chairman Edward M. Kennedy.

OTHER CONVENTION HIGHLIGHTS—REINVENTING THE AFL-CIO?

By far, the most attention at the convention was focused on ways to revitalize and perhaps “reinvent” the labor movement to reverse declining union density, which is now 6.6% of eligible private sector employees and 11.3% of all employees in both the public and private sectors.

Prior to the 2013 convention, AFL-CIO president, Richard Trumka stated in a New York Times interview that: “The crisis for labor has deepened. It’s at a point where we really must do something differently. We really have to experiment.”

The AFL-CIO revealed elements of its experiment at the convention, including a call for strengthening alliances with other progressive groups, such as the NAACP, the Sierra Club and the National Council of LaRaza, by giving them a role on the AFL-CIO’s Executive Council. However, that met with reservations from a number of union leaders who fear that aligning too stridently with political causes will weaken the labor movement. “This is the American Federation of Labor,” International Association of Fire Fighters President Harold A. Schaitberger said in an interview. “We are supposed to be representing workers and workers’ interests . . . We are not going to be the ‘American Federation of Progressive and Liberal Organizations.’”

Including progressive groups under labor’s tent poses potential conflicts with unions on issues such as the Affordable Care Act. While many progressive groups generally support the law, the AFL-CIO has serious concerns with the effect of the Affordable Care Act on multi-employer group health plans, and the Roofers union has called for repeal. Also, opposition by environmental groups such as the Sierra Club to the construction of the Keystone XL pipeline would appear to conflict with strong support for the pipeline by the AFL-CIO’s Building and Construction Trades Department and its member unions.

In an interview with Reuters, Trumka suggested: “The labor movement really is at a crossroads, and we have some decisions to make.”

Trumka called for passage of a resolution that would include non-union workers within the AFL-CIO, even though they lack formal representation or collective bargaining rights. For example, when a union loses a representation election, the minority of workers who voted in favor of the union would be invited to join the AFL-CIO’s Working America and be identified as part of the AFL-CIO even though formally unrepresented. That, too, troubled some union leaders. Trumka responded to concerns that departing from the “collective bargaining model” would cause unions to lose focus and identity. “At the end of the day, it’s on us. It’s on us to build a movement not for the 99 percent, but of the 99 percent,” he said during his convention speech. “Not just the 11 percent we are right now. The 99 percent.”

RESOLUTION ON THE AFFORDABLE CARE ACT

By far, the most closely watched action was the AFL-CIO’s call for a special exemption from the Affordable Care Act by the Obama administration or by Congress that would include union multi-employer health plans (Taft-Hartley plans) as health insurance eligible for federal subsidies. The change would permit the use of premium tax credits to subsidize enrollment into multi-employer group health plans, which is only available to union workers.

Although originally the AFL-CIO strongly lobbied for passage of the Affordable Care Act (commonly referred to as “Obamacare”), it now demands reforms to the law without which they will oppose implementation.

Rejecting heavy behind-the-scenes lobbying from the Obama administration, the convention passed a resolution demanding that the administration “fix” the problems, including greater employer responsibility, especially in regards to part-time workers. An earlier draft said that the AFL-CIO could no longer support the health care law and called for its repeal unless changes were made to protect union multi-employer plans.

Sean McGarvey, president of the AFL-CIO Building and Construction Trades Department, said the resolution, “[P]oints out the key facts that must be addressed by the administration and if needed, by Congress.”

Laborers’ International Union of North America (LIUNA) President Terry O’Sullivan, who endorsed the resolution, told the convention delegates that without changes to the way the ACA is implemented, there are likely to be “unintended consequences” that will hurt workers’ health care coverage.

“It needs to be changed and fixed now . . . We will work with the president to do everything we can to fix the Affordable Care Act . . . We want it fixed, fixed, fixed.”

ANALYSIS

Giving organized labor what it wants could be a problem for the administration. The Congressional Research Service issued a memo earlier this year finding that the changes called for by the AFL-CIO are not allowed through rulemaking, but must come from Congress. The AFL-CIO resolution calls for the health care law to be amended by Congress if new rules cannot satisfy AFL-CIO concerns. Yet, congressional opposition is likely.

“We will do whatever is within our power to ensure that the administration does not once again provide a special exemption to unions at the expense of American taxpayers,” Michigan Representative Dave Camp and Utah Senator Orrin Hatch wrote in a letter this week to U.S. Treasury Secretary Jack Lew. Camp is chairman of the House Ways and Means Committee and Hatch is ranking member of the Senate Committee on Finance.

Also, U.S. Senator John Thune (R-SD), Chairman of the Senate Republican Conference, has introduced the “Union Bailout Prevention Act” to prevent the Obama administration from granting the unions’ request for special Obamacare “carve outs.”

In introducing the legislation, Thune stated: “Despite championing ObamaCare’s passage in 2010, union leaders are now awaking to the ugly reality of ObamaCare that most Americans have predicted all along, including higher health care costs,” said Thune. “Now that the full consequences of the Democrats’ law are nearing, these same union leaders are seeking a special backroom deal from the White House. Rather than take hard-earned money from taxpayers to subsidize union health care plans, the Obama administration should give all Americans a break by permanently delaying this train wreck.”

ELECTION OF OFFICERS—TWO OLD FACES, ONE NEW ONE

Rich Trumka (formerly of the United Mine Workers of America) was reelected AFL-CIO president, along with Elizabeth Shuler (formerly of the International Brotherhood of Electrical Workers) who was reelected as Secretary-Treasurer, both for additional four-year terms. Tefere Gebre (formerly of LIUNA and also a member of the United Food and Commercial Workers International Union and the International Brotherhood of Electrical Workers) was elected as Executive Vice President. He is a 45-year old Ethiopian political refugee who formerly served as executive director of the Orange County Labor Federation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

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