The Labor Year In Review, And What To Expect In 2019

Constangy, Brooks, Smith & Prophete, LLP

Constangy, Brooks, Smith & Prophete, LLP

To paraphrase a proverb sometimes attributed to physicist Niels Bohr, film mogul Samuel Goldwyn, baseball great Yogi Berra, and even writer Mark Twain, “It is difficult to make predictions, especially about the future.” Nevertheless, here is our attempt at labor law prognostications for 2019 and beyond.

Employers have grown used to adjusting their policies and practices and decisions based on the political winds that shape the composition of the U.S. Department of Labor and the National Labor Relations Board, and we expect that to continue.

The WAGE Act shows the Democrats’ labor agenda. The new Democratic majority in the U.S. House of Representatives has telegraphed some of its agenda in proposed legislation. Rep. Bobby Scott (D-Va.), Chairman of the House Education and Workforce Committee, is promising a drive for a $15 minimum federal wage with hearings early this year. Rep. Scott is a lead sponsor of the “WAGE Act,” which would amend the National Labor Relations Act in a way that is favorable to organized labor. The proposed amendments include required card check for union representation, government-mandated first collective bargaining agreements if employers and unions are unable to reach agreement within 90 days of certification, broad allowance of secondary boycotts, repeal of right-to-work laws, and the “quickie election” rules promulgated by the Board under President Obama. The WAGE Act is not likely to see the light of day in the Republican-majority Senate, but it shows that House Democrats are focused on adopting the agenda of organized labor, even if it may be at odds with and detrimental to the current economic boom.

NLRB is plowing ahead in the face of resistance. The NLRB’s shift to a more “employer-friendly” philosophy has been slowed by creative attacks from organized labor and Democrats in Congress. Here are the key issues in play:

  • Independent contractor standard. In January, the Board decided 3-1 in SuperShuttle DFW, Inc., to return to an older Board standard for making an “independent contractor” determination based on common law principles that include “entrepreneurial opportunity” as a factor in the determination. The Board found that airport van service operators who were franchisees were “independent contractors” excluded from the coverage of the NLRA. According to the majority, the franchisees’ ownership of vans, scheduling autonomy, and other factors gave the franchisees “significant entrepreneurial opportunity and control” over their own incomes. A 2014 Board decision to the contrary did not give sufficient weight to “entrepreneurial opportunity,” the majority said:  “[E]ntrepreneurial opportunity, like employer control, is a principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain.”
  • “Quickie election” regulations to be replaced. In 2017, the new Republican-majority Board issued a notice for public comment regarding proposed changes to the 2015 “quickie election” rules issued by the Obama Administration. The deadline for comments on the new rules was extended in 2018, and we expect the new rules to be issued in 2019.
  • New “joint employer” standard on the way. As with the representation election rules, the Republican-majority Board has issued proposed regulations to establish the standard for determining whether two or more employers are “joint employers” of certain employees. The comment period on the proposed regulations has closed, and final regulations are expected to overrule the Obama-era Board’s decision in Browning-Ferris Industries, a case we have covered extensively. Meanwhile, in January of this year, the U.S. Court of Appeals for the District of Columbia Circuit approved, for the most part, the Obama-era standard.
  • Employer email and communications systems. The Board has asked for amicus briefs on whether it should adhere to, modify, or overrule the Obama-era Board’s decision in Purple Communications, Inc. In Purple Communications,the Board overruled precedent to the contrary and decided that employees who have access to their employer’s email system for work-related purposes generally have a presumptive right under section 7 of the NLRA to use it, on nonworking time, to engage in protected concerted activities. The current NLRB General Counsel, Peter Robb, has weighed in to urge the Board to overrule Purple Communications and return to the earlier standard, which did not allow employees to use their employers’ email systems for Section 7 activity.

New overtime regulations? The DOL in its 2018 Fall Regulatory Agenda announced its intent to issue a Notice of Proposed Rulemaking in March 2019 with the updated salary level for the white-collar exemptions under the Fair Labor Standards Act. Proposed regulations are currently being reviewed at the White House Office of Information and Regulatory Affairs. The Secretary of Labor has also indicated that the DOL is looking at the definition of “joint employer” for purposes of the various laws and regulations that the DOL administers and enforces. We expect the DOL to depart from the Obama-era interpretations, but there may be a sharp swing back if in the future Democrats can gain a filibuster-proof majority in Congress, or depending on the outcome of the 2020 elections.

Technology’s continuing impact. Companies are embracing technology and automation in ways previously not thought possible. Flexible “24/7” communications, remote work, and analytics-based decision-making are coming to the fore in many industries. Interactive collaboration between computers, robots and people is growing.

Artificial intelligence allows managers to schedule more efficiently, and to better monitor and control attendance and overtime. This can give management more time to actually manage their workers.

Technology can also provide employees with more control over their work and work methods, which allows them to be more productive and engaged, potentially with less disruption to their personal lives.

However, a report by the Brookings Institution indicates that automation is expected to negatively affect the employment prospects of men, minorities, and younger people. According to the report, almost half of the jobs held by those under age 24 and almost half of the jobs held by Latino workers are vulnerable to automation. The report noted that disruption is expected to be particularly severe in packaging, manufacturing, and production.

The fear of disruption and recognition of vulnerability may be affecting employees’ desire to unionize. A recent report by the U.S. Bureau of Labor Statistics indicates that 6.4 percent of the private sector workforce is represented by unions, and 33.9 percent of the public sector workforce. The highest unionization rates in the private sector are found in production-related jobs with predominantly male workforces.

Politicians and government agencies are stepping into some of the void left by organized labor by enacting measures addressing such topics as salary transparency, minimum wage, paid sick and safe leave, fair scheduling, “right to disconnect” from work-related email or text messages during non-working time, and more.

The expansion of legally-imposed workplace standards is exemplified in a lawsuit seeking to enjoin a voter-approved measure requiring panic buttons in hotel rooms and limiting the number of rooms a housekeeping employee can be required to clean each day. The California Hotel and Lodging Association has sued to enjoin Measure WW, which was approved by Long Beach voters in November. According to the chief executive officer of the Association, the restrictions may limit some housekeepers’ overtime and incentive opportunities, and may even cause some to lose benefits by falling to part-time status. With respect to the panic button requirement, the Association says that it infringes on the exclusive power of the California Division of Occupational Safety and Health (also known as CAL/OSH) to regulate worker safety in California.

Whether employees win or lose as a result of these public policy efforts, and who will be affected the most, remains to be seen.

Employment is chugging along, and may get even better. Despite signals that could have presaged a downturn, January 2019 data came in strong despite the partial shutdown of the federal government. In the United States approximately 300,000 new private-sector jobs were created, and the growth was across nearly all industries. “This is what happens when the political class takes its boot off the neck of private business, as the GOP Congress and the Trump Administration did for two years,” said The Wall Street Journal in a January editorial (paid subscription required for full access). The editorial noted that job growth and the labor participation rate were particularly strong in November 2018 through January 2019, and that this was “especially impressive” coming nine and a half years into an expansion with an unemployment rate of approximately 4 percent. The editorial also noted that wage gains were up 3.2 percent as compared with the corresponding period in 2017-2018 and that the results beat the wage gain rate of between 2 and 2.5 percent during President Obama’s two terms.

According to the editorial, U.S. economic growth may accelerate still further after the announcement by the Federal Reserve to hold further increases in interest rates, and if the Administration finalizes the replacement for NAFTA and can reach an agreement with China. As the editorial noted, “Faster growth means a tighter labor market, which means faster wage growth and expanded opportunities for the least skilled.”

Good news for workers. What’s not to like?

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.

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