© 2009 Vedder Price P.C. Big Changes on the Horizon for Employers Presented By: J. Kevin Hennessy...

© 2009 Vedder Price P.C.

Big Changes on the Big Changes on the Horizon Horizon for Employersfor Employers

Presented By:

J. Kevin HennessyVedder Price P.C.September 26, 2009


Perfect Storm for Employers Perfect Storm for Employers in 2009 and Beyondin 2009 and Beyond

Democratic President Backed by Organized Labor

Democratic Party Majority in Congress

Economic Downturn


We Will Cover Three Major TrendsWe Will Cover Three Major Trends

Employee Free Choice Act and Other Labor-Friendly Legislation

Legislative Initiatives

EEO Compliance Initiatives


The Employee Free Choice Act:The Employee Free Choice Act:

Preparing for ChangePreparing for Change ___________________


Organized Labor TodayOrganized Labor Today

Union membership continues to decline

Down to 7.4% – half of what it was 25 years ago

Traditional secret ballot elections have not worked

Unions currently win 68% of elections but with many fewer elections

Competition between Unions: Change to Win divorces from AFL-CIO


Employee Free Choice Act – Employee Free Choice Act – H.R. 1409H.R. 1409

The crown jewel of Labor’s “wish list”

Its goal is to reverse a half-century decline in union membership

Will continue to be a controversial part of the 2010 legislative session

Bernie Marcus: EFCA represents a “planned hostile takeover of Human Resources”


Organized Labor’s Trifecta: Organized Labor’s Trifecta: The Oval Office, the House, The Oval Office, the House, and a Filibuster-proof Senateand a Filibuster-proof Senate

Organized Labor viewed November election as a “once in a lifetime chance”

AFL-CIO committed $53 million to fund thousands of political “street workers”

Affiliated unions pledged over $200 million

Change to Win recently added dues surcharge to raise millions earmarked for EFCA passage


Employee Free Choice ActEmployee Free Choice Act

Three Key Impact Points:

Union organizing made easier

Mandatory interest arbitration for first contract

Increased penalties for employer mistakes

continued



Union organizing made easier:

Card check recognition

Effectively abolishes the right to a secret ballot election

Certification of Union will be based on card majority (50% + 1)

continued



Likely impact:

Teamsters signed up 13,000 UPS Freight workers in less than 9 months

CWA did same with 10,000 workers at Cingular

Remember: Unions can promise anything to get cards signed

continued


To Illustrate: To Illustrate: Current Organizing Process Current Organizing Process

1. Union solicits employees

2. Employees show interest by signing cards or a petition

3. If 30%+ of the group signs, the union can go to the NLRB and request an election

4. The company presents its position and the facts to employees over a month-and-a-half

5. The NLRB conducts an election

6. 50%+1 OF THOSE WHO VOTE determine union or not


Organizing Process Under EFCAOrganizing Process Under EFCA

1. Union solicits employees

2. Employees show interest by signing cards or a petition

3. If 30%+ of the group signs, the union can go to the NLRB and request an election

4. The company presents its position and the facts to employees over a month-and-a-half

5. The NLRB conducts an election

6. 50%+1 OF THOSE WHO VOTE [of cards] determine union or not union



Mandatory interest arbitration on first contract:

After 90 days of negotiations, either side can call in FMCS

If FMCS does not mediate an agreement within 30 days, then dispute goes to binding arbitration

Neutral arbitrator to be appointed by FMCS

Contract will have 2-year term

continued



Pay to play – increased penalties for mistakes:

Triple backpay for discharge of union supporter during organizing or first time contracts

Fines up to $20,000 for each violation where “willful” or “repetitive” violations are found

continued



What’s NOT in the EFCA?

Neutrality or gag order

Ability to decertify union through majority signatures

Restrictions on strikes or lockouts

continued


Likely Impact of EFCA on EmployersLikely Impact of EFCA on Employers

The union is certified before you know about it

Employers are used to a week or two notice of card signing, plus an additional month and a half of campaigning

No policing measures in place to protect against signature fraud or other union tricks

Union cards signed today could possibly be used later after EFCA is passed


Likely Impact of EFCA on Employers Likely Impact of EFCA on Employers

Impact on collective bargaining is significant

Unions may see no value in agreeing to any contracts that do not include significant increases – will let arbitrators impose increases

There are no guidelines for arbitrators to follow

What factors to be considered by arbitrators?

Unions likely to make demand to join under funded multi-employer pension plans, along with union-sponsored health and welfare plans and PACS

continued


Likely Impact of EFCA on EmployersLikely Impact of EFCA on Employers

Negotiations on a renewal contract will be more difficult as the employer may be forced to demand “concessions” to return to economic reality

Collective bargaining becomes the condensed version – from 352 days down to 120

continued


Current Status of EFCACurrent Status of EFCA

Not enough votes in Senate to invoke cloture – Sen. Specter key on this

Starbucks, Costco Warehouse, and Whole Foods offer a “third way”: keeps secret ballot election, no binding arbitration, but increased penalties and union access

National Labor Relations Modernization Act (H.R. 1355) – drops card check; tweaks arbitration; but allows union access to employees


Current Status of EFCACurrent Status of EFCA

What’s Likely to Happen?

Passage of modified EFCA with short election, no arbitration, but with increased penalties and maybe union access; or

Wait until next Congressional elections

continued


Other Union-Friendly Legislation on Other Union-Friendly Legislation on the Tablethe Table

“RESPECT Act” (H.R. 1644)Broadens a union’s right to organize supervisory employees

Supervisors must supervise a majority of the time

The Patriot Corporations of America Act of 2009 (S. 829) - tax incentives to remain neutral

Worker Freedom Acts (WFAs) bar mandatory meetings on political/union subjects


Possible Employer StrategiesPossible Employer Strategies

Strategies Before Passage:Use the “U” word?

Educate your management on union card signing and EFCA

Make certain your entire organization is aware of and alert to organizing signs and how to respond

Tripwire early warning system

Problem solving / feedback systems

Employee opinion surveys



Strategies Before Passage:

Update no-solicitation/no-distribution rule

to limit on-site organizing and access

Gain full control of e-mail systems, bulletin

boards, etc.

Remember, cards signed now may count later

continued



A more aggressive approach

Shift emphasis from simply “awareness” to actively engaging employees face-to-face

Bolder union-free message as part of on-boarding of new employees

Employee communication committees to address issues more directly

Adopt inexpensive peer review or ADR programs for discipline matters

Implement low-cost work/life balance programs

continued



A more aggressive approach (cont’d)

Employee relations audit to identify areas of vulnerability

Tripwire early warning system

Be prepared to run rapid-response or “mini” campaigns

Videos with high-level corporate message

continued



After Passage of EFCA:It may already be too late to begin to win the hearts and minds of employees???

Direct face-to-face meetings with employees to educate them on what a union card is and what happens when it is signed

Follow through on any employee “issues” uncovered with earlier strategy points

Follow through on any promises or commitments made to employees throughout process

continued


Other Labor-Friendly Initiatives

___________________


Three Obama Executive Orders:Three Obama Executive Orders:

1. Notification of Employee Rights Under Federal Labor Laws

2. No Reimbursement of Costs Related to Persuasion of Employees

3. Successor Contractor Must Offer Right of First Refusal to Each of the Predecessor’s Employees


Notification of Employee Rights Notification of Employee Rights Under Federal Labor Laws Under Federal Labor Laws (Ex. Order 13496)(Ex. Order 13496)

Right to seek help from a union

Leaflet the workplace

Strike and picket

Toll-free number and web links to file unfair labor practice charges against the employer


Other Legislative Initiatives

___________________


Lilly Ledbetter Fair Pay Act Lilly Ledbetter Fair Pay Act Effective January 2009Effective January 2009Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007), required plaintiffs to file wage claims within 180 days of an allegedly discriminatory wage decision

The Act reverses Ledbetter: “[A]n unlawful employment practice occurs … when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid …”


Lilly Ledbetter Fair Pay ActLilly Ledbetter Fair Pay ActPractical Tips:Practical Tips:

Review employee compensation to spot disparities

Institute a compensation policy?

Document pay decisions and reasons

continued


Paycheck Fairness ActPaycheck Fairness Act

Passed House on January 9, 2009, pending in Senate, President Obama supports this bill

Would replace “any other factor other than sex” defense with “bona-fide factor other than sex, such as education, training, or experience” defense

Would make it more difficult to defend equal pay claims because employers cannot rely on the “bona-fide factor defense” unless such factor: (i) is not based upon or derived from a sex-based differential in compensation; (ii) is job-related with respect to the position in question; and (iii) is consistent with business necessity


Paycheck Fairness Act Paycheck Fairness Act What It Means For YouWhat It Means For You

Greater exposure for employers with respect to pay equity due to elimination of damages caps and narrowing of potential defenses

Ambiguity of standards could create an increase in litigation

continued


Employment Non-Discrimination Employment Non-Discrimination ActAct

Co-sponsored by President Obama during the last Congress and remains a major component of the President’s LGBT policy agenda

Latest version of bill would add Title VII protections to gay, lesbian, and bi-sexual employees

Originally included gender identity, but gender identity was removed and the bill passed the House in 2007. Removal of gender identity ignited protests by LGBT groups


FMLA/Leave LegislationFMLA/Leave Legislation

Expansion of FMLA and some form of paid leave is a priority of the Obama administration and the Democratic Congress

Several bills have already been introduced in the new Congress

FMLA was first signed into law shortly after Clinton came into office. Likely that we will see expansion of the FMLA during this administration


FMLA/Leave Legislation – FMLA/Leave Legislation – Family Fairness Act of 2009Family Fairness Act of 2009

Supported by Obama administration

Designed to give part-time employees FMLA rights

Would eliminate the 1250 hours requirement for FMLA coverage

12-month requirement would remain

continued


FMLA/Leave Legislation – FMLA/Leave Legislation – Family Leave Insurance Act of 2009Family Leave Insurance Act of 2009

Introduced in the House by four CA representatives

Cites studies saying that 78% of employees say they need to take FMLA leave, but cannot afford to

Bill would create a federal insurance fund to give employees 12 weeks of paid leave

Employees and employers would each contribute .2% of each employee’s pay, or roughly $7 per employee per month

continued


Working Families Flexibility ActWorking Families Flexibility Act

President Obama has long supported legislation that creates a legal obligation and framework for employees to seek flexible work arrangements

Employee applies for flexible work arrangement, employer must consider the request and give the employee an answer in writing, which must include specific reasons for denying the request, including financial, staffing and other factors

Appeal/reconsideration rights, retaliation protections

Employees may seek investigation by DOL and hearing with ALJ


Employee Classification Legislation – Employee Classification Legislation – Employee Misclassification Prevention Employee Misclassification Prevention ActAct

Co-sponsored by Obama

Would amend the FLSA to require written notification to each current employee and non-employee regarding their classification status upon commencement of employment

Directors of DOL to audit more employers on classification problems and impose civil fines of $10,000 per violation


Employee Classification Legislation – Employee Classification Legislation – Independent Contractor Classification ActIndependent Contractor Classification Act

Also introduced by President Obama

Creates an avenue for workers to request a determination from the IRS regarding their individual classification status much like the existing private letter ruling process

IRS can award costs and attorneys’ fees, notify the DOL, audit

Retaliation prohibition, disclosure to workers, and records requirements

continued


Employee Classification Legislation – Employee Classification Legislation – What It Means for YouWhat It Means for You

Another area where we believe we are going to see some action in the new Congress

With rise in unemployment, more and more independent contractors are challenging their classification status though the unemployment process

Would increase the risk of misclassification and would narrow the scope of workers that can be properly classified as contractors.

continued


Compliance Initiatives

___________________


0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Race Sex NationalOrigin

Religion Retaliation Age Disability Equal Pay

2004

2008

Charge Statistics: 2004 & 2008Charge Statistics: 2004 & 2008

34.9% 30.5%

10.5%

3.1%

28.6% 22.5% 19.4%

1.3%

35.6%

29.7%

11.1%

3.4%

34.3%

25.8%

20.4%

1.0%


Pay Claims Keep Pay Claims Keep on Comingon Coming


Pay Claims Keep on ComingPay Claims Keep on Coming

Wage/hour collective and class actions have more than tripled since 1997

They now annually outnumber race and sex discrimination class actions

Rolling in industry waves and topical waves


Pay Claims Keep on ComingPay Claims Keep on ComingTopical waves – Types of claims:

Improper classification and failure to pay overtime

“Off the clock” work

Meal and break periods

Pay discrimination – latest trend

Can be based on any protected class (race, gender, age, etc.)

All can be enforced by class actions

Also beginning to see some retaliation claims

OFFCP looking hard at pay discrimination for women

continued


Blackberry Blackberry OvertimeOvertime


Blackberry OvertimeBlackberry Overtime

“Karoshi”Japanese term for “death by overwork”

Relatives of deceased employees are suing employers for compensation

Recent survey60 million employees who work primarily from home

50 million who spend the bulk of their time out of the office



A Google search of “BlackBerry overtime” reveals chatter among employees about whether they should be getting paid for time spent checking and responding to email outside of work

continued



Main laws are Fair Labor Standards Act and state wage payment laws such as the Illinois Wage Payment and Collection Act and Illinois Minimum Wage Law

Basic requirement:Non-exempt employees must be paid at least the minimum wage for all hours worked and time and one-half their regular rate for all hours over 40 in a workweek

continued



Related concept is that non-exempt employees must be paid for all time “suffered or permitted to work”

Touchstone is whether employer “knows or has reason to believe that the work is being performed”

continued


Immigration Compliance


Why Do We Care?Why Do We Care?

Desire to comply with the law

Increased enforcement in FY 2008

1100 criminal worksite arrests

5100 administrative worksite arrests

$21 million in fines

11 Federal Contractor debarments

Use of both criminal and civil statutes

Fines – up to $250,000

Imprisonment – up to 10 years

Forfeiture of assets


Who Should Care?Who Should Care?

“No industry, regardless of size, type or location is exempt from complying with the law.”

ICE Website, April 27, 2009


New Administration – Aren’t New Administration – Aren’t All Bets Off?All Bets Off?

Priority: Comprehensive Immigration ReformBut: One commentator predicts “bloodbath”

Balanced against increased enforcement against EMPLOYERS

Congressional Hearings in April, 2009:ICE will build a more “vigorous” worksite fine process

Should result in “meaningful penalties” for employers

Enhanced federal contractor debarment/exclusion policy

Exclusion from receiving loans under the Recovery Act


What HAS NOT Changed: Employers’ What HAS NOT Changed: Employers’ Current Legal Responsibilities under IRCACurrent Legal Responsibilities under IRCA

Employer must not knowingly hire or continue to employ any person not authorized to work in the United States

Employer must verify the employment eligibility of every new employee, whether they are a citizen or an alien

Employer must not engage in discrimination against qualified workers.


E-Verify – What Is It?E-Verify – What Is It?

Free Internet-based program; checks SSA and DHS databases

Employer enters into MOU with SSA and DHSUsers issued password and ID codeMust complete on-line trainingMust display E-Verify poster

Employer enters I-9 data into system

E-Verify responds with positive confirmation or tentative non-confirmation (TNC)

Federal contractors must use it


E-Verify IssuesE-Verify Issues

Database not perfect

Improper use (pre-hire) creates risk

Benefit - may register selected sites only

Illinois law struck down

SHRM, others prefer different system


Establish and Enforce an Establish and Enforce an Immigration Compliance PolicyImmigration Compliance PolicyMAKE IT CLEAR!

Appoint a compliance officer

Set up schedule for regular internal Immigration audits

I-9 records

PERM recruitment reports

Institute a training program – top to bottom

Establish a monitoring system

Communicate ramifications of non-compliance and enforce


Immigration Compliance PolicyImmigration Compliance Policy

Set forth clear I-9 guidelines

Who can review/complete I-9s for company?

Periodic training of ALL employees

Schedule regular I-9 audits with third party review

Determine location/manner of recordkeeping

Ensure I-9 records are separate from personnel files

Implement a tickler system

Establish document retention schedule

continued


ANY QUESTIONS?ANY QUESTIONS?

Thank you!

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