Trump Could Rewrite Rules for Employers

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By Gayle Cinquegrani

Nov. 15 — Lawyers are studying statements made by Donald Trump for clues about what his administration’s labor and employment policy will look like so they can advise their clients on workplace strategies. Some predict the shift in course will generate more work for law firms.

Change is on the way, but the extent and nature of it is difficult to gauge because Trump is not a traditional candidate, several practitioners and former Labor Department officials told Bloomberg BNA in the wake of the election.

“The transition team has not articulated any priorities,” said Alexander Passantino, a partner at Seyfarth Shaw and former acting administrator of the DOL’s Wage and Hour Division. “We’re operating in a vacuum,” he said.

“It’s very safe to assume it will be less anti-employer than the current administration,” he said, but “it’s hard to counsel employers right now” because the timeline and nature of changes is unclear.

“Trump’s proposals have been “very general, very vague,” said Vincent Cino, chairman of labor law firm Jackson Lewis. “My suspicion is there will be much less regulation than currently exists.” But he said he can’t tell clients to stop complying with any rules “until we are given some concrete direction where this will be headed.”

In any event, law firms may prosper from the change in administration strategy. “Whenever there’s a change in leadership, there’s a flurry of activity, and whenever there’s a flurry of activity, there’s an increase in litigation until it settles down,” Cino said. “Less regulation leads to more litigation.”

Executive Orders

The consensus seems to be that the new president, like the current president, will use executive orders as a quick method of implementing policy. “There’s a long list of executive orders that I would expect the president-elect to overturn within days of being inaugurated,” said Seth Harris, a member of Dentons who served as acting and deputy labor secretary under President Barack Obama.

“President Obama set a precedent for how a president could be extremely aggressive” in using executive orders, and “I think President Trump will follow President Obama’s lead,” Ogletree Deakins shareholder Mark Kisicki said. “I’d expect him to rescind several of President Obama’s executive orders,” he said.

“The blacklisting rule is one of the first things that’s going to disappear,” Kisicki predicted.

The rule, based on Obama’s Fair Pay and Safe Workplaces executive order, requires government contractors and subcontractors to report workplace violations found by administrative agencies and courts. The government would take this record into account when deciding whether to award future contracts or cancel existing ones. A federal court in October temporarily blocked the rule from taking effect.

Passantino identified the rule establishing paid sick leave for employees working on federal contracts as another probable candidate for reversal. The rule was issued to implement an executive order.

“If President Trump decides he wants these to go away, he just issues an executive order” of his own, he said. “It’s an easy fix.”

The fiduciary rule, which tightens conflict-of-interest restrictions on financial advisers handling retirement accounts, is also in danger. “The fiduciary regulation is going to be overturned. We just don’t know how,” Harris said.

With regard to lesbian, gay, bisexual and transgender rights, Trump expressed support “on the stump,” Harris said. “Is he going to be different” from many other Republicans by supporting a rule from the Office of Federal Contract Compliance Programs extending LGBT protections to employees of federal contractors, Harris asked.

Persuader Rule

Harris and Kisicki expect the “persuader” rule to die. “The persuader regulations, I have no doubt that those will be taken off the table,” Kisicki said. “If it doesn’t get struck down, it’ll be reversed,” Harris said.

The persuader rule increases disclosure requirements for employers that use advisers, such as law firms, to help them fight unionization drives. Many lawyers asserted the rule infringed on attorney-client privilege. A federal court has suspended the rule, which was scheduled to go into effect in June.

A revision or rescission of the rule could affect law firms’ decisions to take on unionization campaign assignments. The persuader rule imposed “an extensive reporting obligation” on the lawyers who advise employers about unionization drives, even if the lawyers don’t interact directly with their clients’ employees, Kisicki said. “Some law firms, anticipating that this would be necessary, advised clients that they were withdrawing from providing the legal service of giving advice” about unionization drives. Trump’s likely pullback of this rule “will give them the ability to get back into that space safely,” he said.

Other Obama administration rules will take effect before Trump’s inauguration. “They’re going to go into effect, and to change them will require an administrative process, but they don’t have to be enforced,” Kisicki said.

“There has been some talk” that the White House would direct the Justice Department “to simply concede” some of the Labor Department regulations being legally challenged by employers, but “a lot of courts won’t do that,” Harris said. In addition, “the Justice Department will be ferociously opposed to doing that.”

Overtime Rule

One such controversial regulation is the overtime rule, which takes effect Dec. 1. It is expected to make an additional 4 million-plus workers eligible for overtime pay by doubling the salary threshold for determining eligibility.

To modify or rescind it, Congress would have to pass a law, or the Trump administration would have to conduct a new rulemaking. The new administration may decide to retroactively phase in the salary threshold over a few years or change the automatic indexing of the threshold, Harris said. States and business groups have blasted and challenged in court the provision in the rule that automatically increases the salary threshold every three years to keep up with inflation. “At a minimum, there would be months” before these changes could occur, though, and employers would have to comply with the rule in the meantime, Harris said.

The overtime rule probably would continue to have some impact even if the Trump administration eliminated it. Many employers already have raised employees’ salaries slightly above the $47,476 annual threshold to avoid paying overtime. “If the regulation were to be overturned, would they lower people’s salaries? I think that’s highly unlikely,” Harris said.

NLRB

Another controversial area likely to see big changes from the election is the National Labor Relations Board. “There’s going to be a more conservative approach and a more aggressive approach,” Kisicki said. The board has only three members, so the new president will be able to appoint two new members who are “in tune” with him, he said. Once they’re on board, “It’s highly likely that the expansion of the joint employer standard will be reversed,” he said.

Kisicki was referring to a 2015 ruling in which the NLRB expanded employer liability by finding that a business may be considered a joint employer in union representation elections if it has even an indirect right to control workers ( Browning-Ferris Indus. of Calif., Inc., 362 N.L.R.B. No. 186 (2015)).

Congress will play a role in other workplace initiatives. “I don’t think anything is going to make it out of the Republican Congress that is going to be alarming to the employer community,” Kisicki said.

There will definitely be some kind of proposal for “limited paid leave,” Kisicki said, and “Congress will have a difficult time simply saying no to any paid leave proposal.” He is advising clients to comply with the law as it is now. Some states already have a paid leave program funded through deductions from workers’ paychecks, he noted.

Immigration

The new president also would need cooperation from Congress to implement some of his likely immigration policy. “Rhetorically, he was very, very tough on the H-1B program during the campaign,” Harris said. The H-1B visa program allows U.S. employers to temporarily employ foreign workers with special skills.

“Any changes he would want to make would have to be made legislatively,” but “Congress is not going to be enthusiastic about scaling back the H-1B program because a lot of industries rely heavily on that program, and they will be fighting tooth and nail to expand it,” Harris said.

Trump would be able to control the level of enforcement of the rules, though. “I would have to assume aggressive enforcement of immigration rules,” Kisicki said. Trump will probably require E-Verify—the electronic employment verification system that matches employees’ records with government databases—nationally. Presently, the use of E-Verify is voluntary in most cases.

Infrastructure

Trump has stated he will spend as much as $1 trillion to shore up the nation’s transportation, water, telecommunications and energy infrastructure. With its creation of thousands of new construction jobs, this initiative could affect labor and employment law in several ways.

Harris raised several questions regarding Trump’s likely approach to workforce issues. Will the Occupational Safety and Health Administration, he said, “have the resources” and “be allowed” to enforce construction safety rules on infrastructure projects? Similarly, will the Mine Safety and Health Administration be able to enforce safety standards related to the mining of the sand and gravel used in the construction projects? In addition, Harris asked, “Will he try to repeal Davis-Bacon or say it doesn’t apply to these projects” and eliminate the requirement for contractors to pay prevailing wages to their workers?

The Davis-Bacon Act requires contractors and subcontractors to pay their workers the local prevailing wage under public works contracts with the federal government. Passantino of Seyfarth Shaw said even a huge infrastructure investment by the Trump administration may not elevate workers’ wages significantly. If the federal government funds infrastructure projects through grants without becoming a party to the contracts, the Davis-Bacon prevailing wage standards won’t apply, he said. “I would not imagine that a Republican-controlled Congress would add Davis-Bacon,” Passantino said.

All the lawyers seemed to agree that change is afoot but that for the time being, employers must obey the existing rules. “Many of those rules are already in effect, so their clients are expected to comply with them. Abandoning compliance puts the client at risk,” Harris said. “Unless you know for sure how the regulation is going to change, compliance has to be the rule.”

It’s difficult for lawyers to know what to expect because “with Donald Trump, it’s a little bit fuzzy at this point,” Cino of Jackson Lewis said.

“He certainly didn’t portray himself as a regular, doctrinaire conservative Republican,” Harris said. “The Labor Department will be one place” where the public will learn whether Trump is “a different kind of Republican.”

Consequently, Harris said, “I would not give blanket advice” to clients. “I would go issue by issue and consider whether the applicable rule is likely to be overturned” and whether the client has to make an irrevocable decision to come into compliance, such as raising employee salaries.

“Once we see the Cabinet fleshed out with respect to labor positions,” Kisicki said, “we’ll have a much better sense” of what clients can expect.

To contact the reporter on this story: Gayle Cinquegrani in Washington at gcinquegrani@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

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