The Biden era of labor law change – the shift to organized labor

Labor law, along with other employment-related policy matters, is at the forefront of the political, economic, and oftentimes cultural divide in the nation. With the change in Presidential administrations, some knowledgeable commentators contend that “everything” in the law and broader economy is now up for change, and much hangs on whether the filibuster rule remains viable in the U.S. Senate. Immediate change is likely, including revocation of Trump Executive Orders and issuance of new ones by President Joe Biden, regulatory changes, and possible legislative amendments to the National Labor Relations Act and other laws.

President Biden made strong commitments to organized labor in public statements and on his campaign website. The Biden campaign made it clear that his administration will support union organizing, collective bargaining, and unionization. In general, his plan is to seek to add to the power of unions by increasing union membership, as well as reducing the rights and leverage that employers have enjoyed recently and, somewhat, historically.

Change at the NLRB

Board nominations are made by the President, with advice and consent of the Senate. Historically, a political balance has been maintained by nominations to fill vacancies to seat three from the party in the White House and two from the other party.

The five-member National Labor Relations Board currently has three Republican members, one Democrat, and one vacancy. We expect the Biden Administration to try to fill the vacant seat promptly. Elimination of the filibuster when the Democrats last controlled the Senate is likely to mean that a Biden nominee to the vacant seat will be confirmed without pause, changing the count at the NLRB to three Republicans and two Democrats.

Of the remaining seats on the Board, the term of Trump appointee William Emanuel (R) expires in August. Filling that seat is likely to be the first opportunity for President Biden to get a Board with a 3-2 Democratic majority. Some pro-labor officials have suggested “Board-packing” to put more seats on the Board through legislation, but that action would be unprecedented and is probably not likely to happen.

Here are the Board seats and members today, in order of term ending dates, with party affiliations noted:

• William Emanuel, term expiring August 27, 2021 (R)

• John Ring (Chair, under President Trump), term expiring December 16, 2022 (R)

• Vacant seat, term expiring August 27, 2023

• Lauren McFerran, term expiring December 16, 2024 (D)

• Marvin Kaplan, term expiring August 27, 2025 (R)

Last night, President Biden appointed Member McFerran as NLRB Chair.

The term of the current NLRB General Counsel, Peter Robb, was set to expire in November 2021, but the Biden team asked him to resign immediately. General Counsel Robb sent a letter last night saying that he would not resign before the expiration of his term. He was subsequently fired last night. The General Counsel’s office essentially serves as prosecutor of unfair labor practice charges and to a large extent controls Board policy in enforcement. Involuntary termination of an NLRB General Counsel apparently is unprecedented and has never been tested for legal validity.

During the Trump Administration, the Board has eased employers’ regulatory burdens with an arguably more balanced interpretation and enforcement of the NLRA than we saw during the Obama Administration. This has accompanied nearly full employment for the later years of President Trump’s term, before the COVID pandemic struck. Once in control with a Democratic Board majority and a new General Counsel in place, a “complete flip” can be expected. Specifically, we expect the Biden Board to overrule many recent NLRB decisions, reverse recent NLRB rulemaking issued by the current Board’s Republican majority, and withdraw or replace the numerous memoranda from the Office of the General Counsel that were issued during Mr. Robb’s term that generally gave employers more flexibility to handle workforce issues efficiently and gave workers more freedom to remove themselves from union representation.

Recent NLRB decisions that are likely to be reversed

The current NLRB majority of Trump nominees overruled many decisions of the Obama-era Board. Employers should expect these Trump-era decisions to be overruled by the Biden Board, if not earlier legislatively, once the NLRB has a Democratic majority again. The following changes are likely:

• Employee access to employers’ electronic communications systems for protected concerted activity, such as union organizing, if employees use the systems for business.

• “Micro” bargaining units with proof of an overwhelming community of interest (instead of the traditional community of interest standard), which would be required to expand a union’s petitioned-for unit to include additional employees for representation elections.

• Restrictions on employer policies and rules that might interfere with protected concerted activity.

• Requirement of a clear and express waiver of bargaining obligations regarding mandatory subjects of bargaining during the term of a collective bargaining agreement.

• Including dues check-off as part of the status quo after a collective bargaining agreement expires, unless the agreement contains clear language to the contrary.

• A standard that makes it much more likely for the Board to find a “joint employer” relationship.

• A restrictive independent contractor standard that parallels the California “ABC” standard.

• Limitations on the confidentiality of witness statements in employer investigations.

• Restrictions on employers’ ability to keep workplace investigations confidential.

• Limits on the ability of employers to withdraw recognition of a union.

• Mandatory bargaining over any discretionary management decisions, including discipline, before a first contract is agreed upon.

Trump-era regulations likely to be overruled

The NLRB’s current Republican majority followed an ambitious rulemaking agenda in addition to reversing decisions of the Obama-era Board. The Board in the last few years has issued regulations to set a joint employment standard, and to replace the “quickie election” rules that provided little time for employees to hear from all sides in a representation campaign. It also proposed a policy standard that graduate student instructors or researchers at institutions of higher learning were not “employees” under the NLRA. The Biden Board can be expected to seek elimination, if not replacement, of all those regulations in rulemaking as soon as it can.

Change at the U.S. Department of Labor

The Biden transition advisory committee for the U.S. Department of Labor had no members with a management or corporate-side background. Instead, it was staffed with union-side representatives, and current or former state and federal officials. This is unsurprising given that, during the campaign, Mr. Biden himself stated that he is a “union man.”

President Biden’s nominee for Secretary of Labor, Boston Mayor Marty Walsh, was an official with a construction trades union before becoming Mayor. Employers should expect the Biden Department of Labor to roll out new substantive and enforcement policies that favor organized labor and protect its economic and political power. The DOL is expected to act in these two areas, at least:

• The “Persuader Rule.” The Biden DOL is expected to try to resurrect the Obama DOL’s “persuader rule,” which would have mandated that employers report about communications to employees, as well as the amounts spent, in opposition to union organizing and for outside labor consultants. This included attorneys who provided advice to employers in representation and decertification campaigns and related labor matters. For years, there has been an “advice exception,” but during the Obama Administration the DOL tried to narrow the exception to such a degree that it was nonexistent in the labor relations context. Even the American Bar Association expressed concerns that it jeopardized the attorney-client privilege. The Obama DOL’s attempt never took effect because it was enjoined by a federal court. But we expect the Biden Administration to try again, even if it has to do so by legislation rather than regulatory action.

• Union financial reporting and disclosure. For years, unions have complained about financial reporting requirements. These requirements will probably come under review, and it is possible that much of the current reporting will be eliminated.

Change by Executive Order

President Biden has promised a freeze on any current rulemaking of Executive Branch agencies. The freeze is expected to apply to any regulations issued by the Trump Administration that have not yet taken effect. The impact of a freeze on NLRB rulemaking is not clear.

President Biden is expected to reinstate an Obama Executive Order that would require consideration of employers' labor law violation history as a factor in awarding any covered federal contract. The Obama E.O. required employers seeking such contracts to disclose to the contracting agency any federal labor and employment law violations in the prior three-year period. Moreover, employers pursuing such contracts were required to sign neutrality agreements in which they promised not to oppose union organizing. Debarment from federal contracts will be an added penalty for multiple violations of federal labor law.

Legislation

Legislative proposals generally supported by President Biden and organized labor are pending or expected to be introduced in the coming session of Congress. Some form of these proposals are likely to get to the floor of the Senate for consideration, with final content and approval possibly hinging on whether the filibuster remains in place. These proposals are a virtual wish list for organized labor and have the potential to dramatically change the private and public sector labor landscape across the nation. From a labor law standpoint, the following legislative proposals are especially noteworthy:

• Rehabilitation for Multiemployer Pensions Act/Butch Lewis Act

• Public Service Freedom to Negotiate Act

• Public Safety Employer-Employee Cooperation Act

• Protecting the Right to Organize Act (the “PRO Act”)

The Rehabilitation for Multiemployer Pensions Act/Butch Lewis Act would give relief to underfunded pension Taft-Hartley joint union multi-employer plans, and might help employers participating in these funds to avoid liability for, among other things, withdrawal to deal with underfunding problems that have resulted from poor investments or mismanagement.

The Public Service Freedom to Negotiate Act and the Public Safety Employer-Employee Cooperation Act are intended to guarantee collective bargaining rights for employees of state and local governments.

The PRO Act would change the legal landscape for union organizing and representation, and change the balance of power between employers and labor unions to favor organized labor. The following is a summary of key features of the PRO Act and related legislative proposals that appear to have broad support from Democrats:

• Block employers from enforcing agreements that restrict employees’ participation in class actions. This aspect of the PRO Act would legislatively overrule Epic Systems Corp. v. Lewis, in which the U.S. Supreme Court held that arbitration agreements requiring individual arbitration are enforceable under the Federal Arbitration Act. The probable effect would be increased court litigation against employers.

• Invalidate Trump-era regulations to reestablish the Obama Board’s Browning-Ferris standard for joint employment under the NLRA. The Obama standard was that joint employment exists if an employer has the contractual right to control working conditions or effectively control them indirectly, even if that power is not exercised. The probable effect is that franchisors and lessor/user employers will have greater potential for liability and bargaining obligations for employees who are directly employed by others, and less flexibility to terminate contracts with other employers for labor-related reasons.

• Impose a “pro-employee” standard for determining whether an individual is an employee or an independent contractor. Any legislation in this area is expected to track the California “ABC” test and impose a heightened test for supervisory status. The probable effect is that more people (for example, gig workers) will be subject to Board jurisdiction and thus there will be more potential targets for union organizing efforts.

• Prohibit permanent replacements for employees engaged in economic strikes (as opposed to unfair labor practice strikes). The probable effect is more and longer economic strikes because there would be less employer leverage in bargaining and more incentive for unions and employees to strike.

• Allow intermittent strikes as protected concerted activity. The probable effect of this is more leverage for unions and more disruption of efficient employer conduct of the business.

• Repeal of the Taft-Hartley Act provision allowing state “right to work” laws, which prohibit employer and union agreements requiring union membership. The probable effect in the roughly 29 states that have right to work laws will be increased organizing activity in those states.  Another potential consequence could be more and longer strikes, as unions can compel employee-members to honor called strikes with union fines and discipline.

• Amendment of the NLRA to allow unions and employers to negotiate agreements requiring non-union employees to pay a “fair share fee” for the union’s representation of the bargaining unit. The probable effect is that more employees will say, “Why not just join the union if the cost is nearly the same,” while not realizing that joining the union will subject the employee to potential union fines and discipline and give the union more economic leverage in bargaining and strike situations. Paying union dues instead of “fair share fees” may also help to support political and other causes espoused by the union leadership that the employees oppose.

• Make secondary boycotts lawful. The probable effect will be economic damage to the public and secondary employers that are not involved in the labor dispute and that cannot control the resolution of the dispute. At the same time, bargaining and political power for the union side would be expected to increase by extending strike activity to the broader economy, including shutdowns of entire industry sectors, and consumer and industrial product shortages of the sort seen in some European countries.

• Legislatively reinstate the Obama Board’s “quickie election” rule. The “quickie election” rule shortened the period between filing a petition for a union election and the election, required employers to supply unions with sensitive information about election unit employees, and postponed most legal challenges to an election until after the election. The probable effect of reinstating the rule will be more surprise union petitions and less-informed employees, as well as increased costs for employers and unions associated with campaigns and post-election litigation.

• Require employee access to employers’ electronic communications systems for protected concerted activity, such as union organizing, if employees use the systems for business.

• The return of “card-check” recognition. Employers can expect the effort to obtain “card check” for establishing union representation with no secret ballot election in certain situations. The probable effect will be the establishment of more union bargaining relationships where employees have not had the chance to freely vote on an informed basis. And union representation will be almost certain when combined with Board acceptance of “micro” bargaining units with a bias toward finding petitioned-for bargaining units presumptively appropriate.

• No more “captive audience” meetings. Employers can expect to be prohibited from requiring attendance at meetings regarding unionization during union campaigns. The probable effect is that employees will not hear the employer’s view on unions and, therefore, more union victories in representation elections.

• Fines for unfair labor practices with potential personal liability for management. The amount of the fines could be $50,000 per violation, and $100,000 for repeat violations. The probable effect is increased risk of employer liability and increased reluctance of management personnel to vigorously support the company’s position on unionization.

• Temporary injunctions while interference and termination cases are being litigated at the Board. The NLRB may be required to seek temporary injunctive relief whenever there is reasonable cause to find that an employer unlawfully terminated an employee or significantly interfered with employees’ rights under the NLRA. It is also expected that federal district courts will grant the temporary relief for the duration of the NLRB proceedings, unless the courts conclude that there is no reasonable likelihood that the NLRB will succeed on the merits of its claim. The probable effect of this is that employers will be more prone to settle unfair labor practice charges to rid the workforce of problem employees immediately – even if the charges lack merit.

• Expansion of the unfair labor practice remedies. This could include awards of consequential damages, as well as liquidated damages of up to twice the amount of actual damages awarded, in addition to back pay and front pay. Again, the probable effect would be increased risk of employer liability and increased reluctance of supervisors and managers to vigorously support the company’s position on unionization.

• Establish a private right of action for unfair labor practices. This means that employees will be able to sue in court for alleged unfair labor practices if the NLRB General Counsel does not pursue their charges. The probable effect would be increased litigation, and increased defense costs and risk of liability for employers.

• Require employers to post an official notice to inform employees of their rights under the NLRA. Although this is probably not the end of the world for most employers, there is the potential for liability if the postings are not up, or are in bad condition or obscured by other postings.

• Require first contract mediation and arbitration if no contract is agreed upon within 90 days of the start of bargaining. The probable effect is increased pressure on employers to get a collective bargaining agreement so that they can avoid the expense of mediation and arbitration, and the risk of a significant adverse outcome from an arbitration panel with no long-term accountability.

• Establish a cabinet-level team to promote union organizing and collective bargaining. The probable effect will be increased exercise and consideration of organized labor’s political power in areas outside of the labor and employment context.

 The bottom line

Federal labor law is likely to see a huge shift as the Biden team goes to work. Employers and others who may be affected should monitor developments and begin now to consider how they will stay out of harm’s way. The challenge will be providing viable and profitable employment opportunities in a much more difficult, risky, and expensive environment.

For a printer-friendly copy, click here.