A Publication of WTVP

In recent weeks, much of the media coverage regarding the presidential transition focused on the challenges posed by a deepening recession. President Barack Obama announced a massive stimulus package, which will certainly draw significant attention in the immediate future. Employers should be mindful, however, that not all of President Obama’s plans revolve around job creation or economic stabilization.

During his service as a Senator, and in various campaign speeches, President Obama clearly announced that he intends to revamp the American workplace. Should these efforts succeed, employers will face substantial additional litigation costs and increased risk of liability exposure. This article will summarize some threatened employment law changes under the Civil Rights Act of 2008, the Lilly Ledbetter Fair Pay Act, the Working Families Flexibility Act, and the Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers Act (RESPECT Act).

While a Senator, President Obama co-sponsored a bill entitled “The Civil Rights Act of 2008” (H.R. 5129/S. 2554), which proposed sweeping changes to several federal laws, including Title VII of the Civil Rights Act of 1964, as amended; the Equal Pay Act; and the Federal Arbitration Act.

The Civil Rights Act of 2008 seeks to eliminate the damage caps for discrimination, harassment and retaliation claims under Title VII and the Americans with Disabilities Act (ADA). Currently, these caps impose a maximum award for compensatory and punitive damages based on the number of employees an employer maintains. Elimination of damage caps significantly increases both the cost of litigation as well as the cost of settlement. With potentially unlimited dollars waiting at trial, plaintiffs and their counsel wield a much larger stick during settlement negotiations.

Additionally, the Civil Rights Act of 2008 would alter the availability of certain employer-friendly affirmative defenses under the Equal Pay Act (EPA) and expand the types of damages available to successful plaintiffs. On January 6, 2009, Congresswoman Rosa DeLauro introduced a variation of the EPA changes contemplated by the  Civil Rights Act of 2008 in the Paycheck Fairness Act (H.R. 12), with 198 co-sponsors.

Currently, the EPA requires employers to pay men and women equal pay for “equal work on jobs, the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.” The EPA has always afforded employers certain affirmative defenses, including the ability to avoid liability for an EPA claim where a wage differential occurred because of any “factor other than sex.” The amendments contemplated by the Civil Rights Act of 2008 and the Paycheck Fairness Act would require the employer to establish that the pay differential is “bona fide,” which means essentially the differential is “job-related with respect to the position in question and consistent with business necessity,” such as education, training or experience. The revisions further allow recovery of compensatory damages, and in the event the employer acts with malice or reckless indifference, punitive damages would also be available. Under the current law, a successful EPA plaintiff may only recover unpaid wages and liquidated damages in an amount equal to the unpaid wages.

The Civil Rights Act of 2008 also seeks to amend the Federal Arbitration Act (FAA). Today, the FAA allows employers to require applicants and employees to execute an agreement that any disputes arising from the terms and conditions of employment be subject to mandatory arbitration. The threatened amendment requires employers to seek the employee’s knowing, voluntary consent to arbitration only after the alleged dispute arises. Should this law pass, employers who rely on mandatory arbitration clauses to limit litigation costs and exposure will be deprived of a significant business tool.

The Lilly Ledbetter Fair Pay Act, which President Obama sponsored in 2008 but did not survive the Senate, re-emerged on January 6, 2009 (H.R. 11), in the form of the Lilly Ledbetter Fair Pay Act of 2009 (LLFPA). The LLFPA would overrule a U.S. Supreme Court decision holding that a Title VII plaintiff could not reach back in time to the first date a discriminatory pay practice occurred, but was limited to claims that arose in the statutory period of either 180 or 300 days. Effectively amending Title VII, the ADA and the Rehabilitation Act of 1973, the LLFPA would deem each payment that arose from a discriminatory employment decision a new violation of the underlying statute.

The Working Families Flexibility Act (WFFA), if passed, would afford employees the opportunity to individually negotiate certain terms and conditions of employment with their employers. Specifically, the employee may, on a yearly basis, request a change to the number of hours worked, the weekly work schedule or the work location. The WFFA would obligate employers to meet with the employee to discuss the request and provide a written explanation for the decision. The employer must articulate various specific reasons for a denial. Moreover, employees would be entitled to have a “representative of the employee’s choosing” present at the negotiations. The Department of Labor would enforce the WFFA (including the anti-interference and anti-retaliation provisions) by administrative review.

The RESPECT Act would amend the National Labor Relations Act (NLRA). The NLRA, which regulates labor/management relations, excludes “supervisors” from the class of persons afforded rights under the statute. At present, the NLRA defines a supervisor as an employee with the authority to “hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward or discipline other employees or the responsibility to direct [other employees], to adjust their grievances, or effectively to recommend such action” if the supervisor exercises “independent judgment” in performing these tasks. The RESPECT Act would significantly narrow the definition of “supervisor” by eliminating the “assign” and “direct” functions from this definition and including a requirement that a “majority” of the supervisor’s working time be spent performing the other delineated supervisory tasks. Should Congress enact these changes, front-line supervisors would be subject to unionization, which would likely limit management’s ability to speak to its employees about union organization or union-related matters through them. As a Senator, President Obama sponsored a similar bill in 2007.

Although certain changes loom on the horizon for nearly all Americans, employers should be particularly alert this year to pending legislation in Congress. No period in recent history threatened such far-reaching changes in the employment law landscape. iBi