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Brace Yourselves!

Brace Yourselves! | Human Resource Executive Online Whoever wins this historic presidential race, HR professionals should prepare themselves for some dramatic changes in employment law and labor activity.

Monday, September 1, 2008
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This presidential election has HR executives quaking in their boots.

Regardless of which party wins the White House, there will likely be an onslaught of legislation that could have a profound impact on HR -- from unions to sick leave to ergonomics.

If the Democrats pick up seats in the House and Senate, as expected, a Republican administration might have difficulty stemming the tide, a variety of policy experts say. And if Barack Obama is elected president, human resource leaders could see more new workplace regulations than at any time in the last two decades.

"2009 will be the year of living dangerously for HR executives," says Larry Lorber, a Washington-based employment-law attorney with Proskauer Rose and chairman of the U.S. Chamber of Commerce's Equal Employment Opportunity Committee. "The Democrats are teeing up all these bills. There's pent-up demand."

Says John Sullivan, a management professor at San Francisco State University, "This could be the biggest change for HR since the Reagan administration."

Healthcare and immigration remain major issues for HR, though policy experts say it's not clear exactly what impact the upcoming elections might have in those areas. McCain and Obama have relatively similar approaches to immigration reform. And each candidate has put forth healthcare proposals that could be both good and bad for corporate America.

"There are no clear-cut friends or foes on healthcare," says Dan Yager, senior vice president and general counsel of the HR Policy Association in Washington, a group of senior-level HR leaders.

One issue in the presidential race is much clearer, and looms far above all the others for HR -- the Employee Free Choice Act, known as EFCA.

"It's the big daddy of them all," says Lorber.

EFCA would allow workers to join a union -- without a secret-ballot election -- if more than half of any bargaining unit sign union-authorization cards. Business groups contend employees, even ones who oppose a union, would be pressured by labor organizers and co-workers into signing authorization cards. Without a secret-ballot election, those workers would have no opportunity later to vote against the union.

EFCA opponents say that one-two punch -- the pressure to sign and the lack of a vote -- would lead to an explosion of unionization.

Also extremely troubling for business groups is a provision in EFCA that says when the employer and the union can't agree on a contract within 90 days, either party can ask for federal mediation -- which could lead to binding arbitration. Employers fear such "first-contract arbitration" would take away a great deal of their flexibility in employment decisions, and make them less competitive and profitable.

"This is the potential generational change in our labor laws," says Michael Lotito, a workplace-law expert and partner in the San Francisco office of law firm Jackson Lewis. "Nothing in my lifetime, including the Civil Rights Act of 1991, would change our labor and employment laws as dramatically as EFCA would."

EFCA passed the House in 2007, but failed to make it through the Senate, where supporters couldn't get the necessary 60 votes to end debate. That could change if the Democrats pick up Senate seats.

Obama is a strong supporter of EFCA; McCain has voted with opponents. Lotito predicts that with 60 pro-EFCA senators, and Obama in the White House, the bill would be enacted within 100 days after Obama takes office.

Even if McCain is elected, EFCA still could become law, according to Lotito and others. There could be enough pro-EFCA Senate votes to overcome a McCain veto. Alternatively, if EFCA passes the Senate and is sent to McCain as part of a compromise with another piece of legislation -- say, a tax or energy bill -- McCain could well sign it.

EFCA may not get enough Senate support, but that doesn't mean employers would be in the clear. Policy experts say there would likely be a compromise bill, one that might drop the union card-check provision but keep first-contract arbitration. And McCain might go along with it -- again, as part of a larger compromise, the experts say.

Employers worried about EFCA can only hope that, regardless of who is elected president, and how many seats the Democrats gain, the Republicans will stand firm in the Senate.

"It is possible," Lotito says, "that the Republicans will hold tight and say, 'This is a defining moment; there is no compromise.' "

For HR, EFCA is not just another bill in Washington -- it would change the nature of the profession, says Lotito.

"With EFCA, talking about a union is not going to be an event; it's going to be a way of life."

Because the majority of employees could sign authorization cards before a company even gets wind of a union drive, human resource leaders will have to be proactive.

"The company is going to have to communicate its value proposition, and why a union is irrelevant, in its everyday communications with its workforce," says Lotito. HR will also have the responsibility to make clear to employees the value of their benefits, including such intangibles as complaint resolution and promotional opportunities.

In addition, HR will also have to train supervisors to communicate to employees why unions aren't needed, and make sure supervisors properly handle employees' questions about unions.

An increase in unions will mean that HR will have to get involved in a host of labor issues, such as helping negotiate and administer collective-bargaining agreements.

"The HR person is going to have to become a labor person," says Lotito, the way it was back in the 1940s and '50s, when unions reached their peak.

"This will revolutionize the HR profession," he says, "by taking us ahead -- into the past."

Many policy experts believe HR is ill-prepared for EFCA.

"Most of the HR leaders at companies today have grown up in a world where they haven't had to deal with unions," says Fred Foulkes, professor of organizational behavior and faculty director of the Human Resources Policy Institute at the Boston University School of Management.

And, he adds, "a lot of HR staffs have been downsizing. If you have plants around the country, and you're dealing with dozens of organizing drives, it's going to be difficult to respond."

Government at Work

According to policy experts contacted for this story, EFCA may be HR's most serious concern, but it's just one of many far-reaching workplace regulations that could become a reality with the Democrats in control of both Congress and the White House. Among them:

* The Healthy Families Act. The bill would require employers with at least 15 employees to provide seven paid sick days per year. The measure failed to gain traction during the previous session of Congress, but was co-sponsored by Obama, and if he's elected, the bill "would stand a decent chance of passage," says Mike Peterson, the director of labor and employment policy for the HR Policy Association.

McCain has not taken a position on the bill, and Peterson and other policy experts say they don't know whether he would oppose such legislation.

The bill is strongly opposed by business groups, who are worried about the cost and the loss of employer flexibility.

"Employers would like to manage and decide the appropriate benefits that make sense to their workforces," says Jeri Gillespie, vice president of human resource policy for the Washington-based National Association of Manufacturers.

* The Lilly Ledbetter Fair Pay Act. The bill, aimed at reversing a Supreme Court ruling, would make it easier for employees to sue for pay discrimination. Each time an employee receives a paycheck or pension payment, the time period for filing a claim would be restarted.

Business groups say that, under the bill, ex-employees could file claims years after they've left a company -- all they'd need is to receive a pension check. Such claims could be difficult to defend against, particularly if witnesses have died or moved away.

And, says Peterson, "there would never be any finality from an employer standpoint."

The bill passed the House last year and was introduced in the Senate this year but failed to advance. Obama is a strong supporter of the measure; McCain has said he would vote against it.

As with the Healthy Families Act, the bill has a reasonably good chance of passing if Obama wins and the Democrats show strong gains in the Senate, policy experts say.

* The Civil Rights Act of 2008. Opponents say this bill would create more headaches for HR than a jackhammer in the ear. Most worrisome is the provision that would eliminate caps on compensatory and punitive damages awarded in discrimination cases.

In addition, the bill would eliminate pre-dispute arbitration agreements, in which workers agree to arbitrate any complaints with the company, rather than in court. The bill would also render unenforceable any agreements already signed.

Proponents of the bill say employees are pressured into signing such agreements; employers argue that the agreements allow resolutions that are faster, more efficient, less expensive and confidential.

The bill would also allow plaintiffs in wage-and-hour lawsuits to recover compensatory and punitive damages, in addition to the back pay currently allowed.

The legislation was introduced in both houses this year; Obama was a co-sponsor in the Senate. McCain hasn't taken a position but would likely veto it, experts say.

* Ergonomics. In 2000, the federal Occupational Safety and Health Administration introduced ergonomic standards for the workplace. Business groups attacked the standards, saying they would cost employers as much as $100 billion to implement, and the new rules were overturned by Congress in 2001.

Congressional Democrats are expected to push for the standards to be reinstated. Obama has said he strongly supports such a move; McCain would likely oppose reinstatement, policy experts say.

Obama and McCain are on opposites of a number of other issues that would affect the workplace. For example, Obama wants to raise the minimum wage as inflation rises. McCain, at a campaign appearance before a group of business leaders, called that "a sure way to add to your costs and to slow the creation of new jobs.

And last year Obama, with two co-sponsors, introduced the Patriot Employer Act of 2007, which would give tax breaks to companies that keep jobs in the United States, maintain their corporate headquarters here, pay a certain level of wages, stay neutral during organizing drives, pay at least 60 percent of the healthcare premiums of employees, prepare workers for retirement and support workers who serve in the military.

Even with Obama in the White House and a strong Democratic Congress, the bill may not have much chance of passing, says Yager, of the HR Policy Association. But, he adds, "it's a blueprint showing how Barack Obama would define who is a good employer and who is not a good employer."

HR is also keeping a close eye on what will happen to the Bush tax cuts, which are set to expire in 2010. McCain is expected to extend most of them; Obama is expected to let some expire.

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Mike Aitken, director of governmental affairs for the Alexandria, Va.-based Society for Human Resource Management, says changes to the tax cuts will have a significant impact on the human resource profession, ranging from pension-plan administration to the way retirement savings are calculated.

Aitken notes that "many companies recruit on employee benefits," and letting some tax cuts expire would "cut down on some of the things you're trying to push for."

At least one major set of regulations could go into effect before the next president takes office. The Americans with Disabilities Act Restoration Act would reverse four Supreme Court decisions that narrowed the definition of a disability, thereby limiting who would be covered by the ADA. Under the Restoration Act, for example, courts and employers could no longer consider mitigating measures, such as medicine or a device, to determine whether a person is disabled.

The bill is moving through Congress and could reach the desk of President Bush, who is expected to sign it. Both McCain and Obama support the measure. (The bill had yet to be signed at press time.)

Immigration Matters

Although recent polls show that worry about the economy and energy costs has diverted the public's attention from immigration reform, the issue is still very much on the radar of HR leaders.

Not that they're likely to get many details from the two presidential candidates.

"I think they're being intentionally vague -- it's not an issue they want to talk about publicly," says Lynn Shotwell, executive director of the Washington-based American Council on International Personnel, whose members are in-house immigration professionals -- usually in HR or the legal department -- at large, multinational employers.

It's hard to take a position on immigration without alienating voters on one side or the other, and so the two candidates are talking in generalities.

McCain has been particularly silent on the issue, says Shotwell, because his past positions have alienated the many Republicans who oppose any sort of "amnesty" for illegal immigrants. In 2005, McCain, along with Sen. Ted Kennedy, D-Mass., introduced a bill that would have created a path to legalization. Like other immigration-reform bills, it failed to get off the ground.

Shotwell and other immigration policy experts say McCain may not come out and announce it, but if a strongly Democratic Congress passed a bill similar to the one he co-sponsored, he would probably sign it.

"He understands the complexity of the situation, and would support a reasonable solution," says Shotwell.

Obama also supports legalization. Just about the only difference between the two candidates, say experts, is that McCain argues that securing the border with Mexico should be the first priority.

There may be differences in their approaches to H-1B non-immigrant visas for highly educated workers. Both candidates support increasing the number of visas allowed, says Shotwell. But Obama, who shares labor's concern that H-1B workers are sometimes used to substitute for American workers, would likely put more restrictions on how employers can use the visas, she says.

"New restrictions," says Shotwell, "would add to the bureaucratic hurdles for companies that comply with the visa requirements, and the ones that don't comply aren't going to comply."

But, she says, the positions of the two candidates may not make much difference in the end. "What really drives the debate is Congress," she says. "Either Obama or McCain, like Bush, would sign almost any reasonable bill that would be put in front of them."

Pain, Gain in Healthcare?

HR leaders hoping to find a clear choice between McCain and Obama on healthcare are likely to be disappointed. Both candidates are offering proposals that business may find difficult to swallow.

McCain's plan to shore up the individual health-insurance market could have a major impact on HR, says Marisa Milton, the director of healthcare policy for the HR Policy Association.

McCain is proposing a refundable tax credit of $2,500 for individuals and $5,000 for families to offset the cost of health insurance.

That would be a boon to people with individual health plans, who currently get no tax write-offs. But it would also mean that many people who get health insurance through their employers would no longer get a full write-off -- and so their plans would essentially cost more.

The danger to employers is that many young, healthy workers might be tempted to move into the individual market, where they may be able to get a better deal. "As healthy people leave, the employer-based plans could implode," says Milton.

Obama is calling for a new national healthcare plan that would cover the 47 million Americans who don't have health insurance. Part of the cost of that plan would come from employers.

Under Obama's proposal, employers that don't provide a "meaningful" contribution to their workers' health coverage will have to pay the government a percentage of their payroll. The money would go toward the national plan.

Business leaders may not like this proposal any more than McCain's. As Milton says, "No one is going to come out of this unscathed."

As with immigration, the two candidates' overall proposals on healthcare aren't particularly detailed, and HR leaders don't have a clear picture on everything that might affect them.

Yager says the candidates are likely to keep things vague.

"At the end of the day, healthcare is going to take a comprehensive solution, and we're not likely to see that articulated before the election."

However important immigration and healthcare may be, that's not what this election is all about for HR executives.

All the employment-related bills are like planes circling an airport, getting ready to land. And many of them may get clearance, no matter who becomes president.

"This backlog of employment stuff is the wish list of the union folks and the civil-rights folks," says Lorber, the Proskauer Rose attorney.

"That's what frightens HR executives the most."

In other words: Get ready.

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