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Warnings from the Top

Warnings from the Top | Human Resource Executive Online The nation's most powerful employment attorneys for 2009, presented exclusively by HRE, tell you what they see on the horizon from the Obama administration, and what you need to do.

Saturday, May 16, 2009
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For battle-weary employers, it can be easy to feel adrift in a choppy sea of red ink and rocky choices these days.

In this churn of lost jobs, lost retirement and lost business, it might make sense to simply tread water without thinking about just how bad it really could get, or how best to plan for the future. Bad idea, say some of the nation's top employment attorneys for 2009, according to an exclusive list compiled by Human Resource Executive® magazine and Lawdragon, the Los Angeles-based news and networking site for lawyers and clients.

Each top attorney interviewed for this story says just about the same thing: Buoyed by support from big labor, the Obama administration has the potential to rock the boat for employers. Like it or not, changes are coming.

Exhibit A: The Lilly Ledbetter Fair Pay Act of 2009; signed into law by Obama on Jan. 29, the act extends the statute of limitations to file a pay-discrimination claim with every paycheck.

Exhibit B: The Employee Free Choice Act; the big dog of labor issues, hotly debated by employers, lobbyists, organized labor, the media and just about anyone who holds an opinion about anything workplace-related. Still in committee, EFCA could potentially pave the way toward easier union organization and certification.

Exhibit C: The regulations set up for the new ADA amendments that went into effect Jan. 1, broadening the definitions of those covered under the act and creating the potential for more claims filed against employers.

Add to these an undoubtedly more labor-friendly National Labor Relations Board, as the Obama administration is likely to fill three vacant seats to the five-person board. Also don't forget an immigration reform push that will probably embrace millions of illegal immigrants but entangle foreign high-skilled workers. And get ready for a host of other issues waiting in the wings, some of which have merely been eclipsed by Exhibits A through C, or by attention paid to the economic-recovery plan.

"Employers have got to be feeling like a Christian Scientist with appendicitis these days," says Joel H. Kaplan, a partner with Seyfarth Shaw in Chicago. "It's not a good environment for employers, and it's going to be a very difficult four years -- maybe eight."

The prescription these attorneys offer? Perform regular audits and remain vigilant toward legislative developments beyond the horizon.

Better take their advice to heart. And better make sure you have a good attorney. According to Katrina Dewey, publisher and CEO of Lawdragon, all the lawyers named on the Top 100 list are "go-to" attorneys, though there are hundreds more out there with "the chops to deal with every situation from a broad context, rather than as if it's the first time [they'd seen it]."

Good thing, because just about every employment lawyer practicing in America today will be sinking their teeth into a host of new legal challenges.

In some ways, unions' hopes in 2009 may revolve more around the Capitol, not 1600 Pennsylvania Ave. In fact, on Jan. 9, while Rep. Hilda Solis, D-Calif., was attending her first confirmation hearing as the would-be new U.S. Secretary of Labor, the House approved two labor-backed bills by wide margins: the Ledbetter Act and the Paycheck Fairness Act, which amends the Equal Pay Act of 1963 by creating stronger protections against unequal compensation based on sex. Both bills had been stymied in the Senate in 2008 because of Republican opposition and a presumed veto from President George W. Bush.

Roger Quillen, a partner with Fisher & Phillips in Atlanta, says both Ledbetter and the Paycheck Fairness acts could represent huge headaches for HR. Particularly in the case of Ledbetter, he says, there are "significant ramifications in terms of record-keeping requirements."

Instead of a statute of limitations that specifies the claimant has 180 days to file a pay discrimination charge, the Ledbetter Act specifies that the statute of limitations is automatically renewed each time the employee is paid. For employers, Quillen says, the Ledbetter Act could be a ticking time bomb.

The Ledbetter Threat

While EFCA captures the lion's share of attention from most corners in employment law, Quillen says, the Ledbetter Act, "in a very practical sense, is going to have an impact in far more workplaces."

"The problem for employers," he says, "is that they don't really know when a claim like that might turn up, and they don't know what kinds of records they should be keeping in order to defend themselves . . . ."

Garry G. Mathiason, a partner and shareholder with Littler Mendelson in San Francisco, calls Ledbetter a warning shot across the bow of employers.

"I don't think it was accidental that the first legislation signed was Ledbetter," he says. The message from the administration was clear, he says: " 'On employment laws, on labor laws, on issues in the workplace, we're going to be very aggressive.' "

To prove his point, Mathiason cites another development that will have enormous impact for employers: a beefed-up U.S. Department of Labor under Solis, with plans to add 250 new investigators to its wage-and-hour division.

The juice behind the new muscle at the DOL is an increase of $600 million in the department's discretionary spending for enforcement under Obama's proposed budget.

"If you think about that much money going into enforcement, it's just unbelievable," says Mathiason.

Enforcement officers from DOL may be plenty busy. Last year, the agency estimated that as many as 70 percent of employers were not in compliance with the Fair Labor Standards Act, and Mathiason expects charges against employers for violating wage-and-hour laws to increase.

Further evidence of renewed enforcement efforts from the DOL appeared in late March, when the U.S. Government Accountability Office released the results of an audit of the DOL's wage and hour division. Conducted from July 2008 to March 2009 at the request of Rep. George Miller, D-Calif., the report rips into the department with charges of inept handling of complaints and sometimes passive approaches with employers over wage disputes.

Mathiason and other employment attorneys contacted for this story warn that now is the time for employers to conduct their own audits of wage-and-hour practices, before any issues arise.

EFCA in the Center Ring

EFCA, however, remains the issue making the loudest noise and potentially inflicting the harshest blow to human resources because of the changes it could bring to the workplace, including easier union certification through a card-check process rather than a secret-ballot election and mandatory arbitration for the first collective-bargaining agreement if neither the employer nor union can voluntarily agree to terms.

Kaplan says the arbitration provision of EFCA is more odious a prospect for management to face than card-check.

"As an economic matter and as a labor-relations matter, I see the arbitration [provision] as much more pernicious and, in the long run, much more hurtful to employers and ultimately destructive to labor relations," he says.

Because of the provision, he says, collective bargaining will become "a sham, because unions are going to say, 'Hell, I've got nothing to lose by pushing ridiculous positions.' " Kaplan says he isn't certain that the legislation will ultimately see the light of day.

Some Democratic senators who voted for cloture in June 2007 have already said they are interested in finding some accommodation between labor and business.

And a recent defection from the pro-EFCA camp of Sen. Arlen Specter, D-Pa., who announced that he would vote against the bill because of the economic climate -- and this, roughly a month before he stunned the political world by swapping parties -- further sucked away some momentum from the bill's imminent passage.

Even Diane Feinstein D-Calif., one of the bill's sponsors, withdrew her support in late March, calling the bill in its present form too divisive in light of the economy. Perhaps Feinstein was taking a cue from Obama, who supported the bill while in the Senate, but told The Washington Post on Jan. 15 that EFCA won't be worth much if there are no jobs to be had.

Paul Salvatore, a partner and global co-chair of the labor and employment department in the New York office of Proskauer Rose, agrees the legislation will pass, in one form or another.

And if and when it does, "EFCA will really rock the world, in terms of how unions organize and what the future of organized labor will be in the private sector," says Salvatore, who is also HRE's legal columnist. "I think that is the main event.

"Because unions have declined, really since the early 1980s in the private sector, most human resource people don't have the hands-on labor-relations experience that EFCA would call for," he says.

In addition to the push from organized labor, Salvatore also cites the pro-labor views of Vice President Joe Biden and the appointment of Solis as Secretary of Labor as key signs that the tide is turning in favor of new labor legislation.

"We're in a different era, and employers need to understand that," he says. "I think we're going to see an era of increased regulation."

And it seems as if organized labor itself is trying to reorganize and play nice to achieve common goals.

In March, an article in The New York Times cited reunification overtures by the AFL-CIO and Change to Win -- the two major labor organizations.

"If that happens, there will be one labor federation of some sort that will be much more powerful" than each is now, says Salvatore.

In April, the groups reported that they had reached a united front on their support for immigration reform. When immigration reform was a hot initiative from the Bush administration in 2007 -- which Obama supported -- the fractured groups didn't see eye-to-eye on a platform. That seems to have changed now.

Also in April, the Obama administration reaffirmed its intent on pushing immigration reform, perhaps as early as this year.

 

H-1 Bye-Bye?

Austin T. Fragomen, a partner in the New York office of Fragomen, Del Rey, Bernsen & Loewy, says there's a split personality to Obama's dedication to comprehensive immigration reform. Sure, he's pro-immigration reform, but for employers looking to bolster a global workforce with highly skilled, high-achieving H-1 or L-1 workers? You've got a problem.

Case in point: When the American Recovery and Reinvestment Act of 2009 passed, it included the Sanders-Grassley Amendment, also known as the Employ American Workers Act.

The amendment, produced by Sens. Bernie Sanders, I-Vt., and Charles Grassley, R-Iowa, essentially prohibits employers who receive stimulus funds from filing H-1 petitions for new employees, unless they can prove they are dependent on such employees.

"Now, the president didn't come out and support this, but we have to assume that he didn't oppose it, either," says Fragomen.

He says it's plausible that the EAWA will also be woven into the administration's comprehensive immigration-reform package.

The effect will be devastating, he says, particularly for global businesses.

"There's a big threat here in global companies being able to access global talent," he says. "It's very consistent with the American organized labor [position], which is that you shouldn't have to hire any foreign nationals, [and] you should educate and train every worker from the United States."

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Ultimately, businesses that need to stay competitive on the global stage may find themselves shackled to a front-row seat as companies in countries with less restrictive hiring practices outperform them.

Ironically, says Fragomen, many of the technological innovations that have spun out of Silicon Valley are the results of immigrant workers, who ultimately created millions of jobs and billions of dollars for America.

"But I think that's going to be very difficult now, in this environment," he says.

The potential for being left behind in the global marketplace extends beyond business and into some of the most prestigious universities. After all, if foreign students can't attend Harvard, Tuck, Wharton or another university to earn an M.B.A., and find meaningful employment in the United States, they're unlikely to attend schools in the United States.

Fragomen says employers and universities that are concerned about keeping their edge in the marketplace need to keep their eyes peeled on developments in Washington. But don't just sit there -- agitate.

"I think businesses need to become highly motivated and active through their trade associations," he says.

"Directly approach members of Congress and the administration. Take a very active role in this debate, because it's going to be very important, and [be prepared] to point out all the pitfalls in these policies. If companies can't access top people for research facilities, what do they do? They don't hire Americans; they go build a research facility in China."

Time to Train, Audit

Recess is over now; in addition to making your voice heard by lobbying, it's time to turn your attention to Labor Relations 101.

"Many companies have been ... training supervisors and employees in a prophylactic effort to keep their workplaces union-free," says Salvatore.

Knowing how and what to communicate to employees about the pros and cons of union representation is essential. Salvatore cites the decline of the American auto industry as an example of the problems that organized labor can bring to an industry, and, thus, to the employee.

But there's a difference between making a case to employees and trespassing against the law, and the National Labor Relations Act specifies what employers can and can't do.

Keep it on the up-and-up, says Quillen. "You can talk about a union's track record, you can talk about officials of the specific union who have been tried and convicted of corruption," he says. "As long as there's nothing that's an implicit threat or coercion."

Mathiason's worry about employers and labor relations can be summed up in one word: naiveté. 

"We've got a whole generation of managers out there now who have never dealt with a union issue," he says. "They've never been taught on threats, interrogations, promises, surveillance tips ... . We used to teach all that stuff."

Employers should also perform top-to-bottom audits -- of work rules, employment practices (to ensure they're nondiscriminatory), workplace safety ... the works, says Quillen.

"Scour your workplace, and make sure you have a really clean house," he says. Do you need better lighting? Get it, he says. Machinery guards to protect against moving parts? Check. Ergonomic keyboards? Check.

Employees will appreciate the attention to their health and safety, and union organizers won't be able to cite hazardous workplace conditions.

Wage-and-hour audits are also a must, says Mathiason -- preferably an attorney-client privileged audit, so any irregularities don't create problems for the employer. "Find out where your weaknesses are, and put serious effort into the compliance process, because you're going to need it," he says.

And what should you do if a wage-and-hour audit turns up a potential violation of the Ledbetter Act or other potential bias?

Hands down, all recommend that you restructure the compensation system to reclassify a broad spectrum of employees.

Doing so, says Mathiason, eliminates "all of that historical anomaly."

Kaplan also suggests that every employer should have a strict document retention policy, so there's always a paper trail to explain differences in salaries.

Train to Accommodate

The ADA Amendments Act also holds the potential to torpedo an employer with potential claims of disability discrimination.

The new amendments to the Americans with Disabilities Act extend the definition of disability to include what may have before been considered an impairment.

"Before the ADA Amendments Act passed, the lower courts had done a lot of work to define -- to limit, really -- the definition of 'disability' and 'substantially impaired,' " says Quillen.

"This act has come around and swept a lot of those limiting decisions away. Whether you're talking about hearing aids or taking medications for diabetes or taking medications for seizures, those mitigating measures are not sufficient to keep someone from falling into the definition of disabled."

Kaplan urges employers to get up to speed on the specifics of the ADAA, and recognize where they may be vulnerable for a claim of discrimination, from job descriptions to workplace requirements.

"The problem with the ADAA now is going to be less on the accountability end than on the reasonable-accommodation end," says Kaplan.

Those expanded definitions mean that employers must make sure managers understand the new parameters of the ADAA and how it affects them. Review job descriptions with an eye on the new amendments.

Between training and audits, it's no wonder some employers might opt to hunker down and take their chances through the next four years, hoping to pull out of the recession stronger than ever.

But that would not be wise, of course.

"It's crazy," says Mathiason. "I mean, what do you do? You have all these tsunami warning sirens screaming. The employer that doesn't take [the appropriate] steps is going to pay 20-fold when it hits."

(Editor's Note: This special advertising section profiles some of those attorneys selected for inclusion in the Most Powerful Attorneys of 2009.)

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