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What does Barack Obama's victory auger for employers, and for their counsel? What are the likely legislative changes that will result? And, does this signal a time of new cooperation, or confrontation, between management and labor?

Union membership is at historical lows, down to about 7.5 percent of the private-sector work force, one-third the rate in 1983. Unions are understandably eager for Congress to pass legislation that will reverse this continual slide. They are particularly eager, as a first order of business, to seek passage of the Employee Free Choice Act ("EFCA"), which would make it significantly easier for unions to gain representation in a particular company. Obama has committed to signing such legislation.

'ARMAGEDDON'? NOT LIKELY

What is the expectation of employers in advance of a union- and employee-friendly Obama Administration? Surely, it lies somewhere short of the answer provided recently by one spokesman for the United States Chamber of Commerce: "This will be Armageddon."[FOOTNOTE 1]

With the economy in turmoil, the unemployment rate rising precipitously, and corporate layoffs unfortunately becoming more and more prevalent, Obama's victory comes at a challenging time both for companies and employees. Nevertheless, despite these problems, the atmosphere between employers and employees is relatively positive.

Litigation is down. Fewer discrimination lawsuits, whether class-wide or individual, are filed today, and employers are eager to resolve disputes through mediation or in other non-contentious ways.

Even with the economic downturn, most employers want to attract and keep good employees. The move toward corporate social responsibility, diversity, transparency in business decisions, and compliance with EEO and other employment laws all reflect an effort on behalf of employers to maintain good relations with employees.

Similarly, companies' efforts to help employees strike a "work-life balance" have become more important than ever, and they indicate a new era of cooperation between employers and employees.

Most of these positive developments, of course, have taken place in the absence of labor unions, and at a time, again, when they are historically at a period of low influence.

Nevertheless, with Obama's victory, more than 20 years after the Reagan administration's aggressive stance in favor of management, the pendulum away from union representation may be ready to swing in favor of labor.

Obama's victory is, to be sure, a historic event. Even if it was widely anticipated in the polls, the enormity of the victory, the repudiation of the current administration, and the tectonic shift in U.S. politics it signifies are striking. No matter how much advance notice we had that he would likely win, most voters expected a closer election, and few would have been terribly surprised if the normal "red state/ blue state" divisions had prevailed and the Republicans had once again walked away with the presidency.

Obama's training as a lawyer, and his performance in the presidential debates, were key to his victory. He stayed on message, and his level of preparation and knowledge of the issues. His clear, articulate arguments, permitted all but the most skeptical of observers to become comfortable with the idea of this senator, unknown until recently to the vast majority of Americans, becoming president.

How will the Obama presidency affect employment law and policy? Obama's pronouncements during his campaign, and his record as senator, provide ample evidence that he will seek to pass legislation which will substantially shift the ground toward a more union-friendly environment. He will also likely seek to expand the protection of numerous existing employment laws.

THE RECESSION'S IMPACT

Until recently, most management employment lawyers have focused on the likelihood that major Democratic legislative initiatives -- most notably, EFCA -- will become law, and that these pro-employee developments will translate to a difficult and challenging time for employers in an Obama administration.

But with the economy in free-fall, the new president is less likely to focus on issues that upset years of labor-management balance, or ground-breaking legislation designed to rewrite the rules of the game. At least in the short term, these will likely take second or third place behind initiatives designed to help employers hold on to jobs and maintain economic stability. Conversely, this may result in one or more employment law changes being slipped into a financial crisis response bill with little or no debate.

For example, the financial crisis has stirred populist anger over executive compensation and golden parachutes on Wall Street. The recently enacted bailout package contains some new provisions to regulate in this area, and it seems inevitable that still more attempts at regulation on these issues will follow. (When a senator, Obama introduced the "Shareholder Vote on Executive Compensation Act" in 2007 to permit shareholders to hold nonbinding votes on executive compensation.)

Of course, Obama may well have the opportunity to appoint two or three U.S. Supreme Court justices. Given the closely divided nature of the current court, even one new appointment could make a significant difference.

LIKELY LEGISLATIVE INITIATIVES

Throughout his campaign, Obama openly expressed his intent to work with labor organizations to revamp current labor laws. Twenty-five percent of delegates at the Democratic National Convention either were union members or lived in the same household as a union member. (By comparison, 7.5 percent of private sector employees are members of a union). With endorsements from the AFL-CIO and AFSCME, labor leaders made it clear that they expect Obama to push new labor legislation forward. Changes may occur in some or all of the following areas.

EFCA

EFCA would amend the National Labor Relations Act (NLRA) to eliminate the need for employees to decide by secret ballot vote whether to be represented by a union. EFCA would instead establish a "card check" procedure, under which a union could be certified if a majority of employees signed union authorization cards. A union could demand an employer begin bargaining 10 days after the union is certified as the exclusive bargaining representative by the National Labor Relations Board. EFCA would also impose more stringent penalties for unfair labor practices committed by employers during an organizing campaign or during bargaining over a first contract.

Unions may see EFCA as the most important legislation that has been before Congress in years. They see enactment of the bill as the single most important step toward reversing their loss of membership and power.

There is substantial room for compromise with regard to EFCA's most controversial provisions. There may yet be a chance that a secret ballot will be preserved -- what democratic administration wants to be recalled as one that abolished a secret ballot election? -- if the lengthy time period between the filing of a petition and scheduling an election can be shortened.

The onerous treble damages provisions of EFCA may well be a focus of compromise, as would likely be the provisions for binding "interest arbitration," which would be an extraordinary and troubling change to existing law.

Family and Medical Leave Act

When Senator, Obama proposed that the FMLA be expanded to include businesses employing 25 to 49 people (as opposed to the current minimum of 50 employees). An expanded FMLA under an Obama presidency also would: (1) provide leave for elder care and domestic violence and (2) provide parents up to 24 hours of leave each year to attend school activities for their children. Obama also supports granting 7 days of paid sick leave per year to each employee.

RESPECT Act

Obama supports the Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers (RESPECT) Act, which would narrow the definition of "supervisor" under the NLRA. This change would enable more employees to become members of unions. It would amend the NLRA's definition of "supervisor" to provide that individuals could only be excluded from a bargaining unit as supervisors if they: (1) have authority over employees for a majority of their work time and (2) have the power to assign that authority to other employees and to responsibly direct employees.

Expansion of WARN

Obama supports amending the Worker Adjustment and Retraining Notification Act ("WARN") to expand the statute's protections. The Forewarn Act of 2007 would: (1) require a 90-day written notice of plant closures or layoffs, instead of the current 60-day notice; (2) double the penalties for employers who violate the law; and (3) apply to employers of 50 or more employees instead of 100 employees, as under the current act.

Anti-Discrimination

The Employment Non-Discrimination Act of 2007 (ENDA), which Obama would likely support, would prohibit employment discrimination on the basis of sexual orientation. The Equal Remedies Act of 2007, cosponsored by Senator Obama, would remove the limits on the dollar amount of punitive damages, as well as damages for pecuniary and non-pecuniary losses, in cases brought pursuant to the Title VII of the Civil Rights Act of 1964 ("Title VII").

The Lilly Ledbetter Fair Pay Act would reverse the Supreme Court's 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co.,[FOOTNOTE 2] which imposed severe time limits on the ability of plaintiffs to challenge longstanding, allegedly discriminatory compensation decisions. The act would amend Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Rehabilitation Act of 1973 to reverse that ruling.

President-elect Obama does not support same-sex marriage, but he supports full civil unions that "give same-sex couples equal legal rights and privileges as married couples, including the right to assist their loved ones in times of emergency as well as equal health insurance, other employee benefits, and property and adoption rights."

Independent Contractors

The Independent Contractor Proper Classification Act, proposed by Sen. Obama in 2007, would, among other things, require employers to treat workers misclassified as independent contractors as employees for employment tax purposes upon a determination of misclassification by the Secretary of the Treasury. It would also eliminate the defense of "industry practice" as a justification for misclassifying workers as independent contractors.

And, the law would require the Secretary of Labor to establish a procedure for workers to petition for a determination of their status as employees or independent contractors.

CONCLUSION

The view that an Obama administration will lead to "Armageddon" in terms of labor relations, as expressed by the U.S. Chamber of Commerce, is a bit extreme. But it will undoubtedly mean significant changes for employers and expansion of the current scope of labor and employment law. It is to be hoped that the amendments to existing laws, and expected new ones, will work in favor of both employers and employees, and will not reverse the positive gains of recent years.

Philip M. Berkowitz is a partner at Nixon Peabody, where he heads the international labor and employment law practice team.

:::::FOOTNOTES:::::

FN1 S. Greenhouse, "After Push for Obama, Unions Seek New Rules," New York Times, Nov. 9, 2008 (quoting Randel Johnson, vice president for labor policy of the U.S. Chamber of Commerce).

FN2 127 S. Ct. 2162 (2007).

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