November 22, 2016

Dan Handman Considers Possible Labor and Employment Changes Under Trump

Daniel H. Handman authored the Corporate Counsel article titled, “Expect Big Changes in Labor and Employment From the Trump Administration,” looking at the impact of the incoming administration on key labor and employment issues including organized labor, paid family leave, arbitration agreements and the “gig” economy.

Text of the article is below and can be found on Corporate Counsel’s website by clicking here.

Expect Big Changes in Labor and Employment From the Trump Administration

Since at least the 1920s, Republicans have been viewed as the party of commerce, small government and less regulation. And, to be sure, most Republicans still are. But Donald Trump challenged all of those assumptions by running a populist campaign directed to the working class in which he has often touted “yuge” government. Indeed, Trump garnered more votes from union households than any Republican candidate in decades.

Those shifting electoral dynamics, coupled with Trump’s battles against his own party and his relative silence on issues involving the American workplace, make it challenging to predict what stances his administration will take on labor and employment law issues. And so, the ordinary crystal ball simply does not work here. Nevertheless, there are some small tea leaves that provide signs of how a Trump administration might proceed.

Organized Labor

This is the diciest issue facing the Trump administration by far. The National Labor Relations Board under President Barack Obama took a very active role in support of organized labor. The four biggest changes promoted by the Obama board were:

(1) regulations expediting labor union elections (the “quickie election” rule);

(2) regulations requiring law firms offering advice to employers on union organizing to report such activity (the “persuader rule”);

(3) decisions invalidating employers’ social media policies and other rules which, in its view, chilled organizing activity; and

(4) decisions expanding its jurisdiction in untraditional environments, like franchises or graduate teaching assistants.

Republicans railed against each of those changes and in some cases challenged them successfully in court. With any other Republican, it would be a no-brainer; there would be an about-face. But Trump is not an ordinary Republican, and considering his populist message and broad appeal to working class voters, the question remains whether he will take positions in office that serve the interest of management over labor.

Most experts expect him to make a pivot on those controversial issues. The persuader rule, which at least one court has already found to be invalid, will likely be revoked shortly after he gets into office, and the quickie election rule is probably not far behind. One would also expect Trump board appointees to reverse course on the controversial decisions, but the question remains: Will the same Trump who told workers “I will be your voice” really appoint employee-friendly board members? The safe money is on a reversal in course, but that is decidedly up in the air.

Paid Family Leave

Perhaps the most surprising statement of policy during Trump’s campaign was his expressed support for paid family leave—one of the few areas where he and Democratic party nominee Hillary Clinton agreed. Trump himself floated a plan to offer six weeks of paid maternity leave to employees if their employer did not already offer it.

As with many of Trump’s policies, the finer details of this proposal were left unstated, and, again, his expressed comments departed dramatically from Republican dogma. Indeed, the Family and Medical Insurance Leave Act, which would have provided for paid family leave, was introduced in the U.S. Senate last session but garnered the support of no Republican senators and died in committee without even a hearing.

This of course raises a major question. Will Trump be able to get such a bill through a Congress controlled in both chambers by members of his own party, albeit a party which provided him with less support than any other major party nominee in the recent past?

Expect movement on this issue. Republicans will feel intense pressure to return some favor to working class voters and to hold true on some of the more achievable promises Trump made, and this is one. But do not expect it to be funded through a payroll tax, like Social Security or unemployment. Rather, expect a tax break to employers who provide paid leave.

Arbitration Agreements

It is not exactly a sexy campaign issue, but many expect the trend favoring private arbitration to pick up pace with Trump U.S. Supreme Court nominees, most importantly with regard to class action waivers. In 2011, the Supreme Court decided AT&T Mobility v. Concepcion, a landmark decision in which it agreed to enforce arbitration agreements with class action waivers. Private employers have since seized on that ruling to stem the growing cost of class action litigation.

Employee advocates fought back on two fronts. On the state level, some states enacted laws—California’s Private Attorneys General Act principal among them—allowing groups of employees to litigate collectively, although not technically through a class action. Secondly, federal agencies, most prominently the NLRB, pushed back against the enforcement of class action waivers in arbitration agreements, and they have met with some success.

Expect Trump to appoint a Supreme Court justice who favors the trend toward private arbitration and away from class action litigation. In particular, look for the court to close any remaining avenues for class or class-like litigation and to stem the tide of NLRB action in opposition to arbitration agreements.

Gig Economy Issues

The most talked about issue by employment lawyers—but one which received no mention on the campaign trail—is the changing face of the American workplace and whether existing employment laws are flexible enough to deal with the new “gig economy” workers. The NLRB and other agencies see no problem in applying New Deal-era laws to such workers, steadfast in the belief that they can easily be classified as employees or independent contractors, or so they believe. But a federal judge in a wage-hour class action involving Lyft drivers recently lamented that the task was like trying to fit a square peg into two round holes, imploring Congress to come up with new classifications to deal with emerging technology employers.

Some gig economy companies have proposed a new classification for such workers, frequently referred to as “dependent contractors.” This third classification, they propose, would be nimbler and, among other things, would allow portable benefits to follow a worker between jobs.

While many experts agree that change is needed, neither Trump nor congressional Republicans appear to have much sympathy for the industry. Indeed, Silicon Valley businesses contributed overwhelmingly to Clinton and other Democrats. Even with Republicans controlling Congress, it does not seem a priority for Republicans, no matter how needed a change is. For one thing, it would challenge fundamental assumptions about the nature of the American workplace, and, again, Trump’s populist campaign was focused on getting jobs back from overseas, not on reinventing how employees work.

The Bottom Line

Workers were critical to Donald Trump’s successful campaign, and he has many debts to repay them. Trump pledged in bombastic fashion to be “the greatest jobs producing president that God ever created,” but no one—not even members of his own party—expect factory jobs to return from overseas. Like it or not, he has large shoes to fill, as Obama was one of the most successful job-creators in recent history. To be sure, he will do what he can to assuage the business world; but, at the same time, to keep those voters in the Republican tent, Trump will need to do more, so expect changes you would not otherwise see in a Republican president.

November 18, 2016 edition of the “Corporate Counsel”© 2016 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or