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Special Report: Obama-nomics

What will the new administration mean for your business? Michael Pallerino explores the winds of change.


by Michael J. Pallerino

November 18, 2008

They speak of changes in union activity. Minimum wage. Taxes. Immigration and health care. They built a platform on the premise that what our nation needs now more than anything else is a fundamental shift in the way things have been done.

But what does it all mean? What does President-elect Barack Obama's incoming administration, which is still being pieced together and this potentially new way of thinking mean for local business?

Sure, there are many questions. In an economic environment that continues to spin helplessly out of control, there are openings to revisit how businesses approach wages, immigration, taxes, health care, executive compensation and benefits, civil rights and the mother of all business dynamics - unionization.

Dudley Rochelle Carter, a shareholder in Littler Mendelson, one of the nation's largest employment and labor law firms, and her colleagues have been evaluating the "what ifs" during the long election process.

"During the campaign, all of the talk centered on change," Carter says. "That was the by-word. When we started looking at this at Littler, we asked our people [the firm has partners in practically every state] from every perspective. So we know there is going to be change. But what?"

Carter says that while there is no crystal ball, the firm has enough people on the ground to garner the insights that follow. Of all the areas that may be impacted, the Employee Free Choice Act (EFCA) may be the biggest one to keep an eye on. The legislation is designed to dramatically increase unions' ability to organize workers.

Carter says that President-elect Obama has already pledged to sign EFCA into law once passed. If the EFCA is enacted, unions will be able to organize employees, including in business sectors historically free of unionization, without the need for a secret ballot election. That significant power suggests a dramatic increase in the number of private companies with unionized workforces.

"This is the No. 1 item on the labor agenda," she says. "This is a very significant act because you could have a company now go union without a secret ballot election. This wasn't true in the past. This has been brewing for a year or two, so it is not purely something the President-elect is pushing."

Another proposal to watch is the one that says who can be designated who can be designated as a supervisor for union-related purposes. Translation: This would lead to more union members and less supervisors. "That would change up the mix a little," she says.

There may also be a movement to change the "right to work" law, which would impact Georgia, one of 22 states that work under this law. If passed, both initiatives would increase the pool of potential unionized employees and lead to increased union organizing, particularly in states in the South and West that historically have had a lower percentage of unionized employers.

Other areas that Carter says are worth watching include:

Agency/Labor Relationships: Under President-elect Obama, who favors the Department of Labor and other agencies to do more to support workers, companies may see more aggressive efforts by these agencies to ensure companies are in full compliance with labor and employment laws and regulations.

Health care: Early indications show that the new Administration would seek to keep the familiar employer-provided current health care system in place. Providing coverage for the uninsured will be prominent in any new health care proposal, with employers most likely required to fund such coverage, either through a requirement to actually provide health care benefits or a mandate to pay into some sort of government mechanism, which would then provide coverage.

Immigration: There will be efforts to increase enforcement of immigration laws and hold accountable employers who willfully disregard immigration laws and use undocumented workers. To note, the new Administration is likely to agree with a Bush Administration proposal that requires government contractors to use the new E-Verify program as a way to ensure that those employers only use employees authorized to work in the country. Carter says this program could be expanded to all employers sometime in the next four years if accuracy and funding issues are resolved.

Anti-Discrimination Laws: With President-elect Obama's support, the new Administration will strengthen various anti-discrimination laws through changes to the Americans with Disabilities Act, set to take effect in 2009. Changes can be expected involving equal pay and the prohibition of sexual orientation discrimination, as well as restrictions on the use of alternative dispute resolution mechanisms. 

Minimum Wage:
The new Administration will seek to increase the federal minimum wage and index it to inflation as a way to address the widening income gap. Carter says the minimum wage hike will be part of a broader economic stimulus package, a likely priority for the new Administration.

Time Off: Under President Clinton, the Family and Medical Leave Act (FMLA) was enacted to provide paid leaves to help families achieve better balance. President-elect Obama and Congress seek to expand FMLA leave to cover workers at smaller companies and permit leave for more reasons, support paid FMLA leave and mandatory sick leave, and offer flexible work arrangements for workers. 

Taxes: The new Administration is proposing several initiatives that will use the tax code as a way to incentivize American companies to invest in U.S. jobs that adhere to a minimum standard of living. The Patriot Employer Act, for example, gives tax breaks to businesses that provide paid health care, but only if they do not oppose unionization.

Littler Mendelson recommends that in anticipation of potentially substantial further changes, companies engage in an examination of all employment-related practices, including wage rates, practices, benefits, policies, and supervisor and management training, along with a broader examination of the company culture.


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