The Audacity of 2010

Changing labor law could be President Obama's next defining moment.

Flashback to January 2009: A new Administration, buoyed by a spirit of “hope and change,” sweeps into Washington promising to pick up the shattered remains of the U.S. financial system, manage multiple wars and reform the healthcare system. So far, all of those promises remain in the “unfulfilled” category, but they have diverted attention away from numerous legislative proposals that could have major impact on material handling professionals, and very soon, too.

Big changes could be coming in 2010, and not all of them will be welcomed by manufacturing and distribution companies.

Attorneys specializing in labor and employment law — like Jennifer L. Neumann and Michael W. Groebe, authors of the exclusive article that follows — predict the U.S. workforce will be next in line for a regulatory overhaul as soon as economic and healthcare debates cool.

Material handling professionals have already braced themselves for potential change as the debate over the Employee Free Choice Act (S.560, H.R.1409) rages on. Currently, EFCA, also known as the card-check bill, has been referred to committee in both the House and Senate, and it's moving at a snail's pace. But Congress has proposed additional labor-related bills that, if passed into law, will impact every business involved in sourcing, allocating and distributing raw material and finished product throughout the world's interconnected supply chains. — Ed.

Change was the cornerstone of Pres. Obama's campaign. Now, armed with Democratic majorities in the Senate and House of Representatives, he is positioned to deliver.

While the Obama Administration has spent most of 2009 focusing on economic stimulus and healthcare reform, labor reform is likely to be next on the agenda as we enter the New Year.

The Groundwork

Pres. Obama has already prepared the foundation for change. Back in January, during the first few days of his presidency, he signed the Lilly Ledbetter Act, which extends the time period within which someone can file a claim of compensation discrimination.

Previously, the clock started running the date compensation was set, not the date of the most recent paycheck. Now, under the Lilly Ledbetter Act, the clock resets with each new allegedly discriminatory paycheck, thus significantly expanding the statute of limitations on suits alleging compensation discrimination.

A day after signing the Lilly Ledbetter Act, the President issued three executive orders, each of which assists unionization. The first, E.O. 13494, prohibits government contractors from using contract monies for anti-union efforts. Contractors cannot use designated funds to hire lawyers or consultants to help prevent unionization or prepare anti-union materials.

The second, E.O. 13495, requires that, when a federal service contract terminates, the employees of the terminated contractor are given a right of first refusal to new employment with the successor contractor. When successor employers hire a majority of a unionized workforce, they will likely have to recognize an existing union under the National Labor Relations Act. Thus, E.O. 13495 makes it easier for unions to remain in place when government contractors change.

The third, E.O. 13496, mandates the posting of a notice in the workplace by contractors informing employees of their legally protected right to join a union.

Pending Legislation

Now, labor-related legislative proposals are pending in the House of Representatives and Senate. Four in particular — the Forewarn Act, Employment Non-Discrimination Act (ENDA), Paycheck Fairness Act (PFA) and the Employee Free Choice Act (EFCA) — would have serious implications for manufacturers and distributors if signed into law.

Companies that have had to scale back operations or even close facilities are likely familiar with the Worker Adjustment and Retraining Notification Act (WARN). The WARN Act requires employers to provide 60 days notice before an employee is going to lose his or her job due to a mass layoff or plant closing. To the extent employers fail to provide 60 days advanced notice, the employer is responsible for paying the laid-off employee for any working days short of the 60-day notice requirement. The purpose of the Act was to allow employees time to find another job.

The Forewarn Act (S.1374, H.R.3042) would amend the WARN Act to lower the threshold of coverage from 100 employees to 75, lower the number of affected employees for what constitutes a “mass layoff,” increase the advance notice from 60 to 90 days and increase penalties for violations. The proposed law would also expand the type of information that must be put in the written notice to employees. The notice would be required to detail the effects of the plant shutdown or mass layoff and include information regarding benefits and services, such as unemployment compensation, trade adjustment assistance, COBRA benefits and on-site access to rapid response teams, among others.

Given the massive layoffs over the past two years and the resulting high unemployment rate, which is likely to persist through economic recovery, it is easy to see why this law would garner public sympathy. However, as businesses familiar with the requirements of the current WARN Act know, in uncertain economic times, it can be difficult to predict what will happen 60 or 90 days out. In late June, the Forewarn Act was referred to committee in both the House and Senate.

Next on the list is the ENDA (S.1584, H.R. 3017), which would prohibit employment discrimination based on sexual orientation and gender identity. ENDA defines “gender identity” as the gender-related identity, appearance, mannerisms or other gender-related characteristics of an individual, with or without regard to the individual's designated sex at birth. Title VII of the Civil Rights Act of 1964 currently protects against employment discrimination based on race, color, religion, sex or national origin. ENDA would be consistent with 21 states, which already prohibit employment discrimination based on sexual orientation and 12 states that prohibit employment discrimination based on gender identity.

Unlike claims under Title VII that allow for claims based on disparate treatment (i.e., a woman is paid less than a man based on her gender) and disparate impact (i.e., company policy leads to fewer promotions for African-Americans than Caucasians), ENDA would not allow for disparate impact claims.

While this proposed legislation may appear to be a significant change that would require changes to employer policies, a significant portion of the discrimination that is experienced by gay, lesbian, bisexual and/or transgendered employees is based on gender stereotypes (i.e., a male employee doesn't act “manly enough” or a female employee doesn't appear “lady like”). This type of gender stereotyping is already prohibited as a form of gender discrimination. Manufacturers and distributors should ensure their policies prevent gender stereotyping, whether ENDA becomes law or not.

In September, the House Education and Labor Committee held hearings on ENDA, and in early November, hearings were held by the Senate Committee on Health, Education, Labor and Pensions.

Thirdly, the PFA (H.R.12, S.182), which passed the House of Representatives, would amend the Equal Pay Act (EPA) to prohibit retaliation against employees for sharing salary information with co-workers, expand damages under the EPA and place the burden on the employer to prove that any pay disparity is job related and consistent with business necessity instead of based on gender.

And, finally, the EFCA, which has been introduced but not yet voted on, essentially eases the burden for unions to organize and ratify the first collective bargaining agreement after the union is in place. It also creates civil fines for employers that violate the National Labor Relations Act.

Now more than ever, it's time for material handling professionals to prepare for big changes in 2010. Businesses should rely on legal counsel, human resources and/or government affairs departments, industry trade associations and trade media for assistance if and when the proposals are approved.

Still, managers shouldn't wait for legislation to happen. Internal audits, as well as policy reviews and revisions, can help ensure compliance and prepare operations for changes. Additionally, managers must ensure that all supervisory employees are kept informed of, and held accountable to, current labor laws and regulations.

Jennifer L. Neumann, senior counsel, and Michael W. Groebe, associate, are members of the Foley & Lardner LLP labor and employment practice and automotive industry teams. For more information, contact Neumann at [email protected] or Groebe at [email protected].

Legislative Watch

Following are bills currently in Congress that could significantly impact material handling operations.

Food Safety Modernization Act (S. 510, H.R. 875) and Food Safety Enhancement Act (H.R. 2749)

The Food Safety Modernization Act has been referred to committee, while the Food Safety Enhancement Act passed the House of Representatives in late July. Introduced in March by Sen. Dick Durbin (D-IL), S. 510 is the Senate's own version of the Food Safety Enhancement Act. Legislators expect to combine the House and Senate versions into a single bill.

At the first Senate hearing in late October, Tom Stenzel, president of the United Fresh Produce Association testified to the produce industry's commitment to food safety from field to table, due in large part to the Produce Traceability Initiative, an industry-wide effort to develop a standardized supply chain traceability system.

In a separate move to enhance traceability, 55 major foodservice manufacturers, distributors and operators collectively founded the foodservice GS1 US standards initiative to develop a common timeline for voluntary, individual company implementation of GS1 global standards for company identification, item identification and product description. Forty-five of the founding member companies have committed to the timeline. GS1 US, a nonprofit standards organization, administers the Universal Product Code and develops worldwide standards for identification codes, data carriers and electronic commerce.

The ultimate goal is 75% adoption of GS1 standards throughout the foodservice industry by 2015. The objectives are three-fold: to drive waste out of the foodservice supply chain, improve product information for customers and establish a foundation for improving food safety and traceability.

TRACE Act of 2009 (H.R. 814)

This bill would amend the Federal Food, Drug, and Cosmetic Act, the Federal Meat Inspection Act, the Poultry Products Inspection Act and the Egg Products Inspection Act to improve the safety of food, meat, and poultry products through traceability. In April, it was referred to committee.

Food Safety and Tracking Improvement Act (S. 425)

S. 425 would amend the Federal Food, Drug, and Cosmetic Act to establish a traceability system for food and amend the Federal Meat Inspection Act, the Poultry Products Inspections Act, the Egg Products Inspection Act and the Federal Food, Drug, and Cosmetic Act to strengthen enforcement of public health and food safety laws. In February, the bill was referred to committee.

Regulatory Watch

Following are issues currently being addressed by regulatory organizations that directly impact material handling.

Solid Wood Packaging Material

The U.S. Animal Plant & Health Inspection Service (APHIS) plans to implement a national treatment and certification rule for solid wood packaging material. Though no rule has been finalized, APHIS has suggested that implementing ISPM-15, the international voluntary standard, on a domestic basis may be the best initial step to stop the spread of wood pests associated with the movement of wood packaging, firewood and other wood products.

Combustible Dust

This month, OSHA is holding two meetings in Washington to discuss the workplace hazards of combustible dust. The agency says it will use comments from the meetings to develop a comprehensive standard that addresses fire and explosion hazards related to combustible dust. Additional meetings are planned for early 2010.

State Safety Programs

Jordan Barab, acting assistant secretary for OSHA, told a Congressional committee in late October that federal OSHA will strengthen oversight, monitoring and evaluation of all state OSHA programs. In testimony before the House Committee on Education and Labor, Barab said federal OSHA will immediately begin conducting a baseline evaluation for each state that administers its own program. Federal OSHA also plans to make all national emphasis programs and other similar initiatives mandatory rather than voluntary.

Workplace Injury Records

In September, OSHA introduced a national emphasis program (NEP) on recordkeeping “to assess the accuracy of injury and illness data recorded by employers.” Under the recordkeeping NEP, OSHA will inspect occupational injury and illness records prepared by businesses and enforce regulatory requirements if it determines employers are under-recording injuries and illnesses. Inspections include a records review, employee interviews and a “limited” safety and health inspection of the workplace. The NEP will focus on industries with high injury and illness rates, according to OSHA.

OSHA also proposed a rule that would align the hazard communication standard (HCS) with provisions of the United Nations Globally Harmonized System of Classification and Labeling of Chemicals (GHS). Under the current HCS, employers must implement a hazard communication plan (HCP) for workers exposed to hazardous chemicals. An HCP includes container labels, safety data sheets and employee training, among other measures. The GHS is a single system for classifying chemicals and designing labels and safety data sheets. Under GHS, labels include signal words, pictograms and hazard and precautionary statements. Information on safety data sheets are presented in a designated order.

Material Handling and Climate Change

American Clean Energy and Security Act of 2009 (H.R. 2454)

H.R. 2454 is the infamous “cap and trade” legislation that passed the House in late June. The American Clean Energy and Security Act seeks to improve overall U.S. energy productivity by at least 2.5% per year by 2012. If passed into law, the Act would establish a cap-and-trade system for greenhouse gas emissions and set a goal to reduce emissions by 83% of 2005 levels by 2050.

A related bill pending in the Senate, the Clean Energy Jobs and American Power Act (S. 1733), also aims to reduce greenhouse gas emissions.

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