Trump Employment Law Policies: Possibilities

President-Elect Donald Trump offered little specifics about employment law policies on the campaign trail, except for Ivanka’s idea of six weeks of paid maternity and elder care leave, coupled with child care tax benefits. But Trump painted enough broad brush strokes to offer some possibilities. He also energized whites, a demographic group not emphasized since George Wallace’s failed candidacy. That reality points all of us in a starkly new direction for employment law.

Important, too, he chose a running mate who championed a religious freedom law that allowed certain private businesses to discriminate against the LGBT community. Little noticed beyond Indiana, Vice President-Elect Mike Pence helped to enact one of the nation’s harshest right-to-work laws. Looking to the future in this column, I view Pence as the main shaper of specific labor and employment laws while Trump plays the ceremonial role of figure head for the U.S. government. What follows are not predictions, but extrapolations from campaign themes, Trump rallies, and Pence’s track record.

The White Vote

While immigration is the lead story, it’s important to contemplate the possibilities of tectonic change for Title VII. Essentially, the law can be turned upside down because Republicans control the three branches. So what’s possible here?

First, disparate impact theory is probably going to undergo legislative scrutiny. Specifically, Congress might enact a bill to repeal its previous codification of Griggs v. Duke Power. That seminal decision ruled that employment practices which are neutral on their face but have differential impact by race are discriminatory unless the employer has a substantial business justification. A good example is the employer who does a background check on applicants for arrests and convictions. The practice is neutral on its face but has strong disparate impact on black males. A one sentence bill, passed by Congress and signed by President Trump, would end 50 years of bedrock antidiscrimination law. It’s hard to imagine this would not also adversely affect the employment discrimination bar, on the plaintiff and defendant side.  

Next, whatever remains of affirmative action after Ricci v. DeStefano is now on life support. The origins of affirmative action are relevant: the concept originated in Truman, Eisenhower, Kennedy and Johnson executive orders that pertained to federal contractors. These orders trace to F.D.R’s bold executive order to racially integrate military contractors. A president’s procurement powers are immensely potent. It’s reasonable to guess that Trump will redline existing executive orders that have been expanded beyond race to include sexual orientation.

What about a white worker union? If you doubt this, visit the Southern Poverty Law Center and click near the top, a tab for “Hate Map.” As I write, there are 892 hate organizations arrayed all over the U.S. Intriguingly, the highest concentration of groups mirrors Trump’s strongest voter areas. I recently clicked on an Indiana neo-Nazi party. The new piece for me was its emphasis on “white economics,” the idea (which I emphatically disavow) that it’s important to support your race. If you think it’s far-fetched to believe that this group would try to form a union, recall that “Nazi” stands for “National Socialist German Workers Party.”

Would the NLRB certify a neo-Nazi group as a bargaining representative? That’s a tough call. Duty of fair representation case law emanates from racist unions that excluded blacks. But suppose the neo-Nazi union is in a rural area and this workplace has only whites. Further suppose it keeps race out of the campaign for a union and focuses strictly on economics. If the group were denied representation rights by the NLRB, how could this action be reconciled with the First Amendment right to assemble and speak?

Immigration: This has been Trump’s signature policy stance; but apart from talking tough on a wall and deportation, he hasn’t offered much.

A Trump administration and Republican Congress would possibly criminalize the employment of unauthorized aliens. This has been tried by several states, foremost, Arizona. That state enacted a sweeping law that criminalized the hiring of unlawful immigrants.

What does that mean exactly? 1. If you knowingly hired this person, you face criminal fines and possible prison time. 2. If you are this person (unlawful alien), you also face criminal fines and prison time. The catch, however, is that you also face expedited deportation.

Few, if any people, were ever criminal defendants in Arizona—even before the Supreme Court struck down the state law as a violation of federal policy. But it led to a large exodus of aliens (called “self- deportation”) and labor shortages—plus rising wages—in agriculture, tourism, construction, and landscaping.

In U.S. v. Arizona, the Supreme Court ruled that the state’s criminalization of the hiring process for unlawful aliens is preempted by the federal law that governs immigration. In short order, the overruled language of the Arizona law could be proposed in Congress as an IRCA amendment. It would seem likely to pass and be signed. Along the way, a policy expert might tell President Trump that is a more effective and cheaper substitute to building a wall and sending Mexico the bill.

Arizona offers another potent and harsh tool to thwart unlawful immigration. Its Lawful Arizona Workers Act requires employers to use the federal E-Verify system. In contrast, however, IRCA makes use of the system voluntary. It allows employers to verify worker eligibility by using approved documents. If a company knowingly hires an undocumented worker on two occasions, Arizona law permanently bars the firm from doing business in that state. The law was upheld in U.S. Chamber of Commerce v. Whiting. 

However, Justice Breyer’s dissenting opinion noted that Congress didn’t require use of E-Verify because “if E–Verify were made mandatory nationwide, 164,000 newly hired workers each year would erroneously be adjudged ineligible to work because of name mismatches, as when the worker’s first or last name is incorrectly spelled in government databases or on identification documents.” He also noted that discrimination against Hispanics increased when employer penalties increased under IRCA.

Congress could enact a federal version of the law by barring employers who violate IRCA as federal contractors. Employers would likely err in the direction pointed out by Justice Breyer than face these highly punitive sanctions.

Bankruptcy Loopholes: Trump famously explained that Hillary Clinton and other political insiders passed tax and business laws that allowed people like him to take advantage of others. If elected, he promised to close those loopholes.

Chapter 11 bankruptcy is a subject Trump knows well. The law allows a company whose debts exceed assets to file for court protection from creditors—a group that usually includes retirees and employees. In a successful restructuring, a bankrupt company discharges debt—in this case, walks from pension obligations. A government corporation called PBGC (Pension Benefit Guaranty Corp.) pays up to $60,136 (in 2015) of a pension plan that is thrown off the corporation’s balance sheet.

How is this a loophole? The company, such as a casino, survives and is recapitalized by new investors. Pensioners lose some of their retirement—everything over an annual payment of $60,136. Who pays for this? Solvent companies who administer defined benefit plans. Taxpayers are on the hook for debts that PBGC cannot pay.

Economists call this moral hazard. The legal system punishes others (good companies; taxpayers) to pay for the bad risks of bankrupt companies. The PBGC would be under Trump’s control. He might order the corporation to “charge back” the bad pension plans to the bankrupt firms. This would close a big “loophole,” allowing Trump to deliver on his promise.

But it would mean that many more Chapter 11 bankruptcies would fail; they would therefore convert to liquidation. PBGC, healthy companies and taxpayers would be off the hook—a good thing. However, in a liquidation scenario, pensioners would lose everything; and liquidating companies would lay-off their entire workforce.

“PC” Policies: Trump’s popularity derives in no small measure from people who are tired of “political correctness.” This concept is generally found in EEOC regulations that prohibit employers from creating a “hostile work environment.” That term applies to sexual harassment, but also racial, national origin, and religious harassment. A Trump EEOC could redline “hostile work environment,” thereby signaling that no federal employment policy prohibits the type of degrading language that Trump has used against women, Mexican, Muslims, and other groups.

English-Only Rules for Contractors: The federal government has an immense proprietary role when it wears its hat as a “contractor.” If you’re thinking that this term applies only to military employers, think again: It covers companies too numerous to mention, but includes firms that sell paper, cleaning supplies, computers, food, clothing, building materials, and so on. It is no stretch of imagination that a Trump administration would require all contractors to ban the speaking of all languages other than English in the workplaces of contractors. Penalties could include debarment.

Religious Freedom-LGBT Discrimination: The federal religious freedom law would likely be amended along the lines of Indiana’s recent law that sparked an outcry and boycotts. One might anticipate the law would be broadly crafted to allow employers free reign to discriminate in employment based on sexual orientation and transgender status.

Overall

In teaching employment and labor law for 28 years, I have instructed my students that this field is dominated by four pillars: 1. Employment-at-will. 2. Title VII. 3. The Fair Labor Standards Act. 4. The National Labor Relations Act. A Trump presidency will crack Title VII and the National Labor Relations Act (with expanded right-to-work and union decertification). Going forward, the only certainty for lawyers in this field is great structural change in the types of problems that clients will present for advice and solutions.