Labor Laws Got You Lost How to Play by the New Employment Rules

By Monica Ginsburg

Aug. 6, 2009

President Barack Obama has been in office for only seven months, but already his administration has ushered in a slew of rules and regulations that affect the way employers deal with their employees—from a new law that makes it easier for people to pursue pay discrimination cases to a broader reading of who’s covered under the Americans with Disabilities Act.

More change is on the way—a lot more.

    In fact, even before Election Day last year, Chicago labor law firm Franczek Radelet began tracking then-candidate Obama’s speeches and platform positions and tallied more than 30 workplace-related initiatives he likely would push if he won.

Now Franczek Radelet, like employment lawyers and human resources executives all over the country, is scrambling to adjust to the new rules emanating from Washington.

“It’s a paradigm shift from what we saw in the Bush administration,” partner David Radelet says. “There’s a new team in place and a new political agenda. It really is staggering what might be coming.”

Among the changes that already have come down or might be approved:

  • Lilly Ledbetter Fair Pay Act: This was the first piece of legislation Obama signed into law. Enacted in January, it expands a worker’s right to sue in pay discrimination cases by relaxing the statute of limitations.

  • COBRA subsidies: As part of the American Recovery and Reinvestment Act, signed into law in February, qualified employees laid off between September 1, 2008, and December 31, 2009, pay 35 percent of their COBRA health care coverage for up to nine months while the government picks up the rest. But that doesn’t mean this is a cost-free move for employers: They’re required to notify employees of their rights under this new law and are responsible for implementing the new system.

  • Paycheck Fairness Act: This one isn’t law yet; it has passed the House and is awaiting action in the Senate. The act takes aim at gender discrimination in pay.

  • Card-check bill: Known officially as the Employee Free Choice Act, this legislation would make it easier for unions to organize employees, though the particulars are still being hammered out on Capitol Hill.

As a small-business owner, you might not have a staff of HR managers and labor lawyers to guide you in this new and changing landscape. Crain’s Chicago Business (a sister publication of Workforce Management) has combed through the proposed and newly minted laws and has asked experts to predict what’s coming next.

Phyllis Apelbaum, founder of Arrow Messenger Services, is especially concerned about the card-check measure as she battles to keep her Chicago-based messenger and delivery service afloat in a sour economy.

Apelbaum says Arrow’s business has declined 25 percent since September and, since January, she has been forced cut her staff to 150 employees from 235.

Apelbaum wonders how the card-check bill would affect small businesses like Arrow that historically have been off-limits to unions.

“If the unions win, I can’t pay our employees any more than I’m paying them now,” she says. “In the end, I’ll be forced to close down. How does anybody win in that situation?”

So what should small-business owners expect as the new rules flow from Washington? Expanded employee rights, more government oversight, increased union influence and more vigorous enforcement of new and existing laws, observers say. And that could mean increased costs for wages, record keeping, employee training and, if you make a wrong move, legal fees.

The bottom line: Be prepared.

“The more regulated employee relations become, the more vulnerable small businesses are if they don’t have support in place,” says Amy Kohn, an employment law consultant at Lincolnshire, Illinois-based human resources consultancy Hewitt Associates.

Some tips for navigating a new legal landscape:

  • Work with organizations that follow workplace trends such as your local chamber of commerce or the Society for Human Resources Management. They’ll likely track pending and new legislation and may offer training to help small-business owners maintain compliance as rules change.
  • Create a centralized human resources function, even if it’s on a contract or outsourced basis, to review wage rates, benefits, and hiring and firing policies, and to update record-keeping procedures, if needed.

 “Human resources is a management function that every business, regardless of size, should invest in,” says Frank Saibert, chairman of the labor and employment law practice at Ungaretti & Harris in Chicago. “You need to have controls in place. It’s part of today’s environment.”

  • Reach out to state and federal legislators. Zach Mottl, director of development for Atlas Tool & Die in Lyons, Illinois, says most business owners in his industry are concerned about any measure that increases costs. In his role as chairman of the government relations committee for the Park Ridge, Illinois-based Tooling Manufacturers Association, he arranges regular breakfast meetings between business owners and state and federal legislators. Most recently, more than 50 people met to talk about the Employee Free Choice Act.

 “Even if they’re not acting in the way we would like, our government representatives need to hear from us and understand how legislation affects our industry,” Mottl says. “We’ll keep fighting for what we need, and they need to know that.”

  • Run lean. In the uncertain economic and legislative times, Mottl postponed expansion plans that included buying another manufacturing company and purchasing a building. Instead, he is looking internally for ways to cut costs.

“It’s not the time to take on extra expenses,” he says. “We need to do more with what we have here now.”

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