Thursday, December 7, 2017
Two weeks ago, I asked whether companies were wasting time on harassment training given the flood of accusations, resignations, and terminations over the past few weeks. Having served as a defense lawyer on these kinds of claims and conducted hundreds of trainings, I know that most men generally know right from wrong before the training (and some still do wrong). I also know that in many cases, people look the other way when they see or hear about the complaints, particularly if the accused is a superstar or highly ranked employee. Although most men do not have the power and connections to develop an alleged Harvey Weinstein-type "complicity machine" to manage payoffs and silence accusers, some members of management play a similar role when they ignore complaints or rumors of inappropriate or illegal behavior.
The head in the sand attitude that executives and board members have displayed in the Weinstein matter has led to a lawsuit arguing that Disney knew or should have known of Weinstein's behavior. We may see more of these lawsuits now that women have less fear of speaking out and Time honored the "Silence Breakers" as the Person of the Year. As I read the Time article and watched some of the "silence breakers" on television, it reminded me of 2002, when Time honored "The Whistleblowers." Those whistleblowers caused Congress to enact sweeping new protection under Sarbanes-Oxley. Because of all of the publicity, companies around the country are now working with lawyers and human resources experts to review and revamp their antiharassment training and complaint mechanisms. As a result, we will likely see a spike in internal and external complaints. But do we need more than lawsuits? Would more women in the boardroom and the C-Suite make a difference in corporate culture in general and thereby lead to more gender equity?
Last week, Vĕra Jourová, the EU Commissioner for Justice and Gender Equality put forth some proposals to redress the gender pay gap in Member States’ businesses. She recommends an increase in the number of women on boards for companies whose non-executive Boards are more than 60% male. These companies would be required to “prioritize” women when candidates of “equal merit” are being considered for a position. Germany, Sweden, and the Netherlands have already previously rejected a similar proposal.
I'm generally not in favor of quotas because I think they produce a backlash. However, I know that many companies here and abroad will start to recruit more female directors and executives in an effort to appear on top of this issue. Will it work? We will soon see. After pressure from institutional investors such as BlackRock and State Street to increase diversity, women and minorities surpassed 50% of S & P open board seats in 2017. Stay tuned.
Tuesday, November 28, 2017
A recent Pennsylvania opinion makes all sorts of mistakes with regard to a single-member limited liability company (LLC), but in dissent, at least some of the key issues are correctly framed. In an unreported opinion, the court considered whether a company (WIT Strategy) that required an individual to form an LLC as a predicate to payment was an employee eligible for unemployment compensation. WIT Strategy v. Unemployment Compensation Board of Review, 2017 WL 5661148, at *1 (Pa. Cmwlth. 2017). The majority explained the test for whether the worker was an employee as follows:
The burden to overcome the ‘strong presumption’ that a worker is an employee rests with the employer. To prevail, an employer must prove: (i) the worker performed his job free from the employer's control and direction, and (ii) the worker, operating as an independent tradesman, professional or businessman, did or could perform the work for others, not just the employer.
Id. at *3. (quoting Quality Care Options v. Unemployment Comp. Bd. of Review, 57 A.3d 655, 659-60 (Pa. Cmwlth. 2012) (citations omitted; emphasis added)).
As to the first prong, the Unemployment Compensation Board of Review (UCBR) determined, and the court confirmed, that WIT Strategy had retained control over the claimant consistent with the type of control one exerts over an employee. I might disagree with the assessment, but the test is correct, and the analysis reasonable, if not clearly correct. Assessment of the second prong, though, is flawed.
The court quotes the UCBR's conclusions:
The [UCBR] does not find that [C]laimant was operating a trade or business, customarily or otherwise. The only reason [C]laimant formed the LLC was because WIT required it, claiming that it needed to pay [C]laimant through the LLC. WIT also claimed that doing so was a ‘common agency model’ for its kind of agency. The [UCBR] does not credit WIT's testimony. Rather, although [C]laimant did perform two projects for other entities, each for under $600 [.00], there is no evidence that [C]laimant solicited business through her LLC since its inception in 2013 through her termination in 2015. [C]laimant worked for WIT 40 hours per week and did not have employees of the LLC to solicit business for her. Further, although WIT claimed that all its team members were required to have additional clients through their LLCs to share with it, WIT did not prove that [C]laimant had such clients. As [C]laimant did not operate a trade or business, but rather the LLC was formed as a type of shell corporation, the fact that [C]laimant was the single-member owner is not dispositive. [C]laimant was not customarily engaged in a trade, occupation, profession or business.
The legal form by which Claimant provided public relations and communications services to WIT-provided clients and to her own clients is irrelevant. A sole proprietor may establish a single-member LLC for many reasons, the obvious being a desire to limit individual liability. It is not known what the Board meant by a “shell corporation,” and there is no evidence on this point. A limited liability company is not even a corporation. The Pennsylvania Associations Code provides as follows:One or more persons may act as organizers to form a limited liability company ....15 Pa. C.S. § 8821. A single-member LLC, such as Jilletante Creative, is a perfectly lawful and valid alternative to a sole proprietorship.
Claimant continued to operate as an LLC even after her separation from WIT. The record includes Claimant's two-page detailed proposal to a potential client on “Jilletante Creative, LLC” letterhead, signed as “Jilletante Creative, LLC; By: Jillian Ivey, sole member.” R.R. 10a-11a. Jilletante Creative is not a sham or “shell” corporation, and characterizing it as such is a red herring in the analysis of whether Claimant worked for WIT clients as an employee of WIT or as an independent contractor.
Thursday, October 5, 2017
On Monday, the Supreme Court heard argument on three cases that could have a significant impact on an estimated 55% of employers and 25 million employees. The Court will opine on the controversial use of class action waivers and mandatory arbitration in the employment context. Specifically, the Court will decide whether mandatory arbitration violates the National Labor Relations Act or is permissible under the Federal Arbitration Act. Notably, the NLRA applies in the non-union context as well.
Monday’s argument was noteworthy for another reason—the Trump Administration reversed its position and thus supported the employers instead of the employees as the Obama Administration had done when the cases were first filed. The current administration also argued against its own NLRB’s position that these agreements are invalid.
In a decision handed down by the NLRB before the Trump Administration switched sides on the issue, the agency ruled that Dish Network’s mandatory arbitration provision violates §8(a)(1) of the NLRA because it “specifies in broad terms that it applies to ‘any claim, controversy and/or dispute between them, arising out of and/or in any way related to Employee’s application for employment, employment and/or termination of employment, whenever and wherever brought.’” The Board believed that employees would “reasonably construe” that they could not file charges with the NLRB, and this interfered with their §7 rights.
The potential impact of the Supreme Court case goes far beyond employment law, however. As the NLRB explained on Monday:
The Board's rule here is correct for three reasons. First, it relies on long-standing precedent, barring enforcement of contracts that interfere with the right of employees to act together concertedly to improve their lot as employees. Second, finding individual arbitration agreements unenforceable under the Federal Arbitrations Act savings clause because are legal under the National Labor Relations Act gives full effect to both statutes. And, third, the employer's position would require this Court, for the first time, to enforce an arbitration agreement that violates an express prohibition in another coequal federal statute. (emphasis added).
This view contradicted the employers' opening statement that:
Respondents claim that arbitration agreements providing for individual arbitration that would otherwise be enforceable under the FAA are nonetheless invalid by operation of another federal statute. This Court's cases provide a well-trod path for resolving such claims. Because of the clarity with which the FAA speaks to enforcing arbitration agreements as written, the FAA will only yield in the face of a contrary congressional command and the tie goes to arbitration. Applying those principles to Section 7 of the NLRA, the result is clear that the FAA should not yield.
My co-bloggers have written about mandatory arbitration in other contexts (e.g., Josh Fershee on derivative suits here, Ann Lipton on IPOs here, on corporate governance here, and on shareholder disputes here, and Joan Heminway promoting Steve Bradford’s work here). Although Monday’s case addresses the employment arena, many have concerns with the potential unequal playing field in arbitral settings, and I anticipate more litigation or calls for legislation.
I wrote about arbitration in 2015, after a New York Times series let the world in on corporate America’s secret. Before that expose, most people had no idea that they couldn’t sue their mobile phone provider or a host of other companies because they had consented to arbitration. Most Americans subject to arbitration never pay attention to the provisions in their employee handbook or in the pile of paperwork they sign upon hire. They don’t realize until they want to sue that they have given up their right to litigate over wage and hour disputes or join a class action.
As a defense lawyer, I drafted and rolled out class action waivers and arbitration provisions for businesses that wanted to reduce the likelihood of potentially crippling legal fees and settlements. In most cases, the employees needed to sign as a condition of continued employment. Thus, I’m conflicted about the Court’s deliberations. I see the business rationale for mandatory arbitration of disputes especially for small businesses, but as a consumer or potential plaintiff, I know I would personally feel robbed of my day in court.
The Court waited until Justice Gorsuch was on board to avoid a 4-4 split, but he did not ask any questions during oral argument. Given the questions that were asked and the makeup of the Court, most observers predict a 5-4 decision upholding mandatory arbitrations. The transcript of the argument is here. If that happens, I know that many more employers who were on the fence will implement these provisions. If they’re smart, they will also beef up their compliance programs and internal complaint mechanisms so that employees don’t need to resort to outsiders to enforce their rights.
My colleague Teresa Verges, who runs the Investor Rights Clinic at the University of Miami, has written a thought-provoking article that assumes that arbitration is here to stay. She proposes a more fair arbitral forum for those she labels “forced participants.” The abstract is below:
Decades of Supreme Court decisions elevating the Federal Arbitration Act (FAA) have led to an explosion of mandatory arbitration in the United States. A form of dispute resolution once used primarily between merchants and businesses to resolve their disputes, arbitration has expanded to myriad sectors, such as consumer and service disputes, investor disputes, employment and civil rights disputes. This article explores this expansion to such non-traditional contexts and argues that this shift requires the arbitral forum to evolve to increase protections for forced participants and millions of potential claims that involve matters of public policy. By way of example, decades of forced arbitration of securities disputes has led to increased due process and procedural reforms, even as concerns remain about investor access, the lack of transparency and investors’ perception of fairness.
I’ll report back on the Court’s eventual ruling, but in the meantime, perhaps some policymakers should consider some of Professor Verges’ proposals. Practically speaking though, once the NLRB has its full complement of commissioners, we can expect more employer-friendly decisions in general under the Trump Administration.
 Murphy Oil USA v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015), cert. granted, 137 S. Ct. 809, 196 L. Ed. 2d 595 (2017); Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016), cert. granted, 137 S. Ct. 809, 196 l. Ed. 2d. 595 (2017); Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016), cert. granted, 137 S. Ct. 809, 196 L. Ed. 2d 595 (2017)
Wednesday, August 2, 2017
Good morning from gorgeous Belize. I hope to see some of you this weekend at SEALS. A couple of weeks ago, I posted about the compliance course I recently taught. I received quite a few emails asking for my syllabus and teaching materials. I am still in the middle of grading but I thought I would provide some general advice for those who are considering teaching a similar course. I taught thinking about the priorities of current employers and the skills our students need.
1) Picking materials is hard- It's actually harder if you have actually worked in compliance, as I have, and still consult, as I do from time to time. I have all of the current compliance textbooks but didn't find any that suited my needs. Shameless plug- I'm co-authoring a compliance textbook to help fill the gap. I wanted my students to have the experience they would have if they were working in-house and had to work with real documents. I found myself either using or getting ideas from many primary source materials from the Society of Corporate Compliance and Ethics, the Institute of Privacy Professionals, DLA Piper, the Federal Sentencing Guidelines for Organizational Defendants, policy statements from various governmental entities in the US (the SEC, DOJ Banamex case, and state regulators), and abroad (UK Serious Frauds Office and Privacy Office). Students also compared CSR reports, looked at NGO materials, read the codes of conducts of the guest speakers who came in, and looked at 10-Ks, the Carbon Disclosure Project, and other climate change documents for their companies. I also had students watch YouTube videos pretending that they went to CLEs and had to write a memo to the General Counsel so that s/he could update the board on the latest developments in healthcare compliance and risk assessments.
2) This should be a 3-credit course for it to be an effective skills course- My grand vision was for guest speakers to come in on Mondays for an hour and then I would lecture for the remaining time or I would lecture for two hours on Monday and then students would have simulations on Wednesday.This never happened. Students became so engaged that the lecturers never finished in an hour. We were always behind. Simulations always ran over.
3) Don't give too much reading- I should have known better. I have now taught at three institutions at various tiers and at each one students have admitted- no, actually bragged- that they don't do the reading. Some have told me that they do the reading for my classes because I grade for class participation, but I could actually see for my compliance course how they could do reasonably well without doing all of the reading, which means that I gave too much. I actually deliberately provided more than they needed in some areas (especially in the data privacy area) because I wanted them to build a library in case they obtained an internship or job after graduation and could use the resources. When I started out in compliance, just knowing where to look was half the battle. My students have 50 state surveys in employment law, privacy and other areas that will at least give them a head start.
4) Grading is hard- Grading a skills course is inherently subjective and requires substantive feedback to be effective. 40% of the grade is based on a class project, which was either a presentation to the board of directors or a training to a group of employees. Students had their choice of topic and audience but had to stay within their industry and had the entire 6-week term to prepare. Should I give more credit to the team who trained the sales force on off-label marketing for pharmaceuticals because the class acting as the sales force (and I) were deliberately disrespectful (as some sales people would be in real life because this type of training would likely limit their commissions)? This made their training harder. Should I be tougher on the group that trained the bored board on AML, since one student presenter was in banking for years? I already know the answers to these rhetorical questions. On individual projects, I provide comments as though I am a general counsel, a board member, or a CEO depending on the assignment. This may mean that the commentary is "why should I care, tell me about the ROI up front." This is not language that law students are used to, but it's language that I have tried to instill throughout the course. I gave them various versions of the speech, "give me less kumbaya, we need to care about the slave labor in the factories, and less consumers care about company reputation, and more statistics and hard numbers to back it up." Some of you may have seen this recent article about United and the "non-boycott, which validates what I have been blogging about for years. If it had come out during the class, I would have made students read it because board members would have read it and real life compliance officers would have had to deal with it head on.
5) Be current but know when to stop- I love compliance and CSR. For the students, it's just a class although I hope they now love it too. I found myself printing out new materials right before class because I thought they should see this latest development. I'm sure that what made me think of myself as cutting edge and of the moment made me come across to them as scattered and disorganized because it wasn't on the syllabus.
6) Use guest speakers whenever possible- Skype them in if you have to. Nothing gives you credibility like having someone else say exactly what you have already said.
If you have any questions, let me know. I will eventually get back to those of you who asked for materials, but hopefully some of these links will help. If you are teaching a course or looking at textbook, send me feedback on them so that I can consider it as I work on my own. Please email me at firstname.lastname@example.org.
Next week, I will blog about how (not) to teach a class on legal issues for start ups, entrepreneurs, and small businesses, which I taught last semester.
Wednesday, April 19, 2017
Ratings behemoth Bill O'Reilly is out of a job at Fox News “after thorough and careful review of the [sexual harassment] allegations” against him by several women. Fox had settled with almost half a dozen women before these allegations came to light, causing advertisers to leave in droves once the media reported on it. According to one article, social media activists played a major role in the loss of dozens of sponsors. Despite the revelations, or perhaps in a show of support, O’Reilly’s ratings actually went up even as advertisers pulled out. Fox terminated O’Reilly-- who had just signed a new contract worth $20 million per year-- the day before its parent company’s board was scheduled to meet to discuss the matter. The employment lawyer in me also wonders if the company was trying to preempt any negligent retention liability, but I digress.
An angry public also took to social media to expose United Airlines' after its ill-fated decision to have a passenger forcibly removed from his seat to make room for crew members. However, despite the estimated 3.5 million impressions on Twitter of #BoycottUnited, the airline will not likely suffer financially in the long term because of its near monopoly on some key routes. United’s stock price nosedived by $800 million right after the disturbing video surfaced, but has rebounded somewhat with EPS beating estimates. Check out Haskell Murray's recent post here for more perspective on United.
Pepsi and supermodel Kendall Jenner also suffered more embarrassment than financial loss after people around the world erupted on social media over an ad that many believed trivialized the Black Lives Matter movement. Pepsi pulled the controversial ad within 24 hours. Some believe that Pepsi may suffer in sales, but I’m not so sure. Ironically, Pepsi’s stock price went up during the scandal and went down after the company apologized.
Pepsi and United both suffered public relations nightmares, but the skeptic in me believes that consumers will ultimately focus on what’s most important to them- convenience, quality, price, and in Pepsi’s case, taste. I recently attended my 25th law school reunion, and all of my colleagues who used a ride sharing app used Uber nowithstanding its well-publicized leadership scandals and the #deleteuber campaign. Indeed, many social media campaigns actually backfire. The #grabyourwallet boycott of Ivanka Trump’s brand raised public awareness but may have actually led to its recent record sales.
Reasonable people can disagree about whether social media campaigns and threats of consumer boycotts actually cause long-standing and permanent changes in corporate culture or policy. There is no doubt, however, that CEOs and PR departments will be working more closely than ever in the age of viral videos and 24-hour worldwide Twitter feeds.
Monday, February 27, 2017
Later this week, I will head to Indiana to present at and attend a social enterprise law conference at The Law School at the University of Notre Dame. The conference includes presentations by participating authors in the forthcoming Cambridge Handbook of Social Enterprise Law, edited by Ben Means and Joe Yockey. The range of presentations/chapters is impressive. Fellow BLPB editors Haskell Murray and Anne Tucker also are conference presenters and book contributors.
Interestingly (at least for me), my chapter relates to Haskell's post from last Friday. The title of my chapter is "Financing Social Enterprise: Is the Crowd the Answer?" Set forth below is the précis I submitted for distribution to the conference participants.
Crowdfunding is an open call for financial backing: the solicitation of funding from, and the provision of funding by, an undifferentiated, unrestricted mass of individuals (the “crowd”), commonly over the Internet. Crowdfunding in its various forms (e.g., donative, reward, presale, and securities crowdfunding) may implicate many different areas of law and intersects in the business setting with choice of entity as well as business finance (comprising funding, restructuring, and investment exit considerations, including mergers and acquisitions). In operation, crowdfunding uses technology to transform traditional fundraising processes by, among other things, increasing the base of potential funders for a business or project. The crowdfunding movement—if we can label it as such—has principally been a populist adventure in which the public at large has clamored for participation rights in markets from which they had been largely excluded.
Similarly, the current popularity of social enterprise, including the movement toward benefit corporations and the legislative adoption of other social enterprise business entities, also stems from populist roots. By focusing on a double or triple bottom line—serving social or environmental objectives as well as shareholder financial wealth—social enterprises represent a distinct approach to organizing and conducting business operations. Reacting to a perceived gap in the markets for business forms, charters, and tax benefits, social enterprise (and, in particular, benefit corporations) offer venturers business formation and operation alternatives not available in a market environment oriented narrowly around the maximization or absence of the private inurement of financial value to business owners, principals, or employees.
Perhaps it is unsurprising then, that social enterprise has been relatively quick to engage crowdfunding as a means of financing new and ongoing ventures. In addition, early data in the United States for offerings conducted under Regulation CF (promulgated under the CROWDFUND Act, Title III of the JOBS Act) indicates a relatively high incidence of securities crowdfunding by social enterprise firms. The common account of crowdfunding and social enterprise as grassroots movements striking out against structures deemed to be elitist or exclusive may underlie the use of crowdfunding by social enterprise firms in funding their operations.
Yet, social enterprise’s early-adopter status and general significance in the crowdfunding realm is understudied and undertheorized to date. This chapter offers information that aims to address in part that deficit in the literature by illuminating and commenting on the history, present experience, and future prospects of financing social enterprise through crowdfunding—especially securities crowdfunding. The chapter has a modest objective: to make salient observations about crowdfunding social enterprise initiatives the based on doctrine, policy, theory, and practice.
Specifically, to achieve this objective, the chapter begins by briefly tracing the populist-oriented foundations of the current manifestations of crowdfunding and social enterprise. Next, the chapter addresses the financing of social enterprise through crowdfunding, focusing on the relatively recent advent of securities crowdfunding (including specifically the May 2016 introduction of offerings under Regulation CF in the United States). The remainder of the chapter reflects on these foundational matters by contextualizing crowdfunded social enterprise as a part of the overall market for social enterprise finance and making related observations about litigation risk and possible impacts of securities crowdfunding on social enterprise (and vice versa).
Please let me know if you have thoughts on any of the matters I am covering in my chapter or resources to recommend in finishing writing the chapter that I may not have found. I seem to find new articles that touch on the subject of the chapter every week. I will have more to say on my chapter and the other chapters of the Handbook after the conference and as the book proceeds toward publication.
Sunday, September 4, 2016
Although I knew that Labor Day was a creation of the labor movement (about which I have mixed views), I had never looked up the history of the holiday in the United States. The Department of Labor, unsurprisingly, has a nifty, short webpage with some nice historical facts. Among them: the holiday has roots back into the 1880s and was originally a municipal creation, then became a state holiday in a number of states before Congress approved the holiday in 1894. The brief history on the webpage concludes with the following paragraph:
The vital force of labor added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation's strength, freedom, and leadership — the American worker.
Labor and employment lawyers have focused commentary over the past week on legal matters relating to their spheres of influence in acknowledging Labor Day. Proskauer partner Mark Theodore posted a piece on a pair of recent NLRB decisions, and a union commentator, executive director of the Center for Union Facts, posted an advocacy piece promoting proposed federal legislation--the Employee Rights Act (which, according to the article, is "legislation which would protect employees from out-of-touch union bosses.").
All of this may be of interest to business lawyers. Or it may not. But tomorrow, I will honor the holiday by working--at least for part of the day. And that does seem, somehow, fitting . . . .
Wednesday, May 4, 2016
Last week, Hamdi Ulukaya, founder and CEO of Chobani, announced a 10% company stock grant to all company employees. Chobani joined the ranks of high profile stock grants including Whole Foods, Starbucks, Apple and Twitter. Stock grants, while more common in tech industries, are a part of hybrid corporate law-employment law conversation on shared ownership. Employee ownership in companies can occur in several different forms such as ERISA-governed benefit plans where the company stock issued or bought as a part of a retirement saving plan. Alternatively, a stock grant may be structured as a bonus plan, a standard compensation, or a vesting employee benefit eligible after threshold years and types of service. All of these plans fall under the rubric of shared ownership. In 2015, the National Center for Employee Benefits estimated that over 9000 companies participated in some form of shared ownership.
In a similar vein, actors in the hit (and record-breaking with 16 Tony Nominations) musical Hamilton have entered into a profit-sharing agreement with producers. The deal is different for these actors, but the sentiment is the same in sharing profits, aligning interests, and promoting employee loyalty.
Shared ownership plans, especially the ERISA-governed ones can have specific tax and financing benefits for companies. Creating a shared ownership plan, however is often focused on creating certain firm-specific benefits such as recruiting and retaining talent, and improving firm performance by aligning interests between employees and the company. The recruitment and retention aspect can be especially valuable to start-up firms that struggle to compete with mature firms on salary and reputation. Empirical studies have found improved workplace performance, on average, for firms with shared capitalism plans, with positive effects observed most strongly when combined with policies such as low supervision, decision-making participation, and competitive pay.
I note these stories with particular interest for several reasons. The first is that I am routinely embarrassed by how little play I give employees in my corporation class . I seem all too happy to ignore this very important piece of the corporate power puzzle, engine for the machine, etc., etc. Second, I have been looking at shared ownership in the context of a recent research project, so look for more on that topic in a separate post once the project progresses. Third, my sense is that social enterprise movement will bring with it greater demands for shared ownership as a means to address social factors such as retirement security, employee autonomy and wage inequality. Look for more of these stories in the headlines and an emphasis on it in scholarship.
Friday, April 1, 2016
Benjamin Means and Joseph Seiner, both of University of South Carolina School of Law, have an interesting article out entitled Navigating the Uber Economy. Work is changing quickly, and the employment/independent contractor line is becoming more difficult to draw. The abstract is reproduced below and the article is available here. Last July, Anne Tucker authored a blog post related to this issue, available here.
In litigation against ride-sharing companies Uber and Lyft, former drivers have alleged that they were misclassified as independent contractors and denied employment benefits. The companies have countered that they do not employ drivers and merely license access to a platform that matches those who need rides with nearby available drivers. At stake are the prospects, not only for Uber and Lyft, but for a nascent, multi-billion dollar "on-demand" economy.
Unfortunately, existing laws fail to provide adequate guidance regarding the distinction between independent contractors and employees, especially when applied to the hybrid working arrangements characteristic of a modern economy. Under the Fair Labor Standards Act and analogous state laws, courts consider several factors to assess the "economic reality" of a worker's alleged employment status; yet, there is no objective basis for prioritizing those factors.
This Essay argues that the classification of workers as independent contractors or employees should be shaped by an overarching inquiry: how much flexibility does the individual have in the working relationship? Those who can choose the time, place and manner of the work they perform are more independent than those who must accommodate themselves to a business owner's schedule. Our approach is novel and would provide an objective basis for adjudicating classification disputes, especially those that arise in the context of the on-demand economy. By reducing legal uncertainty, we would ensure both that workers receive appropriate protections under existing law and that businesses are able to innovate without fear of unknown liabilities.
Tuesday, February 23, 2016
Following is a guest post from by J. Scott Colesanti and Madeline Rasmussen. Scott is a former contributing editor to this Blog, and I am happy to share the post post below. This is sports and labor law post, to be sure, but employment issues, especially big time sports-related ones, are business law, too.
Why NFL Players Might Want the NFL to Win Its Appeal of Brady v. NFL
by J. Scott Colesanti and Madeline Rasmussen
It feels like weeks since we saw a meaningful NFL contest (well, actually it has been a little over a week). But it is nonetheless still weeks until the Brady appeal before the Second Circuit in March. Should the vacatur of the superstar’s 4-game suspension in “Deflategate” be upheld, alternative means of both implementing and reviewing NFL punishment seem likely, alternatives none too comforting for future disciplined football players.
Tuesday, January 5, 2016
On Saturday, January 9, 2016, I will be spending the day at the AALS Section on Socio-Economics Annual Meeting at the Sheraton New York Times Square Hotel. Among other things, I will be part of a panel discussion from 9:50 - 10:50 AM, Death of the Firm: Vulnerabilities and the Changing Structure of Employment. My co-panelists will be June Carbone and Katherine Stone (I am very tempted to give up my 15 minutes and just sit back and listen to these two great scholars, but please don't use the comments section to encourage me to do that). As I understand it, the gist of the discussion will be that while firms once supported a significant part of the safety net that provided employee health and retirement benefits, they have recently abdicated more and more of these responsibilities. At the same time, however, what may be described as subsidies granted by the state to firms -- particularly corporations -- as part of a social contract whereby these firms provided the aforementioned benefits, have not been correspondingly reduced. In fact, the rights of corporations have been expanded by, for example, cases like Citizens United and Hobby Lobby -- suggesting a possible windfall for the minority of individuals best positioned to reap the benefits of corporate growth and insulation. Obviously, competing interpretations of the relevant history abound. Regardless, please stop by if you have the opportunity. Continuing to beat a favorite drum of mine (see here, here, and here), I will be applying the lens of corporate personality theory to the foregoing issue and arguing that corporate personality theory has a role to play both in understanding how we got here and how best to move forward. Additional details, including the entire day’s program, can be found here.
On Monday, January 11, 2016, I will also be participating in the Society of Socio-Economists Annual Meeting, also at the Sheraton. Program details are available here. Again, please stop by if you have the opportunity.
January 5, 2016 in Business Associations, Conferences, Constitutional Law, Corporate Governance, Corporate Personality, Corporations, Current Affairs, Employment Law, Financial Markets, Law and Economics, Shareholders, Stefan J. Padfield | Permalink | Comments (0)
Sunday, November 1, 2015
I teach both Civil Procedure and Business Associations. As a former defense-side commercial and employment litigator, I teach civ pro as a strategy class. I tell my students that unfortunately (and cynically), the facts don’t really matter. As my civil procedure professor Arthur Miller drilled into my head 25 ago, if you have procedure on your side, you will win every time regardless of the facts. Last week I taught the seminal but somewhat inscrutable Iqbal and Twombly cases, which make it harder for plaintiffs to survive a motion to dismiss and to get their day in court. In some ways, it can deny access to justice if the plaintiff does not have the funds or the will to re-file properly. Next semester I will teach Transnational Business and Human Rights, which touches on access to justice for aggrieved stakeholders who seek redress from multinationals. The facts in those cases are literally a matter of life and death but after the Kiobel case, which started off as a business and human rights case but turned into a jurisdictional case at the Supreme Court, civil procedure once again "triumphed" and the doors to U.S. courthouses closed a bit tighter for litigants.
This weekend, the New York Times published an in depth article about how the corporate use of arbitration clauses affects everyone from small businesses to employees to those who try to sue their cell phone carriers and credit card companies. Of course, most people subject to arbitration clauses don’t know about them until it’s too late. On the one hand, one could argue that corporations would be irresponsible not to take advantage of every legal avenue to avoid the expense of protracted and in some cases frivolous litigation, particularly class actions. On the other hand, the article, which as one commenter noted could have been written by the plaintiffs bar, painted a heartbreaking David v. Goliath scenario.
I see both sides and plan to discuss the article and the subsequent pieces in the NYT series in both of my classes. I want my students to think about what they would do if they were in-house counsel, board members, or business owners posed with the choice of whether to include these clauses in contracts or employee handbooks. For some of them it will just be a business decision. For others it will be a question of whether it’s a just business decision.
November 1, 2015 in ADR, Business Associations, Corporate Governance, Corporations, CSR, Current Affairs, Employment Law, Ethics, Human Rights, Marcia Narine Weldon, Teaching | Permalink | Comments (0)
Thursday, September 24, 2015
This comes to us courtesy of Rachel Ezrol at Emory Law:
A Vulnerability and the Human Condition Initiative & Feminism and Legal Theory Workshop Project
A Workshop on Vulnerability at the Intersection of the Changing Firm and the Changing Family
When: October 16-17, 2015
Where: Emory University School of Law
Registration is FREE for Emory students, faculty, and staff.
From the Call for Papers:
Theories of dependency situate the limitations that attend the caregiving role in the construction of the relationship between work and family. The “worker,” defined without reference to family responsibilities, becomes capable of autonomy, self-sufficiency, and responsibility through stable, full-time employment. The privatized family, created by the union of spouses, is celebrated in terms of a self-sufficient ideal that addresses dependency within its own ranks, often through the gendered assumptions regarding responsibility for caretaking. The feminist project has long critiqued these arrangements as they enshrine the inequality that follows as natural and inevitable and cloak the burdens of caretaking from examination or critique. The interpenetrations of the family and the firm have thus been understood as both multiple and wide-ranging. Both this system and the feminist critique of it, however, are associated with the construction of wage labor that arose with industrialization. This workshop will apply the lens of vulnerability to consider the implications that arise from large scale changes in the structure of employment - changes that place this prior ideal of stable self-sufficiency beyond the reach of much of the population.
Issues For Discussion May Include:
This workshop will use vulnerability theory to explore the implications of the changing structure of employment and business organizations in the information age. In considering these changes, we ask in particular:
- How does the changing relationship between employment and the family, and particularly the disappearance of the breadwinner capable of earning a stable “family wage,” affect our understanding of the family and its association with care and dependency?
- How does the changing structure of employment and business organization affect possibilities for reform? What should be the role of a responsive state in directing these shifting flows of capital and care?
- How might a conception of the vulnerable subject help our analysis of the changing nature of the firm? What relationships does it bring into relief?
- What kind of legal subject is the business organization? Are there relevant distinctions among business and corporate forms in regard to understanding both vulnerability and the need for resilience?
- How are business organizations vulnerable? The family? Have these vulnerabilities shifted over time, and what forms of resilience are available for both institutions to respond to new economic realities?
- What, if any, should be the role of international and transnational organizations in a neoliberal era? What is their role in building both human and institutional resilience?
- Is corporate philanthropy an adequate response to the retraction of state regulation? What forms of resilience should be regulated and which should be left to the ‘free market’?
- How does the Supreme Court's willingness to assign rights to corporate persons (Citizen's United, Hobby Lobby), affect workers, customers and communities? The relationship between public and private arenas?
Program Coordinator | Emory University School of Law
1301 Clifton Road | Atlanta, GA 30322 | Room G500 Gambrell Hall
404-712-2420 (t) | 404-727-1973 (f)
Vulnerability and the Human Condition Initiative
Feminism and Legal Theory Project
Friday, August 7, 2015
The internet has been abuzz this week with news that Netflix will now offer of "unlimited" maternity and paternity leave to its employees.
I place "unlimited" in scare quotes because, while Netflix uses that word, the announcement makes clear that the leave is unlimited....during the first year after a child's birth or adoption.
Nonetheless, one year of paid maternity/paternity leave is extremely generous by U.S. company standards.
Amid the praise, there has been a fair bit of skepticism.
- Why Netflix's And Microsoft's New Parental Leave Policies Fall Short Of What Parents Need (Forbes)
- Netflix's New Parental Leave Policy Could Make Things Worse for Women (Time)
- Why Netflix’s ‘unlimited’ maternity leave policy won’t work (MarketWatch)
- Why Netflix’s unlimited parental leave is probably a bad idea for your company (Washington Post)
- Not All Netflix Workers Will Get 'Unlimited' Parental Leave (HuffPost Business)
No good deed goes unpunished? As far as I could tell, the criticism boils down to the following:
- Netflix (and other companies) may not be able to afford this massive benefit
- The policy does not cover all Netflix employees
- The policy may lead to jealousy and strained working relationships
- Parents will have a hard time separating from their children after one year
- Employees might actually take less time off, as seen with some of the unlimited vacation policies
The skepticism following Netflix's announcement reminds me of the somewhat surprising blowback from Gravity Payment's decision to raise its minimum salary to $70,000. More details on the Gravity Payment's situation are nicely detailed by our friend Christine Hurt (BYU Law) at The Conglomerate. Decisions by both companies appear to warrant business judgment rule protection, even if they turn out badly.
While the reactions have been mixed, Netflix has definitely been getting a lot of publicity. Perhaps the publicity will breathe new life into efforts to have the U.S. join the rest of the industrialize world in requiring paid maternity/paternity leave.
In any event, it will be interesting to see how Netflix's policy plays out. To date, the stock market seems to be supporting the announcement (or at least fairly neutral on the announcement). If support continues, perhaps we will see this type of policy spread organically.