Saturday, May 27, 2006

Foundation Rescinds Book Award Because of Author's Opposition to Unionization of Yale Graduate Students

Death_by_a_thousand_cuts According to the Chronicle of Higher Education, the Sidney Hillman Foundation at the last minute rescinded an award it already had announced would go to authors Ian Shapiro and Michael Graetz.  The recission apparently was due to Shapiro's opposition to the unionization of Yale graduate students. From Book Prize Is Yanked From Yale Professors Over Author's Role in Graduate-Student Labor Dispute:

Two Yale University professors, Ian Shapiro and Michael J. Graetz, expected to receive a 2006 Sidney Hillman Award on Tuesday at a ceremony in New York City. Instead, they got phone calls on Tuesday morning telling them that the judges had reversed the decision to honor the professors' book on the repeal of the estate tax....
The telephone calls came from Bruce Raynor, president of the Sidney Hillman Foundation, which sponsors the awards....
Mr. Raynor told the authors that the last-minute reversal had been based on information that came to light about Mr. Shapiro's dealings with members of GESO, the Graduate Employees and Students Organization, in its efforts to organize a graduate-student union at Yale in the 1990s....

Mr. Graetz and Mr. Shapiro pointed out that the book, which was published last year by Princeton University Press, does not address labor organizing. "There is no connection to GESO at all," Mr. Graetz said. "This book has absolutely nothing to do with the graduate students."...

The move toward rethinking the award began last week. On Thursday, May 18, the Hillman Foundation ran an advertisement in The New York Times listing the 2006 winners in several categories: book, magazine, broadcast, photojournalism, newspaper, and blog, a new category this year. Mr. Shapiro's and Mr. Graetz's book was listed as the winner in the book category. Although Mr. Shapiro and Mr. Graetz had written "an excellent book," Mr. Raynor told The Chronicle, the decision came down to "more than just the words on the page."

Mr. Meyerson [one of the judges] read a statement he delivered Tuesday night at the awards ceremony. "Normally judges evaluate the dancer, not the dance," he said. "What we tried to do in the excruciatingly limited time available to us was to gauge the severity and credibility of the allegations. ... A crucial factor for us was that the National Labor Relations Board in the region issued a complaint against several Yale professors, and Professor Shapiro most particularly, for these actions."

As Mr. Meyerson and Mr. Shapiro both noted, the labor board never adjudicated the graduate students' complaint because their labor action failed to meet certain legal criteria. "There was never any hearing on the merits of the complaint," Mr. Shapiro said. "People like me never got to come into a hearing and say, What's the evidence that I threatened anyone?"

Mr. Meyerson said he had consulted with a friend who was a labor lawyer, who told him that "such a complaint would not have been issued if the NLRB attorneys had not found the claims to be credible and meritorious." In the end, Mr. Meyerson and the other judges concluded that "Professor Shapiro's actions rose to a level that required the rethinking of the award."

"What we came down to was that the book was eminently qualified to win many other awards," he said, but did not fit the criteria of the Hillman Prize.

Hat tip: Paul Caron at TaxProf Blog.

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May 27, 2006 | Permalink | Comments (0) | TrackBack (0)

Top-5 International Employment & Labor Law SSRN Downloads

Top-5 Benefits/Compensation//Pension SSRN Downloads

Air Traffic Controller Labor Dispute in Seattle

Airplane_3 SeattlePi.com is reporting that there is an escalating labor dispute between air traffic controllers and the Federal Aviation Administration (FAA) at Seattle Tacoma airport. 

According to the article, the sides are an impasse in their negotiations:

Air traffic controllers at Sea-Tac Airport handed out leaflets [this past] Tuesday about their stalled contract, saying it would lead to pay cuts for incoming employees at a time when many veterans have to retire.

Their union, the National Air Traffic Controllers Association, and the Federal Aviation Administration have been at an impasse since April.

Because of the differences, Congress has until June 5 to find a legislative resolution to the dispute.

If federal lawmakers do not find one, the FAA can implement its last, best contract offer -- which the union says also would cap pay for current employees and cut wages for those who would replace them.

Air traffic controllers are barred by law from striking. Those who went on strike in the 1980s were fired.

Given the divisive and unfortunate past surrounding air traffic controller labor disputes, this is definitely one controversy worth keeping track of.

PS

May 27, 2006 in Labor and Employment News | Permalink | Comments (0) | TrackBack (0)

New York: No More "Discretionary Clauses" in ERISA Long Term Disability Plans

Newyork Here's an interesting update from The Disabled Worker Law Blog.  According to the post, the New York State Insurance Commission has outlawed so-called discretionary clauses in ERISA long-term disability plans.

According to Troy Rosasco at The Disabled Worker:

Insurance companies frequently used discretionary clauses to unfairly deny legitimate long term disability claims by claiming their policy gave them “discretion” to decide what is and is not a disability. Discretionary clauses also handcuffed federal court judges who reviewed the unfair denials.

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Now - New York residents with ERISA group long term disability policies will have greater success challenging disability claim denials or terminations. Federal Judges will have far greater leeway in deciding who is disabled from their ‘own occupation’ or ‘any occupation’.

PS

May 27, 2006 in Pension and Benefits | Permalink | Comments (0) | TrackBack (0)

Friday, May 26, 2006

ERISA Section 404(c) Rulemakings On The Way

Dolseal_2The Alexander Hamilton Institute's Benefits Alert Newsletter is reporting that there are a number of employee benefits-related rulemaking actions on tap for consideration this summer. Of particular note, the Department of Labor's Employee Benefit Security Administration (EBSA) is considering a number of amendments for ERISA Section 404(c) plans.

Such pension plans allow participants to exercise control over the assets in their accounts, and consequently, plan fiduciaries do not have the same potential fiduciary liability for losses resulting  from participants's investment decisions.

One part of the rulemaking under consideration this summer would require that plan administrators provide the necessary information about fees and expenses so that participants can make informed investment decisions. 

Another proposed amendment would set forth the types of investments that qualify as default investments when participants fail to make investment elections themselves and create a "safe harbor" for plan sponsors and fiduciaries who select such qualified, default investments.

Hearing on these rulemakings are scheduled for June and August 2006.

PS

May 26, 2006 in Pension and Benefits | Permalink | Comments (1) | TrackBack (0)

Another State Universal Health Care Law, Another ERISA Preemption Analysis

Map_1Update:  Reader Tom Gies, who practices management-side labor and employment law at Crowell & Moring in Washington D.C., provides support for my views on these state play-or-pay laws in two separate recent pieces he has authored here (Legal Times) and here (ERISA Litigation Reporter, scroll down to page 3).

Like Massachusetts, Vermont yesterday just passed its own version of a nearly-universal health care insurance law.  Vermont hopes to extend health insurance coverage to as many as 96% of its residents by 2010.  According to Reuters, the Vermont plan works by setting up:

[a] new subsidized health-care plan called Catamount Health[, which] will be offered by insurance companies and paid for in part with a hike in the state's cigarette tax and a fee on employers who do not offer health insurance to their workers.

It will provide coverage similar to that offered to state employees, taking nearly 25,000 people off the rolls of the uninsured, backers of the legislation say.

Not surprisingly, I foresee some ERISA preemption issues with this law.  Similar to the Massachusetts health care insurance legislation passed a couple of months ago, it appears that the part of the Vermont law which places a fee on employers who do not offer health insurance to their workers (the play-or-pay provision) may be preempted by ERISA. 

To briefly restate my earlier reasoning (which I know others disagree with), this is because the Vermont law may be seen as interfering too much with how employers administrate or operate their health plans and may undermine the goal of uniformity in employee benefit administration that ERISA is thought to promote.  And because the law is not directed against entities engaged in insurance, it will not be saved from ERISA preemption either.

As I have said before as well, I do not favor this outcome, but this is where current ERISA preemption case law appears to lead.

PS

May 26, 2006 in Pension and Benefits | Permalink | Comments (0) | TrackBack (0)

Dennis Nolan Becomes NAA President

Nolan Congratulations to Dennis Nolan, who today becomes president of the National Academy of Arbitrators.

Professor Nolan is the Webster Professor of Labor Law at the University of South Carolina School of Law, where he has taught labor and employment law since 1974.  He has has published eight books and over forty major articles and chapters on labor law, labor and employment arbitration, and legal history.  He has delivered nearly a hundred and fifty papers and lectures in his specialties, including conferences and lecture tours in Australia, Canada, England, the United Kingdom, Ireland, and New Zealand.

In addition to his teaching and research, Professor Nolan has maintained an active arbitration and mediation practice since 1976.  He serves on the labor arbitration panels of the American Arbitration Association and the Federal Mediation and Conciliation Service, as well as many private panels.  In 1985, he was selected for membership in the National Academy of Arbitrators.  He has served as a member of the Academy's Board of Governors from 1993-96, chair of the Southeastern Region from 1998-2001, Vice President in 2001-03, President-Elect in 2005-06, and now President in 2006-07.

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May 26, 2006 in Arbitration | Permalink | Comments (0) | TrackBack (0)

Pitt Offers Certificate in Disability Law

Meisel2 The University of Pittsburgh School of Law has developed a Certificate in Disability Legal Studies Program to address the needs of the estimated 54 million disabled Americans.  “Disability law pervades so many areas of life that it is essential to provide legal training to all of those professionals who are affected by it so that they may incorporate it into their professional practice,” said Alan Meisel, the Director of the new certificate program.

The 15-credit program is geared for a wide variety of professionals, including administrators, educators, health practitioners, advocates, social workers, architects, city planners, attorneys, business leaders, human resource directors, and students in those fields.

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May 26, 2006 in Teaching | Permalink | Comments (0) | TrackBack (0)

Thursday, May 25, 2006

Citizen Panel: Oregon Legislators Should Not Work Drunk

Politician_1This one, from ABCNews, comes under the "Folks, I'm not making this stuff up" category:

Oregon legislators and staff members should not be drunk while performing their official duties, a citizen panel says.

The Public Commission on the Oregon Legislature adopted that recommendation Monday, although the panel decided to leave it to House and Senate leaders to draft rules against intoxication and possible penalties.

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The new policy was suggested by Steve Doell, president of Crime Victims United, who said he and another member of the group noticed alcohol on the breath of at least one legislator at the end of the 2005 session while they were advocating tougher drunken-driving penalties.

What are they going to do next? Demand that legislators and their staff be ethical while performing their official duties?

Hat Tip: Wasted Blog

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May 25, 2006 in Commentary | Permalink | Comments (0) | TrackBack (0)

Third Circuit Narrows Title VII Ministerial Exception

Church_4In what may be truly Judge Becker's last decision for the Third Circuit, a divided panel has decided that the ministerial exception, which has been previously interpreted as broadly exempting religious institutions from having to comply with Title VII antidiscrimination mandates with regard to their clergy, only applies when the discrimination relates to "religious belief, religious doctrine, or the internal regulations of a church." 

Here's a summary from Inside Higher Ed:

Ministers or other religious officials may sue a religious college for employment discrimination if the institution’s reasons for taking the contested employment action are not grounded in “faith, doctrine, or internal regulation” of the church, a divided federal appeals court ruled Wednesday.  The decision by the U.S. Court of Appeals for the Third Circuit, in a case involving a chaplain who accused Gannon University of discriminating against her because she’s a woman, represents a major break with legal precedent governing the law of religious colleges and faith-based institutions generally.

Of significance, the court, in the voice of Judge Becker, stated:

This case, however, is about something completely different. Petruska alleges that she was demoted because of animus against women that had nothing to do with religous beliefs, religious doctrine, or internal regulation .... While several of our sister courts have opined that the employer’s reasons are irrelevant to the ministerial exception ... we conclude that these reasons make all the difference. The Constitution protects religious exercise, and we decline to turn the Free Exercise Clause into a license for the free exercise of discrimination unmoored from religious principle.

The decision is Petruska v. Gannon University, 05-1222 (3d Cir. May 24, 2006).

Because there is now a substantial difference of opinion on how broadly the minsterial exception should apply in cases like these (seven of eleven circuit courts recognize the broad version of the ministerial exception), don't be surprised to see this issue make its way to the Supreme Court eventually.

PS

May 25, 2006 in Employment Discrimination | Permalink | Comments (0) | TrackBack (0)

Attorneys with Disabilities

Logo4_1 The Equal Employment Opportunity Commission has issued a new fact sheet addressing the application of the reasonable accommodation obligation under the Americans with Disabilities Act (ADA) to attorneys with disabilities and their employers.  The new publication is available at http://www.eeoc.gov/facts/accommodations-attorneys.html.

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May 25, 2006 in Employment Discrimination | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 24, 2006

Sperino on Recreating Diversity in Employment Law

Ssperino_1Sandra Sperino (Illinois/St. Louis) has posted on SSRN her forthcoming piece: Forgotten Federalism: Recreating Diversity in Employment Law by Debunking the Myth of the McDonnell-Douglas Monolith.

Here's the abstract:

The McDonnell-Douglas framework is one of the primary methods used by courts to evaluate discrimination claims based on circumstantial evidence. Although McDonnell-Douglas often is referred to as a singular test, it is actually a collection of different tests gathered rather deceptively under one name. Over the years, federal courts considering state law claims have increasingly applied the McDonnell-Douglas framework to these state claims, without considering whether the same result would occur under state law. The federal courts' rather monolithic view of McDonnell-Douglas is choking debate on important issues of employment law and denying states the ability to weigh in on significant policy issues.

In addition to ignoring the potential policy choices of states, some federal courts have chosen to trump state employment law by declaring that application of McDonnell-Douglas to state claims is mandated by vertical choice of law. This use of vertical choice of law is disingenuous and contrary to the Supreme Court's pronouncements of vertical choice of law. Additionally, it improperly limits the ability of states to create diversity in employment law by creating substantive standards that are different from those created under federal law.

Another fascinating and insightful piece by Sandra.  You can download it here.

PS

May 24, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

First Annual Colloquium on Current Scholarship in Labor & Employment Law

Conf_2Marquette University Law School is proud to announce that it will be hosting the 2006 Colloquium on Current Scholarship in Labor and Employment Law on Friday, October 27, 2006.

The Colloquium offers an opportunity for labor and employment law scholars from around the country to present their works-in-progress or recent scholarship, to get feedback from their colleagues, and to have a chance to meet and interact with those who are also teaching and researching in the labor and employment law area. Although all participants are encouraged to present their scholarship, one need not present in order to attend.

The colloquium will begin at 8 a.m. on Friday, October 27 and will conclude before dinner on the same day (a reception and dinner will follow).  All meals and refreshments will be provided during the day. There will also be an informal get-together Thursday evening.

Tentative Schedule:

8:00-9:00: Registration & Continental Breakfast

9:00-10:30: Session 1

10:30-10:45: Break

10:45-12:15: Session 2

12:15-1:30: Lunch

1:30-3:00: Session 3

3:00-3:15: Break

3:15-4:45: Session 4

5:00-6:00: Reception

6:00-8:30: Dinner

For more information, you can contact any of the conference organizers - Paul Secunda, Scott Moss, or Joe Slater - using the links below.

Registration and paper deadlines:

Register on-line here. To register as a presenter, please also submit a title and abstract to Prof. Secunda by July 31, 2006.

Full papers will be due by October 1, 2006.

In arranging the presentation schedule, preference may be given to presenters who deliver full papers by this date. Additionally, if there are a large number of proposals for presentations, priority for presentations will be given to those who submit early.

The Colloquium is free of charge but participants must pay their travel expenses.

Please check the Colloquium website for updated program, travel, hotel, and other information.

Conference Organizers:

Paul M. Secunda

Scott Moss

Joe Slater

PS

May 24, 2006 in Conferences & Colloquia | Permalink | Comments (0) | TrackBack (0)

Employee Rights and Employment Policy Journal

Employee Rights and Employment Policy Journal
Volume 9, Number 2, 2005

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Articles

  • Ramona L. Paetzold, Supreme Court’s 2004-05 Term Employment Law Cases: Retaliation, Disparate Impact and Freedom of Expression, p. 147.
  • Sandra F. Sperino, Chaos Theory: The Unintended Consequences of Expanding Individual Liability Under the Family and Medical Leave Act, p. 175.
  • Scott M. Aronson, ERISA’s Equitable Illusion: The Unjust Justice of Section 502(A)(3), p. 247.
  • Ramona L. Paetzold, How Courts, Employers, and the ADA Disable Persons with Bipolar Disorder, p. 293.
  • Joseph E. Slater (photo above), Do Unions Representing a Minority of Employees Have the Right to Bargain Collectively?: A Review of Charles Morris, The Blue Eagle at Work, p. 383.
  • Cyntha Nance, From Widgets to Digits: Reimagining Protective Workplace Policy; A Review of Katherine Stone’s, From Widgets to Digits: Employment Regulation for the Changing Workplace, p. 407.

AALS Section Proceedings

  • Joseph E. Slater, Michael J. Zimmer, Charles A. Sullivan, Alfred A. Blumrosen, Proof and Pervasiveness: Employment Discrimination in Law and Reality After Desert Palace, Inc., v. Costa: Proceedings of the 2005 Annual Meeting, Association of American Law Schools, Sections on Employment Discrimination, Civil Rights, Labor Relations and Employment Law, and Minority Groups, p. 427.
  • Sharona Hoffman, Paul Steven Miller, Chai R. Fledblum, & Michael Stein, The Definition of Disability in the Americans with Disabilities Act: Its Successes and Shortcomings; Proceedings of the 2005 Annual Meeting, Association of American Law Schools, Sections on Employment Discrimination Law; Labor Relations and Employment Law; and Law, Medicine, and Health Care, p. 473.
  • Maria O’Brien Hylton, Constance Hiatt, Shannon Minter, & Teresa Collett, Same Sex Marriage and Its Implications for Employee Benefits: Proceedings of the 2005 Annual Meeting, Association of American Law Schools, Sections on Employee Benefits, and Sexual Orientation and Gender Identity Issues, p. 499.

AALS Tributes Honoring Senior Law Professors

  • Honoring Clyde W. Summers, by Laura J. Cooper, p. 521
  • Honoring James E. Jones, Jr., by Vicki Schultz, p. 525
  • Honoring Joseph R. Grodin, by Christopher David Ruiz Cameron, p. 535.

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May 24, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Fourth Edition

 1865089133International and Comparative Employment Relations,
ed. by Greg J. Bamber, Russell D. Lansbury, & Nick Wailes

From the promo:

Each country is analysed according to a similar format, with an examination of the environment of employment relations—economic, historical, legal, social and political—and the major ‘players’; employers, unions and governments.  Then follow descriptions of the main processes of employment relations, such as local and centralised collective bargaining, arbitration and mediation, joint consultation and employee participation.  Important and topical issues are discussed, such as: non-unionised workplaces, novel forms of human resource management, labour law reform, employee involvement, multinational enterprises, differences between Asian and western companies, small and medium sized enterprises, migrant workers, technological change, labour market flexibility and pay determination.  These issues are important in most countries and valuable lessons can be learnt from the experiences of others.

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May 24, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 23, 2006

Fischl from Miami to Connecticut

Mfischl On our sister Law Professor Blog, Brian Leiter's Law School Reports, Brian is reporting that Michael Fischl (Miami) has accepted a senior lateral offer from the University of Connecticut Law School.

Michael received his B.A. from the University of Illinois in 1975 (cum laude and Phi Beta Kappa, with highest distinction in Political Science) and a J.D. cum laude from Harvard Law School in 1978. After law school, he was an appellate lawyer with the National Labor Relations Board in Washington, D.C., and the principal author of the board's briefs in a number of cases before the U.S. Supreme Court in the early 1980s, including NLRB v. Transportation Management, Inc. and NLRB v. Hendricks County REMC, and he received several commendations from the Board's General Counsel for his outstanding performance as an appellate attorney.

Since joining the faculty in 1983, Michael has presented lectures on labor topics at the law schools at Harvard and Duke, and he has published articles on labor law and legal theory in Columbia Law Review, Law & Social Inquiry, and Jurist: Books-on-Law.

Congratulations, Michael, on your big move!

PS

May 23, 2006 in Faculty News | Permalink | Comments (1) | TrackBack (0)

(One of) Becker's Last Opinion(s): Plain Error, Attorney Fees Jury Instructions, and the ADEA

Becker As has been noted with much sadness in a number of places in the blogosphere, Judge Edward Becker of the Third Circuit Court of Appeals passed away from cancer last Friday. Yesterday, Robert Loblaw at Decision of the Day posted on what it appears to be Judge Becker's last opinion.

True to his nature as a scholarly judge, Judge Becker gives some insightful commentary in the ADEA case of Collins v. Alco Parking Corp., 05-2802 (3d Cir. May 22, 2006), in which the court unanimously affirmed the jury verdict in favor of the defendant.  Although a seemingly run-of-the-mill ADEA case involving the termination of an older car rental agency employee alleged to have bilked customers out of additional money for car rentals, Judge Becker makes at least two insightful points in the opinion, one involving the proper standard of review for jury instructions and another involving the propriety of giving the jury an attorney fee-shifting instruction.

First, he painstakingly explains why the proper standard of review for looking over the jury instructions in the case was plain error and not plenary review under Federal Rule of Civil Procedure 51(c).  In short,  plain error review was appropriate because "[u]nder the[] circumstances, we cannot say that Collins, [the plaintiff], registered an objection to the attorney fee instruction, much less that he 'stat[ed] distinctly the matter objected to and the grounds of the objection,' as required by Rule 51."

Turning to whether the attorney fee instruction constituted plain error by the district court, Judge Becker first recounted the instruction given:

You are instructed that if plaintiff wins on his claim, he may be entitled to an award of attorney fees and costs over and above what you award as damages. It is my duty to decide whether to award attorney fees and costs, and if so, how much. Therefore, attorney fees and costs should play no part in your calculation of any damages. 

Judge Becker found this instruction to the jury did not entail plain error because:

Collins would have us believe that there is some reasonable possibility that the jury, in order to eliminate the chance that Collins might be awarded attorney fees, took the
disproportionate step of returning a verdict against him even though it believed he was the victim of age discrimination, notwithstanding the District Court’s clear instructions to the
contrary. In our view, such a theory is too implausible to support a finding of plain error.

Just another example of Judge Becker's ability to write lucid, comprehensive, and most importantly, fair, appellate decisions.

He will be sorely missed.

PS

May 23, 2006 in Employment Discrimination | Permalink | Comments (0) | TrackBack (0)

Prop. 82, Pre-School Teachers, and Disparate Impact Discrimination

Sch_building_4

Over on the AALS employment discrimination listserv, there is an interesting discussion going on in response to Eugene Volokh's (UCLA) employment discrimination questions surrounding California's Proposition 82 (Eugene also blogged about it on the Volokh Conspiracy).

Eugene first asks:

Prop. 82, which is on the June ballot in California, would create a new state-funded preschool program, and (among other things) require preschool teachers in that program to have 4-year college degrees.  The degree can be in any subject; it will eventually also require a special 1-year early childhood education credential, but that would be on top of the college degree in any subject.

Would hiring pursuant to this program possibly violate Title VII, under the disparate impact theory, by analogy to Griggs v. Duke Power?

In a follow up listserv post, Eugene asks:

[M]ight the state law be preempted by the business necessity requirement, rather than itself categorically satisfying the business necessity requirement? 

I take it that state law can't turn sex into a BFOQ when it otherwise won't be (the EEOC thinks so, and it seems to me that this makes sense as a matter of federal preemption principles).  Likewise, I know of one case (Gonzales v. Sandoval County, 2 F. Supp. 2d 1442 (D.N.M. 1998)) that holds that "state law can only require fitness [for a job] to the extent permissible under the ADA -- the level of fitness necessary to perform the essential functions of the relevant position, with or without reasonable accommodations."  But I'll be the first to admit that I'm no expert at all on disparate impact law; are the preemption rules different as to it?

All comments welcome.

PS

May 23, 2006 in Employment Discrimination | Permalink | Comments (0) | TrackBack (0)

Rigging Executive Pay

The Wall Street Journal, NPR, etc. are expressing outrage that companies have been backdating executive options to surreptitiously give executives huge payoffs.  The gig looks like this.  Companies give executives stock options ostensibly to align the executives' interests with the interests of stockholders: if the stock goes up, companies and executives both profit from the increased stock value.  Some companies, however, apparently have been backdating the options so that the executives received their options on precisely the same day that the stock prices hit all-year lows.  KLA-Tencor, for example, gave its Chair 10 stock-option grants over 8 years, all precisely timed at market lows.  WSJ estimates that the probability of that happening by chance is one in 20 million.

Perhaps the bigger story, however, is that this heads-I-win-tails-you-lose game is endemic to executive stock grants.  A recent empirical survey of executive employment contracts found that a miniscule percentage of the contracts granting stock options restrict in any way an executive's ability to hedge or pledge those options on the derivatives market.  The derivatives market permits executives to trade the options for fixed payment streams unrelated to stock performance, thus eliminating entirely the incentive theory for granting the options in the first place.  In other words, stock options become simply another fat, albeit somewhat veiled, bonus.

For more on executive employment contracts, see Stewart Schwab & Randall Thomas, An Empirical Analysis of CEO Employment Contracts: What Do Top Executives Bargain For?, 63 Wash. & Lee L. Rev. 231 (2006).

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May 23, 2006 in Labor and Employment News | Permalink | Comments (0) | TrackBack (0)