June 24, 2006
More Homer Simpson Like Employee Behavior
A worker accidentally tripping a shut-off switch at a major Ontario plastics plant will cost Nova Chemicals $11 million in lost profit, the company said Wednesday, because it won't be able to fulfill some contracts because of the blunder.
A contractor's employee installing a structural steel platform at an ethylene plant in Corunna, Ontario, mistakenly activated a process shutdown switch on Monday afternoon, stopping production and forcing two weeks of repairs at the facility.
"The switch is a safety thing so if anyone sees something going wrong they have the opportunity to shut down the plant," said Nova spokesman Greg Wilkinson. "But that's not what happened here. It was not a safety issue. It was simply inadvertent."
To me, "inadvertence" and "$11 million dollars" just don't seem to fit together.
Top-5 International Employment & Labor Law SSRN Downloads
- Laurence R. Helfer, Understanding Change in International Organizations: Globalization and Innovation in the ILO (64).
- Peer Zumbansen, The Parallel Worlds of Corporate Governance and Labor Law (50).
- Allison Christians (photo above), Taxing the Global Worker: Three Spheres of International Social Security Coordination (43).
- Mary Catherine Daly & Carole Silver, Flattening the World of Legal Services? The Ethical and Liability Minefields of Offshoring Legal and Law-Related Services (30).
- David J. Doorev, Who Made That?: Influencing Foreign Labour Practices Through Reflexive Domestic Disclosure Regulation (17).
Top-5 Benefits/Compensation//Pension SSRN Downloads
- Bengt R. Holmstrom, Pay Without Performance and the Managerial Power Hypothesis: A Comment (118).
- Jeremy Telman (photo above), The Business Judgment Rule, Disclosure, and Executive Compensation (100).
- Ruth Helman, Craig Copeland, & Jack VanDerhei, Will More of Us Be Working Forever? The 2006 Retirement Confidence Survey (98).
- Katherine V.W. Stone, Legal Protections for Workers in Atypical Employment Relationships (88).
- Jan Bouwens & Laurence van Lent, Performance Measure Properties and the Effects of Incentive Contracts (54).
Employee Wins Big in Arbitration; Court Restricts Employer's Ability to Claim Arbitral Bias
UBS Financial Services fired Wells Van Pelt. Van Pelt arbitrated pursuant to a predispute arbitration agreement. He won; the panel of arbitrators awarded him nearly $2.5 million. UBS filed suit to vacate, and sought discovery on the issue of whether the chair of the arbitral panel was biased. No way, said the court -- if UBS thought a panel member was biased, UBS should have objected before the arbitration, not afterward. The court therefore concluded that UBS had waived any argument as to arbitral partiality. The case is Van Pelt v. UBS Financial Services, No. 3:05CV477, 2006 WL 1698861 (W.D. N.C. June 14, 2006) (Westlaw subscription required).
This case illustrates several trends that I have noticed in the reported cases this year. First, employment arbitrators aren't necessarily the stooges that many critics of employment arbitration seem to expect them to be -- they often find in favor of employees, and award large -- even large punitive -- damages. Second, employees (like Mr. Van Pelt here) seem increasingly to be foregoing pre-arbitration challenges to enforceability (perhaps because they've concluded they can get a fair deal in arbitration; perhaps because they realize that an enforceability challenge is unlikely to succeed). Third, many employers often seem surprised that an arbitral system they have designed could possibly result in an award for employees -- leading to a recent increase in employer challenges to arbitration awards. Fourth, however, most of these employee-wins-big cases are brought by highly-paid white males in the securities industry alleging breach of contract or occasionally age discrimination, not by low- or middle-income employees alleging race, sex, or disability discrimination. So, even if these cases demonstrate that employees can win in arbitration, they don't necessarily domonstrate that employees who the antidsicrimination laws most seek to protect can win consistently.
For a more-detailed empirical discussion of some of these issues, see Michael H. LeRoy & Peter Feuille, Reinventing the Enterprise Wheel: Court Review of Punitive Awards in Labor and Employment Arbitrations, 11 Harv. Negot. L. Rev. 199 (2006).
June 23, 2006
I Just Can't Imagine an American Executive Doing This
From the Financial Times (subscription required):
Toshihiko Fukui, the Bank of Japan governor, on Tuesday said he would take a 30 per cent cut in his monthly salary for six months to atone for the furore caused by his investment in a controversial fund.
Voluntary atonement in corporate life? Don't the Japanese know that the business judgment rule means never having to say your sorry (let alone atone)?
Another Corporate Executive, Another Sex Scandal
This time, it was Time Warner Inc.'s executive vice-president and chief financial officer, Wayne Pace, whose name was splashed on the front pages of the city's tabloids on the weekend, naming him as the "sugar daddy" for a Brazilian woman who had been arrested and charged with prostitution.
Through his lawyer, the 56-year-old, married executive denied having "an inappropriate relationship" with Andreia Schwartz, but acknowledged knowing the woman, who was awaiting a bail hearing in a Riker's Island jail.
Ms. Schwartz told the New York Post and the New York Daily News in jailhouse interviews that Mr. Pace had showered her with expensive gifts and even helped pay for a Manhattan condo, which she sold in 2002 for $500,000 (U.S.).
Interesting question here is whether, assuming the allegations are true, Time Warner could take disciplinary action against Pace. An attorney in the article opined:
What he did during off-business hours is his own business, but if he used company e-mail to communicate with Ms. Schwartz, or company expense accounts to entertain her, the company has cause for action.
I'm not so sure this analysis is correct. First, even if New York has an applicable off-duty legal activity statute, this type of extracurricular activity might not be protected by such a statute given its connection to illicit behavior.
Also, even without using company property, and under the nexus principle that labor arbitrators use for determining good cause for termination in off-duty conduct cases, if the off-duty conduct has an adverse impact on the company' standing in the community or otherwise disrupts the working environment at Time Warner, I think most arbitrators and decisionmakers would agree that under these circumstances Time Warner would have good cause to terminate Pace's employment.
FMCS Institute for Conflict Management Programs
Information about individual programs can be retrieved by following the links:
Evidence and Witness Examination in Arbitration
Anchorage, AK August 24-25, 2006
$ 550.00 - Early bird $500.00
Arbitration for Advocates
Seattle, WA October 25-27, 2006
$ 650.00 - Early bird $600.00
You can visit the FMCS website here.
Kye Pawlenko has just posted Reevaluating Inter-Union Competition: A Proposal to Resurrect Rival Unionism, published in the University of Pennsylvania Journal of Labor & Employment Law. Here's an excerpt from his abstract:
This Article examines the effects of rival unionism on organizing, something that most scholars have long assumed to be a negative variable. However, my research points to the opposite conclusion. I argue that the absence of a competitive marketplace among unions has contributed, at least in part, to the decline in union density in the private sector. Accordingly, rather than beat back rival unionism, I propose that the AFL-CIO and the NLRB take steps toward creating a competitive market for union control.
June 22, 2006
News Flash: Supreme Court Adopts a Broader "Material Adverse" Standard for Title VII Retaliation Claims
Update: Having now read the opinion and concurrence in more detail, it turns out that the majority opinion actual adopts the standard of the D.C. Cir. and 7th Cir. which adopts a material adverse standard unhinged to terms and conditions of employment. Unlike the 6th Circuit standard discussed below, this new standard adopted by the Supreme Court does not "confine the actions and harms [the retaliation provision] forbids to those that are related to employment or occur at the workplace." In this sense, the Supreme Court adopted a broader materially adverse standard than the one adopted by the en banc 6th Circuit (and the one which Justice Alito appears more comfortable with).
The United States Supreme Court has handed down its decision in the much anticipated Title VII retaliation case of Burlington Northern v. White, No. 05-259 (U.S. June 22, 2006).
At issue (and as discussed in previous posts here and here) was a circuit split over the meaning of an "adverse employment action" under the retaliation provisions of Section 704. Prior to this case, the circuit courts split into three different camps:
[T]he Sixth Circuit prohibits any "materially adverse change in the terms of employment;" the Ninth Circuit prohibits any adverse treatment "reasonably likely to deter" the plaintiff from engaging in protected activity; and finally, the Fifth and Eighth Circuits only prohibit an "ultimate employment decision."
In Burlington Northern, a case in which an black female employee claimed that she was retaliated against for claiming sexual harassment by her railroad employer by being temporarily suspended and being given an inconvenient job reassignment, the Sixth Circuit, applying the "materially adverse" standard, had found that the company had engaged in actionable retaliation.
Today, the Supreme Court affirmed the Sixth Circuit's decision and officially adopted the "material adverse" standard to determine whether an "adverse employment action" has occurred for Title VII retaliation purposes.
Writinng for the Court (with Justice Alito filing a concurrence by himself), Justice Breyer held:
We conclude that the anti-retaliation provision does not confine the actions and harms it forbids to those that are related to employment or occur at the workplace. We also
conclude that the provision covers those (and only those) employer actions that would have been materially adverse to a reasonable employee or job applicant. In the present
context that means that the employers actions must be harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of
More to follow on this important Title VII case after I am able to more fully read both the Court's opinion and Justice Alito's concurrence more carefully.
At the Intersection of Employment and Antitrust Law
Nurses backed by the biggest U.S. health-care union . . . [this past] Tuesday filed four class-action lawsuits against some of the biggest U.S. hospitals, including No. 1 chain HCA Inc., claiming they conspired to depress wages for nurses amid a national shortage.
The lawsuits, which also target the biggest U.S. Catholic hospital system, Ascension Health, charge the hospitals regularly discussed nurses' wages in meetings, over the telephone and in written surveys, in an effort to coordinate and suppress pay.
The suits, filed in federal courts in Chicago; Memphis, Tennessee; Albany, New York; and San Antonio, Texas, seek back compensation and legal costs totaling "hundreds of millions of dollars" under federal antitrust laws.
I don't know nearly enough about antitrust law to even guess whether these class action suits have any chance of success on the merits, but I would be interested in hearing from commentators with antitrust backgrounds.
Government Employee Rights to Access Blogs at Work
Over at Concurring Opinions, Dave Hoffman has an interesting post on how Republican Governor of Kentucky, Ernie Fletcher (pictured left), has allegedly blocked government employees from accessing certain websites beacuse they contain commentary critical of the Fletcher Adminsitration.
As first reported by the BlueGrassReport, and later explored by (among others) TPMuckraker, Gov. Ernie Fletcher directed his IT folks to block state employees from reading blogs late in the day yesterday. Although early reports connected the ban to the BlueGrassReport's focus on Fletcher's legal troubles, the governor’s staff has made its anti-blog crusade more ecumenical over the course of the day. (Suggesting, perhaps, a email from the lawyers last night, reading “Ban more sites.”) But other political and media sites remain unfiltered.
He then asks:
Under what argument or sets of arguments can the government of Kentucky decide to install internet filtering software that bans state employees from surfing, while at work, blog sites but not "ordinary" media outlets. Assume that it is possible to distinguish between a blog and a newspaper site (perhaps the filter recognizes snark and parasitism). Assume also that the policy does indeed ban all blogs, not simply ones reporting on the governor’s indictment.
Let me take a stab at this one. I think that it is right to point out that the government in its employer capacity has much more latitude to regulate its employees' First Amendment rights. And I do believe that First Amendment rights are involved here because it is not just the speech of the speaker that is protected, but it is the right of the listener to obtain information that is also implicated.
Having established that certain First Amendment government employee speech rights are involved, the analysis then goes through the Connick/Pickering framework for public employee free speech. Assuming that the speech on the website, as in this circumstance, involves matters of public concern, there would be then a balancing between the employee's right to obtain the information from the website against the government's right to run an efficient governmental workplace.
I assume that those who believe that the government should prevail in such a balancing of interests would say that surfing the internet during work causes loss in productivity and generally disrupts the workplace. Now accepting Dave's hypothetical that the government bans surfing of all blogs by its employees, I think the government's motive would be above board and perhaps the government wins.
In the circumstances taking place in Kentucky, however, the government appears to be banning only access to certain blog sites that it finds objectionable. Not only is this viewpoint discrimination (and the fact that it is committed by the government in its employer capacity may make some difference in analysis), but importantly such viewpoint discrimination undermines the government's claim that they are just seeking to maintain the efficiency of government services.
So, if this is a limited ban of blogs rather than an outright ban, I think it is more likely that these governmenment employees would prevail on a potential First Amendment claim.
Minimum Wage Bill Defeated -- Again
The Republican-controlled Senate smothered a proposed election-year increase in the minimum wage Wednesday, rejecting Democratic claims that it was past time to boost the $5.15 hourly pay floor that has been in effect for nearly a decade.
The 52-46 vote was eight short of the 60 needed for approval under budget rules and came one day after House Republican leaders made clear they do not intend to allow a vote on the issue, fearing it might pass.
The Senate vote marked the ninth time since 1997 that Democrats there have proposed — and Republicans have blocked — a stand-alone increase in the minimum wage. The debate fell along predictable lines.
June 21, 2006
Opinion Narrowing Ministerial Exception Under Title VII Vacated
Almost a month ago, we did a post on the Third Circuit case of Petruska v. Gannon University, which narrowed the scope of the Title VII ministerial exception when it held that the exception only applies when the discrimination relates to "religious belief, religious doctrine, or the internal regulations of a church."
One of the members of the initial panel, Judge Becker, had since passed away, and now it turns out that the other judge that made up the majority 2-1 opinion, Judge Nygaard, had to recuse himself from the case. Because only Judge Smith, the dissenting judge in the initial case consequently remains, the Third Circuit sitting en banc has deciding to grant the Sur Petition for Rehearing and vacate the initial Petruska opinion, appoint two new judges (along with Judge Smith) to hear the case (Judges Cowen and Greenberg) and have that newly-constructed panel issue a new decision on the matter in the coming months.
Hat Tip: How Appealing
Poll: Glass Ceiling Still A Reality in America
CFO Magazine (via PlanSponsor.com) has just released the results of a poll which suggest that female executives contniue to bounce up against the proverbial glass ceiling:
Four in 10 of those responding to a CFO magazine poll said their career progression has been limited, while just over a third (34%) say they've been denied a promotion or a raise within five years - at least in part because of their gender.
Female respondents pointed to three reasons why they think they are not reaching top positions:
- the close nature of the CEO/CFO relationship, (33%)
- the male-oriented culture of finance, (28%)
- the long hours involved, (25%).
These results seem consistent with previous posts we've done on the persistence of the gender glass ceiling in corporate culture around the world.
How Bad is Your Boss?
Yahoo! News (via Reuters) reports that Working America, the non-union affiliate of the AFL-CIO, is running a contest to see just how incorrigible your boss can be. You can go to the Working America website to enter into "My Bad Boss Contest." The contest works like this:
Voting for the best worst-boss stories will be done by Web readers over the next six weeks. Each week's top vote-getter will be eligible to compete for the grand prize, a seven-night vacation getaway and $1000 for a round trip air fare, to be announced by August 16.
So far, the entries with the most votes include:
-- "Russ," whose table-thumping boss at a small Maryland company nixed bonuses, cut overtime and ordered managers to "instill fear" in workers to boost productivity, all because a competing company's owner had a more expensive car, and
-- "Graphics Girl," who left her Pennsylvania media company, and was publicly berated for doing so, after 10 years, including the last five where she worked 50 to 80 hours a week without overtime pay and often without seeing her children. "I missed birthdays and health and years of seasons changing since my office was in a basement with no windows, all for nothing," she wrote.
Don't think that these stories even come close to the glories of your own boss? Enter and find out how bad you really got it.
Hat Tip: Megan McGrew
Arbitrator’s Early Withdrawal Leaves Parties Unsatisfied
Two commercial entities who had signed an arbitration agreement retained JAMS/Endispute and arbitrator John B. Bates to arbitrate their dispute. At the conclusion of the arbitration hearing, Bates apparently announced that he was withdrawing as arbitrator, but that he was willing to continue to work with the parties as mediator. Bates provided no ethical reason for his withdrawal. One of the parties sued JAMS and Bates for breach of contract; Bates raised arbitral immunity as a defense. The court rejected the defense, finding that Bates’s early withdrawal “defeats rather than serves the adjudicatory purpose of arbitration” underlying the immunity defense.
The case is Morgan Phillips, Inc. v. JAMS/Endispute, L.L.C., ___ Cal.Rptr.3d ___ (Cal. App. 2 Dist. June 20, 2006).
Federal Court Structure Significantly Influences Development of State Employment Law
The article evaluates the role of legal precedents in the diffusion of three exceptions to the employment at-will rule: the implied contract exception, the public policy exception, and the good faith exception. The article finds that (1) precedents by other state courts within the same federal district were most influential on diffusion of the doctrines to state courts; (2) precedents by other state courts within the same federal district adopting the implied contract exception seemed to influence the adoption of the other exceptions to employment at-will, but precedents by other state courts within the same federal district adopting the other exceptions did not appear to influence the adoption of the implied contract exception; and (3) labor market conditions had no statistically significant effects on the diffusion of any of the exceptions.
The authors found it significant and surprising that precedents by other state courts within the same federal district seemed to be most influential in the diffusion process. The federal districts therefore seemed to define an important reference group for the state courts -- i.e., decisions by other state courts within the same federal district seemed to be more influential than decisions by other state courts in neighboring states or the same West reporting region or the same census region.
June 20, 2006
A Study of Wal-Mart's Wage and Benefit Practices
The Economic Policy Institute has published an interesting study about whether Wal-Mart could offer additional wages and benefits and still maintain its profitable position.
According to the study (as reported last week in the Washington Post):
Wal-Mart Stores Inc. could significantly increase employee wages and benefits without raising prices, and still earn a healthy -- albeit smaller -- profit, research released on Thursday concluded.
"The more important question for the future isn't whether Wal-Mart is a force for good or evil in the American economy, but whether the economic benefits provided by Wal-Mart can be preserved even if their labor compensation is dramatically improved," economists Jared Bernstein and Josh Bivens wrote.
They concluded that if Wal-Mart reduced its profit margin to about 2.9 percent, where it stood in 1997, from the 3.6 percent margin it recorded last year, that would free up some $2.3 billion to pay workers without raising prices. That works out to just under $2,100 per non-managerial employee, the researchers calculated.
Although I'm sure that Wal-Mart would not willingly agree to such a cut in its profit margin, it does show how much an additional 0.7 percent profit margin is actually worth in real dollars to a mega corporation like Wal-Mart.
And even though this analysis strikes me as somewhat overly simplistic (as such corporate profits are used for more than just pure company profit or labor costs), it does challenge the corprorate dogma that by raising labor costs one necessarily has to pass on such additional costs to the consumer.
Here is the Economic Policy Institute's entire Issue Brief on Wal-Mart's compensation practices.
Hat Tip: Raw Story
A "Sex Plus" Pregnancy Discrimination Plaintiff Verdict
We have previously reported that there appears to be a growing trend of pregnancy discrimination cases, citing both EEOC statistics and anecdotal stories, like the large Verizon pregnancy discrimination settlement.
Here is another, recent pregnancy discrimination verdict in favor of plaintiffs, but this time in the public sector involving female police officers in Suffolk County, New York (from HR.BLR.com):
A jury in New York has awarded damages to six police officers who said the Suffolk County Police Department discriminated against pregnant officers by denying them light-duty positions, like working the precinct desk, during their pregnancies.
The New York Civil Liberties Union and the American Civil Liberties Union filed a lawsuit on behalf of female Suffolk County officers who challenged a light-duty policy that excluded pregnant women. The light-duty policy allowed officers who sustained on-duty injuries to work the precinct desk and other non-patrol jobs. The policy excluded officers with non-work-related conditions from light-duty eligibility.
This is an interesting pregnancy discrimination case because it highlights another aspect of the pregnancy discrimination definition in Section 701(k) of Title VII which is often overlooked. It is not enough to merely not discriminate on the basis of an employee's pregnancy, but the statutory definition also requires that pregnant employees be treated the same as similarly situated temporarily disabled male and female employees in their ability or inability to work. In this sense, the "sex plus" theory of discrimination has been incorporated into the Title VII pregnancy discrimination in that the proper comparison in these cases is not just comparing all men against all women, but pregnant women against non-pregnant men and women.
This is an interesting pregnancy discrimination case because it highlights another aspect of the pregnancy discrimination definition in Section 701(k) of Title VII which is often overlooked.
It is not enough to merely not discriminate on the basis of an employee's pregnancy, but the statutory definition also requires that pregnant employees be treated the same as similarly situated temporarily disabled male and female employees in their ability or inability to work. In this sense, the "sex plus" theory of discrimination has been incorporated into the Title VII pregnancy discrimination in that the proper comparison in these cases is not just comparing all men against all women, but pregnant women against non-pregnant men and women.PS
A Blue/Green Labor-Environmental Alliance
In what may be a more unlikely alliance than it might first seem to be at first blush, a major environmental group and major industrial union have agreed to form a blue/green alliance to promote "Good jobs, a clean environment, and a safer world."
Salon.com reports (free registration required) that the Sierra Club and the United Steelworkers Union have formed the alliance in order to connect the creation of new jobs with sound environmental strategy.
The story reports:
The alliance already has "in the millions," according to its director, David Foster, a longtime USW member; that includes grant money from foundations as well as funds the Sierra Club and USW are committing from their own budgets. The money will be spent on legislative lobbying, supporting political candidates with strong records on both labor and the environment, and doing educational outreach. At the start, efforts will be focused in four key states -- Minnesota, Ohio, Pennsylvania and Washington -- where there are large numbers of both Sierra Club members and USW members, and where state officials have already shown notable interest in promoting clean energy.
The alliance's main goals will be boosting clean-tech markets to create jobs, pushing fair-trade policies to aid American workers and fighting for tougher restrictions on toxic chemicals.
Given that steelworkers and environmentalists have often been at odds in the past given the perception that good environmental policy would cost heavy industry jobs, this is a promising sign that these two groups that have historically idenified with progressive politics are finally finding common ground.