July 29, 2006
Top-5 International Employment & Labor Law SSRN Downloads
- Mary Catherine Daly & Carole Silver, Flattening the World of Legal Services? The Ethical and Liability Minefields of Offshoring Legal and Law-Related Services (75).
- David J. Doorey, Who Made That?: Influencing Foreign Labour Practices Through Reflexive Domestic Disclosure Regulation (25).
- Ian Malcolm Ramsay, Andrew Barnes, Tanya Josev, Jarrod Lenne, Shelley D. Marshall, Richard Mitchell, & Cameron Rider, Employee Share Ownership Plans: Evaluating the Role of Tax and Other Factors Using Two Case Studies (11).
Top-5 Benefits/Compensation//Pension SSRN Downloads
- Chris Armstrong, Alan D. Jagolinzer, & David F. Larcker, Timing of Employee Stock Option Exercises and the Valuation of Stock Option Expense (126).
- Zvi Bodie (left) & Jonathan Treussard (right), Making Investment Choices as Simple as Possible But Not Simpler (70).
- Ethan Yale & Gregg D. Polsky, Reforming the Taxation of Deferred Compensation (57).
- Paul Fronstin, The Tax Treatment of Health Insurance and Employment-Based Health Benefits (53).
- Gordon Leslie Clark & Ashby Monk, The 'Crisis' in Defined Benefit Corporate Pension Liabilities: Current Solutions and Future Prospects (51).
July 28, 2006
Can We (Judges) All Just Get Along?
Age discrimination allegedly came to the Oklahoma Supreme Court in this case, but the 10th Circuit Court of Appeals in Opala v. Watt, No. 05-6261 (10th Cir., JUly 21, 2006), didn't think Justice Marian Opala had a claim (from the Tulsa World):
A federal appeals court on Friday threw out the lawsuit of 85-year-old Oklahoma Supreme Court Justice Marian Opala, who alleged that the state high court's other eight justices discriminated against him because of his age.
"The federal courts lack the power to resolve this dispute," the 10th U.S. Circuit Court of Appeals concluded in a 13-page decision.
The case involved how the Oklahoma Supreme Court went about deciding who became Chief Justice. Justice Opala alleged that the rules were changed so that he could not become Chief Justice.
Opala sued soon after the other justices changed a court rule in November 2004 that governed how the chief justice is chosen every two years.
The other justices contended that the new rule didn't keep Opala from becoming chief justice but that he just wasn't elected.
The appellate judges concluded 3-0 that declaring the new rule unconstitutional would not help Opala because "we lack the power to reinstate the pre-determined sequential order" that had existed under the previous rule.
Hat Tip: Rosario Vega-Lynn
Yale and Polsky on Reforming the Taxation of Deferred Compensation
From the abstract:
Executive pay is currently a topic of significant interest for policymakers, academics, and the popular press. Just weeks ago, in reaction to widespread press reports and academic criticism of extravagant executive perquisites, the SEC proposed new regulations designed to change fundamentally the manner in which executive compensation is reported to share-holders. Despite all of this attention, one significant aspect of executive deferred compensation has gone virtually unnoticed - the federal tax rules governing this form of compensation are fundamentally flawed and must be extensively over-hauled.
These rules are flawed because they often create a significant incentive for companies and their executives to structure deferred, rather than current, compensation, thereby producing highly inefficient and inequitable results. This Article addresses potential legislative reforms that would remedy this problem by neutralizing the tax treatment of current and deferred compensation. While this neutrality goal, which was part of the recent proposals made by President Bush's Advisory Panel on Tax Reform, is easy to describe in general and conclusory terms, the devil is in the details. There has been little serious academic analysis of how to implement a set of tax rules that would create neutrality while avoiding undue complexity. This Article attempts to fill that void.
A timely article on executive compensation issues which have been dominating news in the business world. You can download it here.
Employers Offering More Elder-Care Benefits
The Wall Street Journal is reporting that an increasing number of employers are offering an increasing array of elder-care benefits, reflecting the increasing number of employees responsible for caring for elderly parents:
As more Americans care for elderly relatives, companies are increasingly helping employees by adding workplace benefits similar to those that have been offered for child dependents.
About a quarter of all companies currently provide some basic elder-care benefits, mainly referrals that help employees find caregivers and legal services, a recent survey showed. But other companies, such as accounting firm KPMG LLP and Unilever PLC, the consumer-products concern, are going beyond this to provide employees with additional benefits, which can include extended leaves of absence and subsidized in-home care when emergencies arise.
For more, see Employers Expand Elder-Care Benefits. rb
For more, see Employers Expand Elder-Care Benefits.
July 27, 2006
Rule 68 Offers of Judgment and Equitable Relief in Title VII Cases
When I was in practice, I found that one of the most underutilized tools for defense counsel in Title VII cases was Federal Rule of Civil Procedure 68, which provides a mechanism by which defendants can make an offer of judgment to a plaintiff to stop the attorney fees clock from running.
This is important because a prevailing plaintiff in a Title VII case can receive their attorney's fees from the defendant. If the plaintiff turns down the offer of judgment from the defendant, and then ends up winning their case but for less money than the defendant offers, the plaintiff cannot recover their fees from defendant post-offer. Rule 68 therefore acts to encourage settlement without the additional burdens of litigation.
The issue becomes more difficult if in addition to monetary damages, the plaintiff is also awarded equitable relief, like reinstatement or something similar. In these cases, the question is how much value to give such equitable relief so that one can determine whether the plaintiff ended up getting more or less than the original offer of judgment made by defendant.
In Reiter v. MTA New York City Transit Authority, No. 04-5420 (2nd Cir., July 20, 2006), the Second Circuit Court of Appeal considered this issue in a case in which a plaintiff prevailed on his Title VII retaliation claim. In the case, the MTA made an Offer of Judgment for $20,001 under Rule 68, but made no mention of equitable relief. Reiter won his case at trial and received $14,000 in monetary relief and the equitable relief of restoration to his executive level job. Making the issue a little more confusing, "the district court also granted the [MTA]’s motion for a new trial conditioned on Reiter’s agreement to accept a remittitur to $10,000," which Reiter ended up agreeing to take.
The magistrate who heard the party contentions with regard to attorney fees found that, "the equitable relief did not have 'any significant value' and that the final monetary award was less than the Offer. The court then awarded Reiter only pre-Offer attorneys’ fees."
The Second Circuit reversed this decision as clearly erroneous. Agreeing with Reiter's position, the court found that, "the district court erred when it denied attorneys’ fees and costs incurred after the Offer because the equitable relief he obtained, along with the $10,000 monetary award, was more favorable than the Offer." More specifically, the court concluded:
[W]e have no difficulty opining that any such rational executive [referring to Reiter] would more likely than not jump at the chance [at reinstatement] if it were priced at just $10,000 -- an amount totaling less than 10% of a single year’s salary. In sum, while monetizing equitable relief will, in many instances, pose vexing problems (ones we leave for another time) we have little difficulty concluding that Reiter ultimately recovered more than the Offer and that, consequently, it did not cut off his entitlement to post-Offer attorneys’ fees.
I think the court comes to the right conclusion in this case, but I was hoping for a more bright-line rule concerning how to value equitable relief in Rule 68 offer of judgment cases. Perhaps in the future, defendants who have the burden in showing that the plaintiff did not receive as much as the offer of judgment can place a value on the equitable relief plaintiff seeking up front. In the offer of judgment, they would also explain how they arrived at the number for equitable relief.
Not a fool proof method, for sure, but clearly better than just ignoring the value of equitable relief in these situations altogether.
Hyde on the Defense of Transnational Labor Standards
Alan Hyde (Rutgers-Newark) has posted on SSRN his forthcoming piece in the book Globalization and the Future of Labour Law entitled, A Stag Hunt Account and Defense of Transnational Labor Standards - A Preliminary Look at the Problem.
Here's the abstract:
Labor standards with transnational application may be modeled as agreements among developing countries to overcome collective action problems, although this has not previously been done. Specifically, many labor standards arise in Stag Hunt games, in which there is a Pareto-optimal solution if, but only if, no player defects.
Examples include bans on child labor or noxious work practices. It is not in any nation's interest to rely on child labor or poisonous work practices, and they play no role in optimum development strategies, but the country that defected from a ban on these practices might anticipate particular streams of trade or foreign direct investment, gains that we model as short-term. The model, in light of the behavioral literature on Stag Hunt games, has implications for the number of countries that can be bound by a labor standard, institutional aspects of labor standard formulation, subject matter of labor standards, and sanctions. There is thus no conflict between transnational labor standards, and the theory of comparative advantage, since countries adopt only labor standards that are in their interest.
You can download this important contribution to international labor law at the SSRN link here.
Another Wal-Mart Bill, More ERISA Preemption?
Mike Zimmer (Seton Hall) wrote the employment discrimination and worklaw listserv with news that Chicago City Council has passed a measure that would require "big-box" retailers (i.e., Wal-Mart and Target) to pay Chicago-based employees $10/hr in wages and $3/hr in fring benefits by July 2010.
Setting aside the debate over whether requiring these city employers to offer a living wage works to the benefit or detriment of poor workers, I want to focus instead on the fringe benefit provisions of this ordinance. Similarly, seeing the clear parallels between this ordinance and the Wal-Mart bill just struck down by the federal district court in Maryland, Mike Zimmer argues:
The Maryland law only set a standard of how much an employer needed to spend either on health care of employees or on contributions to the state to offset its provision of medical care for uninsured people, including WalMart workers. It did not say anything about the content of those health care benefits or require any particular provisions for WalMart's health care plan, at least as far as the court opinion and press reports describe. Neither law seems to be within the scope of what Congress was trying to do with ERISA as far as I can see. Both should stand.
Ross Runkel also agrees and provides his own analysis here.
I am sympathetic to the arguments that both Mike and Ross make and even agree with Mike that neither law seems to interfere with the original Congressional purpose behind ERISA.
But Supreme Court interpretation of ERISA preemption long ago parted ways with original Congressional purpose and the test these days really comes down to whether the state or local law will substantially interfere with the administration of an employee benefit plan and whether the measure will undermine the goal of having uniform employee benefit obligations accross the country.
Because I continue to believe that under this employer-friendly test that laws like those in Maryland and Chicago will be considered preempted by ERISA, I must disagree with both Mike and Ross.
On the other hand, and as I have argued before, if a court were to find that "the law does not directly interfere with Wal-Mart's health care plan, but only requires it to spend a given amount of money on health care regardless of whether it has such a plan or not," perhaps the courts reviewing these pieces of legislation would come to a different result. A possibility, but I'm not counting on it.
EEOC Issues Fact Sheet on Employment Rights of People with Hearing Loss
The EEOC yesterday issued a new question-and-answer fact sheet on the application of the Americans with Disabilities Act to job applicants and employees who are deaf or who have hearing impairments. Topics addressed in the document include:
- When a hearing loss is a disability under the ADA;
- When an employer may ask an applicant or employee about a hearing impairment and what it should do if an applicant voluntarily discloses the impairment;
- What type of reasonable accommodation an applicant or employee with a hearing disability may need; and
- What an employer should do if it has safety concerns about an applicant or employee with a hearing impairment.
Estimates of the number of people in the United States with a self-described “hearing difficulty” range from 28.6 million to 31.5 million. The number of individuals with hearing difficulty is expected to rise rapidly by 2010 when the baby-boomer generation reaches age 65.
July 26, 2006
Failure to Mitigate, Employment Law, and Cosmetology
In Killian v. Yorozu Automotive Tennessee, Inc., 04-6202 (6th Cir. July 20, 2006), the circuit specifically stated, “[w]e . . . join a number of other circuits in holding that enrollment in school after a diligent job search does not constitute a failure to mitigate.”
The employee, Jackie Killian, took FMLA leave and was terminated. Killian brought an FMLA action against the employer and was unemployed for 8 months. Eventually, Killian received a workforce grant in cosmetology. At the district court level, Killian was awarded $55,000 in damages in a bench trial.
The Sixth Circuit affirmed the trial court and found that the company violated the FMLA by terminated Killian without giving her the opportunity to provide her medical certification. The court also found that Killian has made the necessary showing to be entitled to damages for an FMLA interference claim and mitigated her damages as required.
Fisk on Credit Where It's Due
Catherine Fisk (Duke) has posted on SSRN her forthcoming law review article in the Georgetown Law Journal entitled: Credits Where It's Due: The Law and Norms of Attribution.
Here's the abstract:
The reputation we develop by receiving credit for the work we do proves to the world the nature of our human capital. If professional reputation were property, it would be the most valuable property that most people own because much human capital is difficult to measure. Although attribution is ubiquitous and important, it is largely unregulated by law. In the absence of law, economic sectors that value attribution have devised non-property regimes founded on social norms to acknowledge and reward employee effort and to attribute responsibility for the success or failure of products and projects. Extant contract-based and norms-based attribution regimes fail optimally to protect attribution interests.
This article proposes a new approach to employment contracts designed to shore up the desirable characteristics of existing norms-based attribution systems while allowing legal intervention in cases of market failure. The right to public attribution would be waivable upon proof of a procedurally fair negotiation. The right to attribution necessary to build human capital, however, would be inalienable. Unlike an intellectual property right, attribution rights would not be enforced by restricting access to the misattributed work itself; the only remedy would be for the lost value of human capital. The variation in attribution norms that currently exists in different workplace cultures can and should be preserved through the proposed contract approach. The proposal strikes an appropriate balance between expansive and narrow legal protections for workplace knowledge and, in that respect, addresses one of the most vexing current debates at the intersection of intellectual property and employment law.
A fascinating paper at the intersection of employment and intellectual propery law, indeed! You can download the piece here.
A New Model for Deciding Religious Accommodation Cases
Employers are sometimes requried by Title VII of the 1964 Civil Rights Act to accommodate the sincere religious practices and observances of their employees. That requirement is often ineffective for employees who seek accommodations. Explanations of that ineffectiveness typically focus on the permissive undue hardship defense; however, the problem is as much a result of an unbounded definition of sincere religious belief, practice, or observance as it is a failing of the undue hardship standard itself. Furthermore, courts have been too solicitous when plaintiffs attempt to turn run-of-the-mill disparate treatment claims into accommodation claims. Instead of amending Title VII to modify the undue burden standard as has been proposed in Congress, the reasonable accommodation requirement can be reinvigorated by utilizing it only in situations where a religious employee is faced with a true Hobson's choice between a sincere religious practice or observance and a religion-neutral, generally applicable work rule or policy. This paper describes the Hobson's Choice Model for religious accommodation claims by arguing for strengthening the sincerity review and strictly separating accommodation from traditional disparate treatment claims and using examples of cases involving religious expression.
The article is A Hobson's Choice Model for Religious Accommodation, 43 American Bus. L.J. ___ (2006).
Federal Court Strikes Daimler Chrysler Employment Arbitration Agreement
Judge Nancy Edmunds, of the U.S. District Court for the Eastern District of Michigan, has refused to enforce Daimler Chrysler's employment arbitration agreement. Judge Edwards held that a clause in the agreement in which Daimler Chrysler reserved "the right to amend, modify, suspend, or terminate all or part of this [arbitration agreement] at any time at its sole discretion" showed that Daimler Chrysler did not intend to be bound by the agreement and that mutual assent therefore was lacking.
Judge Edmunds also noted that Daimler Chrysler’s arbitration agreement contained several provisions that were unenforceable because they would not permit the effective vindication of employees’ rights. One provision did not allow the arbitrator to award pay in lieu of future earnings, contrary to federal statutory employment laws. A second provision precluded the arbitrator from deciding any dispute-based benefits, though the FMLA provides that benefits can be awarded as damages. A third provision allowed Daimler Chrysler to choose whether to pay damages or to reinstate the employee, but Judge Edmunds pointed out that determining damages is the role of the judicial forum, and not the defendant. A fourth provision required the arbitrator to deduct from any damages money received by an employee from collateral sources, contrary to Michigan's collateral sources doctrine.
The case is Pellow v. Daimler Chrysler Services North America, LLC, No. 05-73815 (E.D. Mich. 7/20/06) (Westlaw password required).
Judge Strikes "No Class Action" Clause in Consumer Arbitration Case
In a separate consumer-arbitration case, Judge Edmunds refused to enforce an arbitration agreement imposed by cell phone provider T-Mobile on its customers. Recognizing that the Third, Fourth, Seventh, and Eleventh Circuits have enforced consumer arbitration agreements prohibiting class actions, Judge Edmunds nevertheless held that
[w]hether the right to a class action is a substantive or a procedural one, it is certainly necessary for the effective vindication of statutory rights, at least under the facts of this case. [I]n order for arbitration to be feasible, the amount at issue must also exceed the value in time and energy required to arbitrate a claim. Defendant is alleged to have bilked its customers out of millions of dollars, though only a few dollars at a time. Plaintiff's damages are a paltry $19.74, hardly enough to make arbitration worthwhile. Class actions were designed for situations just like this. The  class action mechanism is essential to the effective vindication [this] statutory cause of action.
The case is Wong v. T-Mobile USA Inc., No. 05-73922 (E.D. Mich. 7/20/06) (Westlaw password required).
July 25, 2006
Does Multi-Million Dollar Defamation Verdict Against Union Represent Further Erosion of Labor Rights?
Unions being found liable for defamation for distributing defamatory organizational campaign materials is not an everyday occurence. And when the verdict is for $17.3 million dollars against the union, that is really unusual.
Thanks to the Michael Fox at Jottings By An Employer's Lawyer for the details:
It probably sounded like a good idea at the time -- involved in a labor dispute with the company that did the laundry for Sutter Health hospitals, why not mail out post cards to women of child bearing age telling them that the hospitals used dirty linens.
According to a story in the Sacramento Bee, the post card sent to 11,000 in Northern California said, "you may be bringing home more than your baby if you deliver at a Sutter birthing center."
Unlike the recent Guiness ad, "Brilliant" is hardly the word being uttered about this bright idea at the headquarters of Unite Here following Friday's verdict in the lawsuit brought by Sutter, Union Must Pay Millions in Defamation Case. How "un-brilliant?" $17.3 million according to the jury.
The union plans to appeal this verdict, but this case may signal a further erosion of the rights unions and their members have to engage in certain conduct to support their organizational or collective bargaining goals (from the Sacramento Bee story):
"What this represents is the further criminalization of labor union organizing," said Nelson Lichtenstein, a history professor at the University of California, Santa Barbara, and director of the Center for the Study of Work, Labor and Democracy associated with the university. "If this is upheld, it's another step in the destruction of labor law."
Lichtenstein pointed out that during most union protests, workers carry signs and make charges that could be considered defamatory.
" 'Wal-Mart is evil' or 'The company is unfair' -- those are all statements that you would make at a picket line. Does that mean you can get sued for defamation?" he asked.
"This kind of ruling results in a censoring of the picket line."
Is this just a modern day example of a Danbury Hatters-like case as the story above suggests?
New Union Effort: Uniting Interests of Black and Latino Workers
Here is an interesting piece from yesterday's Washington Post detailing how unions are attempting to build their numbers by bridging the gap between black and Latino workers. Apparently, the lack of trust between the two groups would make this effort a heroic feat indeed:
Recently, [one black, native-born American and Latino immigrant] attended a potluck to try to do something that is rare for African Americans and Latino immigrants: come together to fight for workers' rights.
Union officials hope their combined forces could be a power in North Carolina's Cape Fear region, where tens of thousands of illegal Central American immigrants seeking meatpacking jobs have joined hundreds of thousands of poor and working-class black people who struggle to get by. But the United Food and Commercial Workers union is finding it hard to overcome the deep wariness and suspicion between the groups in its quest to unite them.
The union's difficulties are part of a larger story of distrust between black and Latino workers, a vast cultural divide between immigrants who illegally enter the country seeking work and African Americans who worry that immigrants will take over their jobs, communities and local political power.
Of course, even given these traditional sources of mutual suspicion, black and Latino workers would do well to recognize that they both lose out when employers seek to play the two groups off against one another. Unionization of both group within one union would certainly help solve some of those problems.
HIPAA and Ex Parte Contacts in Employment Litigation
The Tennessee Supreme Court and Court of Appeals both have held that a defendant's attorneys may not engage in ex parte contacts with a plaintiff's treating physicians. Such contacts, held the courts, are barred by the privacy protections of the Health Insurance Portability and Accountability Act. Though both cases were medical malpractice cases, the same issue often arises in employment cases, such as when an employer's attorney seeks to discuss an employee's claim of emotional distress with the employee's physician or mental health provider.
For more on the employment angle of the issue, see Powell & Bales, HIPAA as a Political Football and Its Impact on Informal Discovery in Employment Law Litigation, 111 Penn St. L. Rev. ___ (forthcoming 2006). The DOL has just announced new dates and locations for a HIPAA Compliance Assistance Seminar August 2-3 in Des Moines, Iowa and December 6-7 in Denver, Colorado. The two Tennessee cases are Alsip v. Johnson City Med. Ctr., No. E2004-00831-SC-S09-CV (Tenn. 6/29/06) and Brazier v. Crockett Hosp., No. M2004-02941-COA-R10-CV (Tenn. Ct. App. 7/20/06).
WSJ Reports on Pending Bills for Caregiver Paid Leave
Illinois and Washington are considering insurance programs; Hawaii and Minnesota may tinker with their definition of sick leave; Massachusetts and New Jersey would create a paid-leave benefit; New York would let workers defer part of their paychecks tax-free to pay for family leave; and Pennsylvania would offer tax credits to employers providing paid leave.
California already has a paid leave program funded by a salary deduction into the State Disability Insurance program.
The article, by Kelly Greene, is at page D2.
Tribute to Harry Arthurs
Harry Arthurs is, in the words of Allan Hutchinson, "someone who has become so identified with Canadian law, legal scholarship, and legal education that it is difficult to talk about their development and trajectory over almost the past half century without grappling with his legacy." Labor/employment folks are proud to claim him as one of our own, though his intellectual curiosity and scholarship cut a much broader swath. In honor of his retirement, Osgoode Hall Law Journal has published the following symposium in his honor.
Osgoode Hall Law Journal
Volume 44, No. 1, Spring 2006
Articles & Commentaries
- Curriculum Vitae: Harry Arthurs, p. i
- Allan C. Hutchinson, Introduction: Without Harry, p. 1.
- Roderick A. MacDonald & Hoi Kong, Patchwork Law Reform: Your Idea Is Good in Practice, But it Won’t Work in Theory, p. 11.
- Sally Engle Merry, Human Rights and Transnational Culture: Regulating Gender Violence Through Global Law, p. 53.
- Katherine V.W. Stone, Flexibilization, Globalization, and Privatization: Three Challenges to Labour Rights in Our Time, p. 77.
- Peer Zumbansen, Commentary: Harry Arthurs and the Philosopher’s Stone, p. 105.
- Julian Webb, The ‘Ambitious Modesty’ of Harry Arthurs’ Humane Professionalism, p. 119.
- Robert W. Gordon, Commentary: The Law School, The Profession, and Arthurs’ Humane Professionalism, p. 157.
- Jeremy Webber, Legal Pluralism and Human Agency, p. 167.
- David Schneiderman, Commentary: Pluralism, Disagreement, and Globalization: A Comment on Webber’s ‘Legal Pluralism and Human Agency’, p. 199.
- Rachael Lorna Johnstone, Gender Injustice: An International Comparative Analysis of Equality in Employment By Anne-Marie Mooney Cotter, p. 211.
July 24, 2006
Recently-Published Scholarship: Employment Law Ethics
Northern Kentucky Law Review
Employment and Ethics Symposium Issue
Volume 33, No. 2, 2006
- Dean Cynthia E. Nance (top left), Why Labor and Employment Ethics?, p. 201.
- Samuel A. Marcosson (bottom left), Client Counseling as an Ethical Obligation: Advising Employers Before They Discriminate, p. 221.
- Susan Katz Hoffman (top right), Standards of Ethics For the Employee Benefits Practitioner, p. 239.
- Dennison Keller (bottom right), Older, Wiser And More Dispensable: ADEA Options Available Under Smith v. Jackson: Desperate Times Call For Disparate Impact, p. 259.