Friday, October 13, 2006
This breaking Wal-Mart related story just came to my attention from CNN.com:
A Pennsylvania jury said on Friday that Wal-Mart Stores Inc., the world's largest retailer, must pay $78.47 million in damages to current and former Pennsylvania employees for forcing them to work "off the clock" or during rest breaks.
On Thursday, a state jury in Philadelphia found in favor of Michelle Braun and Dolores Hummel, formerly employed by Wal-Mart, the world's largest retailer, saying the company violated Pennsylvania labor laws by failing to pay employees for their work.
The jury found in Wal-Mart's favor on the charge that it denied workers meal breaks.
Along with a recent $172 million verdict in California, these meal break cases (to the extent that they are upheld on appeal) are becoming the largest labor-related problem for the corporate behemoth. Surprising to the say the least.
Here is a must-read empirical piece by Theodore Eisenberg (Cornell) and Geoffrey Miller (NYU) on the number of companies that utilize binding arbitration clauses in their various types of contracts(including employment contracts).
Here's the abstract:
We study a data set of 2,858 contracts contained as exhibits in Form 8-K filings by reporting corporations over a six month period in 2002 for twelve types of contracts and a seven month period in 2002 for merger contracts. Because 8-K filings are required only for material events, these contracts likely are carefully negotiated by sophisticated parties who are well-informed about the contract terms. These contracts, therefore, provide evidence of efficient ex ante solutions to contracting problems.
The vast majority of contracts did not require arbitration. Only about 11 percent of the contracts included binding arbitration clauses. The rate of arbitration clauses varied substantially by type of contract. For example, pooling and servicing agreements and trust agreements had no arbitration clauses while employment and licensing contracts had the highest rate of arbitration clauses, 37 percent and 33 percent respectively. Arbitration clauses are strongly negatively associated with standardization of contract terms: the more standardized the contract, the less likely it will mandate arbitration of disputes. Contracts with California connections tended to have high rates of arbitration clauses while contracts with New York connections tended to have low rates of arbitration clauses. Arbitration clauses were significantly more likely to appear in contracts with international connections, but even in such contracts, the clauses were infrequent in absolute terms. Only 20 percent of international contracts contained arbitration clauses compared to ten percent of domestic contracts.
Our results suggest, in contracts involving two sophisticated actors, that the parties perceive preserving access to litigation to be value-enhancing compared to ex ante binding arbitration. This contrasts with widespread beliefs about arbitration’s efficiency and with imposition of mandatory arbitration clauses in some standardized consumer transactions such as credit card and cellular phone contracts.
You can download this ground-breaking piece on NELLCO at this link. I would be interested to hear whether the 37% number for employment contracts is considered high or low by readers out there.
Colleen Medill (Nebraska) wrote the employee benefits listserv to let us know about an interesting new study she and her fellow authors conducted for EBRI.
Here's what she wrote:
Below is the link to a study I did on the readability of health care plan SPDs. The study was funded and published by EBRI. Not surprisingly, readability is pretty poor.
E-mail comments to me [here].
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Here are the Blog Juice Ratings for various law professor blogs:
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Eighth Circuit Holds that Viewing Internet Porn is a "Legitimate, Nondiscriminatory Reason" for Discharge
The Eighth Circuit has held that a log of pornographic websites accessed from an employee's assigned IP address, and images of pornography retrieved from the computer hard drive, gave Wells Fargo a legitimate, nondiscriminatory reason to fire the employee. The court affirmed summary judgment for Wells Fargo. The case is Twymon v. Wells Fargo & Co., 462 F.3d 925 (9/12/06).
John Brennan, who has dyslexia and attention deficit disorder, was a hard-working student in high school, earning B's and C's with the help of special accommodations, such as extra assistance reading his test questions.
But entering the workplace after graduation was a shock. Mr. Brennan says he enrolled in a training program to service luxury cars, but he was criticized for "holding the class back" and dismissed. Then he joined an auto-repair shop that promised him training, but says the shop sidetracked him instead into a dead-end job. Fed up with trying to work for other people, Mr. Brennan says he has enrolled in junior college near his Acton, Mass., home, with plans to start his own business.
Amid rapid growth in diagnoses of learning disabilities and special-education programs to address them, more young adults are entering the workplace with known learning differences and a history of receiving accommodations. But few employers have adapted training or job expectations for workers with learning disabilities. The lack of special accommodations has meant a rude awakening for many young workers, fueling on-the-job tensions and a rising tide of discrimination complaints.
The problem, explains Sue Shellenbarger in yesterday's Wall Street Journal, is the difference in accommodation requiements between the IDEA (governing accommodation in public education) and Title I of the ADA (governing accommodation in the workplace). See Employees with ADD, Dyslexia Find Office Less Accommodating.
Thursday, October 12, 2006
James Gray Pope (Rutgers-Newark) has posted on SSRN his recent article in the Law and History Review entitled: Worker Lawmaking, Sit-Down Strikes, and the Shaping of American Industrial Relations, 1935-1958.
Here's the abstract:
This article recounts a legal history of the sit-down strike movement in the United States, focusing on the claim that the sit-downers themselves were engaged in legal practice. It finds strong evidence that many were, and in five distinct forms. First, the sit-down made it possible for mass production workers to legislate and enforce unilateral rules directly regulating relations of production, for example restrictions on the pace of work. Second, sit-downers legislated, adjudicated, and enforced rules governing life in the facilities that they had seized. Third, sit-downers formulated and exercised a legal right of workers to stage a sit-down strike at their place of work. Fourth, sit-downers engaged in self-enforcement of the National Labor Relations Act and the United States Constitution, thereby pressuring the Supreme Court to uphold the Act in April of 1937. Finally, workers used sit-downs to enforce collective bargaining agreements. Courts rejected the strikers' claims to legality and treated the sit-down as a lawless form of mob violence. After a protracted struggle, the courts' position prevailed, and shop-floor lawmaking was gradually displaced by the now-familiar regime of bureaucratized collective bargaining.
You can download this interesting piece of legal history at this link.
The Connecticut Law Review and Connecticut Journal of International Law are co-sponsoring next week a symposium on Wal-Mart. Much of the symposium will focus on labor and employment issues. Here's the promo:
Wal-Mart is the world's largest retailer and the largest private employer in the United States. Due to its size and dominance, the company touches nearly every aspect of our economic and legal systems. Every day new reports surface that describe the far-reaching effects of Wal-Mart's influence, in areas as diverse as banking, ERISA, civil rights, and fashion. The symposium will focus on the effects of Wal-Mart's business practices on law, the national and global economy, business culture, and society more broadly. The symposium will bring together a diverse group of scholars, practitioners, and other experts to explore and debate the virtues and vices of Wal-Mart and to discuss how law should respond to its phenomenal growth and influence. Topics to be addressed include: the Dukes class action lawsuit, Wal-Mart's global reach, organized labor, immigration, banking and anti-trust. The symposium, to be published in Connecticut Law Review, will be the first of its kind summarized in a law review publication.
The fantastic cast of speakers is too long to reprint here, but check it out at Wal-Mart Matters.
A few weeks ago, Carl Garrett, a 60-year-old North Carolina resident, was packing his bags to fly to New Delhi and check into the plush Indraprastha Apollo Hospital to have his gall bladder removed and the painful muscles in his left shoulder repaired. Mr. Garrett was to be a test case, the first company-sponsored worker in the United States to receive medical treatment in low-cost India.
But instead of making the 20-hour flight, Mr. Garrett was grounded by a stormy debate between his employer, which saw the benefits of using the less expensive hospitals in India, and [the Steelworkers] union, which raised questions about the quality of overseas health care and the issue of medical liability should anything go wrong.
For the rest of the story, see Union Disrupts Plan to Send Ailing Workers to India for Cheaper Medical Care, by Saritha Rai, in yesterday's New York Times. Thanks to Michael Fischl for the heads-up.
The Department of Labor has issued a new opinion letter discussing sick leave plans and exempt employees. The DOL agrees that an employer may deduct pay, without jeopardizing the employee's except status, for "absences of one or more full days because of sickness or disability" before the exempt employee qualifies for the plan and "after the employee has exhausted his or her leave allowance thereunder."
Wednesday, October 11, 2006
Lew Maltby, of the National Workrights Institute, has written an op-ed criticizing the NLRB's recent decisions expanding the definition of "supervisor" and thereby contracting the number of employees protected by the NLRA. The op-ed has been accepted by the McClatchy syndicate (formerly Knight-Ridder). For the copy appearing in the Philadelphia Daily News, see Congrats on Your Promotion! Now Turn in Your Union Card.
Cynthia Estlund (NYU) and the rest of the Executive Committee of the AALS Section on Labor Relations & Employment Law are happy to provide the Annual Section Newsletter.
In the newsletter, you will find information about the upcoming Section events (including the Section Breakfast) at the AALS annual meeting in Washington D.C. in January. There is also information on other Section programs of interest and useful labor and employment links on the web.
Tuesday, October 10, 2006
As I've discussed previously, the NLRB's delay can limit its ability to remedy unfair labor practices. Delay doesn't always affect remedies, however, even when the time elapsed is extreme. In a recent case (Human Development Ass'n, 348 N.L.R.B. No. 35 (2006)), the NLRB Regional Office took over 13 years to issue a damage specification after court enforcement of a Section 8(a)(2) unfair labor practice finding against the employer (the employer unlawfully recognized a union without majority support and enforced a union security clause and dues check-off provision; the damages resulted from the improper deduction of dues). The NLRB, citing established precedent, rejected the employer's argument that the doctrine of laches precluded the damage award.
The key difference between this case and others where delay is more of an issue, is that the latter cases typically involve affirmative bargaining orders. Many courts, particularly the D.C. Circuit, do not favor such orders and excessive Board delay will often be cited as a reason to deny enforcement. One can dispute whether delay should matter as much as it does, but the fact remains that the NLRB still takes an inordinate amount of time to process certain cases (note also the years of delay involved with the high-profile "Kentucky River" cases--a delay caused in part by the NLRB frequently lacking all 5 members). This delay does a real disservice to employees and the NLRA itself. At times the NLRB has made strong efforts to reduce delay, with some success. It's looking like that time has come again.
In this consumer arbitration case, a consumer sought to challenge Cingular’s imposition of a $150 early-termination fee. The service contract, however, required the consumer to pay a $125 arbitration fee to resolve any disputes. When the consumer filed a class action suit challenging the fees, Cingular moved to compel arbitration of the consumer’s individual claims, pointing to a class-action waiver in the service contract. Cingular also offered to waive the consumer’s individual arbitration fee.
The consumer opposed arbitration, arguing the class-action waiver was unconscionable. The Illinois Supreme Court agreed. This arbitration agreement was procedurally unconscionable because it did not put the consumer on notice of the arbitration fee – the agreement merely stated that fee information was available “upon request,” and even this was buried “in fine print near the bottom of an 8 by 14 inch page that was filled, from margin to margin, with text.” The arbitration agreement was substantively unconscionable because the cost of pursuing a claim would have approximated the amount of recovery, thus leaving the consumer with no effective remedy in any forum. The court rejected Cingular’s argument that it had offered to waive the individual consumer’s arbitration fee, holding that analysis of whether the arbitration fee was unconscionable should focus on the arbitration agreement as-written, not on an after-the-fact effort to improve the company’s litigation posture. The court held that the arbitration agreement should be enforced without the class action waiver.
The court emphasized, however, that it was not ruling that class action waivers were per se unconscionable; instead, the court ruled, such waivers should be considered on a case-by-case basis. Bizarrely, the court cited an article by Jean Sternlight and Elizabeth Jensen for the proposition that “consumers may benefit from reduced costs if companies are allowed to [limit their exposure to class arbitration or litigation]”. Somehow, the court missed the article’s conclusion that
[t]hese prohibitions are detrimental not only to potential class members but also to the public at large in that they are preventing the law from being adequately enforced . . . . Thus, as a matter of fairness, efficiency, and justice, Congress should prevent companies from exempting themselves from class action liability.
Like any good academics, Sternlight and Jansen considered -- and rejected -- counter-arguments to their thesis, but the court disingenuously cited only to the counterarguments themselves.
The Illinois case is Kinkel v. Cingular Wireless LLC, ___ N.E.2d ___, 2006 WL 2828664 (Ill. 10/5/06). The article is Jean R. Sternlight and Elizabeth J. Jensen, Using Arbitration to Eliminate Consumer Class Actions: Efficient Business Practice or Unconscionable Abuse?, 67 Law & Contemp. Problems 75 (2005).
Here's a brief summary of two recent employment arbitration decisions. A summary of a third arbitration decision -- a particularly important consumer arbitration decision from the Illinois Supreme Court -- will be up shortly.
- Tenth Circuit Enforces Unilateral-Modification Clause. An employment arbitration agreement gave the employer the unilateral right to modify the agreement, with three limitations: (1) the employer had to provide ten days notice to employees of the modification, (2) the employer could not modify the agreement with respect to any potential claim or dispute of which it had actual notice, and (3) the employer could not terminate the arbitration agreement with respect to any claim arising prior to the date of termination. The Tenth Circuit held that while a completely unrestricted right to modify or terminate an employment arbitration agreement would be unenforceable as illusory, the three restrictions in this agreement were sufficient to avoid rendering the arbitration agreement illusory. The case is Hardin v. First Cash Financial Services, Inc., ___ F.3d ___, 2006 WL 2848087 (10th Cir. 10/6/06). For a recent article on unilateral-modification clauses in employment agreements, see Michael L. DeMichele & Richard A. Bales, Unilateral-Modification Provisions in Employment Arbitration Agreements.
- Federal Court in Texas Requires Employee to Arbitrate Tort Claim Against Employer for Workplace Injury. Texas allows employers to “opt out” of workers’ compensation. Parco Oilfield Services did so, and established an ERISA Occupational Injury Benefit Plan to cover workplace injuries. That Plan contained an arbitration clause. A seventy-year-old roustabout crew leader was injured when electrical cables became entangled in his legs, dragging him into drilling equipment and causing spinal injuries and breaking his leg. When the Plan denied him benefits, he sued for his injury in tort as well as under the Fair Labor Standards Act. The United States District Court for the Eastern District of Texas held that the tort claims were subject to arbitration. The FLSA claims, however, were not covered by the arbitration clause and therefore remained in federal court. The case is Sosa v. Parco Oilfield Services, Ltd., No. 2:05-CV-153, 2006 WL 2821882 (Westlaw password required).
Dash from PlanSponsor.com (free registration required) this morning reports on a slight slowing of health care cost increases in this country:
‘POCKET "CHANGE." While 2006 average health-care rate increases were 7.9%, Hewitt Associates is projecting a 7.7% average increase for employers in 2007. The average health cost per person for major companies will increase from $7,744 in 2006 to $8,340 in 2007, while the amount employees are being asked to contribute in 2007 will be $1,678, representing 20% of the overall health-care premium.
Average employee out-of-pocket costs, such as co-payments, coinsurance, and deductibles, also are expected to increase, and employees' total health-care costs — including employee contribution and out-of-pocket costs — are projected to increase 7.8% from 2006 levels. Hewitt predicts that increases in employee contributions will continue to offset salary gains for many workers next year.
Monday, October 9, 2006
Keeping with the religion theme this Monday, an avid reader of this blog points out an article today from the New York Times discussing the ability of religious employers to avoid having to abide by certain laws, including employment discrimination laws, in recognition of their special status under the First Amendment.
Here are some excerpts:
Legislators and regulators are not the only people in government who have drafted special rules for religious organizations. Judges, too, have carved out or preserved safe havens that shield religious employers of all faiths from most employee lawsuits, from laws protecting pensions and providing unemployment benefits, and from laws that give employees the right to form unions to negotiate with their employers.
Some of these exemptions are rooted in long traditions, while others have grown from court decisions over the last 15 years. Together, they are expanding the ability of religious organizations — especially religious schools — to manage their affairs with less interference from the government and their own employees.
The most sweeping of these judicial protections, and the one that confronted the novice nun in Toledo, is called the ministerial exception. Judges have been applying this exception, sometimes called the church autonomy doctrine, to religious employment disputes for more than 100 years.
As a rule, state and federal judges will handle any lawsuit that is filed in the right place in an appropriate, timely manner. But judges will almost never agree to hear a controversy that would require them to delve into the doctrines, governance, discipline or hiring preferences of any religious faith. Citing the protections of the First Amendment, they have ruled with great consistency that congregations cannot fully express their faith and exercise their religious freedom unless they are free to select their own spiritual leaders without any interference from government agencies or second-guessing by the courts.
This is a long article on the topic, but even if you can only read the opening story about the novice nun dismissed because she developed breast cancer and then having her lawsuit dismissed under the ADA, you will get the flavor of some of the problems in this area of the law.
We wrote about the ministerial exception many times in the past few months while discussing the Petruska decision from the 3rd Circuit. And although that case originally decided by the now-deceased Judge Becker seemed to put together a workable compromise between religious employers and the rights of their employees, it was later decided in favor of the religious organization under a much more deferential ministerial exception approach by a reconstituted 3rd Circuit panel.
In any event, this is a very important and difficult topic, but at the very least religious employers should not be able to run roughshod over their employees' civil rights in all cases. Rather the question should come down to what is truly at the core of the organization's religious belief or expression, and not just a relexive kow-towing to any employment action a religious employer takes because of potential First Amendment concerns. Courts and legislators have to be willing to get analytically dirty in these affairs and be willing to do the necessary searching analysis these cases require.
Well, you are in luck, according to this survey today published in Inside Higher Ed. According to the article:
Listen to many critics of higher education, and you would think that faith had been long ago banished from the quad — or at least all those quads not at places like Notre Dame or Liberty or Yeshiva.
It turns out though, that there are plenty of believers on college faculties. Professors may be more skeptical of God and religion than Americans on average, but academic views and practices on religion are diverse, believers outnumber atheists and agnostics, and plenty of professors can be found regularly attending religious services.
These are some of the findings of a national survey of professors at all types of institutions, conducted for a presentation sponsored by the Social Science Research Council. The survey was conducted and analyzed by two sociologists, Neil Gross of Harvard University and Solon Simmons of George Mason University.
Just another stereotype - the liberal, godless professor - blown away by actual empiricial evidence.
Sunday, October 8, 2006
This post allows me to do two things: first, welcome a new blog to the Law Professor Blogs Network with a good friend as one of its members; second, it allows me to link to an interesting post on this new blog about cash balance plans being used at law firms.
As to the first matter, the Legal Profession Blog debuted last month with Alan Childress (Tulane), Michael Frisch (Georgetown (Ethics Counsel)), and my buddy from guest blogging at PrawfsBlawg, Jeff Lipshaw, who is visiting at Tulane this year. A hearty welcome to them all and, as one who has written on the intersection of the Model Rules and various areas of the law, I will be following their progress with much interest,
Now to the post Jeff did today on cash balance plans in the law firm environment. His point is well-taken: younger partners with cash balance plans are likely to get less at retirement than their older colleagues who retired under traditional defined benefit plans.
Two thoughts on this. First, even though younger partners will likely fair worse under these cash balance pension plans, I agree with Jeff that the individuals here who have the most to lose is those who have their plans converted from the traditional variety to the cash balance plans shortly before retirement. This is where all the age discrimination claims, including the one in Cooper, originate from (see my posts on cash balance plans here, here, and here). It is these older, but not yet retired, partners who have the most to lose since they do not have enough employment time remaining to earn through interest credits what their younger colleagues will eventually make through the cash balance plan formula. That being said, this whole age discriminatory cash balance plan point becomes moot, prospectively at least, given new language protecting these conversions in the Pension Protection Act of 2006.
Second point. I really think a nice in-between way to go for law firms (especially larger ones) is the money purchase pension plan. Actually a defined contribution plan, you don't have to worry about the 401(k) issues Jeff describes in his post, as it is the employer who commits to contributing a mandatory amount to each partner's retirement account each year. Such mandatory contributions also make a lot of sense in this environment since there is likely always going to be "discussion" among law partners on how best to divide firm profits, and the MPPP requires certain amounts be contributed to pension plans without being diverted into partnership equity distributions.