Saturday, June 14, 2008
According to the NYT, a bill to extend unemployment insurance benefits failed in the house by three votes last Wednesday, but passed the bill the next day. Republicans said the passage was because some Republicans who opposed the bill were absent that day. The President has stated he will veto the bill if it does pass, and that group of Republicans says that it has enough votes to prevent the veto from being overriden.
But in an illustration of the election-year unease among Republicans about the unemployment issue, 49 of them again broke with their party leadership and joined 225 Democrats in backing the proposal, which would also extend benefits even longer in states with unemployment above 6 percent. In those states, benefits would be extended for a total of 26 weeks.
. . .
Republicans have zeroed in on the provision eliminating the 20-week work requirement, saying it could allow someone who has worked for as little as two weeks to claim eligibility for benefits. “That is, in my view, irresponsible public policy,” Mr. Boehner said. “It’s a waste of taxpayer dollars.”
But Democrats said they had been warned by labor experts that as many as 10 percent of those eligible for extended benefits could be denied them if the 20-week requirement was retained. They said that it particularly penalized low-wage workers, minorities and women and that anyone who qualified with a brief work history would get a very modest amount of unemployment compensation.
In addition to that provisions, opponents argue that unemployment is not high enough to warrant this extraordinary relief.
Friday, June 13, 2008
A Florida woman was fired by a restaurant owner for laughing.
Darra Kollios, who works at the Trinity Grill in New Port Richey, said her boss approached her in front of a customer with one of the oddest requests she's ever heard.
"I had a customer at the bar and the owner came up to me and said, 'Please stop laughing,' Kollios said. "We giggled -- the guy at the bar and myself. And then I said, 'Are you serious?'
And he said, 'Yes, if you laugh again, you will have to go home."Kollios said she was then fired on the spot.
Kollios said she was shocked by her employer's actions."I will say that I don't have an odd laugh," Kollios said. "I did ask a few people but it's not."The restaurant owner said a customer did not complain about the laughing. However, he prefers the restaurant to be quiet and cozy and Kollios' laugh prevented that from happening.
Under Florida law, employees are considered "at will," which means they may be terminated for any reason as long as they're not under contract and it doesn't involve age, sex or race discrimination.
We live in a great country, no? And don't start comparing me to Michelle Obama (who I admire) you right-wing bloggers! Great example, professors, for explaining employment at will to your students in employment law.
I found this on the Drudge Report and even his headline appeared to be stunned by the callousness.
The Chronicle of Higher Education is reporting (subscription required):
After former President Bill Clinton canceled his scheduled appearance as the commencement speaker at the University of California at Los Angeles this week, to show his support for workers mired in contract negotiations with the university, other prominent national Democrats have followed suit . . . .
Mr. Clinton was to have spoken today to graduates of UCLA's College of Letters and Science, the university's main undergraduate division, but the former president said through a spokesman this week that he would not cross the workers' picket line (The Chronicle, June 11).
On Thursday, two Democratic members of Congress—Reps. Henry A. Waxman and Hilda L. Solis, both from the Los Angeles area—called off planned speeches at other UCLA commencement ceremonies.
Mr. Waxman was to have spoken to graduates of the university's School of Public Health today, and Ms. Solis had been scheduled to address graduates of the Graduate School of Education and Information Studies on Saturday.
In addition, Wesley K. Clark, the retired U.S. Army general who sought the Democratic Party's nomination in the presidential race of 2004, canceled his planned speech to graduates of the political-science department on Sunday. (More than 30 academic departments of the College of Letters and Science hold individual events in addition to the college's main graduation ceremony.)
"Until the University of California and the 20,000 patient-care and service workers resolve their dispute, I won't be able to speak at the commencement ceremony for the UCLA School of Public Health," Mr. Waxman said in a written statement. "I will not cross the picket line and hope this is resolved as quickly as possible."
The contract negotiations affect medical technicians, custodians, and cafeteria workers on campuses throughout the University of California system. Their union, the American Federation of State, County and Municipal Employees, has asked all scheduled speakers at university commencement ceremonies to cancel their engagements.
Well, thankfully for UCLA, I don't hear of any Republican politicians not willing to cross a picket line.
Who says PrawfsBlawg is boring these days? Not with employment law scholar Matt Bodie (St. Louis) banging on the keys. Here is Matt's thoughtful post on the employee benefits angle of the Microsoft/Yahoo! take-over brouhaha (which I understand very little about being a labor and employment plebe):
[Carl] Icahn . . . expressed his outrage about the Yahoo employee severance plan that recently came to light. Calling the plan "unconscionable" and "reprehensible," Icahn said the plan was "a complete, total ... I don't want to use bad words ... a travesty. The very people Microsoft wants to keep, it will make it easier for them to leave." Um, this may be news to Icahn, but the point of the plan is not to let Microsoft keep Yahoo employees -- it's to help Yahoo keep Yahoo employees in the face of a potential takeover.
I'm being a bit glib. Icahn's view roughly correlates in tone, if not in volume, with the CW about the Yahoo plan. The plan has been characterized as a just another creative poison pill that has nothing really to do with employees and everything to do with keeping out Microsoft. Forbes has even deconstructed the Yahoo Q&A to employees about the plan, interspersing its own skeptical commentary.
Here's what's suspicious about the plan:
* It was apparently adopted in response to the Microsoft offer.
* It was apparently adopted in secret.
* Yahoo's efforts to make it seem like a genuine, employee-oriented plan now look disingenuous.
However, I think beneath the cynicism there is potential for this plan and plans like it. Other companies could use this plan as a starting point for more beneficial opportunities down the road.
Here is what is good about the plan:
* It does address a genuine concern: employee retention in the face of a potential buyout. In the case of Yahoo, there's a double whammy. In most buyouts, employees fear that they might lose their jobs, and thus are more likely to jump to another company before the buyout takes place. (And a buyout might end up not even happening.) In Yahoo's case, however, if the employees actually keep their jobs, they will then be working for Microsoft. (Known in some circles as "the Borg.") So Yahoo might end up losing a bunch of employees who fear that a buyout might happen -- even if it never happens.
* Thus, the plan is designed to protect employees against the possibility of a Microsoft buyout. They will get severance if they lose their jobs or if their job responsibilities change. This gives the employees more power -- they have some degree of control over whether they want to keep working or instead get a severance. (It's almost akin to a "no-trade" clause in pro sports.) Of course, this makes the plan more expensive for any buyer, but it's not gratuitous. It's based on a legitimate employee concern: losing out post-merger by having to do a substantially different (and less desirable) job and not being able to get the severance package.
* The plan applies to all employees. Some have criticized this part of the plan as "nuts." But I think it's a welcome signal that all of a company's employees have meaningful contributions to add. Why shouldn't a company seek to retain all of its employees? I think this plan is a welcome change from the notion that only top-level executives add value to a company.
I hope this plan is just a starting point for plans like this in the future. There is an opportunity for employee-oriented companies (like Southwest and Budweiser, perhaps?) to create a plan like this that might be more genuinely oriented towards employee interests. In addition, I think there's an opportunity for creative unions (such as SEIU) to seize on these plans as a win-win for employees, management, and long-term shareholders.
I agree with the never-boring Bodie that here's hoping that public pension funds will not see these types of severance plans as an "anti-shareholder scheme," and rather see these plans as a way of protecting a companies' "employee capital."
Anyone for employee primacy theory in corporate law?
A Japanese firefighter has been sacked after driving fire engines and ambulances for more than 20 years without a licence. The man, who worked in Takaoka City, was only discovered during a routine inspection of licences last week.
According to his bosses, he appeared reluctant to produce his licence, but when he did the inspector realised the man was using his father's licence. He had tried to hide the photograph with his fingers. The man told his superiors he had attended driving school but failed the written exam. Nonetheless he had driven ambulances more than 300 times, and driven fire engines on almost 100 occasions.
Single workers at one of Iran's major state-owned companies have been told to marry by September or face being fired, Iranian newspapers have reported.
The Pars Special Economic Energy Zone Company employs thousands of people, mostly young men, on Iran's Gulf coast. Being married is a job requirement, a directive from the company is reported as saying. Correspondents say the ruling appears to be an attempt to reduce the number of prostitutes working in the area.
The company controls Iran's large network of gas and petrochemical facilities around the coastal city of Assalouyeh on the Gulf coast. Its directive, according to the Etemad newspaper, says that despite requests "some of our colleagues did not fulfil their commitments and are still single".
Actually, the American courts are not far behind on policing their employee's private lives. Don't laugh.
And, finally, from South Africa, a new article on a same-sex marriage law that will no doubt have a significant impact on the provision of pensions and health insurance in that country:
Pierre de Vos (Law Faculty, University of the Western Cape) has posted A Judicial Revolution? The Court-Led Achievement of Same-Sex Marriage in South Africa (Utrecht Law Review, Vol. 4, No. 2, pp. 161-174, June 2008) on SSRN. Here is the abstract:
This article maps the legal developments that led to the adoption of the Civil Union Act, which extended full marriage rights to same-sex couples in South Africa. It points out that this extension of marriage to same-sex couples would not have been possible if it was not for the groundbreaking decisions on sexual orientation discrimination handed down by the South African Constitutional Court over the past ten years. It al so describes the complex legal regime now in place which allows different sex couples to enter into marriage in terms of a traditional Marriage Act or the new Civil Union Act but restricts same-sex couples to entering into marriage in terms of the latter Act. The article concludes that while this extension of marriage rights can be viewed as a legal revolution, some problems remain with the legal regulation of same-sex relationships in South Africa.
Hat tip on the last one to Larry Solum at Legal Theory Blog.
The International Labor Organization (ILO) has issued an important Declaration on Social Justice for a Fair Globalization and Resolution on strengthening the ILO’s capacity to assist its Members’efforts to reach its objectives in the context of globalization.
Here's the press release:
Amid widespread uncertainty in the world of work, ranging from financial turmoil and economic downturn to growing unemployment, informality and insufficient social protection, the governments, workers and employers of the International Labour Organization (ILO) have adopted a landmark Declaration designed to strengthen the ILO’s capacity to promote its Decent Work Agenda and forge an effective response to the growing challenges of globalization . . . .
“The demands of the modern world of work are changing and this Declaration strengthens our effort to respond through the Decent Work Agenda”, said ILO Director-General Juan Somavia. “Not only does it signal a major change towards balanced economic and social policies, but it equips the ILO with a formidable tool to pursue the promotion of a fair globalization based on Decent Work.”
Through the Declaration governments, employers and workers from all member States call for a new strategy to sustain open economies and open societies based on social justice, full and productive employment, sustainable enterprises and social cohesion. The Declaration acknowledges the benefits of globalization but calls for renewed efforts to implement decent work policies as the means to achieve improved and fair outcomes for all.
Specifically, the Declaration establishes a new foundation on which the ILO can effectively support the efforts of its constituents to promote and achieve progress and social justice through the four strategic objectives of the ILO through the Decent Work Agenda employment, social protection, social dialogue and tripartism, and fundamental principles and rights at work. What is more, the Declaration also underscores the fact that failure to promote any one of these objectives would hinder progress towards promoting the others by stressing their mutually supportive nature and interdependence.
At the same time, it gives ILO constituents a key responsibility to contribute, through their social and economic policy to the realization of a global and integrated strategy for the implementation of the Decent Work Agenda. The Declaration also asks the ILO to invite other international and regional organizations to promote decent work, adding “as trade and financial market policy both affect employment, it is the ILO’s role to evaluate these employment effects to achieve its aim of placing employment at the heart of economic policies”.
Good stuff, but who names these declarations anyway?
Hat Tip: Cornell Institute for Workplace Studies
Our good friend Ross Runkel provides the goods on a new ERISA case from the 4th Circuit, Woods v. Prudential (4th Cir 06/11/2008), which finds that conferral of "authority" to a plan administrator (as opposed to the conferral of "discretionary authority") is insufficient to merit application of an "abuse of discretion" standard of review under ERISA:
Woods sued the administrator of her employer's long-term disability plan under the Employee Retirement Income Security Act (ERISA), challenging the plan's denial of benefits. The trial court granted summary judgment in favor of the plan, based on its application of an "abuse of discretion" standard of review. The 4th Circuit reversed.
Benefits decisions are reviewed "de novo" unless a plan confers discretionary authority on its plan administrator. If discretionary authority is conferred, the administrator's decision is reviewed for an "abuse of discretion." Such discretionary authority may be conferred expressly or impliedly. However, regardless of whether the authority is express or implied, the 4th Circuit has "consistently required that the plan manifest a clear intent to confer such discretion."
The court held that the mere conferral of authority to a plan administrator (as opposed to the conferral of discretionary authority) is insufficient to merit application of an "abuse of discretion" standard of review. The court stated, "[a] plan which simply conveys authority to an administrator creates the expectation only that such authority will be exercised, not that the administrator will enjoy wide discretion in wielding its authority...." The court noted that the 7th Circuit has arrived at the same conclusion.
Call this the Cartman of ERISA decisions. I can just hear the plan administrator screaming: "Respect My Authoritay!"
Deborah Davis of Reish, Luftman has this on Qualified Default Investment Alternatives (QDIAs):
This is the third in a series of bulletins about the DOL’s final regulation on Qualified Default Investment Alternatives, or QDIAs, and the fiduciary protections they afford. The first bulletin provided a general overview of the fiduciary protections and the requirements imposed by the regulation. The second bulletin was a detailed discussion of the investments that are eligible to be QDIAs and some of the specific investment related issues. This bulletin discusses the notice and information requirements and the practical application of those rules.
As background, the Pension Protection Act of 2006 (PPA) provides fiduciaries with protection under ERISA section 404(c)(5) from losses that result from investing a defaulted participant’s account. (The fiduciary protection afforded by the QDIA regulation is commonly being called a “safe harbor” and we use that term in this bulletin.) The DOL issued a regulation that sets forth the requirements that plans must satisfy to receive that protection.
Included in the requirements are that the accounts of participants who do not select the investments for their money be invested in a “qualified default investment alternative” or “QDIA” and that these individuals be given notices and specified information. (For ease of reference, we use the term “participants” in this bulletin to refer to participants and beneficiaries, except as otherwise indicated.)
On April 29, 2008, the DOL issued Field Assistance Bulletin (FAB) 2008-03 which provides questions and answers to respond to the 401(k) community’s requests for further clarification. This bulletin discusses the notice and information requirements contained in the DOL’s regulation and FAB in a question-and- answer format and includes a summary Chart at the end.
You can read the rest here.
Tim Miller of the Labor Pains blog tells us that The Center for Union Facts and the Employee Freedom Action Committee has been very active this week raising the issue of card check.
"Right now there is an insidious bill being pushed on lawmakers. If passed, it will upend America’s political landscape and have a long-lasting effect on the economy. And you’ve never heard of it."
Let the debate begin because I think this may be a priority in the coming Obama administration.
Thursday, June 12, 2008
Thanks to Ed Sill for pointing out that the Government Accountability Office (GAO) yesterday released the following reports, testimony, and correspondence on employment verification issues surrounding the immigration debate: Employment Verification: Challenges Exist in Implementing a Mandatory Electronic Employment Verification System. GAO-08-895T, June 10.
And in another sign of its great timing, the New York Times has this story that President Bush is now requiring all government contractors to start using the e-Verify system.
Expect this Executive Order to be short-lived.
Deborah Hellman has written a timely book, When is Discrimination Wrong? (Harvard Press 2008), on the meaning of discrimination, which more than applies to our world of employment discrimination law.
Here is a review by Rebecca Brown, Allen Professor of Law, at Vanderbilt University:
Although democracy is committed to an ideal of equal treatment, we do not always agree on what that commitment requires. In this bold effort to work out when we may morally draw distinctions among people, Deborah Hellman unearths assumptions and unspoken biases that have invisibly corrupted political debates, such as those about affirmative action and the accommodation of the disabled. Cutting through misleading distinctions and false dichotomies, she gets to the heart of what equality means.
Sounds like a fascinating book that adds to the on-going discussion that others have written about, like Sam Bagenstos, of how to change society's normative assumptions about how discrimination works in our society.
I heard about this topic recently at the wonderful NYU Conference on Labor last week and apparently the New York Times thought it was time to write on the topic as well.
Japan’s salarymen, famous for their work ethic and their corporate loyalty, fueled this nation’s industrial rise. But more recently, they have borne the brunt of its economic decline, enduring lower wages, job insecurity and long hours of unpaid overtime.
Now, a few are fighting back, like Hiroshi Takano.
For years, Mr. Takano regularly worked into the wee hours as a store manager at the McDonald’s Company Japan. With his health deteriorating and the company, a Japanese business that operates many local restaurants here, refusing to pay overtime, Mr. Takano sued three years ago, and won.
In January, a Tokyo court ordered McDonald’s Japan to pay him $75,000 in back overtime wages. Last month, the company announced it would pay more overtime to store managers.
Slowly and reluctantly, Japan’s salarymen are learning to stand up for their rights, and in the process rewriting the social contract that had once bound workers to companies with near feudal bonds of loyalty. While this renegotiation is still under way, a new generation of Japanese like Mr. Takano is seeking to limit the demands of employers with more American-style legal protections. These changing attitudes reflect a broader shift as Japan, Asia’s first high-growth success story, struggles to mature into a postindustrial economy.
“Japanese are being forced to think more about their self-interest, which is something they are not used to doing,” said Yoichi Shimada, a law professor at Waseda University in Tokyo. “People are slowly realizing there are legal avenues to defend themselves if they feel wronged.”
According to Japan’s Supreme Court, the number of lawsuits filed against employers rose 45 percent from 1997 to 2005, to 2,303 cases. In 2006, that number increased 21 percent, to 2,777 cases if lawsuits heard by a newly created labor arbitration court are included.
Adding to the alienation between employee and company has been a growing sense of resentment that workers have not benefited from the nation’s economic rebound in the last half decade.
While corporate profits have soared, wages have remained stagnant, feeding a perception that companies have failed to share the good times with employees. This has led some to seek a bigger piece of the pie, say legal and labor experts.
Interesting stuff and something I examine from the Japanese pension and health insurance standpoint in the forthcoming book on Global Issues in Employee Benefits Law.
Hat Tip: Bill Herbert
In November, the Yale Journal of Law and Feminism will commemorate the 30th anniversary of the Pregnancy Discrimination Act (PDA), along with the 20th anniversary of the Journal, with a symposium on Nov. 7-8, 2008 that brings together the women and men who have been involved in every critical phase of the decades-long campaign for sex equality in the workplace.
The event will feature distinguished advocates and scholars from across the country to share their insights into the PDA and the future of workplace equality with students and faculty at the Yale Law School. Judge Marsha Berzon will be our Keynote speaker, and Sue Ross and Wendy Williams will be among the participants.
The symposium is being planned in coordination with Professors Wiliam Eskridge, Judith Resnik. The Journal of Law and Feminism will publish an issue devoted to the PDA and our twentieth anniversary, including pieces written by conference participants and by members of the Journal.
Wendy Williams was the woman who taught me employment discrimination law at Georgetown Law and she is a wonderful scholar and person. This should be a very worthwhile event.
From the good folks at SCOTUSblog:
The Supreme Court on Monday released the schedule of cases to be argued in the opening weeks of the new Term - the session that begins Oct. 6. On four of the five days in this session, the Court will be hearing three cases a day, instead of the more recent custom of two a day. The morning sessions begin at 10 a.m., the afternoon sessions at 1 p.m . . . .
Monday, Oct. 6: Locke v. Karass (07-610) - non-union member exemption from fee for union lawsuits
1 p.m.: Vaden v. Discover Bank (07-773) - scope of federal court power to order arbitration
Tuesday, Oct. 7: 1 p.m.: Kennedy v. Plan Administrator, DuPont Savings (07-636) - surrender of divorced spouse’s claim to pension benefits
Wednesday, Oct. 8: Crawford v. Nashville (06-1595) - protection against retaliation for witness in internal investigation
As you can see, the first three days of the October term feature four labor and employment-related cases in labor, arbitration, ERISA, and employment retaliation.
Bring them on!
Just can't get enough. This summary from the ABA/BNA LAwyers' Manual of Professional Conduct:
Although in-house lawyers are not prohibited from suing their employer under the state whistleblower act, those who are fired for reporting law violations to management in fulfillment of their job duties have no claim under the act, the Minnesota Court of Appeals held June 3 (Kidwell v. Sybaritic Inc., Minn. Ct. App., No. A07-0584, 6/3/08).
If the rule were otherwise, in-house attorneys could routinely sue under the whistleblower act, Judge Matthew E. Johnson said.
Brian F. Kidwell was general counsel of Sybaritic Inc. for about 10 months. The company terminated his employment three weeks after he sent an e-mail message to Sybaritic's top management expressing his concerns about certain activities of the company that he asserted were unlawful. The subject of the e-mail was “A Difficult Duty.”
After his termination, Kidwell sued Sybaritic in state court under the Minnesota Whistleblower Act, Minn. Stat. §181.932. A jury found in his favor and awarded him damages.
On appeal, Sybaritic contended that an in-house attorney may never sue his former employer under the whistleblower act. It also argued that even if such suits are permitted, Kidwell's communications to management could not form the basis of a claim under the whistleblower act.
Rejecting the first argument but finding merit in the second, the court concluded that the judgment against Sybaritic must be vacated.
The court found no clear, binding authority that an attorney may never sue under the whistleblower act.
So much for the comprehensive scheme of state whistleblower laws that Justice Kennedy referred to in his Garcetti majority opinion. Also reminds me of the Balla case from Illinois on whistleblowing by an in-house attorney. Is there no claim because lawyers are ethically supposed to report under the Rules anyway?
Hat Tip: Alex Long
Wednesday, June 11, 2008
The EEOC has issued a press release, reporting that it has settled a disability bias suit against Wal-Mart for $250,000 and injunctive relief. The complaint alleged
that Glenda D. Allen had been employed with the Arkansas-based company as a pharmacy technician since July 1993, most recently at its store in Abingdon, Md. As a result of a gunshot wound sustained during the course of a robbery at a different employer in 1994, Allen suffered permanent damage to her spinal cord and other medical issues, including an abnormal gait requiring the use of a cane as an assistive device.
The agency charged that despite Allen's successful job performance throughout her employment, Wal-Mart declared her incapable of performing her position with or without a reasonable accommodation, denied her a reasonable accommodation, and then unlawfully fired her because of her disability. The lawsuit settled shortly after the court denied Wal-Mart's motion for summary judgment on March 10, and partially granted the EEOC's cross-motion for summary judgment finding that Wal-Mart had no undue hardship defense.
The injunctive relief requires Wal-Mart to comply with the ADA, post a notice to employees about it, provide training, and "[s]ubmit a list of all employees at the Abingdon store and the pharmacies in the Abingdon district who have been denied reasonable accommodation and/or complained that they have been unlawfully denied reasonable accommodation or terminated because of their disabilities." The EEOC will monitor the company's compliance with the decree for the next three years.
It's not as big a defeat as some of the recent FLSA cases, but it's still an important settlement. From rumors that I have heard about Wal-Mart as a client, it's rather remarkable that Wal-Mart settled at all instead of continuing to fight until the end.
Back on the See-Saw: 10th Finds Lawrence Only Gives Rational Review to Public Employee Sexual Privacy Rights
Today, in Seegmiller v. Laverkin City, a panel of the Tenth Circuit unanimously upheld a city's private oral reprimand of a police officer for an adulterous affair she had with another officer not in her department. The city concluded that the affair interfered with her duties as an officer. The officer then challenged the reprimand on state and federal tort and constitutional grounds citing, in part, Lawrence. The unanimous panel opinion held that Lawrence did not recognize a fundamental right to private adult sexual intimacy, but instead struck down state sodomy laws as irrational.
The Tenth Circuit parted company with (but did not cite) recent opinions by both the First Circuit, which applied a balancing test to a challenge to "Don't Ask, Don't Tell" yesterday based on Lawrence, and with the Ninth Circuit, which last month applied intermediate scrutiny to a DADT challenge based on Lawrence. In so doing, the Tenth Circuit repeated some of the arguments that other courts and Justice Scalia have made about the decision. Like other courts, the panel even cited Justice Scalia's dissent as an authoritative guide to the meaning of Justice Kennedy's majority opinion in Lawrence.
How a dissent can provide an authoritative guide is only clear when one consider that Judge Tymkovich, the writer of the opinion, is a very conservative jurist and obviously a big fan of his fellow judicial conservative activist, Justice Scalia. But Dale sums up it up best when he says, "it is now clear that nothing about Lawrence is clear." I only hope when the inevitable review of these cases come that President Obama has had the chance to make numerous appointments to the Supreme Court.
Tuesday, June 10, 2008
The EEOC won an important victory in the 8th Circuit today. In
EEOC v. Allstate, the 8th Circuit affirmed in an interlocutory appeal that a rehiring policy instituted by Allstate as part of a reorganization plan could be challenged under a disparate impact theory, and that the plan did in fact disparately impact older workers.
The rehiring plan came about as a result of a plan to reorganize Allstate's employee insurance agents. Allstate used to hire insurance agents, but it also used to sell insurance through independent contractor agents. In 1990, Allstate stopped hiring new employee agents, entering into new relationships only with independent contractors. Still, until June, 2000, Allstate had about 6300 employee agents. To completely make the switch, Allstate decided to terminate all 6300 of these employees. It gave them four options. Two options allowed the employees to become independent contractors and receive a cash bonus. Two options allowed for severance pay, instead, with a greater amount given in exchange for a release of any claims against Allstate. At first, there was no policy in effect regarding rehiring former employee agents (into non-agent positions), but after a few months, Allstate instituted a plan which provided that former employee-agents would not be considered for rehire in any employee position with Allstate for a period of either (1) one year from their termination date; or (2) the length of time the former agents received severance benefits from Allstate, whichever was longer.
The EEOC brought this action to challenge not the reorganization plan, but just the rehiring portion, arguing that in had a disparate impact on workers over 40 in violation of the ADEA. The district court granted partial summary judgment, agreeing that this policy could be challenged using the disparate impact theory and that the policy had a disparate impact on workers over 40.
Allstate appealed, contesting both holdings. Allstate argued that the Supreme Court's decision in Smith v. City of Jackson, Miss. foreclosed a disparate impact claim for this type of policy. A little analysis of the Smith decision is necessary here. The Supreme Court held that disparate impact claims were cognizable under the ADEA, but made an important distinction between the two prohibitions that form the basis for claims against employers. The ADEA makes it an illegal for an employer:
(1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age;
(2) to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.
29 U.S.C. § 623(a)(1), (2). The Court held that the language in (2) supported disparate impact liability, but the language in (1) did not--it described disparate treatment or intentional discrimination. There was no holding from the Court, however, on exactly what type of policies and practices are described by the two provisions.
Allstate argued that the re-hiring policy was a hiring policy, which would fall under (1), and thus no disparate impact claim could be brought to challenge it. The 8th Circuit agreed that if this was a hiring policy, then it would fall under (1), and no disparate impact claim could be brought. However it agreed with the EEOC and the lower court that this policy was not a hiring policy, but was instead an employment policy, and thus actionable under (2) and amenable to a disparate impact challenge. The reason that this was an employment policy was that it only applied to former employees and not to applicants more generally. Additionally, it was an integral part of the reorganization policy. This is the key new development, but the court did discuss the statistical disparity, as well, and if you're interested in that analysis, I encourage you to look to the opinion.
The real impact from this case is not going to be about rehiring plans and what they are. Rather, the important thing, which is not such good news for the EEOC's position in future cases, is going to be from the implicit holding that hiring policies do not give rise to disparate impact claims. As the dissent in this case noted, (2) refers primarily to employees, whereas (1) refers to individuals. Former employees or applicants are not necessarily employees within the meaning of (2). The Supreme Court said that "employees" means "former employees" for purposes of Title VII (Robinson v. Shell Oil, Co.), but Title VII's version of (2) uses the language "to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities . . ." The implication from the different language may be that Congress did not intend for disparate impact to reach hiring decisions.
In my opinion, the Supreme Court's decision in Smith did not require the 8th Circuit to impliedly hold that hiring decisions are not amenable to disparate impact challenges. The language the Court focused on was not "hiring" or "discharge" as opposed to "limit, segregate, or classify." Instead, the court looked at the singularness of the language in (1) (individual . . . his compensation . . . such individual's age) and contrasted it with the expansiveness of the language in (2) (employees . . . any individual). Nor did Justice O'Connor's concurrence, in which she would have rejected the disparate impact theory entirely under the ADEA, focus on hiring or discharge, or even who employees were.
And the language can be read in (2) to reach hiring policies. While (2) refers to practices regarding employees, it prohibits those policies from "depriv[ing] or tend[ing] to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee." Clearly, any hiring policy other than one that requires every applicant be hired will deprive or tend to deprive some individuals of employment opportunities. When that policy causes an effect based on age, that policy violates the ADEA, just as when it does so on the basis of race, color, religion, sex, or national origin, it violates Title VII. In fact, the 8th Circuit found that this policy did deprive these former employees of employment opportunities and thus fell under (2). Given that fact, I'm not sure why it had to distinguish between hiring policies and employment policies.
Hat tip: Paul Mollica
The DC Circuit issued a decision today in Blue Man, Vegas v. NLRB, ordering the group to bargain with a union certified to represent a group of employees after an election. The group had refused to bargain, challenging the definition of the bargaining unit. The bargaining unit was made up of nearly all of the stage hands but left out some musical instrument technicians. Those technicians had different responsibilities, some were paid salary rather than hourly, and traditionally, they had been treated separately from the other stage hands.
This case was something of a challenge because the group was in the process of changing the system for the technicians. The group had been performing at the Luxor, where the stagehands were Luxor employees and were organized there. The technicians had been employed by the group directly. When the group moved to the Venetian, it decided to employ all of the stage hands directly, and began the process of treating new technician hires the same in some respects as the other stage hands. Despite this, there were enough differences still that it was reasonable for the Board to have found that the technicians lacked the community of interest to be included in the bargaining unit.
Our also very own Marcia McCormick (Samford-Cumberland Law) has just posted on SSRN her forthcoming piece in the Berkeley Journal of Labor and Employment Law: The Truth is Out There: Revamping Federal Antidiscrimination Enforcement for the Twenty-First Century.
Here is the abstract:
Employment discrimination laws in the United States have not created full equality in the workplace, although that was their goal. Real change requires greater accountability for those who make employment decisions and greater transparency to bolster that accountability. To provide that transparency and accountability, we need greater federal involvement in enforcement and a mechanism to publicize the state of the nation's workplaces. To accomplish this, I propose taking private sector employment discrimination disputes away from the Equal Employment Opportunity Commission entirely, and starting with a new agency. The current model, with the EEOC writing compliance guidelines, encouraging mediation, and acting as prosecutor occasionally, is not working. Instead, we need an agency to investigate broadly, issue fact-finding about the state of the nation's workplaces, adjudicate discrimination claims, and promote good practices and voluntary compliance, through something of a hybrid between a truth commission, legislative hearing, and adjudicative agency.
I kid you not when I say that I saw Marcia present this piece three different times over the last year and every time it got better and she actually taught me new stuff each time! That's an accomplishment. It is also a great piece and one that everyone should take a look at who is interested in ways of reforming the broken EEOC system.