June 21, 2008
Union Island Protest in Support of Zimbabwean Labor Leaders
Amidst the growing violence and intimidation in the run-up to the Zimbabwean election, the leaders of Zimbabwe's union movement, Lovemore Matombo and Wellington Chibebe have been arrested for speaking out about the situation in their country, and are being tried on Monday 23 June.
Unions around the world will be taking actions on Monday, in support of Wellington and Lovemore. Come to Union Island at 3pm GMT (4pm CET, 7am SLT) to find out what you can do. We'll also be unveiling a giant mural in support.
Top-10 Labor/Employment/Benefit SSRN Downloads
For reasons unknown to me, SSRN apparently has stopped providing top-10 lists for each of the "journals" into which it subdivides Labor/Employment/Benefit articles. Instead, there now is only one global top-10 list. Here it is.
- Michael D. Hurd & Susann Rohwedder, The Retirement Comsumption Puzzle: Actual Spending Change in Panel Data (297).
- Ian Ayres (left) & Barry J. Nalebuff (right), Life-Cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk (204).
- Nathan B. Oman, Specific Performance and the Thirteenth Amendment (177).
- Katherine V.W. Stone, The Future of Labor and Employment Law in the United States (132).
- Chris Armstrong, Alan D. Jagolinzer, & David F. Larcker, Chief Executive Officer Equity Incentives and Accounting Irregularities (123).
- Paul M. Secunda, "The Longest Journey, with a First Step": Bringing Coherence to Sovereignty and Jurisdictional Issues in Global Employee Benefits Law (104).
- Theodore Eisenberg & Charlotte Lanvers, Summary Judgment Rates Over Time, Across Case Categories, and Across Districts: An Empirical Study of Three Large Federal Districts (104).
- Anne Marie Lofaso, September Massacre: The Latest Battle in the War on Workers' Rights Under the National Labor Relations Act (95).
- Robert Ashford, Binary Economics: The Economic Theory that Gave Rise to ESOPs (83).
- Aaron Halegua, Getting Paid: Processing the Labor Disputes of China's Migrant Workers (80).
June 20, 2008
Fourth Amendment Protection for Electronic Communications
Orin Kerr has a nice post at the Volokh Conspiracy on an interesting new case out of the Ninth Circuit, Quon v. Arch Wireless Operating Co. The case involved a government employer that examined its employees' text messages, which were saved on the network of the private text messaging provider. The court held that employees may have a Fourth Amendment reasonable expectation of privacy in text messages. The decision also stated that there may also be an expectation of privacy in the content of emails (as opposed to the to/from line of emails). Read Orin's post for more detail.
This is a great case for several reasons (and here's hoping it's not reversed). First, it makes a nice addition for anyone teaching employment law. I still love teaching Ortega--you can't beat references to an office Lothario--but this gives a nice update that students will relate to. It also discusses some Stored Communications Act issues, which means that I may have something other than Konop to talk about when teaching the SCA. Second, this provides an increasingly rare example of a court taking the application of constitutional rights in the workplace seriously. It's also a great contrast to the situation in the private sector, in which employers can pretty much do what they want with regard to electronic communications that use their equipment or networks (see here for my article on electronic communications under the NLRA).
Another reminder that public employment law has significant differences from private employment law.
Paid Family Leave for Feds Passes House
We were so busy with the Supreme Court yesterday that I didn't notice that HR 5781, the Federal Employees Paid Parental Leave Act passed the House yesterday by a vote of 248-146 (roll call here). The bill would make 8 of the 12 weeks of parental leave provided to federal employees paid.
This is an important thing for federal employees but also an important step toward paid leave for private sector employees as well, which we've blogged about here, here, here, sort of here, and probably lots more that I'm missing.
Age Discrimination in the UK
Every year when I teach the retirement benefits side of ERISA, I show my students this Frontline video, "Can You Afford to Retire?" The short answer, I tell them, is "no." Then I give them all of the frightening statistics about how little people have saved on average and contrast it with what people expect about their ability to retire or their standard of living when they do.
That is the same message as this editorial Paul sent me from Business.scotsman.com about the situation in the UK.
In the past two weeks, we have learned that over 300,000 more elderly people have fallen below the poverty line in the past year; around two million pensioners rely on their children for financial support; and that the average Scottish worker is set to retire with a weekly income of just £169, just over a third of national average earnings.
. . .
There are so many measures that could improve the chances of those facing retirement doing so without falling into poverty. One concerns the right of employees to continue working after retirement age.
When new legislation was introduced in October 2006 making it unlawful for employers to discriminate against workers on the basis of age, campaigners hoped it would lower the barriers against working beyond state pension age.
But while the regulations prohibit age discrimination in most workplace situations, there are a number of exceptions where discrimination is still lawful, and people over the mandatory retirement age can still be refused employment or forced to retire. According to the Heyday charity, part of Age Concern, this means the government effectively allows companies to sack employees at retirement age.
. . .
Whether you want to work past retirement age or not – and record numbers do – is not necessarily the point. Retirement provision is such that many people can't afford to retire anyway. Given a choice between work and living in poverty, a large proportion of people would choose work. . . . Unfortunately, few organisations take on people past retirement age, regardless of what they can offer.
A cultural shift is needed before companies stop discarding valuable and capable workers because of their age. As with other discrimination battles, however, this needs to be lead by a change in law.
At least we're not alone.
Dividing Labor/Employment Law Into Courses
Ron Brown, U. Hawai'i, asked us to post the following query. In addition to replying to Ron directly, feel free to add a comment to this post, so that others can benefit from your experience.
Do you happen to have any recent surveys or information on how the labor law courses are generally divided in the law schools and the typical course enrollments for each? For example, I teach Labor Law, Employment Discrimination Law, Employment Law, and Asia International & Comparative Labor Law. As we re-consider our curriculum here, I would be interested in knowing (1) how other law schools are doing it and (2) an approximation of enrollment numbers in each class. It would also be helpful to know (3) the approximate number of 2nd and 3d year law students in your school that form the pool of possible enrollees.
Any information you could provide to me would be useful and appreciated.
Please send directly to me at the University of Hawaii.
Corbin Joins Miami
Caroline Corbin has just accepted a tenure-track teaching position at the University of Miami Law School, where she'll be teaching Employment Discrimination among other courses.
Caroline holds a B.A. from Harvard
University (1991) and a J.D. from Columbia Law School (2001), where she
was the highest ranked female law graduate as well as the Solicitations
and Notes Editor of the Columbia Journal of Gender and Law.
Following graduation, Carolinecompleted a postdoctoral research
fellowship at Columbia Law, where she was also an associate in law. Caroline also practiced law as an attorney with the American Civil
Liberties Union’s Reproductive Freedom Project and was a litigation
associate with Sullivan & Cromwell, where she served as lead or
co-counsel in civil rights cases. Her written work includes Above the
Law? The Constitutionality of the Ministerial Exemption from
Antidiscrimination Law, 75 Fordham L. Rev. 1965 (2007) and Mixed Speech: When Speech is Both Private and Governmental, 83 NYU L. Rev. 101 (2008).
Welcome to the legal academy, Caroline!
Second Circuit Affirms Difficult Choice with Race-Conscious Effect
Via Jack Sargent comes Ricci v. DeStefano from the Second Circuit, affirming per curiam the district court. All of the details are from the district court opinion, which is reported at Civil No. 3:04cv1109 (JBA), 2006 U.S. Dist. LEXIS 73277, 2006 WL 2828419 (D. Conn., Sept. 28, 2006) (subscriptions required).
The New Haven Fire Department an exam as part of its promotional process, and the process was established by a collective bargaining agreement. After examining the results of the test, the city held several hearings on whether to certify the results. The results appeared to show that the test disparately impacted African American and Hispanic applicants. After extensive testimony (both lay and expert) about the fairness of the test, its job relatedness, whether the process (and which part) had a disparate impact, and why, the city in a split decision refused to certify the results.
Plaintiffs are seventeen white candidates and one Hispanic candidate who took the promotional exams, fared very well, but received no promotion because without the CSB's certification of the test results, the promotional process could not proceed. They argued that the process did not produce a disparate impact, that it accurately reflected merit, and that the refusal to certify the results was because of political pressure to promote racial diversity--in other words, that this was discrimination against the white candidates. The city argued that the decision was either required by Title VII or was at least driven by a good faith belief that Title VII mandated its action. Plaintiffs countered that a good faith belief was not a defense, and that its assertion was just a pretext for discrimination.
The court held that the process did have a disparate impact and upheld the decision not to certify the results
Here, defendants' remedy is “race conscious” at most because their actions reflected their intent not to implement a promotional process based on testing results that had an adverse impact on African-Americans and Hispanics. The remedy chosen here was decidedly less “race conscious” than the remedies in Kirkland and Bushey, because New Haven did not race-norm the scores, they simply decided to start over, to develop some new assessment mechanism with less disparate impact. Thus, while the evidence shows that race was taken into account in the decision not to certify the test results, the result was race-neutral: all the test results were discarded, no one was promoted, and firefighters of every race will have to participate in another selection process to be considered for promotion. Indeed, there is a total absence of any evidence of discriminatory animus towards plaintiffs-under the reasoning of [Hayden v. County of Nassau, 180 F.3d 42, 51 (2d Cir. 1999)], “nothing in our jurisprudence precludes the use of race-neutral means to improve racial and gender representation.... [T]he intent to remedy the disparate impact of the prior exams is not equivalent to an intent to discriminate against non-minority applicants.”
Because the defendants lacked animus against white applicants, the court further found that there was no equal protection violation.
This was a very interesting analysis of what underlies a lot of the tension in antidiscrimination law. People usually perceive that decisions that harm one racial group benefit another, and decisions that appear to benefit a racial group appear to harm another. Ultimately, decisions to not harm one group will be perceived to cause harm to another group. Deciding whether that harm really exists or is something the law needs to prevent is explicit in the affirmative action debate, but it's also always present but unspoken in the typical discrimination case.
Disappointment (with Hope) on Stevens' Brown Decision
Following up on Jeff's post on the Court's decision in Chamber of Commerce v. Brown (U.S. June 19, 2008) from yesterday, I want to add a few comments regarding my disappointment about the majority decision by Justice Stevens and some words of hope for those who still, like me, hope that states will not give up passing Worker Freedom Act legislation to ban captive audience speech by employers during labor organization campaigns.
First, I think that Justice Stevens made a crucial mistake in finding the California financial accountability law preempted under Machinists preemption by equating the concepts of "free debate" and "market freedom." In coming to his "unequivocal" conclusion that the National Labor Relations Act (NLRA) preempts the California law which prevent employers in California to use state money to "assist, promote, or deter union organizing," Justice Stevens relied on comments in Linn v. Plant Guard Workers, 383 U.S. 53, 62 (1966) and Boston Harbor, 507 U.S. 218, 227 (1993). From Linn, he rightly noted that "congressional intent to encourage free debate on dividing issues of labor and management" was manifested under Section 8(c) of the Act. From Boston Harbor, a market participant case (not a regulation case like this one), he noted that state laws are preempted that regulate within a "zone protected and reserved for market freedom." He then concludes that because the California law interferes with free debate in a zone protected for market freedom, the California law conflicts with the policy judgment that Congress renounced when it amended the NLRA in 1947 with the Taft-Hartley Act to permit noncoercive speech by employers.
To me, the key word has always been "coercion." There cannot be a "free debate" in the organizational setting when employer economic power and bargaining leverage almost always vastly outweighs that of the incipient union. In such an environment, there is only coercion, no freedom, and certainly no free debate when one's livelihood (and that of one's family) is at stake.
There is also no "market freedom" in such an environment. The Court would have better to recognize the economic realities of the organizational phase of unionization and found that Boston Harbor and Machinists do not apply in this context, only after certification of a union when the economic power of the parties are more equal (Jeff Hirsch has argued for something similar in the 8(a)(2) employee participation committee context). So with Machinists inapplicable in the organizational context, I would have found Garmon also not implicated (because a Section 7 right or Section 8 prohibition is not arguably involved), and the California law not preempted. Now to get appointed to the Supreme Court by President Obama.
More seriously, as dreary as the Brown decision is for future attempts by states to control their money not being used for partisan union purposes, I think its emphasis on "free debate" and "market freedom" bode potentially good things for Worker Freedom legislation pending in some states and its aim to outlaw the employer captive audience meeting when employees are forced to listen to their employer's views on unions as a condition of their employment. It is hard to argue that a "free debate" is occurring when employees cannot get up to leave or debate their employers freely without being fired. In a recent paper, I have noted:
Although in a formal sense employees are free to walk away from such speech or not attend such meetings, in reality, employees risk being fired if they are considered to be insubordinate to their supervisors by failing to listen them or by not attending antiunion
assemblies. Indeed, employees can be lawfully terminated for merely asking questions of their employers during such a meeting or for leaving such meetings without permission. One former member of the NLRB characterized this power of employers to monopolize its workplace for anti-union speeches as “one of the most potent and effective methods by which self-organization of employees [can] be stifled.”
It is therefore hardly surprising that the vast majority of employers faced with a union organizing campaign make anti-union presentations to their workers during mandatory meetings. For instance, a federal government report studied four hundred union
elections and found that 92% of these union campaigns involved employers forcing employees to attend captive audience meetings. The average union campaign had eleven captive audience meetings. Additionally, 78% of the employers studied instructed supervisors to give anti-union messages to their subordinates.
Nor is this anywhere close to "market freedom," where the market is being dominated in an intimidating fashion by the employer with no chance of union rebuttal (because equal access rules have been shunted aside by the Supreme Court and the NLRB):
All of this [previous labor history culminating in the Taft Harltey Amendments of 1947] was the start of a trend of denying union access to employer property, as by the U.S. Supreme Court’s 1956 opinion in N.L.R.B. v. Babcock & Wilcox, union organizers were not only being denied the opportunity to respond to employer captive audience speech in the
workplace, but more generally from coming on to the employer’s property to distribute union literature and solicit membership . . . .
In NuTone & Avondale, the Court agreed that the employer, in most cases, had no obligation to provide access to its property to the union for speeches to employees. There, the Court stated that, “the Taft- Hartley Act does not command that labor organizations as a matter of
abstract law, under all circumstances, be protected in the use of every possible means of reaching the minds of individual workers, nor that they are entitled to use a medium of communication simply because the employer is using it.”
In short, the workplace is not one of market freedom or free debate. We need Worker Freedom legislation to cure market inefficiencies and to promote free debate about the merits of forming a union.
I hope that the Brown decision will not discourage those who believe strongly in State's rights (federalism anyone?) to regulate conditions of employment. They should continue to fight for workplace legislation outlawing the highly-abused and very effective employer captive audience meeting.
If You Appoint, They Will Adjudicate
In a Milwaukee variation on the old tree-falling-in-a-forest question, Common Council President Willie Hines Jr. is asking whether the city could get into legal trouble by telling residents that they can bring discrimination complaints to the city’s Equal Rights Commission — even though the panel apparently went out of business in 2003.
Officials in Mayor Tom Barrett’s administration said Friday that complaints are still being investigated, and that Barrett is trying to revive the commission as a more meaningful agency.
Founded in 1991, “the Equal Rights Commission is charged to receive, investigate and eliminate or remedy discrimination in housing and employment by means of conciliation, persuasion, education and litigation,” according to the Web site of the city Department of Employee Relations. The Web site also provides complaint forms and instructions on how to file them.
But all of the commission’s seven seats are vacant, and the body has not met since 2003, Hines said in a recent letter to City Attorney Grant Langley. Yet city ordinances still require the commission’s duties to be carried out, Hines noted . . . .
[Mayor]Barrett spokeswoman Eileen Force said the commission had been disbanded before Barrett was elected in 2004. A 2003 city ordinance updated the duties of the city’s Office of Diversity and Outreach but did not eliminate the commission.
Charles Coleman, the chief and sole employee of the diversity office, said he takes housing and employment discrimination complaints, but he investigates them only when both the complainant and the alleged violator are in the city. Otherwise, Coleman said, he refers the complaints to the U.S. Equal Employment Opportunity Commission, the state Equal Rights Division or the Metropolitan Fair Housing Council.
Investigate complaints or get off the pot!
Hat Tip: Jack Sargent
The Wrath of Kahn: Fed Cir. Reverses MSPB on Whistleblower Case
Talk about your rare events, but co-blogger Marcia McCormick just brought to my attention the case of Kahn v. Dept. of Justice (Fed. Cir. June 11, 2008), in which the Federal Circuit reversed and remanded the Merit Systems Protection Board (MSPB) where
the MSPB found it lacked jurisdiction in a whistleblower case.
Significantly, the Federal Circuit found in Kahn:
The AJ dismissed the appeal for lack of jurisdiction after concluding that the disclosures Mr. Kahn [a special agent for the DEA] made were not protected disclosures under the [Whistleblower Protection Act] WPA because they were made as part of his normal duties. Because we hold that Mr. Kahn made non-frivolous allegations that the disclosures he made were outside of his normal duties, we reverse the Final Decision and remand the case to the Board for further proceedings consistent with this opinion.
Normal duties? Sounds like Garcetti's First Amendment standard is being incorporated into the WPA.? So much for Justice Kennedy's assurances that whistleblowers may depend on other statutory routes outside of the First Amendment (not that this really comforted anyone in the first place)? Actually, Garcetti followed the Fed Cir.'s lead in Willis v. Dep’t of Agric., 141 F.3d 1139, 1144 (Fed. Cir. 1998), in holding the whistleblowing in connection with assigned normal duties is not a protected disclosure covered by the WPA.
No wonder Garcetti is such a god-awful decision. It follows the Federal Circuit for guidance on constitutional employment law!
House Committee Passes Overwhelmingly ADA Amendments Act
Thanks to Sam Bagenstos (Wash U.) and author of the new and improved Disability Law 2.0 blog for pointing out to us that:
At a markup [this past Wednesday], the House Education & Labor Committee passed (by a 43-1 vote!) the ADA Amendments Act, which is a revised version of the earlier ADA Restoration Act proposal. See this press release, which contains details about the bill and a list of its very impressive array of supporters from both the disability and business communities.
Specifically rejects the erroneous Supreme Court decisions that have reduced the protections for people with disabilities under the ADA, restoring original Congressional intent.
Makes it absolutely clear that the ADA is intended to provide broad coverage to protect anyone who faces discrimination on the basis of disability.
Clarifies the definition of disability, including what it means to be “substantially limited in a major life activity.”
Prohibits the consideration of mitigating measures such as medication, prosthetics, and assistive technology, in determining whether an individual has a disability.
Provides coverage to people who experience discrimination based on a perception of impairment regardless of whether the individual experiences disability.
It looks like the AAA is supported by a broad coalition of civil rights groups, disability advocates, and employer trade organizations. If enacted, it would represent a major revamp of the ADA and hopefully expand disability protection for qualified individuals with disabilities in employment, government services, and public accommodations.
June 19, 2008
Employer Has Burden of Proof on RFOA
And number four of the Supreme Court's worklaw-llapalooza is Meacham v. Knolls Atomic Power Laboratory (06-1505), reported here. Breyer took no part in the decision, which was almost unanimous, with Justice Scalia concurring in the judgment and Justice Thomas joining in part, concurring in part, and dissenting in part.
The primary issue in Meacham was who bears the burden of proof in a disparate impact case under the Age Discrimination in Employment Act (ADEA) on whether the adverse employment action was based on a Reasonable Factor other than Age (RFOA) as laid out in the statute. The Supreme Court held that the RFOA was an affirmative defense and that the employer bears the burden of proof.
The case involved a layoff of thirty-one workers at the Knolls Atomic Power Laboratory. Thirty of those workers were aged 40 or over. In order to select those for layoff, Knolls told its managers to score their subordinates on three scales, “performance,” “flexibility,” and “critical skills.” A statistics expert demonstrated that this distribution was so skewed by age that it was extremely unlikely to have occurred by chance. Additionally, the expert demonstrated that the categories of flexibility and critical skills, over which managers had the most discretion, were most closely connected to the statistical outcome. A jury found for the workers that this layoff procedure disparately impacted them based on their age.
The Court of Appeals had reversed the jury's verdict, finding that the RFOA provision was different from the business necessity defense available under Title VII and further finding that the employee had not carried the burden of persuasion that this method of layoff selection was unreasonable and thus violated the ADEA.
The Supreme Court held first that the RFOA was an affirmative defense because of its placement in the statute. It is placed apart from the prohibitions in a section that contains other doctrines considered defenses, like the bona fide occupational qualification (BFOQ) affirmative defense. Additionally, the Court noted the general principle that where a statute provides an exception, the side that claims the benefit of that exception has the burden to prove it, in finding that the employer would have the burden to prove the affirmative defense. Similar language had also been construed the same way for other parts of the ADEA, as well as for other statutes, like the Equal Pay Act's "reasonable factor other than sex," and the Fair Labor Standards Act. Finally, Congress had amended the ADEA after the Supreme Court found a similar provision not to be an affirmative defense to clarify that all of the items in that section were justifications or excuses--classic affirmative defenses.
The Court further clarified comments made in Smith v. City of Jackson, 544 U. S. 228 (2005), in which the Court had held that disparate impact was a cognizable claim under the ADEA. The Court in City of Jackson had said that “Wards Cove’s pre-1991 interpretation of Title VII’s identical language remains applicable to the ADEA.” All that meant was that disparate impact was an available theory and that the employee had the burden of identifying which particular practices allegedly cause an observed disparate impact.
The Court also clarified that the RFOA inquiry is not the same as the business necessity defense. The business necessity defense requires the defendant to demonstrate both that the neutral practice or criterion is job related and that it is necessary to the business. That means that if there are alternative practices without the disparate impact, the employer will have a heavy burden to demonstrate why it did not adopt those. Under a reasonableness standard, the employer need only prove that its adoption of this practice was reasonable even if there are other reasonable tests it could have chosen.
To the arguments of Knolls and several amici that putting the burden on the employer would open the floodgates to frivolous cases, the Court stated that the burden on the employee to demonstrate a specific practice that caused the disparate impact was a heavy one. And even if that weren't enough, the parties needed to take their complaint to Congress, which had created this structure.
Scalia concurred but would simply have deferred to the EEOC's regulations on the subject, which would have led to the same result. Thomas dissented from the view that disparate impact was cognizable under the ADEA, but agreed that the RFOA was an affirmative defense (to disparate treatment in his view.).
On remand, the Second Circuit will still have to decide whether the employer proved this was reasonable. Meacham had sought certiorari as to “[w]hether respondents’ practice of conferring broad discretionary authority upon individual managers to decide which employees to lay off during a reduction in force constituted a ‘reasonable factor other than age’ as a matter of law.” The Court denied certiorari on this question and expressed no views on it in the decision.
The Second Circuit will also have to flesh out a bit the difference between this reasonabless test from business necessity. Certainly, reasonableness is less burdensome for the employer. Still, if alternatives that did not have a disparate impact were available, it may be somewhat burdensome to show that it was not unreasonable to pick an alternative without a disparate impact--although if the employer knows about the disparate impact caused by the practice and knows of an alternative without that impact, we might be getting back into the realm of disparate treatment.
Supreme Court: Kentucky Disability Pension Plan Not Age Discriminatory
In a case that should be of interest for employment discrimination and employee benefit scholars, Kentucky Retirement Systems v. EEOC, the Supreme Court in a close 5-4 decision has found the Kentucky public pension plan not to be age discriminatory in an usual division of the Justices. Justice Breyer delivered another opinion for the Court, in which Roberts, Stevens, Souter, and Thomas joined. Kennedy filed a dissenting opinion, in which Scalia, Ginsburg, and Alito joined. Anyone recall seeing a split like that before?
In any event, here are selected portions of the syllabus:
Kentucky permits “hazardous position” workers, e.g., policemen, to receive normal retirement benefits after working either 20 years or 5 years and attaining age 55 and pays “disability retirement” benefits to workers meeting specified requirements. Kentucky’s “Plan” calculates normal retirement benefits based on actual years of service. The Plan calculates disability benefits by adding to an employee’s actual years of service the number of years that the employee would have had to continue working in order to become eligible for normal retirement benefits, adding no more than the number of years the employee had previously worked. Charles Lickteig, who continued working after becoming eligible for retirement at age 55, became disabled and retired at age 61.
He filed an age discrimination complaint with respondent (EEOC) after the Plan based his pension on his actual years of service without imputing any additional years. The EEOC filed suit against Kentucky and others (collectively Kentucky), arguing that the Plan failed to impute years solely because Lickteig became disabled after age 55. The District Court granted Kentucky summary judgment, holding that the EEOC could not establish age discrimination, but the Sixth Circuit ultimately reversed on the ground that the Plan violated the Age Discrimination in Employment Act of 1967 (ADEA).
Held: Kentucky’s system does not discriminate against workers who become disabled after becoming eligible for retirement based on age.
(a) The ADEA forbids an employer to “discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” A plaintiff claiming age-related “disparate treatment” (i.e., intentional discrimination) must prove that age “actually motivated the employer’s decision.” Hazen Paper Co. v. Biggins, 507 U. S. 604. In Hazen Paper, the Court found that, without evidence of intent, a dismissal based on pension status was not a dismissal “because … of age,” noting that, though pension status depended upon years of service, and years of service typically go hand in hand with age, the two concepts are “analytically distinct." And the dismissal at issue there, if based purely on pension status, would not embody the evils prompting the ADEA: It was not based on a “prohibited stereotype” of older workers, did not produce any “attendant stigma” to those workers, and was not “the result of an inaccurate and denigrating generalization about age.” However, the Court noted that discrimination based on pension status could violate the ADEA if pension status was a “proxy for age.”
(b) Applying Hazen Paper, the circumstances here, taken together, show that the differences in treatment in this particular instance were not “actually motivated” by age. (1) Age and pension status remain “analytically distinct” concepts. (2) Here, several background circumstances eliminate the possibility that pension status serves as a “proxy for age.” Rather than an individual employment decision, at issue here are complex system-wide rules involving not wages, but pensions—a benefit the ADEA treats somewhat more flexibly and leniently in respect to age. Further, Congress has otherwise approved programs, such as Social Security Disability Insurance, that calculate disability benefits using a formula that expressly takes account of age. (3) The disparity here has a clear non-age-related rationale. The Plan’s disability rules track Kentucky’s “normal retirement” rules by imputing only those additional years of service needed to bring the disabled worker’s total to 20 or to the number of years that the individual would have worked had he worked to age 55. Thus, the disability rules’ purpose is to treat a disabled worker as though he had become disabled after, rather than before, he had become eligible for “normal retirement” benefits. Age factors into the disability calculation only because the normal retirement rules themselves permissibly consider age. The Plan simply seeks to treat disabled employees as if they had worked until the point at which they would be eligible for a normal pension. Thus, the disparity turns upon pension eligibility and nothing more . . . .
The Court’s opinion in no way unsettles the rule that a statute or policy that facially discriminates based on age suffices to show disparate treatment under the ADEA. The Court is dealing with the quite special case of differential treatment based on pension status, where pension status—with the explicit blessing of the ADEA—itself turns, in part, on age. Further, the rule for dealing with this sort of case is clear: Where an employer adopts a pension plan that includes age as a factor, and that employer then treats employees differently based on pension status, a plaintiff, to state a claim under the ADEA, must adduce sufficient evidence to show that the differential treatment was “actually motivated” by age, not pension status.
(c) Since Hazen Paper provides the relevant precedent here, an ADEA amendment made in light of Public Employees Retirement System of Ohio v. Betts, 492 U. S. 158 , is beside the point. And a contrary interpretation contained in an EEOC regulation and its compliance manual does not lead to a different conclusion.
Justice Kennedy, in dissent, writes in a strident voice:
The Court today ignores established rules for interpreting and enforcing one of the most important statutes Congress has enacted to protect the Nation’s work force from age discrimination, the Age Discrimination in Employment Act of 1967. That Act prohibits employment actions that “discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” In recent years employers and employees alike have been advised by this Court, by most Courts of Appeals, and by the agency charged with enforcing the Act, the Equal Employment Opportunity Commission (EEOC), that the most straightforward reading of the statute is the correct one: When an employer makes age a factor in an employee benefit plan in a formal, facial, deliberate, and explicit manner, to the detriment of older employees, this is a violation of the Act. Disparate treatment on the basis of age is prohibited unless some exemption or defense provided in the Act applies . . . .
Even were the Court correct that Kentucky’s facially discriminatory disability benefits plan can be justified by a proper motive, the employer’s own submission to us reveals that the plan’s discriminatory classification rests upon a stereotypical assumption that itself violates the Act and the Court’s own analytical framework.
As a threshold matter, all should concede that the paradigm offered to justify the statute is a powerful one: The young police officer or firefighter with a family is disabled in the heroic performance of his or her duty. Disability payments are increased to account for unworked years of service. What the Court overlooks, however, is that a 61-year-old officer or firefighter who is disabled in the same heroic action receives, in many instances, a lower payment and for one reason alone: By explicit command of Kentucky’s disability plan age is an express disadvantage in calculating the disability payment.
This is a straightforward act of discrimination on the basis of age. Though the Commonwealth is entitled by the law, in some instances, to defend an age-based differential as cost justified, 29 U. S. C. §623(f)(2)(B)(ii), that has yet to be established here. What an employer cannot do, and what the Court ought not to do, is to pretend that this explicit discrimination based on age is somehow consistent with the broad statutory and regulatory prohibition against disparate treatment based on age.
As much as I usually agree in employment discrimination cases with Justices Stevens and Souter, you can never be wrong in following Justice Ginsburg's instincts in these types of cases. For that reason among many, I think this case sets a dangerous precedent for age discrimination in the provision of pensions and runs counter to the explicit language of the ADEA. Also, the Supreme Court majority is back to treating the EEOC like an ugly-step child agency. At the very least, I would have preferred that the case be remanded back to the district court to determine whether Kentucky can meet the cost-justification defense under the ADEA.
And because it happens ever so rarely, I can say that I predicted this one to a tee ("[L]ook for a 5-4 reversal in favor of Kentucky allowing it to continue this system for those who started in the system before 2004. In any event, this might be one of those cases in which the usual sides are not the same with Kennedy siding with the progressives and Stevens with the conservatives.").
Holding Pat and Satisfying No One: The Glenn ERISA Conflict of Interest Decision
In what I am sure will be an unsatisfactory opinion for many, the Supreme Court in Metlife v. Glenn, in a very fractured (5-1-1-2) decision has basically left the Firestone discretionary review standard alone in ERISA denial of benefit claims under Section 502(a)(1)(B).
Justice Breyer wrote the majority opinion for the usual suspects, plus Justice Alito (wow, maybe all the bad press was getting to him?). Breyer wrote:
We here decide that this dual role [of the plan insurer] creates a conflict of interest; that a
reviewing court should consider that conflict as a factor in determining whether the plan administrator has abused its discretion in denying benefits; and that the significance of the factor will depend upon the circumstances of the particular case.
In other words, split the baby and go with a totality of the circumstances, ad-hoc, case-by-case analysis. Prediction: there will be no uniformity or predictability in these "combination-of-factors method of review" cases and the conservative bent of the lower federal courts will mean that employee participants and their beneficiaries will continue to lose these denial of benefit cases involving dual-role insurers at an alarming rate.
Court will continue to be guided by the four factors set out by Firestone (U.S. 1989):
(1) In “determining the appropriate standard of review,” a court should be “guided by principles of trust law”; in doing so, it should analogize a plan administrator to the trustee of a common-law trust; and it should consider a benefit determination to be a fiduciary act (i.e., an act in which the administrator owes a special duty of loyalty to
the plan beneficiaries).
(2) Principles of trust law require courts to review a denial of plan benefits “under a de novo standard” unless the plan provides to the contrary.
(3) Where the plan provides to the contrary by granting “the administrator or fiduciary discretionary authority to determine eligibility for benefits . . . .Trust principles make a deferential standard of review appropriate.”
(4) If “a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a ‘factor in determining whether there is an abuse of discretion.’”
Of course, it was the opacity of this decision which lead to courts of appeal to provide different opinions to what happens in the (4) instance. Although the Court correctly holds that a dual-role insurance situations creates a "conflict of interest," it does not go further than that. Justice Breyer merely states that, "we elucidate what this Court set forth in Firestone, namely, that a conflict should “be weighed as a ‘factor in determining whether there is an abuse of discretion.’” The Justice makes clear that this does not mean a change of standard (as I had advocated) to de novo review, but instead:
Trust law continues to apply a deferential standard of review to the discretionary decisionmaking of a conflicted trustee, while at the same time requiring the reviewing judge to take account of the conflict when determining whether the trustee, substantively or procedurally, has abused his discretion. In principle, as we have said, conflicts are but one factor among many that a reviewing judge must take into account. Benefits decisions arise in
too many contexts, concern too many circumstances, and can relate in too many different ways to conflicts—which themselves vary in kind and in degree of seriousness—for us to come up with a one-size-fits-all procedural system that is likely to promote fair and accurate review. Indeed, special procedural rules would create further complexity, adding time and expense to a process that may already be too costly for many of those who seek redress.
We believe that Firestone means what the word “factor” implies, namely, that when judges review the lawfulness of benefit denials, they will often take account of several different considerations of which a conflict of interest is one. This kind of review is no stranger to the judicial system. Not only trust law, but also administrative law, can ask judges to determine lawfulness by taking account of several different, often case-specific, factors, reaching a
result by weighing all together.
In the Glenn case itself, the Court affirms the Sixth Circuit's overturning the denial of benefits, stating:
The conflict of interest at issue here, for example, should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the
benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration . . . .
It should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits.
In all, the majority notes "that our elucidation of Firestone’s standard does not consist of a detailed set of instructions." Great, even more uncertainty. Perhaps Justice Breyer (who I am still angry with after Engquist) is right that there can be "no talismanic words that can avoid the process of judgment,” but the just adopted combination of factors method is unlikely to provide the relief that ERISA participants and beneficiaries sorely need through a more bright-line rule in these conflict of interest cases.
As for the other three opinions: Chief Justice Roberts concurs and agrees that there is a conflict in these situation, but would "consider the conflict of interest on review only where there is evidence that the benefits denial was motivated or affected by the administrator’s conflict." Justice Kennedy, concurring in part and dissenting in part, concludes that, "the case should be remanded so that the Court of Appeals can apply the standards the Court now explains to these facts." Finally, Justice Scalia (joined by Justice Thomas) dissents, saying that although he agrees that there is a conflict in this case, "under [trust] law, a fiduciary with a conflict does not abuse its discretion unless the conflict actually and improperly motivates the decision. There is no evidence of that here."
Kudos to John Langbein who's article, Trust Law as Regulatory Law, 101 Nw. U. L. Rev. 1315, 1323–1324 (2007) (observing that employees are rarely involved in plan negotiations), was cited TWICE in the majority opinion.
My prediction: not too bad ("Here goes nothing: 4-1-4 remedialists with a controlling concurrence by Kennedy. He seems to want to provide for a compromise by providing for certain procedural mechanisms an employer can take (a la Faragher and Ellerth) to avoid liability."). Interestingly, I didn't foresee Alito making it a majority and didn't see a Roberts concurrence. One way of reading the Kennedy concurrence is that he did not get his way and Alito made his vote less critical.
Supreme Court Brown Decision: NLRA Preemption Prevails
The Supreme Court has just decided Chamber of Commerce v. Brown, which Paul posted on earlier (I'll give him a gold star for being only one vote off in his prediction). The verdict? A 7-2 decision by Stevens in favor of preemption, with Breyer & Ginsburg in dissent. The syllabus is below and here is the decision:
Organizations whose members do business with California sued to enjoin enforcement of “Assembly Bill 1889” (AB 1889), which, among other things, prohibits employers that receive State grants or more than $10,000 in state program funds per year from using the funds “to assist, promote, or deter union organizing.” Cal. Govt. Code Ann. §§16645.2(a), 16645.7(a). The District Court granted the plaintiffs partial summary judgment, holding that the National Labor Relations Act (NLRA) pre-empts §§16645.2 and 16645.7 because they regulate employer speech about union organizing under circumstances in which Congress intended free debate. The Ninth Circuit reversed, concluding that Congress did not intend to preclude States from imposing such restrictions on the use of their own funds.
Held: Sections 16645.2 and 16645.7 are pre-empted by the NLRA.
(a) The NLRA contains no express pre-emption provision, but this Court has held pre-emption necessary to implement federal labor policy where, inter alia, Congress intended particular conduct to “be unregulated because left ‘to be controlled by the free play of economic forces.’ ” Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132, 140.
(b) Sections 16645.2 and 16645.7 are pre-empted under Machinists because they regulate within “a zone protected and reserved for market freedom.” Building & Constr. Trades Council v. Associated Builders & Contractors of Mass./R. I., Inc., 507 U. S. 218, 227. In 1947, the Taft-Hartley Act amended the NLRA by, among other things, adding §8(c), which protects from National Labor Relations Board (NLRB) regulation noncoercive speech by both unions and employers about labor organizing. The section both responded to prior NLRB rulings that employers’ attempts to persuade employees not to organize amounted to coercion prohibited as an unfair labor practice by the previous version of §8 and manifested a “congressional intent to encourage free debate on issues dividing labor and management.” Linn v. Plant Guard Workers, 383 U. S. 53, 62. Congress’ express protection of free debate forcefully buttresses the pre-emption analysis in this case. California’s policy judgment that partisan employer speech necessarily interferes with an employee’s choice about union representation is the same policy judgment that Congress renounced when it amended the NLRA to preclude regulation of noncoercive speech as an unfair labor practice. To the extent §§16645.2 and 16645.7 actually further AB 1889’s express goal, they are unequivocally pre-empted.
(c) The Ninth Circuit’s reasons for concluding that Machinists did not pre-empt §§16645.2 and 16645.7—(1) that AB 1889’s spending restrictions apply only to the use of state funds, not to their receipt; (2) that Congress did not leave the zone of activity free from all regulation, in that the NLRB still regulates employer speech on the eve of union elections; and (3) that California modeled AB 1889 on federal statutes, e.g., the Workforce Investment Act—are not persuasive.
463 F. 3d 1076, reversed and remanded.
As Paul is well aware, I generally like the theory preemption in labor and employment law (we're going to be debating the topic at the Third Annual Colloquium on Current Scholarship in Labor and Employment Law and a forthcoming series in PENNumbra). However, I think that holding that 8(c) preempts states' attempts to condition funding on employer neutrality is a stretch of the Court's precedent.
Moreover, Paul notes that "the ruling in the case does not merely mean an end to all attempts at state
regulation in the labor law field. This California law was particularly
susceptible because it in theory interfered with the ability of employer’s to
speak and that right is protected under 8(c). However, a state captive
audience law, which does not interfere with speech but just requiring employees
to listen, may come out differently." He's recently written an interesting article that sets forth that argument in detail and serves as a counter to my recent work arguing for increased preemption of state labor and employment regulation (here and here).
Hat Tip: Dennis Walsh
Humongo Day at Supreme Court for Work Law
In the decisions on workplace issues, these were the results, in summary:
** Federal labor law bars a state from curbing the rights of employers to speak out about labor union organizing by their workers. A California law imposing limits on employer speech when the companies are using state funds for that kind of message is preempted by federal labor law. The vote was 7-2 in Chamber of Commerce v. Brown (06-939).
** In a case involving a claim of age bias in the workplace, the employer not the employee has the burden of providing evidence on the issue of whether an employment action was done for reasons other than age. The Court decided Meacham v. Knolls Atomic Power Laboratory (06-1505) by a vote of 7-1, with the dissent only a partial one. One Justice did not take part: Stephen G. Breyer.
** A pension system does not discriminate illegally against older workers who become disabled after becoming eligible for retirement, when eligibility depends on the worker’s age. The ruling split the Court 5-4 in Kentucky Retirement System v. EEOC (06-1037).
** The administrator of an employee benefit plan has a conflict of interest if allowed to perform the dual role of evaluating claims and paying them. The 6-3 ruling came in MetLife v. Glenn (06-923).
No surprises, believe it or not. NLRA preemption in Brown, burden of proof on employer from RFOA in ADEA, no age discrimination in a public pension case, and a conflict of interest does exist when there is a dual-role insurer in a 502(a)(1)(B) case under ERISA.
ABA Journal, Above the Law, and Ms. JD report on the gender-charged advertising campaign of an all-woman law firm. The firm, Schroder Joseph & Associates, specializes in labor and employment law, and is catching flack for using such stereotypical taglines as "Ever Argue With a Woman?" and "Labor Pains? Talk To Us. (We're Women. We Get It.)".
June 18, 2008
End of Canadian GM Blockade
We posted earlier about tensions between the Canadian Auto Workers and GM, which closed a Canadian plant despite signing a collective-audience weeks before and promising to keep the plant open. The CAW ultimately set up a blockade at the plant, but removed the blockade yesterday to comply with a court order. The court issued an injunction requiring the removal because of the irreparable harm that the blockade could cause to GM and the community. David Doorey at Dorrey's Workplace Blog has some excellent posts providing more details (see here and here).
Incidentally, David also has a post on recent provincial attempts to eliminate card-check recognition that may be interesting to those who have followed recent debates on that topic on this blog. Always interesting to get a view of another country's experience.
Job Termination Nightmare of the Week
Courtesy of Drew Curtis' Fark.com and the Boston Herald.com (and here, too) comes the story of Michael Fiola, an investigator for the Massachussetts Department of Industrial Accidents. Fiola was fired for having child pornography on his work computer, and the state filed criminal charges against him.
Fiola’s troubles began in November 2006 when, seven years into a job probing workers’ compensation fraud, DIA gave him a replacement laptop for one that was stolen.
Months later, DIA information technology officials noted that the data usage on Fiola’s Verizon wireless bill was 4 times greater than his colleagues’. After discovering the child porn, Commissioner Paul Buckley fired him on March 14, 2007.
DIA turned the matter over to state police who, after confirming “an overwhelming amount of images of prepubescent children engaged in pornographic poses” were stored on the laptop, persuaded Boston Municipal Court to issue a criminal complaint against Fiola in August 2007.
It turns out, as his defense investigator discovered, and prosecution experts confirmed, the "the laptop was running corrupted virus-protection software, and Fiola was hit by spammers and crackers bombarding its memory with images of incest and pre-teen porn not visible to the naked eye." So, the state employer was responsible for the situation, since it was the one that installed the corrupted software in the first place. Charges were dropped, and Fiola's case was expunged, but there has been no suggestion that the state will provide some remedy for his termination. A DIA spokesperson said only, "We stand by our decision."