September 5, 2008
Unless something crazy happened during the one and a half hours after I wrote this post, approximately 27,000 assembly workers are now striking against Boeing (as of 3:00am). As our previous post and the Washington Post notes, this story, which involves a failed mediation attempt, shows how an employer insisting on cutting back compensation from its employees may be asking for trouble when its stated profits are rising at the same time:
Members of the International Association of Machinists and Aerospace Workers were prepared to strike just after 3 a.m. EST, a move that could paralyze Boeing's manufacturing plants as the company is experiencing record profits and working on what the union says is a seven-year backlog of orders.
Angry union negotiators called the strike last night after talks aided by a federal mediator failed to produce an agreement. Union members had voted overwhelmingly to strike Wednesday night but grudgingly agreed to a 48-hour contract extension to try to reach a deal. Most of the workers affected are based at plants in the Seattle area; others work in Gresham, Ore., and in Wichita, Kan. . . .
The strike marks a critical test for organized labor, which has struggled to make gains as competition for labor has expanded across the world, diminishing workers' leverage. But the Boeing electricians, riveters, painters and others are in an unusually strong position because they are skilled laborers working for a company that has been highly profitable in recent years. "This is a case where a union does have significant leverage," said Robert A. Bruno, an associate professor of labor and employment relations at the University of Illinois at Chicago. "The employer is very profitable and has the capacity to pay. And they are in a critical industry that you cannot afford to not have functioning."
Boeing officials said their three-year contract offer, which included an 11 percent wage increase and a 3 percent cost of living increase, plus potential bonuses, was generous for workers who earn an average of $56,000 a year before overtime. The union, however, had pressed for more, including a commitment to limit the use of outside contractors. The union also said the company's proposal was riddled with givebacks -- on pensions and the cost of health insurance, for instance -- which infuriated workers who expected more from a company that reported more than $900 million in profit in the last quarter. . . .
It'll be interested to see what happens. As highly skilled workers, the strikers have more leverage than most workers. On the other hand, Boeing isn't exactly known for capitulating for union demands. I remember living in Seattle the year that Boeing managed to tick off its engineers--who aren't usually known for their rabble-rousing unionism--enough to go on strike.
SCOTUS Says No to SG Request for Argument in Union Dues Case
Tony Mauro on the Blog of the Legal Times reports that the Supreme Court has denied the Solicitor General's request to present argument in Locke v. Karass, a case in which deals with whether the fees paid by non-union members of a bargaining unit to cover the cost of collective bargaining can be used for litigation that does not directly benefit their bargaining unit.This denial is noteworthy because such denials are very rare. Usually, if the SG wants some time, the Supreme Court is only too happy to provide it.
According to Mauro, the employees who challenged the use of their money objected to the SG's participation, and the interest group supporting them (the National Right to Work Foundation) has said that the request (and brief filed by the SG) was "yet another example of the Bush Administration doing the bidding of labor unions in disputes over mandatory union fees."
Hmmmm. The Bush administration doing the bidding of labor unions? Seriously? Wow.
More Bad Employment Numbers
DOL has just released its August employment figures, and they're not pretty. Unemployment now stands at 6.1% (up from 4.1% a year ago), which is a five-year low. Real wages still seem to be declining. World equity markets are taking a dive. Retail sales are sluggish. You know it's bad when reports include as a few "good" signs that certain industries (like construction) didn't slash as many jobs as most industries and that gas prices aren't quite as high as they have been.
Whether Discrimination Filings are Down or Up Depends on Where, When, and What Filing You Mean.
Paul reported yesterday that the 2006 figures for employment discrimination filings in federal court were down and expressed skepticism of whether this was a sign that discrimination was less, positing instead that employees were just learning that they couldn't win in federal court.
Well, a recent article in the Houston Chronicle suggests that the numbers of court filings, in Houston at least, this year will be higher than last, and that the numbers of charge filings in 2007 and current inquiries at the EEOC, arguably a better measure than filings in court of whether people feel they've been discriminated against, are up. The EEOC's data show about a 9-ish% increase in charges filed in fiscal year 2007 from 2006. And according to the article, inquiries to the Houston's EEOC regional office are up around 30-ish%.
The Chronicle suggests the increase might be due to the poorer economy, quoting people who said: "When the economy takes a downturn, it's harder to find a new job quickly, and complaints tend to rise" and "When times are good, you can go get another job, and it doesn't matter that much if you were treated unfairly." The article also credits outreach efforts by the EEOC, easier access to information from the EEOC online, and easier telephone and e-mail access to the EEOC. The article further notes that employment discrimination cases are very difficult to win, though--in support of Paul's observation.
AT&T: Big Talk, Discriminatory Actions
AT&T publicly advertises its commitment to diversity in the workplace and has been ranked among the top 40 "best diversified" companies, but a Dallas County jury did not find this dispositive in the racial discrimination, hostile work environment and retaliation suit filed against it. The jury ordered AT&T to pay over $400,000 in damages to an employee after finding race was a motivating factor in the company's repeated failure to promote her.
Evidence was presented that Lakecious Edwards, an eight-year veteran sales representative, was passed over on three separate occasions for promotions that went to Caucasian employees, two of whom were under disciplinary review. When another job opening was posted, the same supervisor intentionally told other AT&T managers that Ms. Edwards was not interested in the position.
It appears that the jury rightfully recognized that because there was a tangible employment action taken in this case, no affirmative defense was available to AT&T and therefore, AT&T's actions lead to a Title VII violation. It is interesting to note that even if there had been no tangible employment action, the Faragher/Ellerth affirmative defense would probably not have been available to AT&T. While it appears that it had a system in place to report harassing behavior, in this case AT&T failed to properly investigate complaints that were filed by Ms. Edwards and others regarding this supervisor's behavior.
As Ms. Edwards's lawyer stated, "We hope that this verdict sends a message to AT&T that...their diversity commitment needs to be more than window dressing." Hopefully this verdict goes beyond AT&T and sends a message to all companies to accompany good diversity talk with sincere diversity action.
Federal Judge Indicted for Harassment-Related Sex Crimes
Last year, we reported that the Fifth Circuit had reprimanded and admonished U.S. District Judge Samuel B. Kent (Galveston) for having sexually harassed his case manager. Now, from the Houston Chronicle, comes word that Judge Kent has been indicted "on charges of abusive sexual contact and attempted aggravated sexual abuse of a female employee, making him the first federal judge to be charged with federal sex crimes and the first in Texas indicted in recent history."
Hat tip: John Beckerman.
Is Union Membership Rebounding in the US?
Buoyed by a rising tide in California in general and Southern California in particular, U.S. unionization levels rose substantially this year, defying a decades-long trend of decline, according to a report by UCLA's Institute for Research on Labor and Employment.
"The State of the Unions in 2008: A Profile of Union Membership in Los Angeles, California and the Nation" shows unionization rates nationwide rising half a percentage point over the 2007 level, to 12.6 percent of all U.S. civilian workers in 2008. The rate rose one-tenth of a percentage point between 2006 and 2007. Prior to that, the last time U.S. unionization rates registered an increase was in 1979.
"This is good news for organized labor," said Ruth Milkman, lead author of the report and outgoing director of the UCLA labor institute. "It shows that despite an extremely hostile environment, unions can grow."
Milkman and UCLA sociology graduate student Bongoh Kye analyzed U.S. Current Population Survey data on union membership for California, Los Angeles and the nation. They report unionization rates by race, immigration status, gender, age and education for the first six months of 2008. This year's report and earlier such studies of unionization data going back to 1996 are available at www.irle.ucla.edu/research/unionmembership.html.
According to the report, in the first half of 2008, the number of U.S. workers on the membership rolls of labor unions increased by 583,300 over the 2007 average.
Fueling the nationwide increase was the recent growth in unionization in California, which currently accounts for 16 percent of all the nation's union members, more than any other state. California's unionization rate in 2008 is 17.8 percent, up from 16.7 percent in 2007 and 15.7 percent in 2006.
I wonder if this increase might be in anticipation of new labor law reform with a new administration and Congress? Or it is more likely that this a regional phenomenon with most of the growth coming in states where unions are already strong?
Time will tell is this is a blip or the start of a trend.
Hat Tip: Ravi Malhotra
The Des Moines Register reports that Iowa Central Community College President Robert Paxton will collect $400,000 from the school in return for his resignation.
The resignation was prompted by the Register's publishing of a July 4 photograph of Paxton aboard a boat with a group of young people, holding the spigot of a small beer keg suspended over a young woman’s open mouth. Paxton said the beer keg was broken and wasn’t dispensing beer into the young woman’s mouth. He said his 19-year-old son, who was arrested for second-offense drunken driving early the next morning, was in the boat but was not drinking.
And I'm certain he didn't inhale.
Ellen Dannin writes to give us a heads-up on a couple of items from the American Constitutional Society. First, Barry Roseman (an attorney an Denver), has written for the ACS Just Cause in Montana: Did the Big Sky Fall? He argues that states (such as Montana) that adopt a just cause discharge standard do not put their employers at competitive disadvantage compared to other states. Second, Ellen has posted on the ACS Blog Privatization and Its Costs, arguing that the OMB's happy-face gloss on the fiscal "savings" from privatizations (for example, the IRS's mailroom) does not account for some of the most significant costs involved in privatizations, such as the cost planning for the privatization and the inevitable exodus of talented employees.
September 4, 2008
Worklife Balance, Employee Benefits, and Google’s Strange Choice
Cross-posted at Examiner.com
Google has placed number one on Fortune’s list of the "100 Best Companies to Work For" for two years in a row, now. In 2007, it was the company’s unusual perks, like free meals, a swimming spa, free doctors, and the prerogative for engineers to spend 20% of their time on their own projects that set the company apart. In 2008, the magazine focused on the generous stock options coupled with great stock performance. And that’s why this summer’s controversy over Google’s daycare benefit came as something of a surprise.
Earlier in the summer, Google announced to its employees that it was going to have to raise the employee contribution to the cost of onsite daycare 75%. The tuition for an infant would rise from from $1,425 per month to almost $2,500 per month and the tuition for preschoolers would rise from just over $1,000 per month to about $1,700 per month. This move would price many of the workers out of the benefit. The childcare didn’t start much below market rates and would move to much above.
Not surprisingly, Google employees revolted, but the company didn’t budge much, eventually settling on a 68.34% hike, according to valleywag.com, which has posted internal e-mails discussing the changes. A vocal group of employees went to the media, and the last word from Wired.com is that Google has proposed building a new facility down the road. Employees suggest that a particular vice president wants the extremely high-quality daycare for her own child and is not willing to accept the less extravagant care preferred by the overwhelming majority of employees.
To suggest that onsite childcare is an employee benefit at Google after this would be illusory, something that the management seems to have recognized, since it no longer advertises it as a benefit. That loss is sad, but the story would have a wonderful ending if this event sparked a real discussion about childcare and work within Google and outside of it—what should childcare look like and how much should it cost? Who can afford it, and is it enough of a productivity booster that the employers should facilitate it and national policy should support it? These questions and more are things we’re just beginning to talk about, and I’d like to see the discussion begin in earnest.
Federal Bias Claims Down, But What Does That Mean?
After reaching a peak of more than 23,000 employment discrimination lawsuits filed in federal court in 1997, that number has dropped to 14,353 in 2006, the Justice Department reports.
Analyzing federal district court data, the Bureau of Justice Statistics (BJS) says that following passage of the Americans with Disabilities Act, the Civil Rights Act of 1991, and other civil rights laws, such suits doubled in the 1990s and then held relatively steady through 2003. Since then, however, the number of civil rights suits filed in federal court has declined 20 percent, BJS reports.
Employment discrimination suits, which account for about half of all federal civil rights suits, numbered about 20,000 cases each year through 2003, but the number of job bias suits filed has dropped each year since then, BJS says.
More civil rights cases were tried before juries in 2006 than in 1990, a development the report attributes to the 1991 act, which made jury trials available for Title VII and Americans with Disabilities Act claims. Employment discrimination plaintiffs were most likely among civil rights plaintiffs to recover damages, BJS says. From 2000 to 2006, the estimated median award for prevailing job bias plaintiffs was $158,460, BJS reports.
I have to say that I am skeptical that the incidence of discrimination in the workplace has diminished. My studies of whistleblower and First Amendment speech claims by federal employees suggest instead that employees have either given up thinking they can receive a fair shake from the agencies of this government or the conservative courts. On the other hand, some are pursuing alternative routes like negotiated collective bargaining procedures.
Strike Averted at Boeing
According to the New York Times, the union at Boeing workers in Washington, Oregon, and Kansas voted to reject the company's latest contract offer. The vote was overwhelmingly, 80 percent, in favor of rejecting it. And 87 percent voted to strike, even after Boeing had appealed directly to the workers to accept the offer and to reject the union leaders' recommendation to strike. The proposed contract would have covered 27,000 workers. The strike would have begun early this morning, but instead of calling the strike, union leaders agreed to return to the bargaining table. The Federal Mediation and Conciliation Service is attempting to mediate the talks, and it requested the return to the table.
According to the article,
The decision temporarily spares Boeing from further delays in the development of an important new aircraft, the 787, known as the Dreamliner. However, it likely heightens pressure on Boeing to meet the union’s demand for a better offer on wages, pensions and job security.
. . .
The plane, Boeing’s first new jet in more than a decade, is a long-range plane that is intended to be 20 percent more fuel efficient than previous Boeing jets. Introduced with fanfare in the middle of this decade, the Dreamliner is more than a year late.
Its first test flight is scheduled late this year, and the first deliveries are set for the third quarter of 2009. Boeing has nearly 900 orders for the plane, whose main United States customer is Northwest Airlines.
Every additional day that the plane is pushed back will cost Boeing about $100 million, analysts said.
Talks between Boeing and the machinists were marked by unusual candor and confrontation about offers and demands at the bargaining table.
. . .
The terms of the three-year contract [Boeing proposed] include an 11 percent raise, up from an earlier offer of 9 percent, for the average machinist, who earns about $27 an hour, or $56,000 a year.
Boeing also proposed an increase in pension financing, as well as a proposal for workers to take on more of their health care expenses.
The union, meanwhile, has pushed for a 13 percent raise and richer pensions, and is balking at higher medical expenses. The current contract was extended while talks continue.
One union leader said the union would give Boeing 48 hours to make a new proposal and come to an agreement, and if it doesn't, the strike will begin early Saturday.
DOL Refuses to Enforce Whistleblower Laws Against Corporate Subsidiaries
Congratulations to Richard Moberly. His scholarship on the whistleblowing provisions of Sarbanes-Oxley serves as the basis of a page 3 article in today's Wall Street Journal about how the Department of Labor is routinely dismissing whistleblower complaints filed by employees at coroprate subsidiaries:
The Department of Labor, charged with enforcing the federal law protecting corporate whistleblowers at publicly traded companies, has been dismissing complaints on the technicality that workers at corporate subsidiaries aren't covered.
The government has ruled in favor of whistleblowers 17 times out of 1,273 complaints filed since 2002, according to department records. Another 841 cases have been dismissed. Many of the dismissals were made on the grounds that employees worked for a corporate subsidiary, says Richard Moberly, a University of Nebraska law professor. He studies issues involving workers who face retaliation from employers for reporting wrongdoing, and based his findings on department data. The rest of the cases are either pending, withdrawn or were settled.
Sen. Patrick Leahy, a Vermont Democrat who helped craft the whistleblower provision -- part of the Sarbanes-Oxley corporate governance act -- says the law was meant to cover workers in corporate subsidiaries. "Otherwise, a company that wants to do something shady, could just do it in their subsidiary," he said.
For the entire WSJ article, see Jennifer Levitz, Whistleblowers Are Left Dangling (subscription required).
Costs and Benefits of the FMLA
On the heels of Bird & Knopf's surprising finding that the costs of disability laws are much higher than expected comes a new study by Jeffrey Eisenach (Criterion Economics; adjunct at George Mason) finding the same true of the FMLA. His article, just posted on SSRN, is Assessing the Costs of the Family and Medical Leave Act. Here's the abstract:
The [FMLA] allows eligible workers employed by covered establishments to take up to 12 weeks of unpaid leave per year. Employees may become eligible for FMLA leave when either the employee or a family member suffers from a serious health condition. Additional qualifying events include family-related responsibilities, such as the birth or adoption of a child. Various aspects of FMLA, as enforced by the Department of Labor, have become controversial, including specifically the provisions permitting employees to take "intermittent" leave for recurring health conditions. This paper reviews existing evidence on the benefits and costs of FMLA, concluding that the costs are likely much greater than the Department of Labor has acknowledged.
September 3, 2008
EEOC Issues ADA Guide
The U.S. Equal Employment Opportunity Commission today issued a comprehensive question-and-answer guide addressing how the Americans with Disabilities Act applies to a wide variety of performance and conduct issues.
reviews relevant ADA requirements and explains how they govern performance and conduct standards as applied to employees with disabilities. Through examples based on actual cases and specific scenarios that the EEOC has learned about from employers and individuals with disabilities, this guide explains when and how performance and conduct standards should be applied and the appropriate role of reasonable accommodation. The guide explains how and when employees should request accommodations to help them meet performance requirements and comply with conduct rules, and how an employer should handle such requests.
Other topics addressed include issues related to attendance, dress codes, and drug and alcohol use, and the circumstances in which employers can ask questions about an employee’s disability when performance or conduct problems occur.
More Sovereign Immunity Fun
Most readers of this blog are all-too-aware of the havoc that the Supreme Court's state sovereign immunity jurisprudence has wreaked upon labor and employment law. Former Chief Justice Rehnquist's absence seems to have quieted the Court's action in this area, but the wake of its previous rulings are still rippling in the lower courts. The latest is a decision by the Third Circuit, Lombardo v. Commonwealth (Aug. 25, 2008). The plaintiff in Lombardo sued Pennsylvania in state court under the ADEA and state human rights act. The state removed the case to federal court, which normally means that they waive any sovereign immunity claims.
The Third Circuit acknowledged the waiver rule, but basically nullified it by distinguishing the waiver of a lawsuit, which removal can achieve, from the waiver of sovereign immunity, which requires a "clear and unmistakable" waiver. In essence, what this holding means is that a state that removes a case can't raise the issue of sovereign immunity itself, but a court can sua sponte. The court recognized that other circuits have gone the other way, although its position isn't totally unreasonable given the Supreme Court's holdings in the area (but those holdings could even more easily fit the opposite conclusion). What this shows is how nutty the entire sovereign immunity field has become. It's about the Eleventh Amendment, except when it's not. It's about subject matter jurisdiction, except that it can be waived by a party. Maybe.
For a set of Justices that talk a lot about limited judicial authority vis a vis the legislature, it would be nice for them to take a step back to see just how much they've forced courts to override the clear intent of Congress in these cases.
Arbitrating Retirees' Health Benefits
Today's Daily Labor Report explains the significance of yesterday's Seventh Circuit decision of Exelon Generation Co. v. Int'l Bhd. of Elec. Workers Local 15, 7th Cir., No. 07-4065, 9/2/08). The court held that the union is not required to obtain the consent of some 6000 retirees before it can arbitrate with Exelon Generation Co. over the company’s unilateral modification of the retirees' entitlement to health benefits.
Hybrid Union Representation Procedure?
As further proof that California is unique in its development of labor and employment law, a bill has just landed on Governor Schwarzenegger's desk that would provide farmworkers with a new option for seeking union representation. It's a compromise that arose from the ashes of an attempt to implement card-check representation and goes some of the way in addressing concerns of union intimidation with a card-check. As described by BNA's Daily Labor Report (subscription required):
Legislation (S.B. 2386) that would allow farmworkers to seek union representation in secret mail-in ballots that ask either for immediate representation or for a traditional ballot box election is on the way to California Gov. Arnold Schwarzenegger's (R) desk after receiving final approval from the Assembly Aug. 29. . . .
The bill keeps intact the ballot box election process in current law, but creates a second option called a mediated election. Under this option, a majority of an employer's workers could file a petition with the Agricultural Labor Relations Board asking for a mediated election. Employees then would have five days to deliver or mail ballots to ALRB, and ALRB would have five more days to gather ballots to account for mailing time.
If more than half of eligible employees vote on those ballots for union representation, ALRB would be asked to certify the vote immediately as an election. If more than half of eligible employees vote for a secret ballot election, ALRB would conduct such an election within seven days.
It's an interesting idea and if more states were doing things like this, I might not be so gung-ho about kicking them out of the business of regulating labor and employment law. There are a few aspects of this bill, however, that make me doubt that it's going to make a significant difference. First, the requirement that a majority of employees to sign a petition for the new procedure means that many of the problems with employer intimidation and unions' lack of access that we currently see under the NLRA will be a problem here. Second, the bill requires a majority of eligible voters to actually vote before even opening the mailed-in ballots. I don't know for sure, but I imagine that getting over half of all employees to mail something in may be hard in certain cases. Despite these concerns, I hope the governor signs the bill, as it can only help farmworkers and I'd love to see how this ends up playing out.
Hat Tip: Dennis Walsh
Can a Worker Get a Break? (Take Two)
Cross Posted: Marquette University Law School Faculty Blog
A follow up on yesterday's post discussing stagnating wages and later retirement ages (this one from the Washington Post):
Six months ago, Ivan Sanchez was optimistic about his future. He had recently earned a bachelor's degree in business management and was writing a book about growing up among gangs and guns in the Bronx.
Then he was threatened by something else: a credit card bill, student and car loan debt, higher gas bills and rising rent. With two high school age children in need of clothing and school supplies and a toddler in need of much more, it didn't take very long for Sanchez's optimism to fade. That's when he decided to do what any financial planner would advise against: He dipped into his 401(k) retirement plan.
"There's no other way I could do it," said Sanchez, a 35-year-old Virginia Beach resident.
Hard economic times are driving some people to take actions that could jeopardize their futures. With home equity lines of credit and other types of loans harder to get, employees are increasingly raiding their retirement plans to take care of immediate needs such as paying down debt and medical bills, staving off foreclosure, or simply covering higher food and fuel prices.
It sounds like a necessity in this case and other cases where financial need overwhelms other consideration. But consider this chart I posted a while ago about the impact of higher mutual fund fees. The same impact is felt when 401k assets are withdrawn before maturity. Moreover, participants must pay a 10% excise tax, in addition to pay income tax on the distribution if before age 59.5.
This is expensive money! A person is probably better off taking a loan from the bank at a lower interest rate if possible.
Hat Tip: Dennis Walsh
September 2, 2008
Can a Worker Get a Break?
Cross posted on: Marquette University Law School Faculty Blog
Apparently, they should not expect one in 2009 (or maybe not in this lifetime).
U.S. workers can expect skimpy raises in their base salaries next year, but top performers may still fatten their paychecks with merit compensation.
A study released Tuesday by Hewitt Associates, a human resources consulting firm, found base pay will rise by 3.8 percent in 2009, marking the seventh consecutive year of flat growth.
One-time performance-based pay, however, is expected to grow by 10.6 percent. That’s down slightly from 10.8 percent this year and 11.8 percent in 2007.
Great. On our way to more pay inequality in this country and to a place where workers will have to wait longer before being able to afford retirement (Yahoo! News via AP):
While the average retirement age remains 63, that standard may soon be going the way of the gold watch — a trend expected to accelerate asclose in on retirement without sufficient savings.
For 64-year-old John Lee, "retirement" bears a strong resemblance to his full-time working career — full of 40- and 50-hour weeks as an IT technical support specialist. He's not strapped but likes the extra cash and the feeling of being needed.
But for Melissa Fodor, a retired travel agent who works part-time as a caregiver for the elderly, the extra work "keeps my head above water" and there's no end in sight to that financial need at age 68.
Although the work is satisfying, she confides that "financially I'm kind of scared most of the time. Because what should happen if my health and my body fail?"
Lower wages on a yearly basis are not the only reason for individuals working longer. The ascendence of consumer driven 401(k) pension plans means that when the market suffers a downturn (like now), workers have less to retire on.
Consider from your daily experiences how many more older people you see these days working at Lowe's, McDonalds, etc.