January 21, 2012
Board GC Seeks Changes in Deferral Policy
Citing concerns about delays in processing grievances through parties’ contractual grievance-arbitration procedures, NLRB Acting General Counsel Lafe Solomon has proposed that the Board consider revising the existing policy of deferring charges to arbitration in certain circumstances.
When it is anticipated that charges alleging violations of Section 8(a)(1) and (3) – which include discharges or other discrimination based on union activities -- will not be resolved or arbitrated within a year, Acting General Counsel Solomon would urge that the Board not defer the case, but rather decide the case on the merits. He would also apply the new policy to cases that have already been deferred for more than one year. AGC Solomon specifically targeted cases involving issues of unlawful discrimination and interference with workers’ protected rights because they are significant and uniquely within the Board’s expertise.
A 2-Fer on Equal Pay
Deborah Eisenberg (Maryland) has just posted on SSRN two articles dealing with equal pay issues. The abstracts are posted after the break; the articles are:
- Money, Sex, and Sunshine: A Market Based Approach to Pay Discrimination, 43 Ariz. St. L.J. 951 (2012).
- Lessons from Wal-Mart Stores v. Dukes About the Legal Quest for Equal Pay, 46 New England L. Rev. (forthcoming 2012).
rbMoney, Sex, and Sunshine: A Market Based Approach to Pay Discrimination, 43 Ariz. St. L.J. 951 (2012).
The Equal Pay Act had a distinct market purpose. Congress made a policy choice to modify the existing compensation market so that employees who perform jobs requiring substantially “equal skill, effort, and responsibility” earn equal wages, regardless of sex. The Act aimed not simply to promote individual fairness, but to foster a more efficient, equitable wage market on a systemic level. Congress recognized that paying lower wages to women constituted “an unfair method of competition,” burdened “commerce and the free flow of good in commerce,” and prevented the “maximum utilization of available labor resources.” Over time, however, the “market” in equal pay cases has been transformed from the fundamental reason for the Act to an acceptable business defense for paying women less. At the same time, pay discrimination is conceptualized today in the rhetoric of “fairness,” which overshadows the core market purpose of the Act.
This Article contends that equal pay laws have failed in their market purpose and will continue to fail so long as reform is centered solely on a litigation-enforcement model. The Article reframes pay discrimination as a market failure caused by insufficient and asymmetric information about the value of work, rather than an individual fairness concern. It explores lessons that can be learned from executive compensation scholarship, which offers more sophisticated analyses of the causes of abusive pay practices. Executive pay scholars have exposed: (1) the human dynamics and conditions that cause compensation markets to fail; (2) the ineffectiveness of litigation to fully address abusive pay because of court reluctance to interfere with “business judgments” about compensation; and (3) the crucial role of transparency as a market-based tool to reform abusive pay practices.
Applying these lessons in modified form, the Article examines how pay secrecy distorts compensation markets and permits pay discrimination to flourish, even in the absence of intentional sex discrimination. Given the increasing ineffectiveness of equal pay litigation, it analyzes how pay disclosure and transparency can be used to promote a more efficient compensation market in which employees are appropriately valued and rewarded without the taint of discriminatory factors.
Lessons from Wal-Mart Stores v. Dukes About the Legal Quest for Equal Pay, 46 New England L. Rev. (forthcoming 2012).
The Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes provides a unique opportunity to reflect on whether and how the legal system should address unjustified pay disparities between men and women who perform similar jobs. This Article describes the Court’s decision and analyzes the insights it offers about the legal quest for equal pay. First, Wal-Mart demonstrates the tension between Title VII’s focus on the employer’s intent and the economic realities of how pay discrimination happens in the modern workplace. As the women at Wal-Mart experienced and research confirms, pay disparities tend to be the greatest when employers delegate excessive, unchecked discretion to supervisors. Second, Wal-Mart exemplifies how litigation remedies tend to be ineffective for pay discrimination because of the intent requirement of Title VII, the prima facie standard of substantially equality under the Equal Pay Act, the broad “factor other than sex” defense, and procedural difficulties for group actions.
This Article proposes a blueprint for a more effective remedy for pay discrimination that would: (1) provide incentives for self-regulation by employers, such as pay transparency and periodic compensation audits; (2) limit defenses to those that are job-related and consistent with business necessity; (3) incorporate a pragmatic interpretation of equal work; and (4) facilitate group actions for systemic pay discrimination.
January 20, 2012
Part 2 of Feuer on Tax Qualification of Pension Plan Trusts
Following last week's Part 1, Albert Feuer has posted Part 2 of his new Tax Management Weekly Report article, "Scriveners’ Errors, Drafting Errors, Operational Failures, Retroactive Amendments, Reformations, ERISA, and the Tax Qualification of Pension Plan Trusts." According to the abstract:
Part II focuses on how the courts do and should resolve assertions that benefit entitlements are not determined by the “unambiguous” terms of an ERISA plan’s governing documents other than equitable estoppel claims, which make benefit-like claims based on misbehavior of plan representatives. Such assertions by plan fiduciaries to reduce benefits that accrued under the terms of the plan’s governing documents are often described as a request to apply the “scrivener’s doctrine.” If the court accepts such application, the acceptance raises operational failure issues because prior to the court decision, the plan presumably failed to follow the superseded terms of the governing documents.
The Revenue Procedure presenting the EPCRS should remind plan sponsors and administrators that the Service lacks the authority to equitably reform pension plans to reduce accrued plan benefits. Court approval is required for such reductions, and it is questionable whether such approval should ever be available. Plan sponsors lack authority under ERISA to seek equitable reformations. ERISA fiduciaries may only act for the exclusive purpose of providing benefits to participants and their beneficiaries pursuant to the terms of the plan governing documents. Thus, no one, who would desire such reformation, has the authority to seek such a reformation. Nevertheless, such approval has been granted by the Seventh Circuit and has been considered by other circuits without any discussion of this issue.
Part II also summaries how the Service may use its resources more effectively to encourage employers to provide tax qualified plan benefits, and thereby have pension plans satisfy the ERISA requirements that are similar to tax-qualification ones. First, reduce the barriers for plan administrators and sponsors who wish to correct operational failures, such as by providing one-stop shopping to users of the Service’s compliance programs, presenting more pre-approved correction methods, encouraging retroactive correction amendments that do not diminish accrued benefits,and providing that such amendments will not cause pre-approved plans to be treated as individually designed, and reminding users that a court decision that a plan has violated the plan’s governing documents means that there was an operational failure, which may have not been fully corrected by the decision. Second, reduce the barriers for the Service to discover operational failures and monitor their correction, such as by requiring plan administrators and sponsors to disclose (1) operational failures pertaining to benefit payments, and (2) their use of self-correction methods.
AALS Section Officers
Following the recent AALS Annual Meeting, the two labor and employment related sections have a new set of officers. The Section on Employment Discrimination has Sandra Sperino as Chair, Deb Widiss as Chair-Elect, Angela Onwuachi-Willig as the Secretary-Treasurer, and the following on the Executive Committee: Camille Gear Rich, Robin Lenhardt, Sophia Lee, and Kerri Stone. The Section on Labor Relations and Employment Law has yours truly as Chair, Peggie Smith as Chair-Elect, Rebeccas Lee as Secretary-Treasurer, and the following on the Executive Committee: Ken Casebeer, Ken Dau-Schmidt, Michael Green, Monique Lillard, and Ann McGinley.
Kodak Bankruptcy Motivated by Retiree Benefits
Today's Wall Street Journal (subscription required) reports:
Here's one way of understanding Eastman Kodak Co.'s problems: The company has twice as many retirees drawing benefits in the U.S. as it has active employees world-wide.
Now, it hopes to scale back what it owes retirees during its stay in bankruptcy court. That leaves thousands of its former employees in danger of becoming the next group of Americans to see their promised retirements benefits—mainly health care—disappear.
Cheverud on Tax Liability in Employment Awards
Eirik Cheverud (8th Cir. Staff Attny's Office) has just posted on SSRN his Note (NYLS L. Rev.) Increased Tax Liability Awards after Eshelman: A Call for Expanded Acceptance Beyond the Realm of Anti-Discrimination Statutes. Here's the abstract:
When an employee suffers an unlawful adverse employment decision, her remedy generally lies in a backpay award. These awards are normally provided in one lump sum, which in turn is taxed as income in the year received. Often, the result is this: the employee would have paid less in taxes if no illegal action had occurred. This law review note details the historical background of this problem (an interesting romp of U.S. tax-policy history), and discusses how courts have begun to address it using increased tax liability awards (ITLAs) -- an additional monetary award increasing a plaintiff's backpay award, intended to offset the negative tax consequences of the backpay award's lump-sum distribution. It next weighs arguments made by courts that have rejected ITLAs, and demonstrates how the reasoning in Eshelman v. Agere Systems, a recent Third Circuit case announcing the availability of ITLAs under anti-discrimination statutes, effectively counters those courts' concerns. The note goes further to suggest that courts could, and should, provide ITLAs under most employment statutes (as opposed to being limited to the anti-discrimination context, which thus far has been the only area where courts, and even most scholars, have addressed ITLA applicability), including the Employee Retirement Income Security Act (ERISA), the Fair Labor Standards Act (FLSA), and the National Labor Relations Act (NLRA).
January 19, 2012
EEOC Seeks Input on Draft Strategic Plan
Comments must be submitted by 5:00 pm ET on February 1, 2012 at email@example.com or by mail to Office of the Chair, U.S. Equal Employment Opportunity Commission, 131 M Street, NE, Washington, DC 20507. This draft plan has not been approved by the Commission and is still under review.
The Strategic Plan serves as a framework for the Commission in achieving its mission by focusing on strategic law enforcement, education, and outreach, and efficiently serving the public. The EEOC has served as the nation’s lead enforcer of employment antidiscrimination laws and chief promoter of equal employment opportunity (EEO) since 1965. Every four fiscal years, Congress requires Executive departments, government corporations, and independent agencies to develop and post a strategic plan on their public website. These plans direct the agency’s work and lay the foundation for the development of more detailed annual plans, budgets, and related program performance information in the future. The EEOC is currently operating under the Strategic Plan for Fiscal Years 2007 - 2012, as modified in July 2008.
The process for developing this plan has been highly inclusive and collaborative. The plan was created by work groups comprised of staff from the EEOC’s headquarters and field offices, with a broad range of internal and external expertise and understanding of the programs and activities conducted within the agency. We are now continuing this inclusive effort by soliciting comments from our public partners, including advocacy groups and individuals. Your input is vital to our efforts to ensure accountability to our nation’s workers, employers, and taxpayers in general.
For general inquiries about the plan, please email firstname.lastname@example.org or call (202) 663-4070/(TTY: 202-663-4494). For press inquiries, please contact the Office of Communications and Legislative Affairs at (202) 663-4191 or email@example.com. If you are private citizen seeking EEOC information, please call (202) 663-4900 or firstname.lastname@example.org. Further information about the EEOC is available on its web site at www.eeoc.gov.
And from the plan itself, a description of its purpose:
The United States Equal Employment Opportunity Commission (“the EEOC”) is pleased to release its Fiscal Years 2012-2016 Strategic Plan (“the Strategic Plan”). Since 1965, the EEOC has served as the nation’s lead enforcer of employment antidiscrimination laws and chief promoter of equal employment opportunity (EEO). The Strategic Plan establishes a framework for achieving the EEOC’s mission “to stop and remedy unlawful employment discrimination,” so that the nation might soon realize the Commission's vision of “justice and equality in the workplace.”
Penn State Sympoisum: Arbitration After Concepcion
Penn State Law will host a symposium February 22, 2012 on U.S. Arbitration Law in the Wake of AT&T Mobility vs. Concepcion. The Symposium, sponsored by the Penn State University Yearbook on Arbitration and Mediation, features an agenda with four panels speakers who will cover:
- The Impact of AT&T Mobility on Federalism Interests.
- The Consequences of AT&T Mobility on Procedure in Multi-Party Litigation.
- Procedural Fairness After AT&T Mobility.
- The Likely Legacy of AT&T Mobility.
Here's a description of the symposium:
The 2011 Supreme Court decision in AT&T Mobility vs. Concepcion last year has potentially changed the legal landscape in a number of areas including class actions and arbitration agreements between consumers and businesses. Renowned U.S. Legal Scholars will convene for the U.S. Arbitration Law in the Wake of AT&T Mobility vs. Concepcion.
Speakers include: John D. Feerick, Arthur W. Rovine, Richard Bales, Richard Reuben, Chris Drahozal, Jill Gross, Hiro Aragaki, Steve Bennett, Sandra Partridge, Terry F. Moritz, & Michael Helfand.
We know that public and private pensions are feeling a world of underfunded hurt right now. So are state unemployment compensation funds, according to the report Unemployment Insurance and the Great Recession (December 2011) of the Urban Institute by Wayne Vroman:
This issue brief examines the unprecedented funding problem of state unemployment insurance (UI) programs. The majority of UI programs (36 of 53) have borrowed, securing record loan amounts to maintain unemployment insurance benefit payments during 2009-2011. It identifies the causes of the funding problem, discusses borrowing options for states and describes policy responses at both the state and federal levels. State actions have included both tax increases and benefit reductions. Federal policy proposals have addressed the low UI taxable wage base in most states and have offered partial debt forgiveness in return for state actions to improve solvency. To date, policy actions have been slow at both the state and federal levels of government.
Hat tip: Carol Furnish.
UNLV Symposium: Democracy & the Workplace
The UNLV Saltman Center for Conflict Resolution will host a symposium February 23-25, 2012 on Democracy and the Workplace. Here's the weblink; here's the list of stellar panels and speakers; and here's the symposium description:
Collective bargaining has become an issue in the United States, riots have roiled Britain, and the Arab spring continues to change politics in many ways. Protests by people who work and who are out of work are becoming more common. To explore the connection between having a voice at work and a voice in democracy, the Saltman Center will host a symposium at the William S. Boyd School of Law at the University of Nevada, Las Vegas from Thursday, Feb. 23 to Saturday, Feb. 25. Leading scholars and practitioners in labor and employment law, human resource management, dispute resolution, dialogue and deliberation, and democracy will speak on the topic.
January 18, 2012
SEC Publishes for Comment Proposal to Exempt Collective Employment Actions from FINRA Arbitration
In a Federal Register notice issued last week, the SEC published for public comment a proposal to amend Rule 13201 of the FINRA Code of Arbitration Procedure for Industry Disputes to expressly preclude employees of FINRA members from arbitrating collective actions arising under the Fair Labor Standards Act, the Age Discrimination in Employment Act or the Equal Pay Act of 1963. The impetus for the rule change was a November 2010 decision by a U.S. District Court for the Southern District of New York (Hugo Gomez et al. v. Brill Securities, Inc.,No. 10 Civ. 3503, 2010 U.S. Dist. LEXIS 118162(S.D.N.Y. Nov. 2, 2010)) holding that a collective action was not a “class action” within the meaning of Rule 13204 of the Industry Code. In its ruling, the court ignored long-standing Interpretive Guidance from FINRA that it intended to include collective actions within the meaning of Rule 13204′s preclusion of class action arbitration.
FINRA’s rule change proposal is a glimmer of good news for individuals seeking to vindicate through consolidated actions small dollar-value claims in the wake of the Supreme Court’s AT&T Mobility v. Concepcion decision precluding states from invalidating class action waivers in arbitration agreements on unconscionability grounds.
In other words, under the proposed FINRA rules, employees would be permitted to litigate the collective-action claims that are carved out of arbitration.
Fired for Working Through Lunch
Good Morning American carried a story a couple of days ago about an Illinois appellate court's reversal of the denial of unemployment compensation (i.e., she got her unemployment) to a woman (Sharon Smiley, photo at left) who was fired for working through lunch. To the general public, of course, this sounds like a story about a clueless and heartless employer -- most folks don't understand the world of FLSA and other trouble an employer can get into if nonexempt employees are working off the clock. On the other hand, one would have singificantly less sympathy for the employer if the employer were giving employees 50 hours of work to do but only 40 hours of paid time to do it.
Hat tip: Robin Bales.
Sprague on Facebook & the NLRB
Hot on the heals of our post on Chris O'Brien’s article examining employee use of social media and the NLRB’s response is Robert Sprague's (Wyoming - Business) article (forthcoming U. Penn. J. Bus. L.) examining nineteen NLRB Office of the General Counsel Advice Memoranda, three ALJ decisions, and one Board decision, all addressing employees who were fired or disciplined due to their social media activities. The article is Facebook Meets the NLRB: Employee Online Communications and Unfair Labor Practices; here's the abstract:
Within the past eighteen months, the National Labor Relations Board (NLRB) has received approximately one-hundred charges by employees that they were disciplined or fired as a result of their work-related online communications, principally through Facebook. These and other charges have resulted in nineteen NLRB Office of the General Counsel Advice Memoranda, four Administrative Law Judge (ALJ) decisions, and one Board decision, all addressing employee use of social media. This article is the first to examine in detail those employee charges and the twenty-three incidents addressed by the Office of the General Counsel, the ALJs, and the Board. This article’s analysis reveals that, based on these charges and incidents, most employees are not engaging online in concerted activities protected by section 7 of the National Labor Relations Act; for the most part they are griping about work and getting fired for it. However, these charges and incidents have raised concerns over the enforcement of overly broad social media policies by employers. Most importantly, the nature of social media technologies raises new issues of unlawful employer surveillance that have yet to be directly addressed by the NLRB. These three issues - determining when employee online communications are protected concerted activity, what constitutes an acceptable social media policy, and when might an employer engage in unlawful online surveillance—are examined in detail in this article.
January 16, 2012
Feuer on Tax Qualification of Pension Plan Trusts
Albert Feuer sends along Part I of his new Tax Management Weekly Report, January 9, 2012 article, "Scriveners’ Errors, Drafting Errors, Operational Failures, Retroactive Amendments, Reformations, ERISA, and the Tax Qualification of Pension Plan Trusts."
According to Al: "The article analyzes the significance of operational failures, i.e., cases in which the terms of a plan’s governing documents are violated. The article offers suggestions how the Internal Revenue Service ("Service") may lessen the burden on itself and conscientious plan sponsors and administrators, while improving compliance with (1) the Code’s tax-qualification rules, and (2) the similar provisions of ERISA."
Al proposes a simple tradeoff:
The Service should broaden the availability of the self-correction program and expand the relief available to users who request the Service to approve corrections of operational failures. In exchange, all pension plan administrators and sponsors should be required to disclose more information about operational failures on their plans’ annual filings. ERISA practitioners have a tendency to disregard plan qualification rules on the basis that courts need not enforce the tax qualification rules, unless pension plans incorporate those rules. The article takes a more expansive view of operational failures than is currently explicitly set forth in the Service’s publications. In particular, the article observes that such failures include all cases in which a court finds that a plan violated the terms of the plan’s governing documents, and observe that by enforcing the qualification rules the Service is enforcing similar ERISA benefit entitlements. For example, the Service has declared that tax-qualified plans must follow the plan’s governing documents for all similarly situated participants, so if the Service follows its compliance policies, it will require plans to follow those terms even for those participants who did not bring claims pertaining to the same issue, or were not permitted to bring such claims.
Interesting read. Check it out.
January 15, 2012
Challenge to NLRB Recess Appointments
Although it was only a matter of time, this came faster than I expected: there has already been a legal challenge to the NLRB recess appointments. The National Federation of Independent Business and the National Right to Work Foundation are arguing that the appointments violate the Constitution. I won't get into that argument here (although I'll note that the DOJ's Office of Legal Counsel, perhaps not surprisingly, has just released an opinion that they are legal). Instead, putting on my Fed Courts hat, I'm wondering whether there's any jurisdiction for this claim.
The issue is that, probably to get a quick challenge filed, the groups used their existing challenge to the NLRB's notice posting rule to question the legality of the recess appointments. I see at least two potential jurisdictional problems. First is that the notice posting rule was promulgated before the recess appointments were made. Honestly, this seems like a slam-dunk no-standing argument for the NLRB. Until the NLRB actually enforces the rule, where standing wouldn't be an issue for the employer involved (at least if there was an unfair labor practice decision by the new Board), I don't see how the groups can argue that they, or anyone else for that matter, has standing. Second, there's a decent political question issue here. I could see the Supreme Court going either way on this, but I could easily come up with an argument that the courts should avoid addressing whether the pro forma Senate sessions are enough to block recess appointments because it's really just a fight between the legislative and executive branches that shouldn't involve the judiciary. But we'll see what happens.
Hat Tip: Patrick Kavanagh