Workplace Prof Blog

Great Series in Slate on Background Situation in New Haven Fire Department

Nicole Allan and Emily Bazelon have written an excellent 5-part series at Slate about the New Haven Fire Department and race relations in fire departments in other cities in anticipation of Monday's decision in Ricci v. DeStefano. Here is a sort of table of contents:

• Part 1: A Connecticut City's Race Problem Sparks a National Debate
• Part 2: Do White, Black, and Hispanic Firefighters in New Haven Get Along?
• Part 3: Why Did New Haven's White Firefighters Test Better Than Blacks and Hispanics?
• Part 4: Is There a Better Way to Decide Who Gets Promoted?
• Part 5: Is There Any Fair Solution to the New Haven Case?

The series goes in depth into a number of the issues that get glossed over in the usual media coverage of this case, avoiding rhetoric and legal jargon and explaining what are very complicated matters. I highly recommend reading it if you are at all interested in the case or employment discrimination and equality issues more generally.

MM

Timmons on Non-Targeted Sexual Harassment

Kelly Cahill Timmons (Georgia State) is quoted at length in a news article by Alyson Palmer of the Fulton County Daily Report on the recent decision by the Eleventh Circuit to rehear a sexual harassment case from last year. The case involved a woman who worked in a workplace permeated with talk about sexual activity and gendered slurs. The plaintiff was not ever called any of these slurs, although they were spoken to her to refer to other women, and she was never the target of sexual advances. The Eleventh Circuit held that she was subjected to sexual harassment even without being targeted in that way, and now the full court will rehear the matter. For a more thorough explanation of the case, you can read the prior post here.

Kelly argued several years ago in, Sexual Harassment and Disparate Impact: Should Non-Targeted Workplace Sexual Conduct Be Actionable under Title VII?, 81 Neb. L. Rev. 1152 (2002-2003) that such non-targeted sexual talk (not the gendered slurs) should be actionable under a disparate impact discrimination theory. From the news article,

[In the Nebraska article, Timmons argued that a]llowing lawsuits over sex talk in the workplace could reinforce the image that women are delicate and in need of protection . . .  and may focus courts and employers on sexual conduct rather than more insidious forms of gender-based hostility in the workplace.

"It's dangerous to say that all talk about sex is disproportionately harmful to women," she explained last week. . . .

. . .

She said when it comes to sexual harassment cases, most courts have not distinguished between disparate treatment claims, which allege that women or minorities are treated differently than other employees, and disparate impact claims, which allege that a job requirement or condition that applies to all employees disadvantages women or minorities. The distinction could matter because plaintiffs cannot get a jury trial or money damages on a claim of disparate impact, but only a judge's order that the employer do things differently in the future.

Most disparate impact cases have to do with the qualifications for a job, such as whether an employer has a good enough reason to require prospective employees to pass certain physical fitness standards. Timmons notes in her article that on rare occasions a plaintiff may successfully challenge a workplace condition on a disparate impact theory, such as in a 1987 6th Circuit case where a female construction worker complained that a requirement that workers use dirty portable toilets without running water or clean toilet paper presented a greater hardship for women than men.

Timmons said last week that derogatory words for women can be the basis for a disparate treatment claim, sometimes called an intentional discrimination claim. Reeves complained about a co-worker's use of what Timmons sometimes refers to as "the C-word," and Timmons said that word in particular is analogous to the worst racial slur. No studies are needed to show that using those words amounts to discrimination, she said. She said she hopes that in the midst of delving into this difficult issue the 11th Circuit doesn't retreat from its recognition that the use of certain words can support a hostile work environment claim.

But Timmons argued that claims over workplace talk about sex, as opposed to the use of slurs, should be handled differently, under a disparate impact theory. In an office where women dominated, she suggested, a man could be made uncomfortable by such talk as well. She said plaintiffs might be able to point to some research that says such talk is more harmful to women. "I think the theory should be available," said Timmons. "I'd be very interested to see what the court says about how you would prove that."

I agree that this will take some deep thinking by the court (and scholars) to fully flesh out. I'm not sure that I fully agree with Kelly on the sexualized language, though. She makes a great contribution by distinguishing between hostile language and sexualized language, but I think that the concerns she raises may be analyzed in the "severe and pervasive" part of the analysis for non-tangible-employment-action sexual harassment. "Severe and pervasive" seems to encompass not only a quantitative aspect to the conduct, but also a normative or qualitative aspect too.

Maybe it's the old-fashioned (pre-modern?) radical feminist in me, but I think that the only kind of sex talk that would satisfy the severe and pervasive threshold would be inherently gendered in the same way that gendered slurs are and therefore would be disparate treatment. For sex talk to reach that severe and pervasive threshold, it has to be the type that does more than discomfort a person (or offend sensibilities), male or female. It has to be the kind that makes the person feel less of a person, or fundamentally disempowered, and that kind of sex talk is very tied up in power and traditional gender roles and norms. When men are the subjects of this kind of talk in a way that would be found to be severe and pervasive enough to alter the working environment for them, the talk is of a type that is usually used to feminize those men. Thus, this type of sex talk seems to present the same kind of issue to me as the challenges courts are facing in teasing out the rules for same-sex sexual harassment and boils down to a lack of understanding or agreement about why it is that sexualized (as opposed to just mean) conduct is discrimination because of sex. It also would be disparate treatment rather than disparate impact because, like with the slurs, it's inextricably linked with gender roles and norms.

The news article provides a really excellent analysis of the issues, unusual even in legal journalism, and Kelly's work in the area is excellent as well. I recommend a read, and congratulations Kelly!

MM

Peggie Smith on Labor Protections for Home Health Care Workers

Peggie Smith (Iowa) has written a legislative policy brief on labor protections for home health care workers for Direct Care Alliance, and advocacy group for direct care workers. From the description of the brief,

In Protecting Home Care Workers under the Fair Labor Standards Act, (PDF) the second in a series of Direct Care Alliance policy briefs, Smith says the decision “threatens to destabilize the home care industry, erode the precarious economic status of home care workers, and undermine the quality of care that they provide to home care clients.”

She outlines two approaches the federal government could take to reverse the ruling:
1. Amend the FLSA to explicitly include home care workers; and
2. Revise Department of Labor (DOL) regulations to significantly limit the reach of the companionship exemption.

MM

The Other Side of Ashcroft v. Iqbal on Rule 8

Rick's post last week on the Supreme Court's decision in Ashcroft v. Iqbal highlighted the concern that many civil procedure and employment law scholars have over what Federal Rule of Civil Procedure 8 requires for a complaint to withstand summary judgment. Mark Herrmann and Jim Beck at Drug and Device Law blog have an extensive post, arguing that the decision is simply an affirmation that the holding in Bell Atlantic Corp. v. Twombly (that conclusory statements of the law are not enough) would apply regardless of the substantive law at issue. They also argue that this result makes good policy because a liberal pleading standard, in combination with the liberal discovery rules adopted after that liberal pleading standard, give plaintiffs with frivolous suits nearly carte blanche to go on extremely expensive fishing expeditions.

They agree that Swierkewicz v. Sorema must have been effectively overruled by Twombly, but conclude that this is a positive thing necessary to weed out frivolous cases. On why this standard will not weed out meritorious ones, they write,

we believe that the hallmark of a meritorious case is that it’s factually supported from the get go. Maybe at the outset it’s “only” a product liability case, and not a far more involved negligence per se or conspiracy case, but it’s a case that warrants resort to discovery. A meritorious case is one with an identifiable aspect of a warning that’s arguably inadequate, that has known medical consequences attributable to the alleged defect, and as a result of those consequences, there’s an actual injury. That’s the kind of case that’s entitled to accrue the expense of discovery. If things then turn up that indicate something more afoot, the plaintiff can seek to amend the complaint to allege that something more.

The meritorious case, we think, doesn’t have any Twombly problems to start with – except maybe around the edges should the plaintiff overplead.

A meritorious case is not one where the plaintiff pleads that the product was “defectively designed” and leaves it at that.

It's good food for thought.

MM

The Less Discriminatory (But Still Discriminatory) Alternative

Earlier this week, Ray Fisman wrote an interesting column at Slate.com about testing in the employment context. He explored the tension between the fact that while at least some employment tests may be racially biased, they result in less bias than actions by individual decisionmakers.
From the column:

[A] recent study published in the Quarterly Journal of Economics, by economists David Autor of MIT and David Scarborough of Black Hills State University, questions whether these oft-vilified tests are necessarily bad for minorities at all. (Scarborough also works for Kronos, a company that sells job testing products.) They argue that the tests—while perhaps biased—may nevertheless serve as a check on the judgment and prejudices of all-too-human interviewers. In fact, the authors find that when a large retailer started using a job screening test in 1999, the fraction of blacks and Hispanics hired didn't change, while the quality of hires of all races increased as a result of testing.

The column explains why it is that testing might be problematic--both through cultural bias in the tests and when they are not sufficiently job related (the example he gives is a math exam for all mail couriers). And it describes the comparison the authors did between the effects of using a test and the effects of leaving the decision to individuals. "Autor and Scarborough's insight is that adding a test—even a racially biased one—will only aggravate the problem of discrimination if it is more biased than the average HR person. A test that favors white applicants may even reduce discrimination if its bias is less extreme than human prejudice."

And Fisman adds this thought as well:

The results of the study don't let test-makers off the hook—they still need to strive to create questions that give applicants of comparable ability equal footing. But we also shouldn't "shoot the messenger" if a test reveals uncomfortable disparities among races. Tests are used for many high-stakes decisions in America—the SAT for college admission, the Armed Forces Qualifying Test for the military, Police Entrance Exams. The fact that minorities perform poorly on these tests shouldn't be shoved under the rug—assessing the extent of racial inequality is the first step to understanding and remedying the underlying problems.

Very important points.

Hat tips: Paul Secunda and Randy Enochs

MM

 

Tristin Green on Ricci v. DeStefano

Tristin Green (Seton Hall, visiting at Berkeley) is guest blogging at Concurring Opinions, and asks an important question about Ricci v. DeStefano, which I've commented on a few times (here's the most detailed): where is the adverse employment action? To state a Title VII disparate treatment claim, a plaintiff must allege that she has suffered some sort of adverse employment action, and that action must have been because of her protected class.

The answer is fleshed out a bit in the comments, but essentially comes down to the fact that the city of New Haven didn't contest that the firefighter plaintiffs suffered an adverse employment action, presumably in the denial of promotion. But that's a little hidden by the framing of the issues.

I think that if the test results had been given effect, at least some of the plaintiffs would have been promoted, and the City didn't contest that. The promotional process was laid out by ordinance, and a formula based on test scores and something else ranked the candidates. A certain number passed the test, but promotions would be given only to a few of those who passed, starting with the highest scores and working backwards. So there was a very direct causal link between throwing the test out and these high-scoring plaintiffs not being promoted.

Instead of framing this issue as the lack of an adverse employment action, the city accepted the plaintiffs' characterization (that this was an adverse action) and instead argued that the decision to not promote (by throwing the test out) didn't discriminate on the basis of race because no one was promoted, Black, White, or Latino. In a way, that sort of is a backdoor way of suggesting that there was no adverse action taken against anyone because everyone suffered the same adverse action--no one was promoted, and everyone will have to compete again under whatever new process will be established.

Hat tip: Paul Secunda

 

MM

Editorial Calling for Labor Protections for Home Care Workers

Today's New York Times has an editorial calling for labor protection for home health care workers as part of the economic stimulus package. Putting the issue in terms of the current economic situation, the editorial begins,

With more jobs being lost all the time across the board — more than 71,000 layoffs in the United States were announced on Monday and Tuesday alone — there should be comfort in the fact that one sector, health care, continues to add jobs. In December, employers added 32,000 health-related positions.

Unfortunately, one of the fastest-growing areas within the health care field — home care for the elderly — also is one of the lowest paid and most exploitable.
. . .
According to the Labor Department, personal and home care aides are expected to be the second fastest-growing occupation in the United States from 2006-2016, increasing by 51 percent, slightly behind the expected growth in systems and data communications analysts.

The editorial goes on to explain why these workers, who are primarily women, members of minority racial or ethnic groups, and immigrants, are particularly exploitable. Protecting these workers' labor standards through wage, overtime, and safety measures would help these workers, shift a significant burden on government resources from the government to the market, and provide for better quality care. It's a very thoughtful piece, and I recommend reading the whole thing.

Peggie Smith (Iowa) writes in this area, and you should look at her work for more on the subject.

Hat tip: Paul Secunda

MM

Hirsch and Craver in NLJ on EFCA

Kudos to our own Jeff Hirsch and to Charlie Craver (George Washington) who were quoted in a recent National Law Journal article (and today's In-House Counsel) on the Employee Free Choice Act.

From the article,

[T]here have been so few major changes in labor law since the 1947 Taft-Hartley Act, and that lack of change is part of the problem and a driving force behind labor's push for the EFCA, said labor and employment law scholar Jeffrey Hirsch of the University of Tennessee College of Law.

Hirsch and others say unions have grown frustrated with secret-ballot election procedures that employers now easily manipulate, using long delays to engage in coercive, anti-union measures to influence workers to vote against the union.

And even if successful in a union election, workers often are forced to wait years for a first contract because there is no real penalty for negotiating delays by employers.

But employers contend that the EFCA's "solutions" will result in greater coercion of employees by unions, uninformed decisions to sign union authorization cards and mandatory contract terms that employers would never accept under normal circumstances.

And in a recent and unusual wrinkle in the battle, a campaign has been launched by a group calling itself Save Our Secret Ballots to amend state constitutions to guarantee secret-ballot union elections.

"I wish both sides would compromise," said labor and employment law scholar Charles Craver of George Washington University Law School who, along with Hirsch and others, sees EFCA as a less than perfect answer to important issues raised by organized labor.

"I think potentially EFCA could have a significant impact," he added, explaining that unions win about half of National Labor Relations Board elections. Under EFCA, he predicted, unions would start winning 80 percent to 85 percent of organizing campaigns.

"I'd like to see union membership go up, not because I think unions are great, but I don't like to see one side get too much power," he said, explaining that employers hold too much power now. "When unions get too much power, I'll criticize them. I like checks and balances."

Jeff points out later that the biggest change isn't in the card check provision but in the binding arbitration provision. The EFCA (in its current form) would provide that after a union is certified, the parties would have 90 days to negotiate a contract after which either party would be able to ask for federal mediation. After 30 days of mediation, either party could then request a federal arbitrator who would be authorized to create a first contract covering wages, benefits and other employment terms that would be binding for two years.

MM

Editorial on Female Bullying

In last weekend's regular Preoccupations feature in the Sunday New York Times was an interesting column on female bullying and the obstacle that a lack of solidarity can be to workplace equality for women. Peggy Klaus, a leadership coach, described some reasons why some women stand in the way of other women's progress. Drawing on a 2007 survey by the Workplace Bullying Institute which found that in the workplace, women bullies targeted other women more than 70% of the time.

Klaus was careful to make clear that many women support each other, but there are some who do not. As for why, she opined

I’ve heard plenty of theories on why women undermine one another at work. Probably the most popular one is the scarcity excuse — the idea that there are too few spots at the top, so women at more senior levels are unwilling to assist female colleagues who could potentially replace them.

Another explanation is what I call the “D.I.Y. Bootstrap Theory,” which goes like this: “If I had to pull myself up by the bootstraps to get ahead with no one to help me, why should I help you? Do it yourself!”

Some people argue that women aren’t intentionally undermining one another; rather, they don’t want to be accused of showing favoritism toward other women.

Others contend that women mistreat one another because of hyperemotionality, leading them to become overly invested in insignificant nuances and causing them to hold grudges. I’ve encountered this phenomenon among women who feel personally assaulted when someone criticizes them or their ideas.

Research shows that, in general, women are the more empathetic sex and are by nature more attuned to their own and others’ feelings. This is a great advantage when dealing with the human complexities of the workplace. But there’s a downside: If women take things too personally when challenged or criticized, they are prone to overreaction. When that happens, there’s trouble.

And, of course, some people assert that while women compete quite ably on the sports field and in the classroom, they haven’t learned how to compete in a healthy way at the office. For example, men often handle their feelings of envy and jealousy with humor and a left-handed compliment: “I’m going to whip your butt on our sales goals this month.” Or, “Who’d you have to pay off for that promotion?” They deal with it, and they move on. Although considered perfectly acceptable for men in most business settings, this kind of banter is not as socially acceptable for women.

Figuring out why, she continued, is much less important than refraining from treating other women badly and holding others accountable if they do. The editorial is worth reading in full and reminds me of the points raised by Susan Estrich, though from a different perspective, in Sex and Power.

Hat tip: Paul Secunda

MM

Krueger on Lessons from the Chicago Sit-In and the WARN Act

Alan Krueger, the Princeton economist, has this commentary in the New York Times on the recent sit-down strike at the Republic Windows plant in Chicago and the WARN Act:

The sit-in at the Republic Windows & Doors factory in Chicago last week brought the Worker Adjustment and Retraining Notification Act of 1988 — or WARN Act for short – to the forefront of attention. This law requires large employers (those with 100 or more employees) to provide 60 days of written advance notice prior to a plant closing or mass layoff.

The WARN Act was passed after a long-running, rancorous debate. President Ronald Reagan vetoed a trade bill because it included provisions of the WARN Act. The WARN Act was later reintroduced as a stand-alone measure and passed by Congress with enough votes to override a presidential veto in July 1988. The WARN Act became law without President Reagan’s signature, and he issued a statement calling the law “counterproductive." . . . .

The economics of the WARN Act are relatively straightforward. More information usually makes markets work more efficiently. If employees are notified that they will lose their jobs in the future, they can start searching and preparing for a new job sooner. Communities and social-service providers can also prepare for a wave of unemployed workers sooner rather than later.

From a company’s perspective, however, advance notice of a pending shutdown can cause it to lose valued employees and customers before it shutters its doors . . . .

But the bigger picture of this saga should not be missed: companies frequently close without giving their employees the required 60 days of advance notice.

A seminal study by John Addison and McKinley Blackburn found that displaced workers were hardly more likely to receive 60 days’ advance notice of a layoff after the WARN Act took effect than they were before it went into effect . . . . .

Like so much in the labor area, as a practical matter the heated battle over the WARN Act became much ado about nothing. Relatively few additional workers were warned about pending layoffs and plant closings as a result of WARN. Indeed, the available evidence makes one wonder why so many employer groups fought so hard to oppose the law if it ultimately turned out to hardly affect the way employers operated.

This commentary made me somewhat miffed.  I have three preliminary thoughts in reply:

1.  If it is true that WARN is either not applicable to most plant closings and mass layoffs and is violated frequently, does that mean the law was "much ado about nothing."  I more likely conclude that the employee threshold of 100 employees should be reduced to somewhere between 25-50 employees and perhaps the definition of "mass layoff" should be less restrictive.  Also, there might be more enforcement actions if there were better remedies available, including the right to compensatory and punitive damages in appropriate cases.

2.  Like most economists (I feel comfortable making this generalization since he feels comfortable lumping all labor laws together), Kreuger puts most of his emphasis on "efficiency," without thinking much about non-quantifiable matters like justice and fairness.  In a plant closing/mass layoff situation, I tend to be much more concerned about the economic well-being of the workers, as opposed to whether the company in question will lose some additional quantum of profit or productivity in the interim.

3.  And finally, the fact that President Reagan found the law enacted over his veto "counterproductive" (of course, he felt that way strongly about the entire labor movement and crushed the PATCO air traffic controllers strike for good measure), seems alone to recommend its bona fides as a law concerning social justice and one which was rightly fought over.

If Professor Kreuger wishes to explain his dismissive comment that much labor law legislation is "much ado about nothing," I would be happy to have that debate with him.

PS

Commentary on the Pressure on Bank of America in the Republic Windows Strike

Over at Prawfsblawg, there has been an interesting exchange on whether the result in the Republic Windows sit-in is to be applauded or decried. Richard Esenberg originally posted a warning that pressuring Bank of America to extend a loan in this circumstance is dangerous, stating that "neither BOA nor any other bank can survive by making, not merely a poor - but an insane 'loan' in response to political pressure." I'm not sure this considers the whole picture. Here, at least some of the owners are continuing to do business, and they should be able to pay back that loan--and should be liable for it.

Additionally, Patrick S. O'Donnell, a frequent contributor at Ratio Juris challenged Esenberg's view on a number of points. Essentially, he cautioned that this critique was not something that would uniformly be accepted by economists. It fit neoclassical economic theory, but not other branches of economic theory, Neoclassical economic theory often hides moral judgments behind its terms and also hides the fact that these judgments are being made. Finally, economics, at least in its neoclassical form, does not automatically trump other moral considerations, and we need to return to privileging the "good."

My comments can't do it justice; you should read the exchange itself. Particularly interesting is the list of values that have been served by pressuring the Bank.

MM

Feuer on AK Steel v. West ERISA Case

Albert Feuer has been good enough to provide us with his commentary on why the Solicitor General was incorrect in its reasoning for recommending denial of cert. in the ERISA case of AK Steel v. West:

The Solicitor General and Covington & Burling recently displayed confusion between plan documents and plan terms in the briefs they filed with the Supreme Court in AK Steel Corp. Retirement Accumulation Plan v. West that is similar to the confusion that they displayed in the briefs that they had filed in Kennedy v. DuPont Savings Plan Administrator.   In the former they disagreed about whether an ERISA Section 502(a)(1)(B) benefit claim under the terms of a plan is restricted to claims pursuant to the plan documents rather than pursuant to the plan terms.  In the latter, they had agreed that a waiver that violates the terms of a pension plan is not effective even if the plan document permits the wavier.

The Solicitor General correctly asserted in its recently filed amicus brief that the plan terms of an ERISA plan must include the provisions that ERISA mandates that ERISA plan contain. The brief pointed to such a unanimous Supreme Court holding with respect to the ERISA mandate prohibiting pension forfeitures in Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739 (2004). Covington & Burling by contrast implicitly argued that the phrase "plan terms" in ERISA Section 502(a)(1)(B) has the same meaning as the phrase "plan documents"

However, the Solicitor General succumbed in part to the Covington & Burling emphasis on "plan documents" by beginning its argument with a discussion of the ERISA Section 404 requirement that fiduciaries make benefit payments by following Title I of ERISA as well as plan documents.  A more extensive discussion of the significance of the phrase "plan terms" then follows.  The initial plan documents approach has three flaws, even though, as the Solicitor General observed, some Supreme Court decisions used the same approach.

First, the approach has no applicability to plans, such as a top hat plan that is not subject to the cited fiduciary sections. However, ERISA Section 502(a)(1)(B) gives participants and beneficiaries of such a plan the right obtain their benefits under the terms of the plan.

Second, the approach focuses on the wrong fiduciary sections. ERISA Section 503 and the regulations there under impose fiduciary responsibilities on persons who make benefit determinations, whether or not the cited fiduciary provisions are applicable. In particular, all ERISA plans must have claims fiduciaries who decide entitlements under plan terms, which include ERISA mandates, in accord with procedural requirements set forth in 29 C.F.R. § 2560.503-1.

Third, the approach focuses on administrator payment obligations rather than the benefit entitlements at issue. ERISA does not always require plan administrators to pay persons the plan benefits to which they are entitled. For example after a distress termination, benefit payments may be limited to the applicable maximum guarantee benefits.

As normal, Albert appears to be operating on a different level  and understanding than those who appear to merely dabble in this area. Here's hoping that the Supreme Court gets wind of Albert's considered opinion.

PS

Republic Windows Strike as Symbol

We've blogged a couple of times about the Republic Windows strike, but our posts are nothing compared to the press that this strike is getting elsewhere. A Google news search this morning showed roughly 3500 news items. In the latest news, JP Morgan Chase has pledged $400,000 toward the workers' $1.5 million in severance and vacation pay claims, according to the Chicago Sun Times. A subsidiary of Chase owns 40% of Republic Windows.

So why so much attention? Why did President-elect Obama support the strike so publicly? Why are so many other high-level politicians involved in negotiating, primarily on behalf of the workers? Why didn't the company ask the police to arrest the workers for trespassing when they refused to leave?

The consensus seems to be that this strike struck a nerve with the media and the public consciousness (see for example CNN, the Associated Press (hat tip Dennis Walsh), and Independent Street, a blog of the Wall Street Journal). It's too perfectly a symbol of popular sentiments about what's wrong with the economy and the bailout to be ignored by politicians or by regular folks. The company had lost business with the downturn in construction caused by the bursting of the housing bubble that came with the collapse of the subprime mortgage market, and then the bank, which had received billions in bailout money cut off the company's line of credit. Without cash flow, the company closed its doors--at least until it could reopen in a cheaper location in another state, where at least one of the owners has bought a window plant. The key concepts here sound like a list of top Google search queries for the last two months. And it certainly doesn't help that the closing happened during the holiday season.

It's too early to tell what the takeaways are going to be from the number of issues related to this strike and its resolution--Wall Street v. Main Street, banks forced to continue lending to poor credit risks, solvent but struggling companies forced into bankruptcy by the lack of credit available, national control of the economy, outsourcing, labor costs, the role of unions, etc. In the meantime we can watch it all play out in a sort of, "It's a Wonderful Life" meets "Norma Rae" daily drama.

MM

Blevins on the EFCA

John Blevins (South Texas) had an opinion piece supporting the passage of the Employee Free Choice Act (EFCA) in the Houston Chronicle this past Saturday.

Here's a taste:

The EFCA . . . would provide employees with an alternate method of creating a recognized union — the "card check." When a majority of employees signs a card supporting self-organization, a union is formed that the employer is required to recognize. (Card check is allowed under current law, but employers are free to ignore it).

[Joseph] Gagnon's[, who previously against the EFCA in the same paper] critique of the EFCA is a familiar one, and it goes something like this: By permitting card check, the EFCA would undermine the "truly free" choice that secret-ballot elections provide.

Without the secret ballot, union organizers would allegedly be free to coerce their fellow employees.

In fact, this critique featured prominently in a recent (and absurd) employer-sponsored ad campaign featuring a Sopranos actor posing as a mob boss pressuring employees. Fortunately for us all, the New Jersey crime families have yet to make significant inroads into our nation's service industries. Sleep tight America.

In all seriousness, Gagnon's bleak portrait is as imaginary as the Sopranos commercial. The EFCA will not lead to coercion — it will end it.

The most critical point is that current elections are anything but free and fair. They are one-sided affairs dominated by the employer.

Indeed, to call them "elections" is a bit generous given the various forms of coercion that employers can and do apply to influence the vote . . . .

There is also little reason to worry that the EFCA would lead to coercion by fellow employees. Most obviously, unions have strong incentives not to intimidate or alienate employees. If unions lose employees' loyalty, they can be disbanded in a year. In any event, the reality is that employees have far more to fear from employers who control both their paychecks and working conditions than from their fellow employees.

The broader policy debate about the benefits of unions is, of course, a different question. Personally, I believe that strong unions are the best way to lift wages and to restore a vibrant American middle class that enjoys real benefits. Others disagree, and people can have good faith arguments about these issues. But regardless of one's position on unions generally, we should not pretend that the modern election system is free and fair. At the very least, the EFCA deserves an honest debate based on the facts.

I and other supporters of the EFCA have made similar points and I have highlighted the degree of coercion employers have over employees in the workplace in advocating for state passage of Worker Freedom Act legislation which would prohibit employer captive audience meetings. 

I similarly don't see WFA laws as against First Amendment values, as the prohibition does not limit speech, but only the conduct of forcing employees to listen to anti-union invective at pain of losing their jobs.

Hat Tip: Steve Nelson

PS

Feuer on the Supplemental Briefs in Kennedy ERISA Case

Here is additional commentary from Albert Feuer on the Supplemental Briefs requested after oral argument in the ERISA case of Kennedy v. Dupont Savings Plan Administrator.  As the title of the piece suggests, it is Albert's view that this case has even become more confused with the filing of these briefs.

Albert points out that what he has written takes a different approach than a piece written by the SCOTUSBlog.

He concludes that:

The Supreme Court may still be able to discern three ERISA core principles from all the briefs that have been filed in this case and from the oral argument. First, ERISA benefit entitlements are determined by Plan terms. Second, ERISA protects benefit entitlement after the plan has paid the benefits. Third, the QDRO Provisions apply to all DROs pertaining to pension plans. The Court may reinforce each principle by using them explicitly in a decision on behalf of the Plan administrator.

It would be great if the parties and the Court would take under advisement the considered views of an ERISA practitioner who practices in this complex on a daily basis.  Here's hoping.

PS

More Commentary on the Grand Irony of ERISA

Thanks to Ian Millhiser (National Senior Citizens Law Center) who wrote this piece about the inequities of employee benefits law under ERISA with his colleague Simon Lazarus for the U.K. Guardian.

Here's a taste:

Erisa sets strict standards to ensure that employers and insurers administering group benefit plans act "solely in the interests of beneficiaries for the exclusive purpose of providing benefits," not their own bottom-line. But the court has rendered these protections meaningless. In a Catch-22 decision written by Justice Scalia, a 5-4 majority held that, when plan administrators violate their obligations under the law, victims may not recover any monetary compensation for resulting losses they suffer. Adding insult to injury, the court has read Erisa as a warrant for "pre-empting" – ie abolishing – pre-existing state law protections, leaving victims with literally no recourse. Thus, in the words of, the late Justice Byron White, the supreme court has achieved the "perverse anomaly of leaving those Congress set out to protect with less protection than they enjoyed before Erisa was enacted."

When forced to apply the supreme court's "tangled" Erisa rules, ordinarily circumspect federal judges have often harshly attacked them. Most famously, the late Chief Judge Edward Becker, a Republican named to the third circuit court of appeals by President Reagan, excoriated Justice Scalia and his allies for converting Erisa "into a shield that insulates HMOs from liability for even the most egregious acts of dereliction committed against plan beneficiaries, a state of affairs directly contrary to the intent of Congress." Judge Becker stressed that the court's distortion of Erisa creates "strong incentives for HMOs to deny claims in bad faith or otherwise 'stiff' participants." The systemic result, he added, is a "'race to the bottom' in which the most profitable HMOs will be those that deny claims most frequently."

This topic is near and dear to my heart and the subject of my current paper: Sorry, No Remedy: The Grand Irony of ERISA.  I agree with the authors of this commentary that the Obama administration must take action to right this ship.  They recommend legislatively "fixing" bad ERISA precedent and to select new judges that are more sensitive to the aims of the law.  \

More specifically, I would like to see Congress clarify current ERISA preemption doctrine to allow for more state experimentation in the area of health care financing and to make clear that "equitable relief" under Section 502(a)(3) of ERISA means exactly what it means under Title VII - backpay and other make whole relief.

PS

Guest Commentary by Albert Feuer on the Pending Kennedy ERISA Case

We are privileged to have Albert Feuer, eminent ERISA practitioner, provide this updated analysis on the Kennedy ERISA case before the Supreme Court based on its recent request for further briefing on the issues:

A Curious ERISA Case Before the Supreme Court Becomes More Curious

Kennedy v. DuPont Savings Plan Administrator, No. 07-636 has become even more curious. A participant’s estate claimed to be entitled to receive the participant’s death benefits because it was his secondary beneficiary. The dispute was whether the participant’s primary designation had been rendered ineffective by a domestic relations order that was not a qualified domestic relations order (“QDRO”). On October 28, 2008, the Supreme Court requested the parties brief a “new question,” which question suggests that the Court is confused.  The Supreme Court certified the following general question for review:

Was the Fifth Circuit correct in concluding that ERISA’s Qualified Domestic Relations Order provision, 29 U.S.C. §1056(d)(3)(B)(i), is the only valid way a divorcing spouse can waive her right to receive her ex-husband’s pension benefits under ERISA?

This question may be answered sensibly by first establishing the source of the right whose waiver is at issue. There would appear to be no disagreement that under ERISA, planterms determine whether the divorcing spouse is a beneficiary entitled to receive the pension benefits. Neither party, however, took this approach.

The disagreement is about how may such designation be rendered ineffective, thereby entitling the secondary beneficiary, the participant’s estate in this case, to the benefits. One would presume that the plan administrator would argue that a designation may only be rendered ineffective if it is revoked pursuant the plan terms. One would presume that the participant’s estate would argue that the designation may also be rendered ineffective by common law principles. Neither party so argued. Thus, the Supreme Court did not resolve the issue by setting forth the circumstances, if any, in which the issue is associated with an ERISA gap, which common law may bridge. The Supreme Court, however, requested briefs regarding:

Whether 29 U.S.C. §1104(a)(1)(D), mandating administration of a plan in accordance with plan documents, required that the distribution in question be waiver of her interest was not otherwise subject to statutory bar. made to Liv Kennedy, even on the assumption that a

The Court, like the plan administrator, is focusing on the plan administrator’s payment obligation, rather than the divorcing spouse’s benefit entitlement. The Court is giving the participant’s estate the chance to supplement its assertions that (1) the overriding ERISA fiduciary obligation to act “solely in the interest of the participants and beneficiaries” makes common law applicable; and (2) documents, such as designation forms, marriage certificates and common law waivers, that are not inconsistent with plan documents, determine designations.

There are three reasons why it is misleading to focus on the plan administrator’s payment obligation, which several circuits consider of little import, rather than plan entitlements.

First, it suggests that the primary purpose of ERISA is the promotion of administrative convenience, rather than the protection of the employee benefits of participants and beneficiaries. Much of the argument by the parties and amici in this case is devoted to the contrasting views of administrative burdens. Very little is devoted to the statutes that determine benefit entitlements.

Second, a focus on the payment obligation may give short shrift to ERISA mandates. These mandates, such as the prohibition on the alienation or assignment of pension benefits, must be part of plan terms, but need not be part of the plan documents. Plan fiduciaries may only follow plan documents to the extent that the terms are consistent with ERISA.

Third, fiduciaries are not always obligated to pay persons their benefit entitlements. The plan administrator devoted considerable attention to ERISA § 206(d)(3)(H), which, in concert with ERISA § 206(d)(3)(I), frees plan fiduciaries from the obligation to make benefit payments to certain persons whose benefit rights are derived from QDROs.

Conclusion:

The Supreme Court may further ERISA’s primary purpose if it issues a decision in favor of the plan administrator based on the core ERISA principle that ERISA benefit entitlements are determined by Plan terms, rather than based on the plan administrator’s payment obligation.

PS

Hutchison on Labor Preemption and Free Speech Rights

Harry Hutchison (George Mason) has just posted on SSRN his article (forthcoming Seton Hall L. Rev.) Liberty, Liberalism, and Neutrality: Labor Preemption and First Amendment Values.  Here's an excerpt from the abstract:

With the advent of postmodern discourse and the possibility that courts have become captive to progressive rhetoric that is not found within the Constitution, I argue that the Supreme Court should reconsider its reliance on the NLRA and preemption doctrine as the primary vehicle to vindicate employers' rights and should instead return to the Constitution itself as a basis for its defense of what has become increasingly difficult to defend: the free speech rights of employers and employees within a labor-management context. This approach is exemplified by recapturing the Supreme Court's understanding of Virginia Electric as an independent ground for relief. This case, decided before the Wagner Act was amended adding explicit protection of employers' speech, stands for the proposition that employer and labor union "attempts to persuade to action with respect to joining or not joining unions are within the First Amendment's guaranty."

This excerpt does not begin to do justice to Harry's wide-ranging article.  Check it out.

rb

Gihilarducci on Defined Benefit Pensions are Dead; Long Live DB Pensions

Teresa Ghilarducci, Bernard L. and Irene Schwartz Chair of Economic Policy Analysis The New School for Social Research, and  author of “When I’m Sixty-Four: The Plot Against Pensions and the Plan to Save Them," has penned this response to the recent blog post we did on Zelinsky and the 401(k) Lessons from the Crash of 2008.

I appreciate Zelinsky calling like it is -- the so-called 2006 Pension Protection Act and the DOL regulations privilege a faddish approach to investing which is overweighted towards stock. (Zelinsky calls it a “enshrining stock-based approach in the law.”) Government paternalism, though is not the problem as Zelinsky characterizes it. He calls the government’s default option for automatic 401(k) contributions, "paternalism." The problem actually is the government’s lack of caring. The Paulson – Bernacke plan proposes a bailout of the investment firms with very little new regulation and maintaining the same legal biases toward 401(k).

The government should do a lot more, I call for a democratic “paternalism.” Instead of giving investment banks a way out – the government is providing a market for their junk assets – it should be giving near retirees and retirees the option to clear the junk out of their accounts and transfer them to government guaranteed bonds. I describe these vehicles in my new book; they are called “Guaranteed Retirement Accounts.” Every worker would get $600 annually from the government in exchange for investing 5% of their pay every pay period to invest in a retirement account that the government would pay 3% indexed for inflation.

The government is now pursuing a misguided message – retirement security can be achieved through 401(k) accounts. What all workers need is access to the same investment vehicles that most public sector workers have, including all federal workers, and most unionized workers. All workers need a secure vehicle, like a defined benefit plan. All workers deserve to put their retirement dollars in a vehicle that guarantees a low–fee and safe return. If we swap tax breaks for 401(k) plans (70% got to the top 20% of wage earners) for a $600 contribution to a guaranteed account for all workers it would cost the government nothing and help the people who need help the most– unlike all the other proposals swirling around.

Please feel free to send your comments to me if you would like to add your two cents to this most timely of debates.

PS

O'Donnell on Hiring During a Lockout, California Unemployment, Prescient Books, and the Lack of a Worker and Consumer Buyout

Thanks for this guest commentary by friend of the blog, Patrick O'Donnell:

Although our paper is precipitously shrinking in content, some important news is still being covered: "8 indicted over hiring during Ralphs lockout."

And the bad news: "California unemployment rate soars to 7.7% in August: The jump from 7.4% in July puts the state in a tie with Mississippi for the third-highest jobless rate in the U.S."

Fortunately, we have Kevin Phillips to help us put all this in proper perspective within the bigger picture.

As Phillips noted yesterday evening in conversation with Bill Moyers, workers and consumers aren't being bailed out....

Good stuff (or should I say bad stuff), Patrick, but thanks for bringing this all to our reader's attention.

PS