KCON9: Second Saturday Morning Panel: Contracts & Employment

Our own Meredith Miller started the panel with a paper on Getting Paid: Contracting in the Naked Economy.  Professor Miller's paper is in part a reflection on her experience with freelancers who have been doing work in the new economy and have been experiencing a hard time getting paid.  The amount due often does not rise to a level that would justify litigation.  Professor Miller began by discussing "the rise in independent work," which is a lose category encompassing the "jobless but not workless." These people are often highly skilled, and big companies prefer to have consultants rather than employees because of liabilities and costs attendant to employees that are not associated with contractual relations with constultants.  

On the other side, there is a literature promoting the benefits to workers in being independent workers.  There are advantages to not having a boss, to not having to commute, not having face-time at work, etc.  Why deal with people when you can stay home in the company of your cats?  But there are significant problems associated with being an independent worker, including significantly, not getting paid.  Professor Miller presented staggering statistics indicating that a very high percentage of independent workers have a hard time getting paid, and a very small percentage of them hire an attorney or actually proceed to court.  She illustrated the problem with this video.

 

Professor Miller suggested simple solutions for independent workers such as clear definitions and expectations in contracts, payments schedules, process payments or payments in advance, terminations fees and attorneys fees in cases of non-payment.  She recommended the Shake App as a means for quickly throwing together useable contracts.  She also discussed legislative reforms, such as New York's proposed Freelancer Payment Protection Act, and potential private solutions.

Rachel Arnow-Richman next gave her paper on Modifying Employment Contracts.  Professor Arnow-Richman began by discussing the abysmal case law on employment law, and by suggesting that modification is just another area in which the law is bad for workers and largely incoherent.  Employment is generally at will these days, and so the notion of modification is difficult because it is not entirely clear that there is a contract to modify.  The agreements are relational and the obligations are indefinite.  Still, where the employer regards the modification as legally binding (e.g., the creation of non-competes, arbitration provisions, or retraction or modification of a previously promulgated employer policy), the doctrine of modification is applicable. 

Professor Arnow-Richman noted two general approaches that have been applied to modification.  The unilateral approach focuses on the employee's at-will status with the employee's continued employment constituting the consideration for the modifcation.  For example, a Colorado case recently upheld the imposition of a non-compete clause on an at-will employmee because the employer can terminate the contract at any point.  If the employer can terminate, it can also introduce a new contract with new terms that the employee accepts by continuing employment.  This approach is troubling, because the worker obviously derives no benefit, and the notion that the benefit was continued employment is a sort of fiction, since that employment is still terminable at will.  Some courts enforce such unilateral modifications only in the case of some additional consideration, such as a raise.  In the at-will context, this is not all that helpful, since the additional consideration will not be relevant to the employee if she is sacked the following day.

 The second approach, which Professor Arnow-Richman prefers, is to require advance notice as the consideration.  This approach relates to a paper she gave at the AALS Section on Contracts meeting in 2013, which is now forthcoming in the Florida Law Review.  There have been cases in which courts have upheld modifications based on reasonable notice.  Unfortunately, the courts do not seem to know why they are doing so.  Still, Professor Arnow-Richman thinks that there is way to make sense of this approach, and it turns on treating even at-will employment as a bilateral contract.  If we so understand at-will employment, and we should, since employment begins with a promissory acceptance and the parties generally anticipate a long-term relationship, then reasonable notice is a standard term for modification.

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