Tuesday, March 17, 2020
Edward A. Zelinsky (Cardozo) has just posted on SSRN his article (forthcoming 70 Catholic U. L. Rev.) Defining Who Is An Employee After A.B.5: Trading Uniformity and Simplicity for Expanded Coverage. Here's an excerpt from the abstract of his thoughtful and nuanced article:
My assessment of California’s A.B.5 differs from the evaluation advanced by the advocates and opponents of that legislation: I conclude that A.B.5 made a significant but limited expansion of the coverage of California labor law but at a notable cost. ...
A review of A.B.5 and the background from which it emerged leads to a more nuanced story than either of the simple pro/con narratives. For those who assert that current law is uncertain and too complex, A.B.5 makes matters worse. A.B.5 is replete with exceptions, exemptions and interpretive challenges which make the law of employee status even more complicated and unclear than it was before. For those who seek expanded employment-based protection for workers in the modern economy, the myriad exceptions and exemptions of A.B.5 are a sobering warning of the practical and political realities standing in the way of such expansion. For those defending the status quo, A.B.5 is an equally sober warning of considerable dissatisfaction with that status quo.
A.B.5 is thus an important data point which indicates that those who seek to reform the law of employee status face a trade-off: Efforts to expand the coverage of employment-based protection laws will make the law more complex and less uniform – as did A.B.5. Given the relevant political forces and policy considerations, legislators can broaden the reach of employment-based regulatory laws to cover more workers in the modern economy or they can simplify and unify the legal definition of employee status. They cannot do both.
Monday, March 2, 2020
David Doorey (York University) has launched a new collaborative law blog called Canadian Law of Work Forum. The blog accepts contributions from scholars, practitioners, and students on topics related to work law and labour policy and will be a great resources for U.S. scholars interested in keeping an eye on Canadian developments. David is also encouraging posts from non-Canadian scholars on comparative law issues. Please visit the blog and consider submitting pieces to David (email@example.com). Great move, David!
Monday, January 27, 2020
Thanks to Jon Harkavy for word that the Clean Slate for Worker Power project has issued its final report A Clean Slate for Worker Power: Building a Just Economy and Democracy. Here's a brief excerpted description from Kelsey Griffin:
An initiative of Harvard Law School’s Labor and Worklife Program — called Clean Slate for Worker Power — released its final report Thursday calling to overhaul American labor laws and increase workers’ collective bargaining power. Law School Faculty members Sharon Block and Benjamin I. Sachs led the project. The initiative brought together leading activists and scholars to recommend policies aimed at empowering working people.
The report claims that an extreme concentration of wealth in the hands of few people has created economic and political inequality in the United States. It argues that current labor laws have fostered systematic racial and gender oppression. It also asserts that labor laws exclude vulnerable workers from vital labor protections and devalue the work performed by these workers.
Block and Sachs said they believe addressing this economic and political inequality would require a completely new system of labor law, rather than simply adjusting current policies. The report recommends that labor laws better enable working people to build collective organizations to increase their leverage with employers and in the political system. The policy recommendations aim to increase worker representation and inclusion by expanding the coverage of labor laws for independent contractors, as well as undocumented, incarcerated, and disabled workers. The report lays out an array of options for alternative worker representation in addition to labor unions, such as work monitors — employees who would ensure compliance with federal labor regulations.
Monday, October 21, 2019
Multinational corporations based in Europe have accelerated their foreign direct investment in the Southern states of the United States in the past quarter-century. Some companies honor workers’ freedom of association, respect workers’ organizing rights and engage in good-faith collective bargaining when workers choose trade union representation. Other firms have interfered with freedom of association, launched aggressive campaigns against employees’ organizing attempts and failed to bargain in good faith when workers choose union representation.
Today, the AFL-CIO is releasing a report by international labor law expert Lance Compa. The report examines European companies’ choices on workers’ rights with documented case studies in several American Southern states. In their home countries, European companies investing in the American South generally respect workers’ organizing and bargaining rights. They commit themselves to International Labor Organization core labor standards, Organization for Economic Co-operation and Development Guidelines, UN Guiding Principles, the UN Global Compact, and other international norms on freedom of association and collective bargaining. But they do not always live up to these global standards in their Southern U.S. operations.
Case studies on well-known companies like VW, Airbus, IKEA and large but lesser known ones like Fresenius and Skanska provide examples of companies that have followed a lower standard in their operations in the southern states where the region’s legacy of racial injustice and social inequality open the door to a low-road way of doing business. The report also makes clear that companies always have a choice and could choose to respect workers human rights.
Tuesday, July 23, 2019
Although employers are more resistant to agreeing to mutual nondisparagement obligations after employment than they used to be, such agreements remain important in one situation: where ending the relationship is conditioned on a good reference and no bad mouthing of the soon-to-be-ex-employee.
But there are complications when it is the corporate employer who is being gagged as compared to the more common situation where an individual employee agrees not to disparage her former employer. The problem arose in Bissette v. University of Mississippi Medical Center, where Garth Bissette, a professor at the Medical Center, ran into difficulties leading to possible detenuring. Before UMMC’s review process was completed, Bissette entered into a settlement agreement providing for his departure but containing a clause requiring UMMC to give Bissette a favorable recommendation and also requiring mutual non-disparagement and confidentiality.
As you might guess, Bissette was later bad mouthed by one Woolverton, a UMMC employee (who hadn’t been told about the agreement). There wasn’t much doubt that Woolverton’s comments were disparaging: he allegedly attended a NIH conference at which he told participants from other universities that, among other things, Bissette had no professional accomplishments during his tenure, did nothing with his scholarship or professional service, and was often intoxicated after returning from lunch.
Although Bissette brought several claims, the most interesting was the breach of contract cause of action. The Mississippi Court of Appeals first found that the individual defendants were not bound because of the wording of the clause in question, which provided that “This agreement is being entered into …. between [....UMMC] for the benefit of itself, all related corporate entities, its and their officers, directors, employees, agents, successors, and assigns . . . . and Dr. Garth Bissette.” According to the court, “employees” such as Woolverton were not individually bound by the agreement since they were merely its third-party beneficiaries. Under this construction, UMCC had not made any promises as to them not disparaging Bissette. Had the University agreed “on behalf of” such persons, the result might have been different. But the court also indicated that reading the commitment so broadly would lead to odd results, such as embracing “even a receptionist” at a UMMC clinic.
This is all pretty odd. How could an agreement between A and B bind C contractually? There’s no indication that UMCC was acting as its employees’ agent. Plus, of course, Woolverton didn’t even know about the settlement! The more sensible reading of the clause is that UMCC is promising that none of its employees, etc. will bad mouth Bissette. And the confidentiality clause seemed to confirm this: it permitted UMMC to disclose to those “necessary to carry out the terms and conditions of this Agreement.”
No matter: the court also rejected the argument that UMCC was vicariously liable by virtue of Woolverton’s acting as its agent (even if he were not personally liable). “Employee” is not synonymous with “agent,” and there was no evidence that Woolverton was furthering UMMC goals at the conference, so the university wasn’t responsible for what he said. That may be true (although the court’s stress on the fact that NIH (not UMMC) paid for the conference seems dubious given how often university work is grant -funded), but if UMCC had committed that none of the named persons would disparage Bissette, it’s not clear that such a promise should be read to be limited to actions taken on the employer’s dime and time.
The net effect was that Bissette walked away with considerably less than he had thought he’d gotten for not continuing to fight his detenuring. Even the “good recommendation” Bissette bargained for seems of doubtful value in light of this story. The lesson for plaintiffs’ attorneys looking for this kind of protection is to work through more carefully exactly what it means for an organization not to disparage or at least the steps the organization will take to inform its employees about what is expected of them.
And there are broader issues this scenario raises. Practically speaking, anyone familiar with academia might doubt both the efficacy of a promise that no one will tell tales out of school at scholarly conferences and the ability of a plaintiff to prove damages should such a breach occur. More theoretically, there’s the question of whether gag clauses really are a societally good idea: what if Bissette really was frequently intoxicated after lunch? Finally, there’s a not insignificant policy question of whether employers, especially public ones., should be free to constrain their employees’ speech, especially when not acting within the scope of their employment.
Thanks to Kamille Perry, Seton Hall class of 2021.
Wednesday, March 27, 2019
Richard Moberly (Nebraska) has somehow found time from his decanal duties to write and post to SSRN his new article (North Carolina L. Rev.) Confidentiality and Whistleblowing. Here's an excerpt from the abstract:
... [T]the federal government has aggressively courted employees to become whistleblowers. In response, corporations have tried to mitigate potential damage by relying on broad confidentiality provisions to discourage employees from revealing insider information. As a result, uncertainty abounds when the corporate desire for confidentiality clashes with the government’s desire for employees to blow the whistle.
This Article is about the increasing tension between these countervailing trends. Ultimately, the Article concludes that the government’s ability to rely on insiders to monitor organizational behavior by blowing the whistle will depend on its willingness to regulate the ability of an organization to protect its secrets through contract.
Tuesday, February 26, 2019
Congratulations to Francis Mootz (Pacific-McGeorge), Leticia Saucedo (Cal.-Davis), and Mike Maslanka (North Texas) on the publication of their book Learning Employment Law (West 2019). Here's the publisher's description:
Learning Employment Law provides concise and clear text, examples, and case excerpts that empower students to engage in sophisticated problem-solving regarding the most pressing issues in contemporary workplace law. The book succinctly reviews the historical backdrop of each issue to ensure that students gain the wider understanding necessary to effectively address contemporary problems. The book is comprised of 44 independent Lessons that can be structured by the professor to highlight different themes. Students will be exposed to common law and regulatory regimes, with a focus on the new workplace challenges of the platform economy, outsourced labor, and immigrant labor. Students will gain a sophisticated understanding of the challenges facing lawyers in this rapidly developing area of the law.
Friday, February 15, 2019
Thanks to Orly Lobel (San Diego) for alerting us that the Open Markets Institute is petitioning the Federal Trade Commission to write a rule banning employee non-competes as an unfair method of competition. To add your name to the petition as a signatory, email OMI Legal Director Sandeep Vaheesan.
Tuesday, January 22, 2019
Rebecca Morrow (Wake Forest) has posted on SSRN an interesting approach to challenging noncompete violations -- as tax code violations. Her article is Noncompetes as Tax Evasion, 96 Wash. U. L. Rev. ___ (2018), and it caught my attention over at Tax Prof Blog. Here's an excerpt from the abstract:
Policymakers should use a [tax-violation] approach to curtail the excessive, exploitative, and anticompetitive use of employment noncompete agreements. Currently, nearly one in five (or thirty million) American workers is bound by an employment noncompete. Employers claim that they adequately compensate employees for noncompete restrictions with higher wages, bigger raises, and/or more generous bonuses. Policymakers scoff at this claim and use contract law to attack them. Unfortunately, employment noncompetes are like Al Capone in that they have flourished despite the law’s efforts to restrain them. Recently, the largest study of noncompetes in U.S. history paradoxically found that their prevalence is unaffected by their enforceability. In states like California that refuse to enforce employment noncompetes, they are as common as in states that uphold them. Contract law has proved ill-equipped to respond to the pervasive, expanding, and damaging use of noncompetes.
This Article is the first to shift the focus and to argue that employment noncompetes, as employers currently use them, constitute tax evasion and should be attacked as such. If employers pay employees for noncompetes through compensation, then by employers’ own account, this compensation is not purely an expense associated with immediate benefits; rather, it is an expenditure associated with future benefits — benefits that the employer will enjoy years after payment. Thus, the IRS should stop allowing employers to fully immediately deduct the compensation they pay to employees subject to noncompetes and instead should require that an adequate portion of total compensation be allocated to the noncompete and amortized over the restricted period, beginning when employment ends.
Tuesday, January 15, 2019
Two increasingly rare events occurred today in the same case: [a subset of] workers got a win, and the Supreme Court narrowed (yes, you read that correctly) the scope of the Federal Arbitration Act. Though the case at first blush appears narrow, it may have much broader implications in the Uber litigation.
The case is New Prime Inc. v. Oliveira. Dominic Oliveira was a truck driver for Prime under a contract calling him an independent contractor and containing an arbitration clause. Oliveira filed a class action alleging underpayment of wages. Prime moved to dismiss and send the case to arbitration, on two grounds: (1) the arbitration clause gave the arbitrator the authority to decide arbitrability issues -- so Prime argued the case should go straight to arbitration for the arbitrator to decide first the arbitrability issue and then, presumably, the merits; and (2) because Oliveira was an independent contractor, he was not covered by the FAA Section 1 exclusion of "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." Because, Prime argued, Oliveira wasn't excluded by Section 1, he was covered by the FAA, and his dispute should be subject to the same nearly irrebuttable presumption of arbitrability applied to all other contracts covered by the FAA.
The Supreme Court ruled 8-0 (Kavanaugh did not participate) for Oliveira on both counts. On the arbitrability issue, the Court characterized the "arbitrator decides arbitrability" clause as merely a specialized form of an arbitration clause. Like any other arbitration clause, the Court reasoned, this type of arbitration clause is not enforceable under the FAA if it's excluded by Section 1. And courts -- not arbitrators -- decide "substantive" arbitrability questions such as the scope of the Section 1 exclusion.
As noted above, Prime argued that the Court should interpret the FAA Section 1 exclusion as applying only to "employees", not to independent contractors. The Court, however, rejected that argument as inconsistent with the common understanding of those terms in the 1920s when the FAA was drafted and enacted. At the time, the Court said, "employment" was more-or-less a synonym for "work" -- and "work" is what Oliveira was doing regardless of whether he is today classified as an "employee" or an "independent contractor".
This is a rare win for workers under the FAA, but it's a narrow one. The Court already has restricted the Section 1 exclusion to transportation workers (Circuit City v. Adams). But Uber drivers are transportation workers, and there's a ton of pending litigation over whether they are employees or independent contractors. After New Prime, Uber drivers may be excluded by the FAA regardless of their legal designation.
Friday, November 16, 2018
Congratulations to Nestor Davidson (Fordham), Michèle Finck (Oxford), and John Infranca (Suffolk) on the publication of their book The Cambridge Handbook of the Law of the Sharing Economy (Cambridge U. Press). I had the pleasure of serving as a peer reviewer on the original proposal, and can verify that the book takes a comprehensive look at the sharing economy -- not just the employment stuff that readers of this blog mostly focus on. Here's the publisher's description:
This Handbook grapples conceptually and practically with what the sharing economy - which includes entities ranging from large for-profit firms like Airbnb, Uber, Lyft, Taskrabbit, and Upwork to smaller, non-profit collaborative initiatives - means for law, and how law, in turn, is shaping critical aspects of the sharing economy. Featuring a diverse set of contributors from many academic disciplines and countries, the book compiles the most important, up-to-date research on the regulation of the sharing economy. The first part surveys the nature of the sharing economy, explores the central challenge of balancing innovation and regulatory concerns, and examines the institutions confronting these regulatory challenges, and the second part turns to a series of specific regulatory domains, including labor and employment law, consumer protection, tax, and civil rights. This groundbreaking work should be read by anyone interested in the dynamic relationship between law and the sharing economy.
Wednesday, September 19, 2018
CBS’ announcement of CEO Les Moonves’ departure offers a welcome example of a company willing to cut bait on a star employee based on reports of repeated sexual harassment. Even more noteworthy is the news that Moonveslikely will receive no severance pay.
CBS’ refusal to offer Moonves a cushioned exit could presage a new level of accountability post-#MeToo, one where harassers can expect neither a pass nor a golden parachute. But there are reasons to be less sanguine. Moonves’ employment contract, like that of many C-suite employees imposes steep penalties on the company in the event of a termination without cause. For CBS, the cost could reach a reported $120 million, even discounting $20 million that the company has pledged to the #MeToo movement.
It can boggle the mind to imagine that Moonves’ termination is anything but justified. The allegations against him include forced oral sex, bodily exposure, physical violence, intimidation and retaliation. If even a fraction of it is true, then there is clearly cause to terminate him under any ordinary meaning of the word.
But it is not the ordinary meaning of “cause” that applies. High-level contracts typically define cause in idiosyncratic ways — requiring that the employee willfully fail to perform, commit a felony, or engage in gross misconduct materially harming the company. Courts interpret such language to mean conduct far exceeding ordinary wrongdoing. In cases of doubt, the burden usually is on the employer to justify its decision based on proven facts.
Friday, May 18, 2018
Diane Ring (Boston College) has just posted on SSRN her article Silos and First Movers in the Sharing Economy Debates. Here's the abstract:
Over the past few years, a significant global debate has developed over the classification of workers in the sharing economy either as independent contractors or as employees.... Classification of a worker as an employee, rather than an independent contractor, can carry a range of implications for worker treatment and protections under labor law, anti-discrimination law, tort law, and tax law, depending on the legal jurisdiction....
Two interacting forces create the most serious risk for inadequate policy formulation: (1) silos among legal experts, and (2) first-mover effects. Both of these factors ... emerge in sharing economy debates in the United States. Tax experts and other legal specialists operate in distinct silos leading to a misunderstanding by non-tax analysts of the tax ramifications of worker classification, and to an underappreciation on the part of tax experts of the potential influence of “modest” tax rule changes on worker classification generally. The risks of such misunderstandings can be amplified by first-mover efforts, such as: (1) platforms’ contractual designation of workers as independent contractors to bolster a claim of nonemployer/employee status; (2) platforms’ support for proposed tax legislation that would “clarify” the status of sharing workers as independent contractors for tax purposes if they satisfy a multiple-prong (relatively easy) safe harbor test; and (3) sharing economy worker litigation to secure employee status.
This Article identifies the incompleteness in the worker classification debates and argues for the active formulation of policy through a process that looks beyond individual fields. A more complete conversation requires analytical engagement across multiple fields and recognition of the de facto power of reform in one arena to influence others. Moreover, it is by no means clear that just because tax might arrive at the legislative drawing table first (due to first mover effects), that it should drive or shape the broader worker classification debate.
Sunday, January 21, 2018
Ken Dau-Schmidt asks the following question--if anyone has a case that comes to mind you can email Ken or, better yet, post a comment, as I couldn't think of an example but would love to see one:
Are there any cases where a worker is an employee under the right to control test, but NOT an employee under the economic realities test? You’d need a worker who was controlled, but not economically dependent. It’s not hard to find cases where workers are employees under the economic realities test but not an employee under the right to control test (the news boys case under the NLRA or the pickle picker cases under the FLSA) but I’m not sure I’ve ever seen a case the other way around.
Monday, January 15, 2018
Shu-Yi Oei & Diane M. Ring (both of Boston College Law) have just posted on SSRN their essay Is New Code Section 199A Really Going to Turn Us All into Independent Contractors? Here's the abstract:
There has been a lot of interest lately in new IRC Section 199A, the new qualified business income (QBI) deduction that grants passthroughs, including qualifying workers who are independent contractors (and not employees), a deduction equal to 20% of a specially calculated base amount of income. One of the important themes that has arisen is its effect on work and labor markets, and the notion that the new deduction creates an incentive for businesses to shift to independent contractor classification. A question that has been percolating in the press, blogs, and on social media is whether new Section 199A is going to create a big shift in the workplace and cause many workers to be reclassified as independent contractors.
Is this really going to happen? How large an effect will tax have on labor markets and arrangements? We think that predicting and assessing the impact of this new provision is a rather nuanced and complicated question. There is an intersection of incentives, disincentives and risks in play among various actors and across different legal fields, not just tax. Here, we provide an initial roadmap for approaching this analysis. We do so drawing on academic work we have done over the past few years on worker classification in tax and other legal fields.
Sunday, November 12, 2017
Shu-Yi Oei and Diane Ring (both Boston College) have just posted on Tax Prof Blog The Senate Tax Bill and the Battles Over Worker Classification. Their post is extensive and detailed and well worth a full read. Here's a quick summary; the take-away is in bold at the bottom:
Senate Republicans released their version of tax reform legislation on Thursday, November 9. The legislative language is not available yet, but the Description of the Chairman’s Mark (prepared by the Joint Committee on Taxation) suggests that one of the key provisions in the bill will clarify the treatment of workers as independent contractors by providing a safe harbor that guarantees such treatment. The JCT-prepared description tracks the contents of the so-called “NEW GIG Act” proposed legislations introduced by Congressman Tom Rice (R-S.C.) in the House and Senator John Thune (R-S.D.) in the Senate in October and July 2017, respectively. “NEW GIG” is short for the “New Economy Works to Guarantee Independence and Growth (NEW GIG) Act.” But notably, and as we further discuss below, the legislation is not limited in its application to gig or sharing economy workers.
Assuming the Senate Bill adopts the basic parameters of the NEW GIG proposed legislation — which looks to be the case based on the JCT-prepared description — we have some concerns. In brief, this legislation purports to simply “clarify” the treatment of workers as independent contractors and to make life easier for workers by introducing a new 1099 reporting threshold and a new withholding obligation. But the legislation carries potentially important ramifications for broader fights over worker classification that are raging in the labor and employment law area. Despite possibly alleviating tax-related confusion and reducing the likelihood of under-withholding, we worry that there are quite a few underappreciated non-tax hazards for workers if these provisions go through.
The legislation (assuming the Senate Bill more or less tracks the NEW GIG Act language) purports to achieve such “clarification” of worker classification status by [, among other things, introducing] a safe harbor “which, if satisfied, would ensure that the worker (service provider) would be treated as an independent contractor, not an employee, and the service recipient (customer) would not be treated as the employer.”...
At first blush, this legislation looks like it does good things for workers by clarifying their tax treatment, providing peace of mind, lowering previously unclear information reporting thresholds, and solving some of their estimated tax/mis-withholding issues.... The problem is that it’s not just about tax....
Our worry is that tax clarification of independent contractor status is a strategic step designed to win this broader (non-tax) regulatory war over worker classification. The risk is that “clarifying” the independent contractor status of workers for tax purposes through the introduction of an easy-to-meet safe harbor risks influencing and tilting the worker classification battle that is occurring in labor and employment law. While determinations of independent contractor status in other areas are theoretically independent from the tax determination, clarification on the tax side may help create presumptions elsewhere that independent contractor classification is normatively correct. While the precise legal tests governing worker classification differ across areas — we have, for example, the common law agency test, the ABC test, the economic realities test, and the IRS 20-factor test — the tests have elements in common: They all examine to some degree the nature of the relationship between the business and the worker, and they all pay attention to the control exercised by the business over the worker. If one field decides the classification question a certain way, there is likely to be some reverberation for the analysis in other fields.
Our specific concern is that “forced clarity” in tax can tilt the direction of the worker classification debate in a way desired by the platform businesses, industry lobbyists and the legislation’s supporters....
Tuesday, September 12, 2017
A huge congratulations to Joe Seiner (South Carolina) on the publication this week by Cambridge University Press of his book The Supreme Court's New Workplace: Procedural Rulings and Substantive Worker Rights in the United States. Here's the publisher's description:
The US Supreme Court has systematically eroded the rights of minority workers through subtle changes in procedural law. This accessible book identifies and describes how the Supreme Court’s new procedural requirements create legal obstacles for civil-rights litigants, thereby undermining their substantive rights. Seiner takes the next step of providing a framework that practitioners can use to navigate these murky waters, allowing workers a better chance of prevailing with their claims. Seiner clearly illustrates how to effectively use his framework, applying the proposed model to one emerging sector - the on-demand industry. Many minority workers now face pervasive discrimination in an uncertain legal environment. This book will serve as a roadmap for successful workplace litigation and a valuable resource for civil-rights research. It will also spark a debate among scholars, lawyers, and others in the legal community over the use of procedure to alter substantive worker rights.
Saturday, August 26, 2017
Monday, August 14, 2017
Charlotte Alexander (Georgia State) and Liz Tippett (Oregon) have just posted on SSRN their article (forthcoming Missouri L. Rev.) The Hacking of Employment Law. Here's the abstract of this timely (pun intended!) article:
Employers can use software in ways that erode employment law, through noncompliance and avoidance. The software exploits outdated regulations that do not anticipate the scale and precision with which employers can manage and manipulate the work relationship. Consequently, employers can implement systems that are largely consistent with existing laws, but violate legal rules on the margin. Employers can also use software to engage in lawful workaround tactics that avoid triggering some or all of the costs of complying with employment law. However, such tactics can cause harm to workers beyond the loss of the specific workers' rights or protections being avoided. Avoidance can create new norms about what work looks like that can degrade wages and working conditions across the labor market. Finally, when employers use software to avoid the employer-employee relationship entirely, employment law itself is weakened, as more workers operate in spaces beyond the law's reach, and employment rights are left only for a privileged few. The result is a weakened employment law regime, where legal rules struggle to keep up with employers’ software-enabled innovations in noncompliance, or are rendered irrelevant as employers innovate in spaces that regulation simply does not reach. We conclude by suggesting ways that regulators can better adapt to workplaces where employers implement their decisions and define the structure of work through software.
Wednesday, July 12, 2017
A few weeks ago, Missouri’s governor signed SB43. That law amends the State’s employment law, including the Missouri Human Rights Act (MHRA), its anti-discrimination statute—mostly in employer-friendly ways. (For media reports on the legislative politics, see, e.g., here, here, and here.) Among the many changes, I’ll highlight (1) MHRA’s new causation requirement and (2) a remarkably broad preemption provision.
- But-For Causation
Most have rightly focused on how MHRA will now require but-for causation. The legislature amended the MHRA to use “because of” to denote causation and by adding these definitions:
(2) "Because" or "because of ", as it relates to the adverse decision or action, the protected criterion was the motivating factor
. . .
(19) "The motivating factor", the employee's protected classification actually played a role in the adverse action or decision and had a determinative influence on the adverse decision or action.
By these definitions, especially the word “determinative” (and “the” in “the motivating factor”), the legislature overrode Daugherty v. City of Maryland Heights, 231 S.W.3d 814, 819 (Mo. 2007). There, the court had read MHRA not to require “a plaintiff to prove that discrimination was a substantial or determining factor in an employment decision; if consideration of age, disability, or other protected characteristics contributed to the unfair treatment, that is sufficient.”
By adopting but-for causation, the MHRA will become more stringent than section 703 of Title VII, see 42 U.S.C. § 2000e-2(m), while matching up more with how the US Supreme Court reads the federal age-discrimination statute and Title VII’s retaliation provision.
- Preemption of Common Law Claims
SB43 also substantially preempts common-law employment claims, in two ways. First, MHRA now includes this: “This chapter, in addition to chapter 285 and chapter 287, shall provide the exclusive remedy for any and all claims for injury or damages arising out of an employment relationship.” The phrase “arising out of an employment relationship” is not further defined.
Second, a new "Whistleblower’s Protection Act" contains this provision: “This section is intended to codify the existing common law exceptions to the at-will employment doctrine and to limit their future expansion by the courts. This section, in addition to chapter 213 and chapter 287, shall provide the exclusive remedy for any and all claims of unlawful employment practices.” (The Act then declares what counts as an “unlawful employment practice” under the Act.)
Courts must usually read statutes to give meaning to all their terms, and cannot read them to make certain provisions superfluous. So, what more does the MHRA preemption provision cover than the whistleblower preemption provision?
If we read “arising out of an employment relationship” broadly, that provision seems to cover all Missouri common law claims predicated on an employment relationship. That would include all the ones that apply to conduct that might not violate the new whistleblower statute (e.g., tortious interference with contract, negligent hiring, intentional infliction of emotional distress, defamation, fraud). That’s because neither chapter 287 (workers’ compensation) nor chapter 285 (miscellaneous) expressly provide for a way to bring all employment-related claims under Missouri common law.
But, does that mean that the MHRA preemption provision covers common-law contract claims for breach of an employment contract? Such claims certainly “aris[e] out of the employment relationship” and entail some allegation of “injury or damages.” It’s unlikely that Missouri’s legislators wanted to stop, for example, an employer who sues for breach of an employment contract. And yet, the text of the MHRA preemption provision doesn’t distinguish between contract and tort claims. It simply covers “any and all claims for injury or damages arising out of an employment relationship.”
SB43 goes into effect on August 28.