Friday, March 15, 2019
Thanks to Aaron Halegua, who has been working on this case, for updating us. Here's an excerpt from the Associated Press story:
Seven Chinese men allege in a lawsuit that they were victims of a forced labor scheme while constructing a Saipan casino.
The casino and its contractors violated U.S. trafficking laws by exploiting the workers, the lawsuit said. Saipan is part of the U.S. Commonwealth of the Northern Mariana Islands.
The lawsuit was filed in December. It was amended Friday to add trafficking claims and to include casino owner Imperial Pacific as a defendant.
According to the lawsuit, the men were subjected to 12-hour workdays, dormitories without showers or air-conditioning and a dangerous construction site.
Friday, March 8, 2019
Today--International Women's Day--every current player on the U.S. Women's Soccer team filed a sex discrimination suit against the U.S. Soccer Federation. The suit is also seeking class status that would cover players as far back as 2015. This is essentially the next step in an earlier complaint filed by players with the EEOC in 2016. The violations claimed are under the Equal Pay Act (paying women players less than male players for substantially the same work) and sex discrimination under Title VII (based on disparate wages and treatment in comparison to male players). The Washington Post summarizes some of the factual allegations listed:
In the lawsuit, the women claim that in 2016, U.S. Soccer made more than $17 million in unexpected profits thanks largely to the women’s team, while paying the women players substantially less than their male counterparts. According to the lawsuit, a comparison of pay schedules for the two teams shows that if each team played 20 exhibition games in one year, members of the men’s team could earn an average of $263,320 each, while women’s players could earn a maximum of $99,000.
The lawsuit also highlights differences in World Cup bonuses for the two teams. After 2014 World Cup, U.S. Soccer paid out a total of $5.375 million in bonuses to the men’s team, which lost in the round of 16. In 2015, U.S.Soccer paid out $1.725 million in bonuses to the women, who won their World Cup, the lawsuit states.
One interesting element is that many of these conditions are rooted in a 2017 collective-bargaining agreement, which U.S. Soccer is sure to cite. However, traditionally, there was an expectation that unions can't waive Title VII and similar rights. Of course, there also used to be the same expectation when it came to mandatory arbitration clauses covering Title VII and similar claims, which the Court later abandoned. So stay tuned.
Yesterday, the Department of Labor announced its much anticipated proposed new overtime regulation. This goes to whether employees can be considered exempt from overtime as administrative, executive, or professional employees. The only real change is to the minimum salary threshold required to count an employee as exempt from overtime (that is, no matter what employees' duties are, if they don't make the minimum, they must get overtime if they are otherwise qualified). As readers will remember, the Obama DOL increased the salary threshold to about $47,000 a year initially, and added a measure that would have it change automatically based on average wage increases; this rule was then put on hold by a district court, largely based on a holding that the DOL relied to much on salary and not enough on employees' duties.
The new proposed rule increases the minimum salary, but only to $35,308 per year (up from the current, Bush II-era $23,660 per year that is in place after the decision striking down the previous increase). It also raised the "highly-compensated employee" rule, which makes it easier to exempt employees making over a certain amount, from $100,000 a year to $147,414. The DOL did not propose an automatic increase to these salary levels, but committed to reviewing them regularly (I'll believe that when I see it). Moreover, it left the duties test untouched.
As is the usual practice, this announcement kicks off the comment period, after which the DOL will produce a final rule. And, as is also the norm these days, there will be lawsuits. Some will argue that the increase in salary goes to far, while others will argue that the rule still makes it too easy to exempt employees. Expect mixed messages from the district courts, which parties will handpick to try to get more favorable rulings. The key, therefore, will be to wait for the appeals courts to step in. So, we should see something of a final word on the final rule in, I'd guess, a couple of years from now.
Thursday, March 7, 2019
USA Today Sports has an interesting article on minor league baseball players and their low--and, during major league spring training, nonexistent--pay. Major League Baseball classifies minor league players as being involved in "short-term seasonal apprenticeships." The article does a nice job showing why that's a stretch, to put it mildly. How has MLB pulled this off? Lobbying, and lots of it. The article explains some of the special legal maneuvers at play (pun intended):
Minor league players earn salaries that amount to less than minimum wage for up to seven years on their first pro contracts, and the rigorous spring-training schedule doesn’t exactly allow time for moonlighting.
After a lobbying effort by MLB, last year’s $1.3 trillion congressional spending bill — signed into law by Donald Trump in March — included an amendment to the Fair Labor Standards Act to exempt minor-league baseball players from federal minimum-wage protection. The so-called Save America’s Pastime Act, originally introduced in 2016 by a pair of congresspersons who received campaign donations from MLB’s PAC, appeared on page 1,967 of the 2,232 omnibus 2018 spending bill.
This winter, the league endorsed a bill in the Arizona House of Representatives to extend the federal exemption into state law in Arizona, the spring-training home for half of Major League teams. Representative T.J. Shope, who sponsored the bill, told the Arizona Capitol Times in January that spring training is “essentially a tryout,” even though all players training in every camp are already under contract with their organizations.
Shope told For The Win by email that the Arizona bill did not pass and “was probably dead before it began.” It didn’t get out of committee, meaning it never reached the statehouse floor for a vote.
That dead bill, like the inclusion of the Save America’s Pastime Act in the 2018 budget, undoubtedly reflects Major League Baseball’s efforts to combat a lawsuit first filed in 2014. Spearheaded by St. Louis-based attorney and former minor-league pitcher Garrett Broshuis, the suit seeks to apply federal minimum-wage laws to the salaries of minor leaguers. Pro players in low minor-league levels make as little as $1100 a month, only get paid during the regular season, and do not receive overtime compensation.
“MLB has signed these players up to seven-season employment contracts,” Broshuis said by phone this week. “They’re enjoying the benefits of controlling these players for seven years. On the contract, it calls them employees. They have a responsibility to treat them as normal employees should be treated. They can’t enjoy the benefits of it and not be required to meet the responsibilities that come with it.
Even if you're not a sports fan, this issue is a good reminder that wage and classifications issues didn't start with Uber. In fact, I see a lot of parallels with other industries that manage to dangle low probability/high reward opportunities in front of individuals who will work for nothing, whether as an apprentice, volunteer, or intern (I'm looking at you, fashion and entertainment industries).
Definitely read the article, as it provides a lot of detail about what's going on and the severe disparities that exist on the same field.
Friday, February 15, 2019
I normally try to avoid too much self-promotion on the blog, but I wanted to post a new draft article of mine. Hopefully the topic is of interest, but I post it mainly because I'd love comments and thoughts, which you can send me directly (I'm going through the journal submission process now, but still need to work on some things, especially citations). The article is called Future Work and is available on SSRN. The abstract:
The Industrial Revolution. The Digital Age. These revolutions radically altered the workplace and society. We may be on the cusp of a new era—one that will rival or even surpass these historic disruptions. Technology such as artificial intelligence, robotics, virtual reality, and cutting-edge monitoring devices are developing at a rapid pace. These technologies have already begun to infiltrate the workplace and will continue to do so at ever increasing speed and breadth.
This Article addresses the impact of these emerging technologies on the workplace of the present and the future. Drawing upon interviews with leading technologists, the Article explains the basics of these technologies, describes their current applications in the workplace, and predicts how they are likely to develop in the future. It then examines the legal and policy issues implicated by the adoption of technology in the workplace—most notably job losses, employee classification, privacy intrusions, discrimination, safety and health, and impacts on disabled workers. These changes will surely strain a workplace regulatory system that is ill-equipped to handle them. What is unclear is whether the strain will be so great that the system breaks, resulting in a new paradigm of work.
Whether or not we are on the brink of a workplace revolution or a more modest evolution, emerging technology will exacerbate the inadequacies of our current workplace laws. This Article discusses possible legislative and judicial reforms designed to ameliorate these problems and stave off the possibility of a collapse that would leave a critical mass of workers without any meaningful protection, power, or voice. The most far-reaching of these options is a proposed “Law of Work” that would address the wide-ranging and interrelated issues posed by these new technologies via a centralized regulatory scheme. This proposal, as well as other more narrowly focused reforms, highlight the major impacts of technology on our workplace laws, underscore both the current and future shortcomings of those laws, and serve as a foundation for further research and discussion on the future of work.
February 15, 2019 in Employment Discrimination, Labor and Employment News, Pension and Benefits, Public Employment Law, Scholarship, Wage & Hour, Worklife Issues, Workplace Safety, Workplace Trends | Permalink | Comments (0)
Wednesday, January 2, 2019
The American Federation of Government Employees has initiated a suit on behalf on of two federal corrections officers who have not received earned overtime pay. The class is likely to grow substantially if the shutdown continues past Jan. 5, as that's the next regularly scheduled payday. Indeed, it is estimated that over 400,000 employees have been deemed essential and are required to continue working during the shutdown.
Like a similar suit brought during the 2013 shutdown by the same law firm--Kalijarvi, Chuzi, Newman & Fitch--the employees are claiming FLSA violations. What I hadn't realized is that despite a win in the 2013 suit, 25,000 employees still haven't received damages (they were awarded liquidated/double damages). If anyone knows why, I'd love to hear it. In any event, the prospect of double damages for over 400,000 employees for heaven knows how many hours of work would, I hope, give politicians extra incentive to get this resolved. That said, no matter how big an FLSA award might be, it still pales in comparison to a $5 billion wall . . . .
Wednesday, October 31, 2018
Some recent labor and employment news:
- Wages look like they're finally rising in a significant way. A DOL report showed an almost 3% increase in wages for this time last year, which outpaces inflation and is the highest increase in a decade.
- A couple of joint-employer items. First, the NLRB has extended the time to comment on a proposed new rule to Dec. 13. Also, the tussle between Congressional Democrats and the Board over the proposed change continues. As this Bloomberg Law (subscription required) article details, the Democrats want evidence supporting the claim that the current, broader joint-employer test is causing the problems that critics claim. This touches on a broader area--the NLRB is really bad at using actual evidence to support its policy views. Some of this is the legacy of the ban on economic analysis (which is so stupid--why in the name of all that is rational can't we have a bipartisan agreement that analysis is useful for labor law, like, say, the rest of the government?). But some of this, frankly, is just lazy. There's nothing stopping the Board from citing others' studies, which it does far less that it could. And this is an equal-opportunity offense. Although some members have been better on this, Board from both parties tend to be woefully inadequate on this score.
- As is the case when the White House changes parties, the DOL has been adjusting how it regulates union finance requirements. Unsurprisingly, they're ratcheting up the requirements by increasing the number of entities covered and expanding what covered entities need to provide. This is shades of the Bush II administration, where the changes were challenged in court. Expect the same here.
- The General Counsel has announced that it's changing its approach to allegations of union negligence. In contrast to the long-standing deferential approach the Board has taken, the GC says he will now prosecute unions for negligence under Section 8(b)(1)(A) (for failure of the duty of fair representation) when it does things like lose a complaint or fails to return a call.
Tuesday, October 2, 2018
Two Fight for $15 stories today. The first is that Amazon has agreed to pay all of its U.S. workers at least $15 an hour. Notably, this includes part-time and temp workers. Effective November 1, this change is expected to apply to 350,000 workers (although I can't find a number on the number of those workers who currently make less than $15 an hour). Amazon is also raising pay in Britain. This follows other increases or promised increase by major companies like Target, but given Amazon's size and profile, it's unsurprising that this is making a bigger splash.
In related news, the Fight for $15 movement has organized a series of national walkouts, rallies, and protests from October 2-4. The aim of these actions are for higher pay and to help candidates that support labor rights. Its still early, but thus far some of the more notable actions seem to be focused in the Midwest, although there are certainly others as well.
Thursday, August 9, 2018
NYC's City Council just passed legislation to stop issuing new ride-hailing licenses for one year. The legislation also requires Uber and similar companies to ensure that drivers earn at least $17.22 per hour (calculated over a week)--like the FLSA tip rule, if drivers don't make that much, the companies must pay the drivers the difference. This can be significant especially in a city like NYC, where almost 85% of drivers make below $17.22/hour and two-thirds of drivers work full-time for ride-hailing companies.
I find the minimum pay provision to be interesting because it puts in motion something I've been thinking about for a while. One of the difficulties in the current "employee"/"not-employee" dichotomy is how much rides on that distinction (pun intended). It's always struck me that this definitional question misses the point. We're stuck with this outmoded definitional hang-up because of current law, but the real question we should be asking is what type of protections do we want for which type of workers. There will always be difficult line drawing, but I think there are areas of agreement. For instance, we've got a long-standing policy of ensuring a minimum pay for the vast majority of "employees." Are there many workers--even those currently classified as independent contractors--who shouldn't also receive at least $7.25/hour? I don't think so. Same for workplace safety and other protections. The devil's in the details, to be sure, but NYC's new legislation represents one step in the direction of ensuring worker rights, rather than just employee rights. And it's a move I'm glad to see.
Finally, a brief plug for a recent article I co-authored with Joe Seiner exploring non-traditional collective action in ride sharing and other modern industries. There's a lot of interesting things going on, but also a lot of legal questions prompted by new activity fitting into old laws.
Tuesday, May 1, 2018
Yesterday, the California Supreme Court issued what is likely to be a bombshell decision in Dynamex Operations v. Lee. Dynamex involved a wage claims brought by a driver under California law. The employer defended with the oft-used (and often successful) argument that the driver and his similar colleagues were independent contractors, not employees. You can check out the decision for the facts, but they will be very familiar to those who spend any time looking at this area. What is more important is how the court analyzed them.
In Dynamex, the court decided to change its standard for determining whether a worker is an employee or independent contractor under the part of the state wage statute that defines "employ" as "to suffer or permit work" (there are two other definitions of "employ"). In particular, it adopted what is referred to as the "ABC test." Under this rule, a worker is presumed to be an employee unless the purported employer can establish three factors. Because of its importance, I'm going to quote the court's formulation, while editing the layout for easier reading:
This [ABC] standard, whose objective is to create a simpler, clearer test for determining whether the worker is an employee or an independent contractor, presumes a worker hired by an entity is an employee and places the burden on the hirer to establish that the worker is an independent contractor. Under the ABC standard, the worker is an employee unless the hiring entity establishes each of three designated factors:
(a) that the worker is free from control and direction over performance of the work, both under the contract and in fact;
(b) that the work provided is outside the usual course of the business for which the work is performed; and
(c) that the worker is customarily engaged in an independently established trade, occupation or business (hence the ABC standard).
If the hirer fails to show that the worker satisfies each of the three criteria, the worker is principal federal wage and hour legislation.
Although it remains to be seen how soon and how big an effect this decision will have, I'm not going out on a limb by predicting that this represents a major change. The ABC test is clearly broader than the FLSA's "economic realities" test, so at a minimum more California workers will enjoy protection under the relevant statute. But California's size and the fact that this is likely to impact gig work could lead to a shift in how some companies classify and pay their gig workers in other states. Time will tell . . . .
Tuesday, April 3, 2018
Yesterday, the US Supreme Court decided Encino Motorcars v. Navarro in a way that rejected past precedent requiring courts to read FLSA’s statutory exemptions narrowly. In a 5-4 ruling, the Court ruled that FLSA exempts a service adviser at a car dealership from its overtime protections under the exemption for “any salesman . . . primarily engaged in . . . servicing automobiles.” 29 U.S.C. § 213(b)(10)(A).
In doing so, however, Justice Thomas, writing for the majority, rejected the general “principle that exemptions to the FLSA should be construed narrowly.” Encino, Slip Op. at 9. Here’s his reasoning:
We reject this principle as a useful guidepost for interpreting the FLSA. Because the FLSA gives no “textual indication” that its exemptions should be construed narrowly, “there is no reason to give [them] anything other than a fair (rather than a ‘narrow’) interpretation.” Scalia, Reading Law, at 363. The narrow construction principle relies on the flawed premise that the FLSA “‘pursues’” its remedial purpose “‘at all costs.’” American Express Co. v. Italian Colors Restaurant, 570 U. S. 228, 234 (2013) (quoting Rodriguez v. United States, 480 U. S. 522, 525-526 (1987) (per curiam)); see also Henson v. Santander Consumer USA Inc., 582 U. S. ___, ___ (2017) (slip op., at 9) (“[I]t is quite mistaken to assume . . . that whatever might appear to further the statute’s primary objective must be the law” (internal quotation marks and alterations omitted)). But the FLSA has over two dozen exemptions in § 213(b) alone, including the one at issue here. Those exemptions are as much a part of the FLSA’s purpose as the overtime-pay requirement. See id., at ___ (slip op., at 9) (“Legislation is, after all, the art of compromise, the limitations expressed in statutory terms often the price of passage”). We thus have no license to give the exemption anything but a fair reading.
In so reasoning, Justice Thomas’s majority opinion didn’t “acknowledg[e] that it unsettles more than half a century of our precedent.” Dissent of Justice Ginsburg, Slip. Op. at 9-10 n.7. See A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 493 (1945) (FLSA “was designed ‘to extend the frontiers of social progress’ by ‘insuring to all our able-bodied working men and women a fair day’s pay for a fair day’s work.’ Message of the President to Congress, May 24, 1934. Any exemption from such humanitarian and remedial legislation must therefore be narrowly construed, giving due regard to the plain meaning of statutory language and the intent of Congress. To extend an exemption to other than those plainly and unmistakably within its terms and spirit is to abuse the interpretative process and to frustrate the announced will of the people.”); accord Citicorp Industrial Credit Co. v. Brock, 483 U.S. 27, 35 (1987); Mitchell v. Kentucky Finance Co., 359 U.S. 290, 295 (1959)(“It is well settled that exemptions from the Fair Labor Standards Act are to be narrowly construed.”)(citations omitted). In her dissent, Justice Ginsburg called this FLSA precedent a “well-grounded application of the general rule that an ‘exception to a general statement of policy is usually read . . . narrowly in order to preserve the primary operation of the provision.’” Dissent Slip. Op. at 9 n.7 (quoting Maracich v. Spears, 570 U.S. 48, 60 (2013)).
Management-side lawyers will likely now invoke Encino often in FLSA exemption litigation. But, it’s hard to know how much this will affect FLSA case outcomes, because it’s unclear how much the “narrowly-read FLSA exemptions” rule had affected FLSA case outcomes in any event, that is, how often that rule operated as makeweight versus a genuine tie-breaker.
More puzzling: The Court could have easily sidestepped the issue by saying that, given the strength of all the other reasons to read § 213(b)(10)(A) the way it did, there was, in this case, really no tie for the “narrowly-read FLSA exemptions” rule to break. Instead, the Court’s majority seems to have wanted to overrule this prior FLSA precedent but without expressly saying that it was directly overruling it as precedent. The mystery is which Justice(s) in the Encino majority (Thomas, Roberts, Kennedy, Alito, Gorsuch) wanted this in the opinion, and why.
Tuesday, March 20, 2018
On March 5, 2018, the U.S. Department of Labor announced that settlements totaling $13.9 million and covering over 2,400 workers with four Chinese contractors building the Imperial Pacific casino in Saipan. Many of these workers paid $6,000 or more to labor brokers in China, incurring significant debts with high interest rates, based on false promises of high-paying jobs in the United States. Instead, upon arriving in Saipan, the workers were stripped of their passports, forced to work long hours under dangerous conditions, and paid below minimum wage. OSHA also imposed significant fines against these contractors and the Department of Justice prosecuted several managers of these companies. News of the settlement was published by numerous media outlets, such as the Associated Press, New York Times, Washington Post, and South China Morning Post, and included a quote from Aaron Halegua, a lawyer and NYU research fellow who assisted the workers in this process and has written about the situation in Saipan elsewhere. Aaron discussed the importance of the settlement and necessary measures to prevent similar abuses from happening again. Specifically, he recommended that the casino, at a minimum, require contractors to purchase surety bonds, train workers about their rights, and hire a third-party monitor to oversee safety and labor conditions. One of the challenges will be distributing the settlement monies as almost all of the workers are now back in China.
Wednesday, March 7, 2018
The US Department of Labor (DOL) unveiled yesterday a new six-month pilot program to encourage employer compliance with the Fair Labor Standards Act. Under the Payroll Audit Independent Determination program (PAID), DOL would cover any back pay employers owed to workers under FLSA (wages owed under FLSA’s minimum wage or overtime provisions). In exchange, the employees would release any of FLSA claims for those violations, and employers would agree to self-auditing procedures for their pay practices. See here, the PAID website here, along with mixed reactions reported here.
One DOL-touted benefit of PAID: Participating employers won’t have to pay FLSA “liquidated damages or civil monetary penalties” so long as those employers “proactively work with WHD to fix and resolve the compensation practices at issue.” DOL won’t make them and, it seems, employees would at least release the employer from any liquidated damages otherwise owed under FLSA for the “identified violations” and relevant time period.
This matters. An employer that violates FLSA is on the hook not just for the wages it should have paid but didn’t (back pay) but also “an additional equal amount as liquidated damages,” 29 U.S.C. § 216(b), unless the employer can show that it’d acted “in good faith” and had “reasonable grounds for believing that his act or omission” didn’t violate FLSA, 29 U.S.C. § 260. So, if a worker is owed $40 in unpaid wages, she may recover up to $80, that is, the $40 in unpaid wages plus and the “additional equal amount” (another $40, the “liquidated damages”).
The FLSA liquidated damages provision isn’t just a damages multiplier. Rather, according to the US Supreme Court, it refers a separate item of compensatory damages: the loss that results because the employer didn’t pay the owed wages on time. Such as loss is real, especially where the worker needs the wages paid on time to maintain a minimal standard of living, but Congress thought that type of loss “too obscure and difficult of proof for estimate other than by liquidated damages.” Brooklyn Savings Bank v. v. O’Neil, 324 U.S. 697, 707-08 (1945).
Accordingly, the employer who gets PAID stands to save up to double–not just the back pay they’d owe the employee, but also the liquidated damages they’d also pay, in cases where the employee would otherwise sue and win. Since FLSA has a fee-shifting statute, employers stands to save more still in such cases. (Even more still if employers fear a FLSA hot-goods injunction. More on that here.) By the same token, however, employees who sign FLSA releases under PAID stand to give up any liquidated damages award, that is, up to half of what they’d recover if they sue and win. DOL’s view: Under PAID, employees will get all their owed back wages “faster” than if they had to sue, and “without having to pay any litigation expenses or attorneys’ fees.”
Now, a puzzle: How would an employer getting PAID fare under parallel State wage and hour law? Like FLSA, many States have wage and hour laws with liquidated damages provisions. See, e.g., Cal.Labor Code § 1194.2; Md. Labor and Employment Code § 3-427(a)(2); W. Va. Code § 21-5B-4(a). In States where the employer’s acts or omissions violated both FLSA and a State’s wage and hour law, would the employee’s release under PAID cover only any FLSA claim or any and all legal claims (including State law claims) arising from the employer’s underpayment? In some States and localities, this matters, because the minimum wage and overtime provisions are more generous there. This issue matters less in, for example, the five States with no State minimum wage.
Wednesday, February 21, 2018
Why are women paid less than men? Prevailing ethos conveniently blames the woman and her alleged inability to negotiate. This article argues that blaming women for any lack of negotiation skills or efforts is inaccurate and that prevailing perceptions about women and negotiation are in-deed myths. The first myth is that women do not negotiate. While this is true in some lab studies and among younger women, more recent workplace data calls this platitude into question. The second myth is that women should avoid negotiations because of potential backlash. Although women in leadership do face an ongoing challenge to be likeable, it is clear that not negotiating has long-term detrimental effects. The third myth, based on the limited assumption that a good negotiator must be assertive, is that women cannot negotiate as well as men. However, the most effective negotiators are not just assertive, but also empathetic, flexible, socially intuitive, and ethical. Women can and do possess these negotiation skills. This article concludes by proposing an action plan which provides advice on how women can become more effective negotiators and identifies structural changes that might encourage negotiation and reduce the gender pay gap.
Tuesday, February 20, 2018
From Marianne Levine, Behind the Minimum Wage Fight, a Sweeping Failure to Enforce the Law, Politico 2/18/18:
As Democrats make raising the minimum wage a centerpiece of their 2018 campaigns, and Republicans call for states to handle the issue, both are missing an important problem: Wage laws are poorly enforced, with workers often unable to recover back pay even after the government rules in their favor.
That’s the conclusion of a nine-month investigation by POLITICO, which found that workers are so lightly protected that six states have no investigators to handle minimum-wage violations, while 26 additional states have fewer than 10 investigators. Given the widespread nature of wage theft and the dearth of resources to combat it, most cases go unreported. Thus, an estimated $15 billion in desperately needed income for workers with lowest wages goes instead into the pockets of shady bosses.
But even those workers who are able to brave the system and win — to get states to order their bosses to pay them what they’re owed -- confront a further barrier: Fully 41 percent of the wages that employers are ordered to pay back to their workers aren’t recovered, according to a POLITICO survey of 15 states.
That’s partly because, in addition to lacking resources, states lack the tools to go after the landscaping firms, restaurants, cleaning companies and other employers that shed one corporate skin for another, changing names while essentially continuing the same businesses — often to evade orders to pay back their workers.
Thursday, February 15, 2018
U.S. workers are increasingly finding it difficult to escape from work. Through their smartphones, email, and social media, work tethers them to their workstations well after the work day has ended. Whether at home or in transit, employers are asking or requiring employees to complete assignments, tasks, and projects outside of working hours. This practice has a profound detrimental impact on employee privacy and autonomy, safety and health, productivity and compensation, and rest and leisure. France and Germany have responded to this emerging workplace issue by taking different legal approaches to providing their employees a right to disconnect from the workplace. Although both the French legislative and German corporate self-regulation models have their advantages, this paper puts forth a hybrid approach using existing U.S. safety and health law under OSHA to respond to this employee disconnection problem. Initially under the general duty of clause of OSHA, and then under OSHA permanent standards and variances, this article provides a uniquely American approach to establishing an employee right to disconnect from work.
Friday, January 12, 2018
I posted yesterday on the conference earlier this week on minimum wage laws in developing countries. Daniel Helman (Ton Duc Thang University, Labor Relations & Trade Unions) circulated a follow-up email making a point about minimum wage laws I hadn't considered before. I suspect his argument has equal force when a single state or municipality in the U.S. raises its minimum wage significantly above (extraordinarily low, by any historical standard) national base rate. Here is Daniel's argument:
During my recent visits to Australia and Singapore (in December) I spent some time networking with academic colleagues. In both places people were talking about how Vietnam was projected to be the most important economy in SE Asia in twenty years. One of the key indicators of this projection is the rate of rise of wages here in Vietnam. The rapid wage increase is seen as a reflection of economic strength and an indicator of future economic growth.
Thus the trend in wage increases signals to the rest of the world that the economy of Vietnam is becoming increasingly robust. Such a signal leads to foreign investment at a consumer level—as international companies aim to establish an economic presence here in Vietnam. They do this now so that in the future, as the domestic demand is large, they will have a well-established presence and will be able to command a large share of the market in their sector.
Of course Vietnam has other features that influence its future success, such as a single-party system which allows for more focused and beneficial policies to be implemented more easily than in other systems; and a culture that is perhaps more focused on its own success after so much hardship for so many decades; and other intangibles, such as respect for the role of work and effort in the family. But the increase in wages—based in large part on the increases in the minimum wage over the past several years, has done a great deal to place Vietnam very high in its economic forecast. Such a signal leads to future investment, and these facts can form a strategy to (rightly) promote future increases in the minimum wage here so that it will reach the level of a living wage sufficient to meet more basic needs. It is similar to the point [ILO Vietnam Country Director] Dr. Chang-Hee Lee made on the first day [of the conference], about how increases in the minimum wage increase demand.
Obviously the totality of pathways and feedbacks are more complicated than what I have written above, but the essential point is that the rate of increase in wages is a signal of the growing robustness of the domestic market; and that this signal is read by global economic stakeholders and influences their behavior.
Thursday, January 11, 2018
Earlier this week I participated in a conference on minimum wage laws in Viet Nam (and SE Asia generally) at the Tôn Đức Thắng University Labor College in Ho Chi Minh City (Saigon), Viet Nam. International wage & hour law is not my specialty, so it was a pleasure to learn from the many law faculty, workers' advocates, employer representatives, and even even the former head of the VGCL (the government-controlled unified trade union) attending. My key take-aways:
The traditional neoclassical economic argument that increasing the minimum wage decreases employment may have even less salience in developing countries than in developed ones. Even in the countries like Viet Nam that produce a large quantity of the clothing, electronics, and other goods consumed in the West, the vast majority of workers still work in services and manufacturing for the local economy. Raising minimum wages can increase both worker productivity and domestic consumption, which can have a positive effect on economic growth and employment and thus offset potential negative effects.
The risk of capital flight in response to raising the minimum wage is overstated. A MNC that has built a factory here is unlikely to relocate it because of a requirement that it spend an extra few cents per hour on wages. It's less clear how increases in minimum wage laws might influence future capital allocation decisions.
- Companies looking to maximize profits by minimizing labor costs are barking up the wrong tree -- they should instead be looking to cut supply-chain costs. The pair of Nikes we spend $150 for in the West costs about $12 to make, of which $2-3 is labor costs. The $138 difference between retail price and cost-of-production is where companies should be looking if they want to squeeze further profits. Nike could slash those costs by vertically integrating, which would have the salutary effect of making Nike directly and obviously responsible for the workers who make the company's shoes. The fact that the Nikes of the world aren't doing this is telling.
- The proportion of workers in the informal economy has a huge impact on the efficacy of minimum wage laws. Minimum wage laws may actually exacerbate wage inequality in countries where a large proportion of workers are off-the-books.
- Minimum wage laws can perform an important signaling effect in developing countries. I'll add a guest post on this topic shortly.
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....