Coyote, updated, and Hans Bader write about yet another new burden loaded on federal contractors, involving the creation of separate affirmative action plans for each installation, including those that do no federal contract business. One result will be to pressure some firms that do only a little federal work to get out of the government contracting business entirely, rather than submit to escalating cost and open-ended legal consequences.
Meanwhile, notes Bader, another part of the Obama administration’s rapidly proliferating “pen and phone” regulation of the workplace “will make it very costly for employers to challenge dubious allegations of wrongdoing against them,” by “[allowing] the government to cut off the contracts of contractors and subcontractors that do not ‘consistently adhere’ to a multitude of complex federal labor, antidiscrimination, harassment, and disabilities-rights laws.” Even more damaging, it will forbid many applications of pre-dispute arbitration to workplace disputes, thus shunting grievances into courtroom litigation. “It will allow trial lawyers to extort larger settlements from companies, and enable bureaucratic agencies to extract costly settlements over conduct that may have been perfectly legal.”
Earlier on regulation of federal contractors, a program driven by executive orders and particularly at the mercy of White House discretion, here and here, here, here, here, and generally at this new tag.
In this Cato podcast (7:01), I talk with Caleb Brown about the National Labor Relations Board’s groundbreaking attempt last week to tag McDonald’s with liability for labor violations found at its independently owned local operators. (Reportage: Steven Greenhouse, NYT; Jon Hyman; Diana Furchtgott-Roth/RCP) It’s a drastic departure from current law that would carry implications for outsourcing more generally: a food company that contracts with independent farmers to grow a particular crop, for example, might wind up being liable for the farmers’ treatment of farm workers, a company that outsources its cafeteria, vehicle maintenance, or janitorial services to outside vendors might become legally responsible for ensuring the labor-law compliance of those contractors, and so forth.
The McDonald’s case is the first of what is expected to be multiple cases filed by the NLRB’s general counsel (akin to a prosecutor), and the full Board has not ruled on the resulting complaints, although given the union-friendly role of the Obama NLRB that is likely to be little more than a formality. The initiative will inevitably land in the courts, which have not always been friendly toward Obama regulatory adventurism, and perhaps eventually the Supreme Court.
One consequence, successful or otherwise, if this ploy works: by treating legally distinct entities that contract with each other as if they were parts of a single vertically integrated enterprise, progressive labor law thinkers will create an incentive for giantism to become more real, by giving fast-food franchisers, for example, legal reason to move toward company-owned rather than independently-owned store arrangements. Not for the first time, the law would mow down the ranks of mid-sized businesses in favor of large or nothing. Commentary from others: Megan McArdle; Stephen Bainbridge; Catherine Fisk, On Labor (supporting the idea); Steve Caldeira, The Hill; Alex Bolt. And a relevant House hearing.
The town of Stratford, Connecticut entered an employment agreement with its director of human resources, stating that his employment would be entirely at-will and further providing:
Based upon the annual performance evaluation, and at the [m]ayor’s sole discretion and recommendation, the base salary may be increased on July 1 of each fiscal year, subject to the approval of the [council], which by Charter fixes the salaries of all mayoral appointees.
Subsequently, the town council voted to reduce the manager’s salary, and the dispute went to litigation. Both a trial court and a Connecticut appeals court agreed with the manager’s argument that even though the document prescribed an at-will relationship, by specifying that the base salary “may be increased” it was implicitly promising that it would never be decreased. [Daniel Schwartz; Adams on Contract Drafting]
Upland, Calif.: “A California family is stumped about what to do with a live-in nanny they say refuses to work, refuses to be fired and refuses to leave. In fact, Marcella Bracamonte claims that the nanny, Diane Stretton, has threatened to sue the family for wrongful firing and elder abuse.” Stretton’s hiring agreement with the Bracamontes entitles her to room and board as part of her compensation, but she now indicates that she is suffering a disability and stays mostly in her room, the couple says. After the dispute arose the Bracamontes discovered that Stretton is on the state vexatious-litigants list and has been involved in at least 36 lawsuits; police say because Stretton is in residence it is a civil matter, but a judge threw out the couple’s initial eviction attempt, saying they had not filled out a quit notice correctly. [ABC News, auto-plays video ad; CBS Los Angeles] In September of last year, whether coincidentally or not, California Gov. Jerry Brown signed into law the so-called California Domestic Workers’ Bill of Rights, affording domestic workers substantially more legal leverage in disputes with their employers. [SCPR] (& Scott Greenfield, with commenters)
“It is a truism that laws tend to be arranged for the benefit of the political class.” Even so, would you expect Connecticut law to provide that private employers must hold open the jobs of full-time elected officials for as much as eight years in case they decide to return? My new blog post at Cato has details.
In an April decision, the National Labor Relations Board found largely unlawful a hospital’s employee handbook policy as follows:
…11. We will not make negative comments about our fellow team members and we will take every opportunity to speak well of each other.
16. We will represent [the hospital] in the community in a positive and professional manner in every opportunity.
21. We will not engage in or listen to negativity or gossip. We will recognize that listening without acting to stop it is the same as participating.
The reason? Under NLRB doctrine, in both non-union and union workplaces, negative discussion of managers and other co-workers could count as “protected activities” linked to the potential for concerted labor action.
[Jon Hyman, Ohio Employer's Law Blog, on the April case of Hills & Dales General Hospital (PDF)]
The Wall Street Journal last month (paywalled, no link) reported on how the long-moribund British auto industry now has a striking success, BMW’s Mini plant in Oxford, along with a hopeful sign for the future, Tata Motors Ltd.’s plans to invest $2.5 billion in its Jaguar plant in Solihull:
Workplace flexibility is a big factor behind the success of the U.K.’s auto industry, experts say. The Mini plant operates under the “working time account” model, which lets employees build up extra working hours that they can then draw on in downtime. …
“This is impossible in the rest of Europe on any relevant scale because of local legislation that protects workers’ rights and pay,” said John Leech, head of the U.K. automotive section at consultancy KPMG.
Labor and left-wing advocates are staging a concerted push for this measure, which opponents say is particularly burdensome to small business. “Supporters cite their success in gaining the enactment of paid sick day laws in Connecticut and six U.S. cities — the District of Columbia, Jersey City, N.J., New York City, Portland, Ore., San Francisco and Seattle–as proof that the campaign is gaining momentum.” Opponents are fighting back with, among other steps, legislation passed in at least ten states specifying that municipal home rule does not include the authority to enact ordinances of this sort. [Rhonda Smith, Bloomberg BNA]
If a worker has been taking leave under the Family and Medical Leave Act for “extreme fatigue” or “mental distress” and you as an employer discover that they’re working another job, you might think it’s okay to dismiss them just for the lack of candor. But don’t assume that! Under the current state of the law, if you’ve informed employees expressly that you’ve got a policy against working at other jobs and if you’ve “uniformly applied” that policy, that is to say, applied it rigidly in the past whatever the equities of the particular situation, then maybe you’ll be in the clear. Maybe. [Christopher Engler, Connecticut Employment Law Blog]
And a good thing too:
In 2008, 1.9 million Portuguese workers in the private sector were covered by collective bargaining agreements. Last year, the number was down to 300,000.
Spain has eased restrictions on collective layoffs and unfair dismissal, and softened limits on extending temporary work, allowing workers to be kept on fixed-term contracts for up to four years.
The New York Times being the New York Times, the trend story is largely anchored by the views of critics who detest the trend and view it as ushering in (new Times preoccupation) American levels of economic inequality, but it still more or less admits that labor market liberalization in Germany has contributed to that nation’s relatively strong economic performance in recent years. Comedy bonus: a description of the United States as a place “where the government hardly interferes in the job market.” [Eduardo Porter, New York Times]
“Did the law firm [Ropes & Gray] retaliate against John Ray III by providing information about his Equal Employment Opportunity Commission race-discrimination complaint to the Above the Law blog?” That is among the questions a federal court in Boston will consider in a trial beginning next month. Specifically, the firm sent a copy of the EEOC’s determination letter in Ray’s case to the popular blog. Since no law bars “retaliation” by employees against employers, we might arrive at a situation in which an employee is free to try his case in the press, while an employer’s hands are tied against responding in kind. [ABA Journal; earlier]
The article, by Ruth Graham in the Boston Globe “Ideas” section, takes more or less for granted that private parties’ liberties of free association and contract must be curtailed in order to right the “galloping injustice of ‘lookism’”:
Tentatively, experts are beginning to float possible solutions. Some have proposed legal remedies including designating unattractive people as a protected class, creating affirmative action programs for the homely, or compensating disfigured but otherwise healthy people in personal-injury courts. Others have suggested using technology to help fight the bias, through methods like blind interviews that take attraction out of job selection.
Well, if experts favor these measures — though there is nothing even remotely new or unusual about allowing damage recovery for disfigurement in a personal injury action — well, okay, then. I was critical of the “looksism” crusade some years back in my book on employment law, The Excuse Factory, but clearly to not enough effect, since more such laws have been passed since then:
The Constitution forbids employment discrimination on the basis of things like race, sex, and religion [no, it doesn't -- it's federal statutes that do that -- W.O.], but only a few jurisdictions have tried to add appearance to the list, starting with the parts of appearance you can measure. The state of Michigan banned height and weight discrimination in 1977, and six municipalities, including Washington, D.C., and San Francisco, have followed suit with similar statutes. These laws haven’t led to a flood of frivolous suits, as libertarians might fear — in fact, they haven’t led to many suits at all, which suggests they aren’t doing much more than tackling the most egregious cases. ([Stanford lawprof Deborah] Rhode’s book reports that in Michigan, an average of just one case a year makes it to court.)
Notice that the paucity of cases filed directly under these statutes (although one would find more if one looked at suits invoking the ADA) is somehow supposed to be a reproach to libertarians for objecting. One might equally well interpret it as an indicator that such laws are mostly a waste of time even from their proponents’ standpoint, since so few persons are willing to swear out a public document in front of the world alleging that they have lost job opportunities due to personal unattractiveness. (& welcome Instapundit readers)
The HR maxim “Hire slow, fire fast” takes deeper root as the law provides more and more handles for the disgruntled employee to litigate. I explain why at Cato at Liberty.