Is the American job market becoming less fluid, as a new paper by Steven Davis and John Haltiwanger argues, with less job-switching and fewer vacancies opening up at established employers? And to the extent this is an unwelcome trend, which policies might be contributing to it? [The Economist; some possibly contrary data points from Alex Tabarrok]
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.
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]