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Who Names the Price?

Naomi R. Sunshine, Employees as Price-Takers, 22 Lewis & Clark L. Rev. 105 (2018).

In Employees as Price-Takers, Naomi Sunshine defines employees as workers who lack “significant input into the prices charged to customers and their own pay rates.” (P. 110.) Sunshine’s proposal comes amidst a blizzard of articles, court cases, tribunal opinions, legal briefs, and white papers all examining this critical issue. It stands out amidst the snow drifts because of its simplicity, and because it provides a creative and intuitive insight. Her price-setting definition of employment has the potential to reorient current debates around this new metric.

There are several competing definitions of “employee,” and Sunshine carefully surveys the landscape. She discusses the dominant “control” test with its different variations, as well as the “economic realities” test, the “entrepreneurial opportunities” test, and the relatively new “ABC” test used in California and elsewhere. She illustrates these tests with the example of an HVAC worker as the paradigmatic independent contractor and examines how the test would categorize such a worker. Sunshine’s quiet unpacking of the entrepreneurial opportunities test is particularly deft, as she works her way down to the test’s foundational focus on the opportunity for profit or loss. She shows how the test renders the most vulnerable workers even more vulnerable, as it leaves them bereft of employment protections even when the potential for profits is merely illusory.

Employees as Price-Takers also examines the idea of an intermediate category between employee and independent contractor. The article looks at academic and policy proposals like Harris and Krueger’s “independent worker” delineation,1 as well as laws such as Canada’s “dependent contractor” statutes. She questions whether a third category is necessary if such workers could appropriately be defined as employees. Her analysis raises important questions, such as: What would the purpose of this third category be? Which “employment” protections would be extended, and which would be withheld? As Sunshine points out, the Fair Labor Standards Act has an expansive definition of employee similar to the Canadian dependent contractor—and thereby may sneakily cover the intermediate category itself. And yet many of these “third way” proposals do not extend minimum wage or hour protection to this middle category.

The primary innovation of the article is its new definition of employment. Sunshine nicely sets out the case for making control over price and pay the critical component of employment—the one that renders employees economically vulnerable. She contends: “If the company controls prices vis-à-vis the customer . . . . the worker is really just a representative of the company—the customer has sought a service from the company, and the worker is the one fulfilling that service.” (P. 149.) Sunshine here keys in on the critical difference between working independently and working as part of a firm. Employees work for an economic firm, and the firm is the economic actor within the relevant marketplace. As Ronald Coase recognized in The Nature of the Firm,2 firms replace markets when they can operate more efficiently as a collective outside of the market. Independent contractors, on the other hand, are not part of the alleged employer—they work as sole proprietors, or as part of a different firm. In the words of the Restatement of Employment Law, “individuals provide services as independent businesspersons if they are able to serve their own economic interests through entrepreneurial control over a significant part of their costs or opportunities for profit.”3 This differentiation is a fairly basic economic one, and it should be a basic legal one, as well. However, reducing the differences between markets and firms to easily discernible factors has proven quite difficult. This is where Sunshine’s ingeniously simple test comes in: who sets the price?  A worker who controls the pricesultimately charged to consumers for an end-product or service is an independent contractor; a worker who does not is an employee.

Sunshine does not resolve every theoretical and doctrinal issue related to this new test, nor would one expect her to do as much in a single article. She makes clear from the beginning that her test is best addressed to workers who interact directly with the customers, forming a triangular relationship between firm, worker, and customer. (Pp. 111-12.) In a bilateral relationship, the employee will always have a say over her pay, as it is (in theory) negotiated between the two parties. This distinction is why I initially found her reference to price and pay, rather than just price, to be confusing. However, her insights into the nature of control over contracting might also apply, in some ways, to bilateral relationships. Sunshine should go back to her HVAC example and think through how her insights on price might apply there.

One other wrinkle for Sunshine’s “price-pay” test is the algorithm used by Uber and other platform companies. Uber claims that it is not a transportation company, but rather an information services company that connects riders with drivers. The argument has some intuitive appeal: no one argues that eBay is a retailer when it provides a marketplace for goods. But Sunshine’s new test resolves this nicely, because the eBay sellers and buyers set their own prices. Uber, on the other hand, has established a metric for price-setting that drivers and customers do not control. If Uber were truly a marketplace, it would allow the drivers and riders to individually “bid” for rides using their own prices. But Uber’s control over prices means that it acts as the employer.

In creating a new price-oriented test for triangular employment relationships, Sunshine offers a more straightforward path through rocky terrain for judges, advocates, and workers themselves than now exists. As she recognizes, there may be a category of non-employees who nevertheless are dependent enough and vulnerable enough to deserve certain employment protections. But we harm the coherence of the “employee” category if we try to jam these workers in there. Employment is a category relating to the legal and economic context in which the worker labors. Sunshine’s article goes a long way in helping us conceptualize and define this category.

  1. Seth D. Harris & Alan B. Krueger,  A Proposal for Modernizing Labor Laws for Twenty-First-Century Work: The “Independent Worker” (2015).
  2. Ronald H. Coase, The Nature of the Firm, 4 Economica 386 (1937).
  3. Restatement of Employment Law § 1.01 cmt. f (2015).
Cite as: Matt Bodie, Who Names the Price?, JOTWELL (January 25, 2019) (reviewing Naomi R. Sunshine, Employees as Price-Takers, 22 Lewis & Clark L. Rev. 105 (2018)), https://worklaw.jotwell.com/who-names-the-price/.

Labor Power and Industrial and Political Democracy

Ewan McGaughey, Democracy in America at Work: The History of Labor’s Vote in Corporate Governance, 42 Seattle U. L. Rev. __ (forthcoming 2019), available at SSRN.

Like everybody else, I’ve been thinking a lot lately about democracy. How can we nurture faith in democracy when significant segments of the working class feel so disempowered that they either don’t vote at all or turn to nihilist, xenophobic, racist, or hateful visions of American life offered by speakers who seem to have less interest in governance than in nurturing grievances? Although turn-out in the mid-terms was high,1 as mid-term elections go anyway, still many people who could have voted did not vote. This invites the question about what law can do to build institutional structures and a culture that convinces the disaffected that they can join together to build a better world. One of the very few things on which one can find agreement between the right and the left today is that a lot of poor people and working people have been left behind by the elites that seem increasingly to control their work lives, their economy, and politics. But the agreement stops there, and the sense of polarized stalemate only breeds cynicism and despair.

I found an antidote to despair in reading Ewan McGaughey’s forthcoming paper, Democracy in America at Work: The History of Labor’s Vote in Corporate Governance. It is a perceptive, broadly synthetic, and snappily-written account of the past and possible future of labor’s role in corporate democracy. The paper enriched my thinking about re-linking democracy in political life with democracy in work life. It bubbles over with ideas about how law could create a more accountable form of capitalism. Based on an admirably succinct survey of the history of labor involvement in corporate governance, McGaughey articulates a bold, provocative, and exciting thesis: “Democratic voice in the economy is embedded in American tradition, efficient, legitimate, and (even without federal law reform) could be written into state laws today.” (P. 3.)

The paper opens with the father of modern American corporate law, A.A. Berle, who (according to McGaughey) had quite a bit to say in favor of democracy in the economy; giving labor rights to limit the “power of corporate managements with respect to wages and labor relations” would strengthen political and economic democracy because “democracy in the economy would follow the ‘corporate’ revolution,’ just as democracy in politics followed the industrial revolution.”2 The paper then name-checks a variety of bills recently introduced in Congress (with no hope of passage, of course) that would require things like employee election of 40% of the board seats in $1 billion companies, or 33% of board seats in listed companies, or 50% of seats on boards of single-employer pension plans. (P. 2.) McGaughey’s task in this paper is to normalize these proposals – to show they are not unprecedented in history, or inefficient or otherwise outrageous as a matter of corporate law. Along the way he suggests reasons why labor and progressive scholar-activists should pay more attention to whose money is on Wall Street (the modest retirement savings of a lot of working people) and the legal rules affecting who has a say over what Wall Street financiers do with Louis Brandeis famously, and still accurately, called “Other People’s Money.”3

McGaughey recounts many examples of labor’s involvement in corporate governance from the nineteenth century through the twentieth. Along the way, he finds examples of many of the labor law reforms being proposed today, including tripartite wage boards, sectoral bargaining, works councils promoted by the National War Labor Board during World War I, and union membership on corporate boards. A cigar manufacturer in 1879 settled a strike by creating a tripartite board to resolve disputes over wages and working conditions. The UAW negotiated, successfully, to have a labor representative on Chrysler’s board of directors from 1980 to 1984. In between, he examines some isolated examples of tripartite systems for setting working conditions and numerous examples of labor involvement in pension plan administration. And he gives sustained attention to a Massachusetts law enacted in 1919, signed by then-governor Calvin Coolidge and still on the books today, that allows “a manufacturing corporation [to] provide by by-law for the nomination and election by its employees of one or more of them as members of its board of directors.” Boston’s famous clothing store, Filene’s, had four of its eleven board members chosen by employees in 1922.

The historian in me wanted much more on each of these examples – what they actually accomplished for labor, what conditions gave rise to them, whether they reflected actual power for workers, and why they disappeared. But that would, of course, make a pithy article into a tome. But what they suggest about what might be done today is more significant to McGaughey than what they achieved and why they failed. He uses them as contrast for the narrative that has become so familiar since Thomas Picketty, and others before and since, have charted the rise of inequality against the decline of unions.4 McGaughey points out that it’s not just that, when workers had unions, unions were able to negotiate that the fruits of capitalism were shared more equitably (though never even close to equally) between the top 1 percent and everyone else. Rather, it’s that without unions, capitalism has been more undemocratic – more autocratic – than at any time in modern American history because corporate leadership, financial analysts, and the leaders of elite financial institutions make all the decisions about other people’s jobs. Even more appalling, however, is that they do so using the pension investments and savings accounts of ordinary people; they run the economy using other people’s money.

McGaughey then explodes the myth that shareholder primacy in corporate law means shareholder democracy, or even any real form of corporate accountability to the majority of shareholders. Rather, he explains, the only accountability that the modern law and theory of “shareholder primacy” delivers is to the financial advisors who work with a small handful of large institutional investors. As he says, “Asset managers control shareholder voting rights with other people’s money.” (P. 42.) And this is not a system that emerged out of a natural search for an efficient system of corporate governance. “The monopolization of shareholder votes by asset managers is not a system that emerged in a competitive environment, but one backed by the coercive power of federal law, and the unequal bargaining power of captured capital.” (P. 43.) These advisors have, he points out, such deep and strong conflicts of interest that it’s a myth to imagine they are acting in the interest of shareholders at all. And the results, he argues, are not even efficient, or productivity-maximizing, or wealth maximizing in economic terms.

Finally, McGaughey explores ways that states, through their corporate law, could lead the way in adopting legal reforms that would create the conditions for actual democracy at work. He asserts that law of three blue- or blue-leaning states (California, New York, and Delaware) account for the vast majority of incorporations. (P. 45.) He argues that there are no federal legal barriers to these three states enacting laws requiring labor representation on the corporate board of directors. (This assertion may vastly overstate Delaware’s willingness to jeopardize its position as a leader of corporate law by doing anything at all that would upset corporate leadership, and it may also underestimate the seriousness of the race-to-the bottom problem if states were to try to regulate membership on corporate boards.) He proposes how states could play a role in creating a more accountable form of capitalism by requiring the creation of truly independent works councils, along the lines that the United States occupying force wrote for Germany in 1946. (P. 45.)

This is a relatively lean article for all that it aspires to do (47 double-spaced pages in manuscript). Much of it is suggestive rather than exhaustive. But that means it’s suggestive of future work rather than exhausting to read. I hazard no opinions on McGaughey’s analysis of corporate law. But I appreciate the ambition to think of ways that capitalism could be made more democratic. And in this time of political alarm or malaise, I welcome creative ideas about how law could provide tools to enable the working class to feel more empowered at work and in the economy.

  1. Maggie Astor & Liam Stack, Midterm Election Turnout Was Up. How Much? We Don’t Yet Know, N.Y. Times, Nov. 9, 2018 (reporting that preliminary data and analysis show that 48 percent of eligible voters voted in 2018 midterms, which is the highest in any midterm election since at least 1970, and that average turnout was 62 percent in counties where a majority have college degrees and 43 percent in counties with less than 10 percent college graduates).
  2. A.A. Berle, Property, production, and Revolution, 65 Colum. L. Rev. 1, 17 (1965); A.A. Berle & G.C. Means, The Modern Corporation and Private Property (1932).
  3. Louis Brandeis, Other People’s Money and How the Bankers Use It (1914).
  4. Thomas Picketty, Capital in the Twenty-First Century (2014); Jake Rosenfeld, What Unions No Longer Do (2014).
Cite as: Catherine Fisk, Labor Power and Industrial and Political Democracy, JOTWELL (January 10, 2019) (reviewing Ewan McGaughey, Democracy in America at Work: The History of Labor’s Vote in Corporate Governance, 42 Seattle U. L. Rev. __ (forthcoming 2019), available at SSRN), https://worklaw.jotwell.com/labor-power-and-industrial-and-political-democracy/.

A Comprehensive Analysis of Proposed Union Strategies to Deal With Janus

Catherine Fisk and Martin Malin, After Janus, 107 Cal. L. Rev. __ (forthcoming 2019), available at SSRN.

Have you ever had an idea for an article, but then somebody else beat you to writing it and did a better job than you would have with the topic? After Janus is my first experience with that, and not surprisingly, its co-authors are scholars I respect immensely.

Janus v. AFSCME held that all union security clauses (contract provisions requiring members of union bargaining units to pay their share of the costs of union representation) in the public sector violate the First Amendment. This constitutionally imposed “right to work” rule will cause unions significant financial damage, mainly because under “duty of fair representation” (DFR) rules, unions generally must represent members of union bargaining units without regard to whether or not they pay any dues. Scholars have been working on ways unions could get around some or all of the negative effects of Janus. Current ideas include getting rid of the “majority exclusive representative” model, adjusting DFR rules, or requiring employers to pay for unions’ collective bargaining costs. AfterJanus responds to these proposals with what I believe is appropriate skepticism. Further, it creatively reframes the union’s financial dilemma as a collective action problem, as opposed to the more common framing of a free-rider problem. It also makes some potentially very useful alternative suggestions. Because it addresses so many topics, the summary below barely hits the highlights. Anyone interested in labor law and policy should read this article in full.

First, the article stresses that “right to work” rules create collective action, not free rider, issues. The problem is that, without a way to require everyone who benefits from union representation to pay for it, it becomes economically rational for more and more employees simply not to pay for the benefits. This means, crucially, that the union will be increasingly unable to provide common goods on which bargaining unit members could “free ride.” The article gives examples of bargaining units in “right to work” jurisdictions whose members vote by substantial majorities to unionize or to remain unionized, while only a minority pay any dues.

The article then critiques several proposals union supporters have made, showing that they do not solve the collective action problem and detailing other flaws. In one of my only quibbles with the article, it largely combines the “eliminate exclusive majority” idea with the “alter DFR rules in grievance/arbitration handling” idea under the general rubric of “Members Only Representation.” I think these ideas are more conceptually separate, but the article deals well with both.

Getting rid of majority/exclusive representation is popular among some labor law scholars, and it would solve the problem of forcing unions to represent those who don’t pay dues. However, there are at least two reasons this is not a way around Janus. First, it is unrealistic politically. As the article shows, among other things, the U.S. labor movement, including major public sector unions such as AFSCME, AFT, NEA, and SEIU, do not want to get rid of it. Second, and more controversially, the article argues that the limited experience with members-only bargaining in the U.S. shows that “such systems are fraught with problems for both employers and employees” (e.g. a system in California schools prior to 1976).

A less radical and more feasible solution would be to adjust DFR rules such that unions either did not have to represent workers who don’t pay dues in grievance/arbitration proceedings, or could require workers to pay the costs of arbitrations or other disciplinary hearings. Janus explicitly left the door open for that, although the opinion stressed that unions would still have to represent all members of bargaining units in contract negotiations. Again, this has some appeal at first glance, and a few states (Florida, Nebraska, Nevada, and New York) already have modified their DFR rules along these lines.

There are complications, however. What about other types of representation? Public-sector unions traditionally represent employees in, e.g., civil service hearings, in suits under employment laws and state and federal constitutional provisions. Moreover, the article shows that states that have adopted this option often have low union density rates. This is partly because most employees don’t think they will need a union in a discipline cases. It does not solve the collective action problem because it turns union membership into a form of last-minute insurance policy. Also, letting individual members handle arbitrations would limit the union’s ability to refine general contract language into specific rights in the interest of all bargaining unit members.

The article also analyzes the proposal that employers should, in some way, pay the costs of contract negotiation. Problems here include making unions financially dependent on employers, leaving union financial health vulnerable to political change, possibly impeding union democracy and lessening motivation for local unions to engage employees, and creating a perception that the public is paying for unions.

Malin and Fisk have some creative alternative suggestions. First, unions could compel employees to make contributions equal to the cost of agency fees to some other 501(c)(3) organization, as is done with religious objectors; this would lessen employees’ incentives to refrain from paying union fees for economic reasons, while still allowing ideological objectors an alternative to supporting a union. Second, unions could assess employees a pro-rata share of estimated total arbitration fees for a year.  So, for example if a union spent a total of $25,000 in a given year on arbitrations, and the bargaining unit had 250 members, a bargaining unit member who refused to pay dues could be charged a $100 share of the total arbitration fees. Third, unions could add more “members-only” benefits, such as insurance, free legal representation, and voluntary shift-trading or leave banks. Fourth, unions can engage in more member education – a route that many unions are taking, assisted by state laws designed to facilitate union-worker contact.

A “Jot” can only scratch the surface of this sophisticated, multi-faceted article. It is a must-read for all labor scholars. I liked it a lot.

Cite as: Joseph Slater, A Comprehensive Analysis of Proposed Union Strategies to Deal With Janus, JOTWELL (December 12, 2018) (reviewing Catherine Fisk and Martin Malin, After Janus, 107 Cal. L. Rev. __ (forthcoming 2019), available at SSRN), https://worklaw.jotwell.com/a-comprehensive-analysis-of-proposed-union-strategies-to-deal-with-janus/.

Train Smarter

Elizabeth Chika Tippett, Harassment Trainings: A Content Analysis, __ Berkeley J. Emp. & Lab. L. __ (forthcoming 2018), available at SSRN.

Every couple of years, some automated program at the University nags me about renewing my sexual harassment training. Since the computer provides no way for me to claim an exemption for my work on the topic over the years, I usually procrastinate a few weeks and then give in, log on, and spend the 20 or so minutes needed to run through the process and get my certificate of compliance. (Why I need a certificate when the program presumably keeps track of my efforts is another question). Each time, I finish thinking how incredibly stupid the training is—and not just because I—like pretty much everyone reading this on Jotwell—know more than the average person about the topic.

But “stupid” is probably counterbalanced by cheap and efficient—if “cheap” means compared to live efforts and “efficient” means a low cost way of checking the “reasonable care to prevent” box for avoiding liability for sexual harassment. And I don’t deny it works since I can’t recall a case where a court found colorable employer training efforts to be per se insufficient to “prevent” misconduct.

Nevertheless, I ask myself each time—can this possibly be what the Supreme Court had in mind?

The difference between me and Tippett is that I’ve never gone further to figure out whether my university is using “best practices” or even “ok practices” in training its employees on this important topic. Liz did, and in an impressive way. Harassment Trainings: A Content Analysis builds on the line of literature started by Susan Bisom-Rapp’s groundbreaking Fixing Watches with Sledgehammers, and Ounce of Prevention articles.1 It both updates the earlier research and provides a remarkable on-the-ground view of the cottage industry of antiharassment training, with a focus on the nearly two decades since the Supreme Court’s employer liability structure in theory changed the way employers did business.

From reading A Content Analysis, it turns out that my experience with sexual harassment training isn’t so unusual after all. And maybe the limitations of employer training have something to do with the reality that #MeToo has exposed: The Court’s elaborate social engineering effort to shift the incentives of both employers and employees in order to rid the workplace of harassment has largely been a failure.

Liz’s article has a number of unexpected findings. Examining the harassment training from 1980 to 2016, she shows that much of the content actually traces back long before Faragher/Ellerth. But, surprisingly, considering how so much else has changed in both law and learning theory, the training long ago coalesced into a “genre” consisting of an authoritative figure summarizing legal rules and giving examples of prohibited conduct. Further, she reports that “current trainings include large quantities of tangential legal information and overemphasize sexual conduct at the expense of other forms of harassment. They also tend to suggest that relatively trivial slights could give rise to harassment-related liability.” That certainly matches my experiences.

More interestingly, she also reports that earlier training had “two competing narratives”—abuse of power taking a toll on victims and liability risks that could affect company performance. But the “power-based narrative faded over time,” and current training tends to focus on the “business case” for preventing harassment—it’s a violation of company policy. That, she argues, tends to deemphasize that harassment is a form of discrimination, with the consequent dilution of the moral case against such conduct. For example, current training tends to ignore stereotyping discrimination or gender-based harassment. Liz argues that there is reason to believe that a focus on the wrongfulness of the conduct might also be more effective in deterring it than an “it’s against the rules” approach. Further, Tippett suggests that framing the law as prohibiting a “wide swath of behavior” may “inadvertently signal” that avoiding interactions with women or other potential victims is the best way to avoid problems, which has obvious negative implications for the cause of workplace equality.

The author concludes by sketching some “new and different approaches” that might be taken to training, including training more tailored to reported individual differences in attitudes, beliefs, or self-reported behavior. And resonating with my experiences was her recommendation of “more authentic content,” which strikes me as more engaging and therefore more likely to leave a lasting impression. One example was, rather than just identifying problematic conduct, having a session that requires managers to respond to how they would deal with a particular scenario. That not only gets the point across about the conduct in question but also engages the trainee in the complicated dynamics of changing objectionable behavior in the workplace.

This project can’t have been easy—to gather her data of 74 examples from 61 providers, Liz had to contact 175 professional trainers and law firms and scour libraries for historical materials. To my mind, that makes the project more important. After all, the point of legal rules is to affect conduct on the ground and it’s impossible to assess the success or failure of any particular regime unless one can determine how conduct changes.

There’s a lot more to the article than I have described, but I hope I’ve explained why I like the piece a lot.

However, there’s an obvious downside to studies such as this: while it is very effective in revealing the shortcomings of current training efforts, it also suggests that mediocre training is the current standard of care for employers, which might make it more difficult to reform such training. Another item to put on the #MeToo agenda.

  1. Susan Bisom-Rapp, Fixing Watches with Sledgehammers: The Questionable Embrace of Employee Sexual Harassment Training by the Legal Profession, 24 U. Ark. Little Rock L. Rev. 125 (2001); Susan Bisom-Rapp, An Ounce of Prevention is a Poor Substitute for a Pound of Cure: Confronting the Developing Jurisprudence of Education and Prevention in Employment Discrimination Law, 22 Berkeley J. Emp. & Lab. L. 1 (2001). Professor Bisom-Rapp is currently revising her earlier work in Susan Bisom-Rapp, Sex Harassment Training Must Change: The Case for Legal Incentives for Transformative Education and Prevention, to be published in 71 Stanford L. Rev. Online 62 (2018).
Cite as: Charles A. Sullivan, Train Smarter, JOTWELL (November 16, 2018) (reviewing Elizabeth Chika Tippett, Harassment Trainings: A Content Analysis, __ Berkeley J. Emp. & Lab. L. __ (forthcoming 2018), available at SSRN), https://worklaw.jotwell.com/train-smarter/.

Where Have All the Claims Gone?

Cynthia Estlund, The Black Hole of Mandatory Arbitration, 96 N.C.L. Rev. 679 (2018).

Much has been written about employers’ mandates that their employees arbitrate claims on an individual basis. Empirical studies have examined employee success rates in arbitration, comparing them to employee success rates in litigation, and the effects of the employer being the only repeat player in the process. Scholars have also examined the evolving abdication by courts of their role in policing arbitration mandates. Cynthia Estlund’s article examines a more basic question: when employers impose arbitration mandates on their employees, do employee claims even get brought? Her answer is a resounding “rarely,” and much more rarely than when the claims can be brought in court.

Estlund acknowledges the challenges in collecting data about employment arbitration. She works with data assembled by Alexander Colvin and his colleagues. Colvin’s studies focus on the American Arbitration Association (AAA), which he estimates is designated in about half of employment arbitration agreements. Colvin also estimates that 56% of private sector non-agricultural employees are covered by arbitration mandates.

The starting point for Estlund’s analysis of claim filing is AAA’s report that in 2016, 2879 individuals filed employment claims. Given that AAA has about half of the employment arbitration business, she doubles this to produce an estimate of 5126 total cases. She then turns to the number of employment cases filed in federal court in 2016, 31,000. If 56% of employees nationwide were subject to employer-imposed arbitration mandates, Estlund reasons, and employees filed arbitration demands with the same frequency as they filed suit, we would expect 39,000 claims in arbitration. She reduces this figure to account for the 15.2% of employees who work in the public sector and to account for the possibility that some, even many, of the federal court filings were by employees subject to arbitration mandates. This yields an estimate of between 9600 and 28,400 expected arbitration claims if employees are as likely to pursue their claims in arbitration as in court. She adjusts the figure upward to take into account state court filings, relying on an estimate of 195,000 per year developed by Mark Gough, and for collective actions in Fair Labor Standards Act (FLSA) cases, which she estimates included 350,000 individuals. She concludes that if employees are as likely to file arbitration demands as law suits, there would be between 320,000 and 727,000 claims in arbitration, or that under 2 percent of the claims one would expect to find actually enter the arbitration process.

Estlund addresses two limitations of her analysis. First, she observes, larger employers are more likely than smaller ones to impose arbitration mandates, and they are also more likely to comply with the employment laws. Second, she relates that many large employers incorporate arbitration in a comprehensive dispute resolution system that includes mediation and many claims may get resolved in earlier stages of the system. But she urges, correctly in my view, that the disparity between the number of arbitration claims we would expect to be filed and the number that are actually filed is so great that these two limitations cannot come close to explaining it.

I have a few quibbles with Estlund’s work. First, I don’t agree with including the individual employees covered by FLSA collective actions in her total figures for law suits filed. Those who join collective actions have not taken the initiative on their own to file suit. They have responded to notices inviting them to join lawsuits already filed. A more apples-to-apples comparison would be between those employees who took the initiative to file suit and those who took the initiative to file arbitration demands. Second, Estlund relied on Colvin’s data, which focused exclusively on AAA cases. J. Ryan Lamar and David Lipsky have conducted extensive empirical analysis of FINRA employment arbitration. It would be nice to see if their data is consistent with Colvin’s with respect to likelihood that an employee will file an arbitration demand. Third, Estlund relied on data from 2016. She had to, as that was the most recent data available to her. But in 2016, the plaintiffs employment bar was just beginning to deal with the Supreme Court’s gutting of the key tools of judicial policing of the fairness of employer-mandated arbitration procedures in AT&T Mobility v. Concepcion and American Express v. Italian Colors Restaurant.

In 2018, plaintiffs’ lawyers are increasingly responding to employer mandates of individual arbitration by filing hundreds, and in some cases thousands, of individual arbitration demands. Such actions give plaintiffs significant settlement leverage because under AAA rules, employers are responsible for all AAA fees and all arbitrator fees. In light of this development, it would not surprise me if the number of arbitration cases has increased significantly since 2016 and will continue to increase in the coming years. It also will not surprise me if employers drop their arbitration mandates once they realize that they could be facing hundreds of thousands of dollars, and in the cases with the largest number of filings millions of dollars, in arbitration fees.

These quibbles aside, Estlund makes a compelling case that under current conditions, employment claims mostly disappear into a black hole when employers mandate individual arbitration. The notion that by agreeing to arbitrate, an employee does not waive statutory rights but merely agrees to seek redress for violations of those rights in an arbitral rather than a judicial forum has become nothing more than a legal myth, or as Estlund puts it, judicial “complicit[y] in employers’ effective nullification of employee rights and protections.”

Cite as: Martin H. Malin, Where Have All the Claims Gone?, JOTWELL (October 18, 2018) (reviewing Cynthia Estlund, The Black Hole of Mandatory Arbitration, 96 N.C.L. Rev. 679 (2018)), https://worklaw.jotwell.com/where-have-all-the-claims-gone/.

Transforming the Workplace with Help from Transitional Justice

Lesley Wexler, Jennifer Robbennolt, & Colleen Murphy, #MeToo, Time's Up, and Theories of Justice, available on SSRN.

It may have been Ashley Judd’s allegations against Harvey Weinstein, the movie mogul, that finally unleashed the powerful movement to call workplace harassment to account, but the movement had clearly been building for some time. Spurred along by the sexism surrounding the 2016 presidential election and allegations of harassment and abuse against high profile figures in the news, entertainment, and tech industries, in politics, and even in the judiciary, the #MeToo movement feels like a public reckoning. The Time’s Up initiative, seeking to institutionalize reform and support victims of harassment, provides a concrete path forward to capitalize on the movement.

A number of activists have called for a restorative or transitional justice approach in order to create real change. Lesley Wexler, Jennifer Robbennolt, and Colleen Murphy take up that call in #MeToo, Time’s Up, and Theories of Justice. They summarize the movement and initiatives currently under way, explore the key components of restorative justice, and look more broadly to the insights of transitional justice to help chart a way forward. As someone who has been advocating for years for a new approach to transparency and accountability surrounding discrimination in the workplace, I found this article incredibly valuable.

Wexler, Robbennolt, and Murphy summarize the evolution of Alyssa Milano’s #MeToo twitter hashtag and at least partial combination with Tarana Burke‘s MeToo movement into a broader phenomenon that focused at least initially on showing how widespread sexual abuse and harassment are and then on naming and shaming high level individuals who abused their power in this way. Acknowledging some critiques of the movement as benefitting mostly heterosexual cisgender upper-class white women, the authors note that even with those shortcomings, #MeToo has ignited a cultural reckoning that has prompted increased self-reflection, conversation, and changing perceptions of sexism, sexual harassment, and sexual assault.” Wexler, Robbennolt, and Murphy then explain how the Time’s Up initiative and other workplace reforms are being instituted to end sexual assault, harassment, and inequality in the workplace, not just for those in the entertainment industry, but also for people who do not have access to resources to enforce their rights in other industries. The comprehensive description of lobbying efforts, changes to workplace structures, cultural transformation, and access to resources for legal enforcement is particularly useful to understand the multi-pronged approach needed for real change.

After this summary of what is happening, Wexler, Robbennolt, and Murphy turn to theories of justice to explain how these efforts at reform might be most successful. They first describe what a restorative justice approach would include and how a transformative justice approach would supplement it. Restorative justice, they explain, “refers to a loose collection of practices or mechanisms that share a number of core commitments,” including participation of victims, offenders, and members of the community; a full description and acknowledgement of the harm the behavior caused; responsibility-taking by the actor; efforts to repair the harm; and reintegration of the offender into the community. Transitional or transformative justice emphasizes that restoration cannot be to an inequitable status quo, but must create a new equitable set of relationships. To do that, we must examine the institutions, structures, norms, and practices that contribute to and enable the wrongdoing.

The authors thoroughly apply the practices of restorative justice to the context of harassment and sexual violence, describing the challenges this context presents, and exploring where particular remedial efforts have satisfied the requirements of restorative justice and where they have failed to do so. They then explain why transitional justice theories could help create more expansive change. Wexler, Robbennolt, and Murphy acknowledge that transitional justice is usually practiced by states and often in situations where societies are transitioning from extended periods of conflict or repression towards more democracy. For this reason, there are some features that are disanalogous to a culture that is broadly mostly democratic, but where systemic wrongdoing nonetheless exists by private actors. Even so, the authors explain how many of the features offer useful guidance and how the structures of transitional justice might be adapted in this context.

For example, the focus of transitional justice on apologies by perpetrators, reparations, and acknowledgement of victims’ accounts are already features of the movement, and those can help lead to broader societal transformation. Additionally, a focus on institutional change seems to be underway and could include legislation to prohibit nondisclosure agreements for workplace discrimination. Finally, a proposed industry commission in Hollywood, chaired by Anita Hill and empowered to take reports of discrimination and enforce zero tolerance policies toward harassment and discrimination could transform that industry and have broader societal effects as well.

I hope this article is widely read and that it inspires and informs the creation of a new approach to ending discrimination at work.


Editor’s note: For a previous review of #MeToo, Time’s Up, and Theories of Justice see Brooke D. Coleman, #MeToo Justice.

Cite as: Marcia L. McCormick, Transforming the Workplace with Help from Transitional Justice, JOTWELL (September 19, 2018) (reviewing Lesley Wexler, Jennifer Robbennolt, & Colleen Murphy, #MeToo, Time's Up, and Theories of Justice, available on SSRN), https://worklaw.jotwell.com/transforming-the-workplace-with-help-from-transitional-justice/.

Valuing Coworker Bonds in Employment Law

Naomi Schoenbaum, Toward a Law of Coworkers, 68 Ala. L. Rev. 605 (2017).

In Jackson v. Deen, 959 F. Supp. 2d 1346 (S.D. Ga. 2013), an employee brought a Title VII claim against her employer on the grounds that her coworkers had been subjected to racial harassment. The employee did not complain that she had been subjected to such harassment. Instead, she claimed to have suffered a cognizable injury because her employer’s harassment of coworkers “deprived her of ‘harmonious working relationships with her African-American subordinates …’” Id. at 1354. Rejecting the notion that the plaintiff was an aggrieved party under Title VII, the court explained that “[q]uite simply, workplace harmony is not an interest sought to be protected by Title VII.” Id. at 1355. In her article, Toward a Law of Coworkers, Professor Naomi Schoenbaum recognizes that this may be true as a matter of current employment law, but she takes issue with the notion that workplace harmony is not an interest worth protecting through employment law.

The premise of Schoenbaum’s article is relatively straightforward: modern employment law is so focused on individual rights that it is generally unconcerned about encouraging coworker bonds. One of the things that makes this thought-provoking article so interesting, however, is how clearly Schoenbaum explains exactly how employment law undermines coworker bonds and exactly why that is a bad thing.

The article begins by explaining some of the benefits of strong employee bonds. As Schoenbaum argues, strong coworker relationships increase the odds that employees will be able to obtain from their coworkers the information necessary to better assess whether their workplace rights may have been violated. They also increase the likelihood that coworkers will provide the emotional and other forms of support that may lead an employee to seek to vindicate her rights. Strong coworker bonds also encourage the sort of supportive behavior that discourages coworker or supervisor harassment and discrimination to begin with. Unfortunately, employment law often does little to encourage such relationships, nor does it seem to recognize that fostering such relationships is a recognizable goal of most employment statutes. Schoenbaum provides numerous examples of how modern employment law fails to give due weight to the value of strong workplace relationships and how that failure may adversely impact employees.

The example that resonated most clearly with me is workplace retaliation. An employee who complains internally about workplace discrimination is protected from employer retaliation only where the employee reasonably believed that the allegedly discriminatory actions were unlawful. Some courts have adopted a fairly demanding threshold for what qualifies as a “reasonable” belief. In order to better understand her legal rights, an employee might obviously seek out coworkers for their reactions to the employee’s situation or to see whether they have experienced similar treatment. But in a workplace where employees feel disconnected from their coworkers, an employee might be unable to acquire the information necessary to decide whether a reasonable basis exists for believing unlawful conduct has occurred. An employee who files an internal complaint of discrimination might also seek the assistance and support of a coworker during the process. But Title VII’s anti-retaliation provision as interpreted by federal courts does not protect those who assist another as part of an employer’s internal complaint procedure unless they actually make a point of demonstrating opposition to the employer’s actions. Given the current state of the law, a coworker could hardly be blamed for not rendering assistance as part of an internal investigation. Ultimately, this thwarts the purposes underlying anti-discrimination statutes.

Assuming employment law should encourage employee bonds – hardly a radical notion in light of labor law’s longstanding declarations in support of that very idea – the question becomes how can courts further this goal? In Jackson v. Deen, the court scoffed at the idea that an employee should have a cause of action for discrimination targeted at coworkers. The court complained that allowing this would “conscript federal courts as human resource departments that are responsible for imposing and monitoring a federally created standard for harmony in the workplace.” Id. at 1354-55. In the face of such judicial disdain (which is undoubtedly shared by many judges), Schoenbaum presents a problem with no easy solution.

Schoenbaum offers a number of doctrinal reforms that “would recognize coworker bonds as an interest of work law.” Doing those proposals justice would take more space than I have here. But for me, the more interesting part of the piece is in the identifying of the problem and the asking of the question. I can certainly sympathize with the federal judge who is unwilling to formally recognize a cause of action for discrimination targeted at a coworker. But I also can’t help thinking after reading Schoenbaum’s article that there are good reasons for courts to explicitly recognize strengthening employee relationships as a legitimate goal of employment law. This is an idea I had pondered before, but this article made me return to the issue and think about it more carefully. What’s more, I also can’t help thinking that by simply recognizing the inherent value of workplace bonds, courts could gradually begin to reshape employment law so as to encourage the formation of these types of bonds.

Ultimately, Toward a Law of Coworkers made me revisit an issue I’ve thought about before and inspired me to think about approaches I had not fully considered before. The article serves as a reminder of how the sometimes unhelpful split between labor law and employment law can work to the disadvantage of employees. At the same time, the article reminds us that this need not always be the case.

Cite as: Alex B. Long, Valuing Coworker Bonds in Employment Law, JOTWELL (August 7, 2018) (reviewing Naomi Schoenbaum, Toward a Law of Coworkers, 68 Ala. L. Rev. 605 (2017)), https://worklaw.jotwell.com/valuing-coworker-bonds-in-employment-law/.

Union Improvisation: The Parent of Social Justice

Michael M. Oswalt, The Right to Improvise in Low-Wage Work, 38 Cardozo L. Rev. 959 (2017).

In the movie 1776, Benjamin Franklin infamously remarks to John Dickinson, “Revolutions…come into this world like bastard children—half improvised and half compromised.” The compromise, of course, was slavery. The rest of the dialogue and its context, which explains the improvisation, is often omitted in discussion of this scene. Recall that Franklin asks John Hancock to poll the Pennsylvania delegation on the question of independence. Franklin votes yea; Dickinson, nay. This is how the decision of American independence lands squarely on the shoulders of Judge James Wilson, who ultimately votes yea. As Dickinson incredulously and rhetorically posits, “And is that how new nations are formed? By a nonentity seeking to preserve the anonymity he so richly deserves?”

If we compare the founding of our nation with the foundational federal labor law statutes of the twentieth century, which statute—the Wagner Act or the Taft-Hartley Act—is the labor law compromise? Most American labor scholars would probably say Taft-Hartley. After all, the Wagner Act, as Professor Karl Klare has correctly observed, “was perhaps the most radical piece of legislation ever enacted by the United States Congress.” Moreover, it is Taft-Hartley that, among other things, narrowed the definition of employee by eliminating the National Labor Relations Act’s (NLRA’s) protection of supervisors and independent contractors and diluted the union’s legal economic weapons by eliminating the secondary boycott. But the late Austro-British labor scholar, Otto Kahn-Freund, would argue that the Wagner Act was in fact a compromise by the American labor movement. As Kahn-Freund allegedly explained, “What the law giveth, the law can taketh away.” And taketh away it did—not merely via congressional amendments but via Supreme Court judgments and ultimately by the Board itself.

In his article, The Right to Improvise in Low-Wage Work, Professor Michael Oswalt supplies the latest example of a labor law scholar offering insight on how to strengthen labor rights. By focusing on the improvisational portion of the social revolution equation, he brilliantly likens the Fight-for-Fifteen and other recent social justice movements to improvisation in jazz music. He understands that talking amongst workers—comparing injustices—is necessary to harness the power of concerted activity.

This characterization allows Professor Oswalt to see three manifestations of talking amongst workers. First, he sees the legal right to talk and engage in spontaneous concerted action, a legal right that is generally protected (unless waived) under the NLRA qua Washington Aluminum. Second, he sees the normative right to combat injustice with spontaneous activity coordinated through talking—a right that Oswalt views as desirable and justifiable. Third, he gleans “in-the-moment resistance” as an essential aspect of Section 7 of the NLRA but points out that the law may not do a good job of “preserv[ing] access to in-the-moment resistance by safeguarding improvisation’s prerequisite: relationships of trust.” Oswalt thinks that the law falls short in this regard because the “key doctrine,” the employees’ Section 7 rights via Republican Aviation, in conjunction with the key limitation “working time is for work,” are antiquated.

It is worth a moment to pause here to place Oswalt’s characterization in historical context. The NLRA has stood for decades as a well-intentioned compromise whittled away by all three branches of government to a shell of its former glory. Labor law scholars have asked in vain, how do we fix this? Kahn-Freund understood the answer. Social justice must be taken; it is never fully or freely given by governments. The law serves only to ossify the privileges of the privileged, justifying rules and the need to narrow those rules to accommodate the interests of the ruling class. For the disempowered, extra-legal solutions are needed. That’s the improvise, which members of the working class themselves must supply. Inequality is the fuel necessary to wake that sleeping giant.

Oswalt spends much of his article showing how labor reformers can fortify Section 7 simply by jazzing up concerted activity. Oswalt relies on “yes-anding”—accepting what comes (yes) then “enthusiastically build[ing] on it” (and)—for workplace reform, just as jazz musicians build upon each other’s melodies while they jam. Oswalt explains his proposal as follows:

I am proposing a right, grounded in section 7, for at least two employees to spontaneously stop working for a reasonable period and leave the active floor together, probably for no more than four or five minutes. Though there would not be a hard cap on the number of breaks that could be taken during a shift, to be protected the cumulative impact on production would need to be “modest,” meaning something like perceptible but not substantial.

Professor Oswalt predicts that these improv sessions or microbreaks will build trust among co-workers, trust being a necessary foundation for successful concerted activity. The article thus appropriately analogizes workers “hanging out” at the workplace to “trusting” and “yes-anding” and characterizes such moments as the oxygen needed for worker improvisation, the spark that ignites social change.

Of course, this is true. Concerted activity is a form of expressive conduct and typically comes in the form of a grievance that when aimed at the government, would notably be protected by the First Amendment. There is no revolution—political, economic, social, or otherwise—without speech. Oswalt thus contributes to our field by highlighting the importance of these moments and clarifying that it is these moments that create the most imaginative need for successful concerted activity.

Professor Oswalt does not, however, go far enough. As Oswalt concedes, talking is already protected by the Act. But Oswalt seeks further to entrench this protection by interpreting the NLRA to protect microbreaks and, more importantly, formalizing that interpretation. That move, in turn, will predictably ossify and stifle improvisation by opening the door to Board oversight of such activity that is currently left to free market forces. This is the lesson of the Act’s deradicalization, eighty years in the making.

To be fair, Oswalt understands this point, as he spends pages recognizing that the Board and reviewing courts have to, and are apt to continue to whittle away at the scope of protected activity. His solution—microbreaks for engaging in talk and spontaneous activity—doesn’t seem to fix the problem. Indeed, the cases he cites in support of this proposition are currently on the Trump Board’s chopping block, ready to further extinguish the fires of concerted activity.

For workers’ rights to flourish, workers must be sufficiently oppressed, sufficiently bold, and sufficiently bonded to one another to understand their condition; understand that they are not alone and have the willingness to fight—perhaps because they have so little to lose. This is where workers stand today. Witness the wave of teachers’ strikes across the country. In this context, I say, forget about the Board. The Fight-for-Fifteen and other similar movements are successful precisely because they are organically generated, grass-roots grown from legitimate grievances about social injustice and inequality. For improvisation to truly transform workers lives, workers must acknowledge that they’ve already compromised enough.

Cite as: Anne Marie Lofaso, Union Improvisation: The Parent of Social Justice, JOTWELL (July 5, 2018) (reviewing Michael M. Oswalt, The Right to Improvise in Low-Wage Work, 38 Cardozo L. Rev. 959 (2017)), https://worklaw.jotwell.com/union-improvisation-the-parent-of-social-justice/.

Substantiated Answers to Important Questions About Sexual Harassment

Jill D. Weinberg and Laura Beth Nielson, What is Sexual Harassment? An Empirical Study of Perceptions of Ordinary People and Judges, 36 St. Louis U. Pub. L. Rev. 39 (2017).

While it is always fun to comb my files of recent scholarship to find things that I “like lots,” it was particularly delightful to come upon What is Sexual Harassment? An Empirical Study of Perceptions of Ordinary People and Judges by Jill D. Weinberg and Laura Beth Nielson. For one thing, it’s all in the title. If the #metoo movement and public discourse surrounding sexual abuse and harassment in and outside of the workplace have indicated anything, it has been that the future of the way that the law and society will handle sexual harassment and abuse lies in how it is perceived, both by ordinary people and by judges. The ways in which laws are written, interpreted, and applied, as well as how mechanisms outside of the legal system will work to combat this problem, will be entirely dependent on how the problem is perceived. Moreover, there is no better way to explore this problem than with an empirical study that can substantiate the observations made and the conclusions reached.

This study was propelled, as its authors recite, “by a series of empirical and normative questions,” like, for example, whether the judiciary and regular people perceive sexual harassment the same way; and whether one’s experiences and background dictate one’s detection of sexual harassment, among others. The study brings us to a better and more refined understanding of the factors that predicate where people locate for themselves the line between lawful and unlawful workplace behavior. The resulting article reports on the results of the survey-based study that aims to coordinate one’s attitudes and perceptions with one’s identity as well as professional and social situations. The article provides more than the results of the study, though. It walks its reader through a literature review on the subject of how people come to discern unlawful sexual harassment, as delineated distinctly from behavior within the parameters of the law. It also lays out, in a fair amount of detail, the research methodology employed by the researchers, as well as the results of the study and their implications. Finally, the authors explore the possibility of broadening the concept and definition of sexual harassment legally, in light of the way in which it seems to be construed and discerned by most people.

I particularly appreciated the authors’ inclusion of a plethora of slants or perspectives into deriving or explaining sexual harassment as a phenomenon. Structural power, formalized policies and procedures, and inter-sex dynamics are explored as causes and predictors of the phenomenon. I also found valuable the positing of various hypotheses as to whether and when factors like one’s personal background and/or identity characteristics impact how people conceptualize social situations like harassment. Ultimately, the authors hypothesized that “an individual’s background will shape how they respond to questions about the presence or absence of sexual harassment.” According to their forecast, “white women and people of color—individuals who are traditionally the most [a]ffected by workplace discrimination and harassment—will identify the workplace vignettes as harassment, whereas white men will not.”

At the end of the day, the study appeared to find, among other things, that lay people or “ordinary” people seem to define sexual harassment more broadly than do judges. It was interesting to see what the numbers revealed, in that the reasoned hypotheses of the researchers did not always find themselves supported by the data. The researchers reported that among their “interesting findings,” was the conclusion that “judges are less likely to classify the very same scenarios as sexual harassment than ordinary people. While this was not a formal hypothesis, these results make sense; judges are trained legal professionals who know the essential elements and the required evidence to prove these claims. However, we did not anticipate to see a nearly 20% difference between ordinary people and judges.” Interestingly, the data seemed to bolster the researchers’ hypothesis that “gender hierarchy influences both populations,” showing that “[b]oth ordinary people and judges deferred to a sociocultural model of sexual harassment where harassment constitutes the male perpetrator and female victim.

The researchers concluded, among other things, that there are three “definitional approaches” to sexual harassment: 1) the legal approach (making use of statutory language and precedent); 2) the social scientific perspective (employing a broader definition and possibly variables that are “extra-legal”); and 3) the so-called “lived experience” or “empathetic” approach (informed by an individual’s background). They also found that one’s personal background actually “had minimal impact on the determination of sexual harassment,” though women from the ordinary people sample were more likely to view the scenarios as harassment than were men. Interestingly, the researchers found “no relationship between a judge’s identity and the determination of sexual harassment.”

Overall, the exposition of the research methodology and results was fascinating. In an area in which scholars often characterize, describe, and ascribe what they believe to be the attitudes, perceptions, and approaches of both society and the judiciary when it comes to discrimination and harassment cases, and scenarios without actual data to substantiate the claims, it is downright exciting to see empirical explorations and a scientific approach recounted in a law review article. The infusion of science and data collection into this field is always welcome and valued, and the chosen topic of these researchers—the factors that inform and predict the discernment of sexual harassment by lay people and judges—could not possibly be any more relevant and salient to the national discourse on the regulation of the workplace. More legal scholarship should avail itself of available empirical data, and more legal scholars should take an interest in the type of research that these researchers have done.

Cite as: Kerri Lynn Stone, Substantiated Answers to Important Questions About Sexual Harassment, JOTWELL (June 11, 2018) (reviewing Jill D. Weinberg and Laura Beth Nielson, What is Sexual Harassment? An Empirical Study of Perceptions of Ordinary People and Judges, 36 St. Louis U. Pub. L. Rev. 39 (2017)), https://worklaw.jotwell.com/substantiated-answers-to-important-questions-about-sexual-harassment/.

Uber, China, and Robots

Cynthia Estlund, What Should We Do After Work? Automation and Employment Law, NYU School of Law, Public Law Research Paper No. 17-28, NYU Law and Economics Research Paper No. 17-26 (Jan. 5, 2018), available at SSRN.

Reams of law review pages have been written about the effects of technological change on employment law. The typical narrative tends to portray technology as a disruptor, changing the structure of work and challenging the assumptions on which our employment law regime is built. Scheduling software, for instance, enables employers to assign workers for last-minute shifts and send them home during slow periods, creating a form of wage and hour instability that was never contemplated by wage and hour law. App-based companies build their entire business models around workers they classify as independent contractors, and yet retain some measure of labor control, putting pressure on the legal definition of “employee.”

Cynthia Estlund’s timely new working paper offers a different description of technology’s relationship to the law that both challenges and complements the narrative above. Her particular focus is automation, or the takeover of previously human-performed tasks by technology both “hard” (robots) and “soft” (algorithms). Estlund portrays automation as related to the larger trend that David Weil has labeled “fissuring,” or employers’ “flight from direct employment.” Employers might choose to hire workers through layers of subcontractors, they might convert employees to independent contractors, they might hire foreign workers in other countries, and they might replace human workers entirely with automated or machine-provided labor. In the public imagination, as Estlund points out, the shorthand for these trends might be “Uber,” “China,” and “robots.” Each of these moves reduces the number of directly employed workers, and, concomitantly, reduces employers’ legal and regulatory obligations. Instead of focusing on the effect of these moves on employment law, however, Estlund conceives of employment law, at least in part, as their cause.

In Estlund’s telling, employment law imposes costs on employers – what she labels a “legal tax on employment.” Antidiscrimination mandates tie employers’ hands in selecting their workforce; overtime requirements increase the wage bill; employment litigation sucks up large portions of employers’ budgets. Employers, therefore, will do almost anything “to avoid the costs and risks of employing human beings.” As direct employment becomes more costly, employers seek out avoidance strategies, and automation and fissuring result. The pressures of the global capital markets for ever-higher profits also incentivize avoidance, as does technology itself. (Here, technology acts both as a driver of fissuring and as an enabler of automation: communications technology enables the offshoring of labor, for example, just as automation technology replaces human workers.)

As Estlund cautions, then, some worker-friendly proposals advanced in the face of automation and fissuring that would strengthen and extend employment law’s reach may actually have a perverse effect: increasing the legal tax on employment, and therefore also increasing employers’ incentives to automate, to offshore, and to move to a more contingent and contracted workforce. In her words, “[T]his sensible response to fissuring not only fails to meet the looming though uncertain challenge of automation-based job loss; it tends to further tilt firms’ calculus away from human labor and toward machines.”

Estlund offers solutions by performing a careful inventory of the costs that employment law – writ large – requires employers to bear. She then advocates reallocating employer mandates that are not directly related to guaranteeing decent work. So, a basic minimum wage, occupational health and safety protections, and antidiscrimination obligations should remain, as they are directly related to the quality and conditions of work. However, employer-provided health insurance, and its attendant costs, should end, as should employer-funded paid family and medical leave (where it exists), as these are essentially “politically expedient off-budget ways to fund social entitlements that bear no necessary relation to employment or to work.”

To be clear, Estlund does not argue that people should lose health insurance coverage or paid leave. The opposite is true: she proposes that these benefits should extend to more people outside the traditional employment relationship, and their costs should be funded via the tax system or another non-employment mechanism. Estlund also considers ideas such as increasing the reach and impact of the Earned Income Tax Credit, and implementing various forms of a universal basic income. In sum, she envisions replacing some employer mandates with a more robust and wide-reaching social safety net, which will perform two simultaneous, salutary functions: 1) reducing the costs of direct employment, thereby also reducing employers’ incentives to automate and fissure, and 2) protecting the workers who are harmed as a result of the fissuring and automation that does occur, in the form of job loss or job degradation.

Estlund closes by acknowledging probable objections to her approach, including the ideas that employers deserve to bear the cost of some societal guarantees, that her proposals are unlikely to succeed politically, that the current state of “churn” in the labor market will ultimately produce more and better jobs, and that her proposals will do no more than tinker with employers’ incentives at the margins, without slowing the inevitable march toward automation. In the face of these critiques, she acknowledges that none of us knows with certainty how fast automation and other forms of fissuring might take over jobs or pieces of jobs as we know them. However, she makes a compelling case for taking seriously the push toward ever more precarious and automated forms of labor, and for undertaking a clear-eyed assessment of the role of employer costs – and employment law – in driving that trend. And she admirably offers practical solutions, as a way “to start somewhere, even in a context of uncertainty and intense debate” over the future of work, and the future of employment law in a world increasingly dominated by Uber, China, and robots.

Cite as: Charlotte S. Alexander, Uber, China, and Robots, JOTWELL (May 14, 2018) (reviewing Cynthia Estlund, What Should We Do After Work? Automation and Employment Law, NYU School of Law, Public Law Research Paper No. 17-28, NYU Law and Economics Research Paper No. 17-26 (Jan. 5, 2018), available at SSRN), https://worklaw.jotwell.com/uber-china-and-robots/.