Yearly Archives: 2011

Ramble On: How Workplace Rights Depend On Employee Conversations

Dec 19, 2011 Matt Bodie

How and why do workers join unions?  These most basic questions remain the source of significant academic and policy debate.  Over the past two decades, unions, employers, and scholars have refocused on the importance of organizing and, in turn, the law relating to employee representational choice.  The Employee Free Choice Act—currently in legislative limbo—would dramatically change the current structure by allowing unions to collect signature cards from a majority of the workers to be represented.  Under the current system, however, unions must provide signature cards from at least thirty percent of the employees in order to move on to a secret ballot election.  In the campaign period before the election, both parties are allowed to press their case vigorously—within limits.  In a notable turn of phrase, the NLRB endeavors to establish “laboratory conditions” during the campaign period in order to determine the “uninhibited desires” of employees.  General Shoe Corp., 77 N.L.R.B. 124, 127 (1948).  As it turns out, establishing laboratory conditions is largely confined to a series of prohibitions: no threats, no bribes, no racially inflammatory speech.  There is no obligation to insure that employees have the information they need to make a proper decision.

In Communication Breakdown, Professor Hirsch takes a new and compelling angle on this regulatory approach.  While recognizing the importance of protections against coercion, he argues that the law has thus far overlooked the importance of positive employee discourse.  He makes his case systematically.  First, Hirsch marshals economic and psychological concepts to support the critical role of discourse in group cooperation.  Using the work of scholars such as Olson, Ostrom, Axelrod, and Bar-Tal, Hirsch convincingly demonstrates how communication of information between interested parties is a critical catalyst to collective action.  Without communication, parties cannot identify and evaluate collective interests or develop a plan of concerted action.  Information-packed communication exchange—which Hirsch calls “discourse”—must be protected and even encouraged in order for employees to determine whether they would benefit from unionization.

Communication Breakdown then analyzes the existing labor law doctrine on workplace communication and finds it mostly missing.  Hirsch has a real talent for explicating the work of the NLRB and courts in labor law.  Here, he first discusses the hurdles to employee communication posed by the modern workplace: increased employee mobility, lower job security, and increased workplace complexity.  He notes that while electronic communication can overcome some barriers to discourse, face-to-face speech is particularly important in establishing trust.  (He uses psychological research here to convincing effect.)  The law has largely failed to address these challenges, and instead has ignored them or made them worse.  Hirsch works through many of the doctrines surrounding employee speech and representation campaigns and finds that they fail to account for the role of discourse.  He takes on card-check certification and points out the weaknesses in that system’s ability to provide for information exchange amongst employees, employers, and unions.  He then evaluates several potential ways in which the NLRB might better foment and support employee discourse on workplace issues.  Indeed, the Board has already moved to implement one of Hirsch’s suggested reforms—a notice posting describing NLRA rights—through a proposed rulemaking.

There are many things to like about Hirsch’s approach in Communication Breakdown (even beyond the Zeppelin reference).  First, he begins his analysis with an interdisciplinary inquiry into the actual structure of employee cooperation and coordination.  He then moves from the economic and psychological models into doctrinal dissection, and he expertly shows how theory points up the weaknesses of the current regulation.  This blend of interdisciplinary and doctrinal analysis is in the best law review tradition, and it moves the ball significantly in the literature on employee representational choice.  Second, Hirsch is not afraid to go where the analysis leads him, even if it may transgress traditional ideological categories in the bar and academy.  For example, Hirsch points out some weaknesses in the card-check approach, even though that approach is extremely popular with academics.  His critique is nuanced, subtle, and balanced; that is his modus operandi.  But in a field that can be polarized and polarizing, Hirsch follows his scholarly lodestar.  Third, Hirsch opens up a new avenue for future analysis.  His definition and categorization of “discourse” provides a new way for scholars to approach the issue of employee choice.  Communication Breakdown demonstrates that innovation in labor law is alive and well, and need not be at the expense of rigor or pragmatism.

In this seemingly post-EFCA era, perhaps it is time for a new discourse between academics and policymakers on better ways to manage employee representational choice.  Communication Breakdown will be an important part of that conversation.

Understanding ADR in the Non-Union Workplace

Dec 9, 2011 Samuel Estreicher

Much has been written about arbitration of employment disputes in the nonunion sector.  Much of this literature is theoretical and declamatory, rarely involving an examination of actual institutional arrangements, outcomes and perceptions.¹ Some work has been done on outcomes in nonunion arbitrations, but these are hobbled by the inability to track the path different claims may take, including withdrawal and settlement.² Employee perceptions have been studied in the union sector, but almost nothing has been done in nonunion companies, and certainly nothing that is able to provide a direct measure of innovations in alternative dispute resolution (“ADR”)  systems in a given workplace.

Armed with a Ph.D. in Management from the Sloan School at MIT, his J.D. degree from Cornell, and management labor-side experience at Twentieth Century Fox and several  law firms,  Zev Eigen of  Northwestern University School of Law is uniquely positioned and likely to improve this state of affairs in the study of the nonunion workplace.   Eigen understands economics and the importance of revealed behavior but he is equally sensitive to the insights of psychologists like my colleague Tom Tyler. Perceptions of fairness affect behaviors, which have feedback effects for each other.

Eigen’s first work as a law teacher built on his dissertation, under Tom Kochan of MIT’s supervision.  It was a study of employee perceptions of the fairness of adhesive contracts, The Devil in the Details: The Interrelationship among Citizenship, Rule of Law and Form-Adhesive Contracts, 41 Conn. L. Rev. 381 (2008).

In the work under review, Eigen and his coauthor, Adam Litwin, have obtained access to a truly remarkable data set spanning more than 100,000 workers and more than 1,000 locations across the United States provided by a large nonunion company, which they have dubbed “Gilda”s, Inc.”   The authors use employee surveys commenced before the company introduced a four-step ADR system and continuing for several years afterwards—permitted ‘before and after” comparisons of employee perceptions.   The four steps of the ADR system were (1) employee initiation of a claim with management, (2) appeal to the HR department, (3) further appeal to either a peer review panel or unilateral determination by higher-level HR management, and (4) if still not satisfied, resort to final, binding arbitration.

Eigen and Litwin are interested in employee perceptions of voice and justice.  “Procedural justice” is a measure of how employees perceive the fairness of the procedures employed in a particular system; “interactive justice,” the authors tell us, is a measure of employee perceptions of how well their interests are being taken into account by management in making decisions. They find that the company’s introduction of a formal 4-step ADR system culminating in arbitration resulted in a decrease in “perceived formal procedural justice” but an increase in “perceived informal procedural justice” as well as an increase in “perceived interactive justice.”

One would expect, in theory, to find all three measures advancing in the same direction.   It is especially interesting that employees are able to distinguish between the quality of the formal procedural justice they are receiving in the employer’s decision-making process from the quality of the informal procedural justice of those procedures, but one would think that the direction should be other way—that perceptions of formal justice are increasing while perhaps the discretion of management and perhaps other informal processes are on the decline.  Moreover, the introduction of the new ADR system has no discernible impact on employees’ organizational commitment—another counterintuitive result.

Explaining these results will take further work. The authors suggest that employees are perceiving a kind of low-level resistance to the new program by their immediate supervisors: “Immediate supervisors might be incentivized to encourage their employees to trust them to resolve claims instead of allowing HR or Gilda’s as a corporate entity to do so.  Perhaps local managers are actively encouraging employees to trust them, which could be interpreted implicitly as being encouraged to distrust Gilda’s DRS or the company writ large.”  (p. 15) This dynamic is consistent with low-level supervision’s disquiet with the formal processes introduced by union contracts.

I applaud the coauthors, and especially Professor Eigen, for an important contribution to our understanding of ADR in the nonunion workplace.  I look forward to further contributions by Zev Eigen.

Barking Up the Wrong Tree: The Antidiscrimination Project and Public Perceptions

Nov 23, 2011 Charles A. Sullivan

One might question the wisdom of a young, not-yet-on-the-market, scholar basically arguing that most of us in her field—including me—have been wrong in important ways. But wise or not, Katie Eyer’s article, That’s Not Discrimination: American Beliefs and the Limits of Anti-Discrimination Law (forthcoming in the Minnesota Law Review) is a remarkable piece of research and exposition. She has an ability to deal with complicated issues in a lucid and spritely prose style. I almost enjoyed being informed how wrong I was!

Katie’s a Research Scholar at Penn and her piece starts with the conventional wisdom of 21^st century employment discrimination law: there’s a lot of bias out there, maybe mostly of the unconscious type, but, in any event, pretty pervasive. While scholars like myself have proposed ways to deal with this reality insofar as federal judges are concerned, Katie suggests a deeper problem: “most people in most factual circumstances are unwilling to make robust attributions to discrimination.”

The implications of this should be obvious, but haven’t been: even if various academic schemes successfully dodged the Scylla of judicial gatekeepers, plaintiffs would still run afoul of the Charybdis of juries being resistant to inferring discrimination – “[E]ven when there is substantial evidence of traditional invidious discriminatory intent (including so-called “direct evidence”), most people will decline to make attributions of discrimination.” In fact, the author finds judicial and lay attitudes remarkably similar as regards the likelihood of discrimination.

If true, this reality would certainly put pain to efforts to deal with cognitive bias or discriminatory workplace cultures, at least efforts that rely on traditional litigation for vindication. Not only are such efforts not likely to do any good but they may do harm “by further expanding the capaciousness of discrimination doctrine” and thus widening the chasm between it and popular perceptions.

And Katie makes a persuasive case. Although others have observed the increasingly reluctance of society to believe that remaining inequalities are the result of intentional discrimination, That’s Not Discrimination undertakes an in-depth discussion of the psychological literature. That research shows that both minorities and the majority are unwilling to attribute negative outcomes to discrimination. For example, she cites a study in which mock jurors were presented evidence of discrimination that plaintiffs’ attorneys would salivate over (including plaintiff’s boss saying that “women should only be in subservient positions” and that he wanted to replace women with men). Almost half the “jurors” nevertheless found against the plaintiff. Other studies show that subjects themselves attribute their failures to discrimination far less often than the evidence presented to them would seem to support.

The article explores possible reasons for this phenomenon, including the cognitive dissonance that would result from discrimination existing in nation widely thought to be a meritocracy. But I can’t do justice to her analysis in this short review, so I won’t try.

However, I do want to highlight her central normative argument. She concludes her descriptive discussion by arguing that “crediting the findings of psychology scholars, both of the most commonly suggested types of reform seem likely to have significant limitations as mechanisms for meaningfully improving outcomes for discrimination litigants.” I think this is euphemistic way of saying many of us are barking up the wrong tree.

So what’s the right tree?  It’s here (as is often the case) that her critique flags. She argues for greater resort to “extra-discrimination remedies.”  No, that doesn’t mean even more discrimination. It means looking to “virtually any remedy for group-based inequality that are not founded in discrimination claims,” such as anti-poverty initiatives and just cause legislation. She then provides a laundry list of other examples, including the FMLA, school-based antibullying legislation, and common law claims. She believes that, while such situations would logically seem to also conflict with deeply-held notions of America as a meritocracy, such claims are not viewed as being as far-fetched as discrimination claims, which trigger “uniquely hostile responses.”

She does anticipate one objection to de-racing and de-sexing discrimination laws: “Most individuals who are deeply invested in the antidiscrimination enterprise  . . . care about discrimination because it is discrimination.”  But with a certain heartlessness she responds that it’s not like you guys are winning a lot of victories under the current regime.

It’s hard to disagree with either Katie’s observation or her rebuttal of the likely response, but I have another reservation: I’m not so sure that employee-leaning scholars and practitioners are doing so well in employment law read broadly. Actually just the opposite.

I hope the somewhat breezy tone of this review doesn’t suggest that I am not a very big fan of this article.  I am. Whether or not I agree with Katie, That’s Not Discrimination is a thought-provoking piece well worth a read. I anticipate that Katie will be an important, and welcome, new voice in the academy’s employment precincts.

Just Notice: A Paradigm-Shifting Solution to Economic Dismissals

Oct 31, 2011 Anne Marie Lofaso1 comment

For over a century, the default job-termination rule in the private sector of the United States has been at-will employment, under which an employer can discharge its employees for any reason, good or bad, or for no reason at all. Although the common law as well as state and federal statutory law has chipped away at this default rule, at-will remains the default standard in every U.S. state except Montana, which has adopted a just-cause discharge standard. These default rules—at-will and just cause—have framed the legal debate over what role the law should play in regulating individual job security.

Professor Arnow-Richman astutely observes that this debate has been framed too narrowly. She notes that a “just cause rule provides only a weak cause of action to … those workers who can prove in court that they were fired for purely arbitrary reasons.” After all, job insecurity has been on the rise. The unemployment rate for the past three or four years has risen dramatically from 4.4 percent in December 2006 to a high of 10.1 percent in October 2009, with a current unemployment rate hovering at 9.1 percent. Given the “profound” changes in the employment paradigm over the past half-century, which includes a rise in short-term and contingent labor, and given that today’s workers are most likely to lose their job for economic reasons—a good reason—then perhaps we need “a fundamental shift in the goals and focus of employment termination law.”

I will put it another way. The law has been good at eliminating some of the bad reasons for firing workers. The National Labor Relations Act prohibits employers from discharging workers because of their union or other protected concerted activity. Title VII prohibits employers from discriminatorily discharging workers because of race, color, national origin, religion, and gender. Other state or federal civil rights statutes prohibit employers from discharging workers because of age, disability, and sexual orientation, to name a few. Some states prohibit employers from discharging workers for reasons that violate a clearly defined public policy. Others forbid employers for firing workers in bad faith. But no state has ever prohibited an employer from discharging a worker for economic reasons, even though such termination, from the workers’ point of view, can be just as devastating as a job termination for any other reason. In each case, job loss results in lost income, lost self-esteem, and lost friendships, to name a few losses. And job loss resulting from a plant closing or mass economic dismissal can, in some ways, have even greater social costs than job loss resulting from discrimination. After all, a plant closing could ruin a town that depends on that plant for its livelihood—think Youngstown and the steel mill closures of the late 1970s. Mass economic dismissals can have rippling effects in communities—rises in crime rates, rises in divorce rates, and rises in poverty levels, just to name a few.

Professor Arnow-Richman’s solution is a universal ‘pay-or-play’ system of employment termination:

Under such a system, employers would be obligated to provide workers advance notice of termination or, at the employer’s election, continued pay and benefits for the duration of the notice period. This system would allow employees a degree of income continuity, enabling them to search for new employment or, in the event the employer elects severance pay, to invest in training.  (P. 37.)

Such a system focuses on a different set of goals, implied promises, and obligations from just cause. Whereas just cause focuses on the goal of job retention, pay-or-play focuses on job transition. Whereas just cause assumes a workplace paradigm that promises long-term employment, pay-or-play assumes a more realistic workplace paradigm that includes long-term employability. And whereas just cause imposes on the employer the obligation of justifying its discharges, pay-or-play imposes on the employer the obligation of supporting re-employment of its workers, either through just notice or severance pay.

This is a brilliant solution to the problem of unemployment. Professor Arnow-Richman has opened the door through which all of us must now peer. But the solution still does not go far or deep enough. Notice and its substantive analogue, severance pay, are but minor burdens to place on employers. As government studies on the WARN Act have explained, advance notice of a plant closure or mass economic dismissal has very little if any negative impact on businesses but does result in a salutary effects on those making the transition from paid job to job loss. And who, in these circumstances after all, is in a better position than the employer to give such notice?

While Professor Arnow-Richman’s article shifts the debate, much more reform is needed to the problem of job insecurity. We should be talking about many other procedural solutions—advance notice, information, consultation, negotiation, and even co-determination. Why not obligate employers to give workers financial information? Wouldn’t this help workers to understand that they may be fired or that they may be asked to take a pay cut? Perhaps workers would choose the pay cut over the mass termination. This is where consultation and bargaining comes in. Isn’t it more efficient to bargain over the problem than to allow employers to make unilateral decisions without input from those who have the most at stake—the workers who may lose their jobs?

More controversially, we must not fear the substantive solutions to these problems either. Currently, there is no claim-right to severance pay; there is no right to a job; and there is no right to a particular job. We—meaning those of us who have worked for long enough—have only a limited “right” to unemployment benefit of limited duration. If we truly care about job transition, then the logical extension of Professor Arnow-Richman’s argument is a right to “a” job, though not necessarily a right to “the” job that we want. Until we shed the fear that talk of rights to jobs necessarily entails an end to, rather than a bolstering of, capitalism, we will never have the debate we need to live in the kind of country that allows all of us become part authors of work lives—autonomous, dignified workers.

The Impairment of Public Sector Collective Bargaining Agreements

Oct 5, 2011 Martin H. Malin

The great recession has hit state and local governments nationwide very hard.  Many have turned to the unions that represent their employees for wage, benefits and work rule concessions in an effort to reduce expenditures.  When they have been unable to secure such concessions, they have resorted to unilateral action abrogating their collective bargaining agreements.  Their actions have taken many forms.  Some are redressable under the contract’s grievance and arbitration procedures or in unfair labor practice proceedings before the state public sector labor relations agency.  However, in many cases such redress is not available, leaving the only avenue an action alleging an unconstitutional impairment of contract.

Stephen Befort‘s article, “Unilateral Alteration of Public Sector Collective Bargaining Agreements and the Contract Clause,” tackles head on the extremely important and timely topic of when unilateral modifications of public employee collective bargaining agreements in response to fiscal crises constitute an unconstitutional impairment of contract.  Befort first provides a brief background on the development of public sector labor law and public sector collective bargaining.   He observes that where unilateral modification of public employees’ collective bargaining agreements is accomplished through legislation, public sector labor relations acts are of little utility because the legislature is not the employer.  Consequently, the only generally available avenue of contest is under the Contract Clause of the Constitution.  Befort then provides useful and detailed background to the development of Contract Clause jurisprudence in general.

Befort observes that “[w]hile the severity of the 2009-10 budget crisis is relatively unique, the existence of public sector budget crises are not.” (P. 9.)  He catalogues four periods of public sector budget crises over the past 30 years: 1982, 1991, 2003-04 and 2009-10.  He examines the Contract Clause challenges to legislative enactments that abrogated collective bargaining agreements during each cycle.  He provides detailed discussion of each case that arose in each cycle.  From this exhaustive description, he derives an array of what he finds to be the most significant factors used by the courts.  These include the severity of the fiscal crisis, foreseeability of the fiscal emergency at the time of entering into the contract, the substantiality of the impairment of the contract, the availability of alternatives to modifying the collective bargaining agreement, whether the impairment operates prospectively only or retroactively, and whether the burden of the fiscal crisis is spread among a large number of constituents or is disproportionately placed on the employees.

Befort critiques the courts’ approaches on three grounds.  First, he finds that many courts have been overly deferential to the judgments of state legislatures.  He persuasively urges that such deference is inconsistent with the Supreme Court’s decision in United States Trust Co. of N.Y. v. New Jersey, 431 U.S. 1 (1977), where the Court opined that deference must be circumscribed when a court is reviewing a state’s impairment of its own contracts because a state can always find uses for extra money where that money is obtained by impairing its contractual obligations instead of raising taxes.  The Court thus required state action which impaired its own contracts to be reasonable, in the sense that the parties did not foresee at the time of contracting the possibility of the changed circumstances, and necessary in the sense that there were no less drastic alternatives available.  Befort demonstrates how a number of courts reviewing impairments of public employee collective bargaining agreements have fallen short of the U.S. Trust standard.

Befort further critiques the courts’ approaches, discerning that some courts have treated collective bargaining agreements as less worthy of protection than bonds.  Befort argues that these courts too easily approve impairments that are prospective only, failing to recognize that a multi-year contract must be treated as an integrated whole.  Indeed, it is common for unions and employers to backload wage increases to reduce the immediate fiscal impact while ending up with an increased base by the end of the contract’s term.  Finally, Befort perceptibly points out that courts have inappropriately opined that public employees owe an extra duty of loyalty which commands from them greater sacrifice for the public interest than from other citizens.

Befort complements his critique with his recommended framework for analysis of impairment issues in public sector collective bargaining agreements.  He urges that courts be true to the Supreme Court’s analysis in U. S. Trust by undertaking a de novo review of whether the impairment was reasonable and necessary to serve an important government purpose. He urges that to be reasonable, the impairment must be in response to an emergency that could not have been foreseen at the time of contracting.  To be necessary, the state must demonstrate that it considered alternatives to impairing the contract and had reasonable grounds for rejecting the alternatives.   Finally, he calls on courts to determine whether the state has distributed the burden of responding to the fiscal crisis broadly and equitably.

Although public sector employment has received renewed attention nationally, legal scholarship in this area remains sparse.  Stephen Befort’s article provides a welcome scholarly analysis to an extremely timely topic.