Employment Law Befort Fall 2013
I. Introduction
A. Employment Law Overview
1. Work provides identity and meaning
a. Is primarily done in an employment relationship
2. Two Categories of law of the workplace:
a. Labor Law – collective law; union management
b. Employment Law – regulation of the employer/employee relationship, defining the rights and obligations of both parties
i. Not a well-defined body of law, but a hodge-podge of regulatory structures
ii. Employment Law is regulated primarily through:
¨ Individual contracts
¨ Collective bargaining
¨ Government regulation
B. Historical Overview of U.S. Employment Law
1. Three Objectives of Evaluation:
a. Efficiency – enhanced productivity and administrative ease
b. Equity – fair and balance outcomes
c. Voice – ability to communicate wants and needs
2. Possible Rule Sources
a. Market – letting it prevail
b. Government regulation
c. Shared decision-making – like unions where government sets up processes but not outcomes – bilateral bargaining mechanisms
3. Four Eras Summary:
a. Old Deal – Market and efficiency dominates
b. New Deal – Government intervenes to bolster equity and voice
c. Employment Law – HR and government displace unions = less voice
d. Global Era – Efficiency concerns dominate
4. Old Deal: 1880-1935
a. At-will rule as predominant employment relationship – perceived freedom of contract
b. Lack of governmental regulation
c. Rise of the unions: 3 million in unions by 1933
d. Labor problems:
i. Poor working conditions
ii. Low wages, long hours
iii. Week job security
iv. Little employee voice
v. Large corps dictating job terms and low bargaining power of employees
5. New Deal: 1933-1965
a. Government stepping in to bolster equity of voice and not as concerned with efficiency
b. Arose from perceived inequality of resources and bargaining power
c. NLRA and growth of unions and government protection of union activity
d. Labor no longer a commodity but a special input in production
i. Involves people, with wants and needs that are more important than price of rule
e. Internal labor markets begin to develop
i. Employers train and retain employees by providing attractive wages and benefits and retirement – use seniority to invest in employees
ii. Idea arises of climbing internal ladder within one long-term employer
iii. Implicit social contract – if do a good job, can expect long term employment
f. By 1960, unions represent 1/3 of workforce
6. Employment Law Era: 1965-1990
a. Rise of HR management
i. Better internal management – makes labor unions less necessary
ii. Unilateral decision making
b. Perceived shared interest of employees and employers – not adversarial anymore
c. Laws develop impacting individual employment relationship as unions decline
i. Title VII, ADEA, OSHA, ERISA come from this era
7. Global Era: Post-1990
a. Trade, tech, global economy
b. Rise of flexible work practices – both hiring and production models are streamlined
c. External labor markets develop
i. Employers bid for labor as needed
ii. Capital mobility enables low-cost hiring and production
iii. Flexible hiring and layoffs in response to economic needs
d. Unions drop to 12% of manufacturing workers and 8% of private employees
8. Result is patchwork of regulation
a. Old Deal: At-will rule
b. New Deal: NLRA, FLSA
c. Employment Law: Anti-discrimination laws, OSHA, ERISA
d. Global: FMLA, WARN Act
C. “Employment” and the Growing Contingent Workforce
1. Changing Demography
a. More women, more diversity, older workers, and more dual-income families
b. More technical, service, and professional jobs
i. Less manufacturing and farming
c. Employment law has been derived from many of these demographic changes:
i. FMLA for working families
ii. ADEA and ERISA for older workers
iii. WARN Act dealing with capital mobility
2. Scope: Employees vs. Independent Contractor
a. Six-Factor Test for employees vs. independent contractor under FLSA and FMLA (listed in Donovan v. DialAmerica) – used by most federal statutes, including Title VII
i. Employer’s right to control manner in which work performed
ii. Employer’s opportunity for profit depending on managerial skill
iii. Employee’s investment in equipment/materials
iv. Special skill required for service rendered
v. Degree of permanence in working relationship
vi. Integral part of alleged employer’s business
¨ Workers are more likely to be viewed as employees if they perform the primary work of the alleged employer (Economic Realities Test)
vii. Overarching consideration (not one of factors) – Economic dependence of EE
¨ NOTE: Label affixed by employer does NOT control the employee vs. independent contractor relationship in eyes of law
b. Economic Realities Test – used by FMLA, FLSA
i. Whether as a matter of economic reality, worker is economically dependent on business served
ii. More employees qualify than common law test
c. Donovan v. DialAmerica: employee vs. independent contractor
i. Telephone researchers are employees and telephone distributors are not
ii. Court argues that “integral part of business” and dependence factors distinguish the two positions
3. Rise of Contingent Workforce
a. Four types of contingent workers:
i. Non-employees
¨ Independent contractors
à Not classified as an employee and thus no access to federally-mandated benefits and standards
à Look at whether someone is setting the agenda/tasks, or if they just want the end product or work
· Ex. Plumber, handyman
¨ Leased employees (staffing agencies)
à Employed by a primary employer, but provide services to a secondary employer on a K basis
à Sub-K relieve employers of responsibilities toward the workers who perform services for them
ii. Employees with less attachment
¨ Temporary employees
à Predominantly female and clerical
à
yees covered by a collective bargaining agreement can be discharged only for “just cause”
b. National Labor Relations Act (NLRA) Rights:
i. To organize and select a representative (or not)
ii. To collectively bargain through a representative
iii. To engage in concerted activity for mutual aid and protection
iv. Coverage: federal law, private sector workers
c. Enforcement mechanisms:
i. NLRB: statutory violations (unfair labor practices)
ii. Arbitration: contract violations (grievances)
d. Labor Law – Job Security
i. Substantive standard: Most CBA’s provide for no discharge or discipline without “just cause”
ii. Procedural process: Grievance procedure which culminates in a binding arbitration
e. “Just Cause” in Union Context
i. Conduct that interferes with management’s legitimate expectations
ii. Objective assessment of employee work performance
iii. May encompass: misconduct, poor performance or lack of work, violation of reasonable work rules
f. Pros of Arbitration
i. Fair Standard
ii. Parties can define “just cause”
iii. Fast and informal
iv. Low transaction costs
g. Cons of Arbitration
i. Less due process
ii. Tend to split the baby
h. Benefits of Union
i. Banding together gives employees more of a chance to effect change
ii. Discuss and formulate concerns
iii. Skilled representative voices their position to management
i. Causes of Union Decline
i. Global product and labor market competition
ii. HR management has become better able to attend to needs/interests of employees
iii. Changing workforce composition
iv. Increase in contingent workers
v. Employer opposition/NLRA weaknesses
vi. Less perceived need, also decline in moral authority of union
4. Statutory Contracts: The Montana Exception
a. Montana has a statutory requirement for “just cause” in termination
b. “Good Cause”
i. Reasonably job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of ER’s operation, or other legitimate biz reason
¨ Legitimate business reason has some logical relationship to the needs of the business and is neither false, whimsical, arbitrary or capricious
ii. Employer must establish that employee, in fact, failed to perform job adequately based on objective grounds
¨ A mere good faith belief, but mistaken interpretation of the facts, is not enough (Marcy v. Delta Airlines)
