Employment Law and Labor Regulations

Chapter 16

Chapter Issues• Employment at Will• Substance Abuse• Worker Safety and Health• Workers’ Compensation• General Regulation of

Labor Markets• Major Labor Relations Acts• The National Labor

Relations Board• Unionization• Collective Bargaining

Employment-At-WillEmployers: Can hire and fire who they want. Employees: May work-at-will or quit when they want.Contractual limits to at-will

• Exceptions:Refusing to commit an illegal

actImportant public duty (jury

duty)Public right (filing for

workers’ compensation)“Whistle Blowing”Contracts in violation of

public policy, i.e. exculpatory agreements

Brown v. Soh

• Brown worked for Skip Barber Racing School

• School offered advanced driving classes for the public

• Driving took place in restricted area• Everyone, including instructors, signed

liability waiver to hold school harmless for any injuries incurred.

• Was a consideration to be able to work and covered “all liability”

• Client, Soh, driving with an instructor• Ran into Brown in restricted area, waving

flag to signal drivers• Brown sued school and others involved in

his injuries.

Brown v. Soh• Trial Court granted summary judgment to

school since he had signed a liability waiver. Brown appealed.

• HELD: Reversed and remanded.• Exculpatory agreements are almost

always rejected in the employment context due to public policy considerations.

• Here employer had advantage in bargaining strength against employee – take it (the adhesion contract of exculpation) or leave it situation for employment.

• If employers allowed to have broad waivers of liability, incentive by employers to manage risk at the workplace is removed

Noncompetition Agreements• Employees sign not to leave

employment and compete directly with employer.

• Different states differ• Some allow them absolutely• Others – common law governs,

allowing if restraints are reasonable in time and extent of coverage.

• Other states, like CA, say that almost every contract that restrains anyone from lawful business is void.

• Employers must pay attention to individual state law in this area.

Substance Abuse

• Alcohol the most common

• 13.6% of all adults have experienced alcohol addiction or abuse in their lives

• 8% of workers are serious alcohol abusers

• Another 3-8% of adults abuse or addicted to illegal or improperly dispensed drugs

• One in eight of workers have substance abuse problem

Consequences of Substance Abuse

• Reduced productivity & higher insurance expenses cost employers over $250 billion per year

• Safety Issues ~ workers under influence of alcohol or other drugs are 3.6 time more likely to be injured or to injure another

• Insurance costs are about double for families with an alcoholic

• Issue Spotter: “What Attitude Toward Drinking and the Office?” – Re: office parties and other festivities

• Exxon Valdez Case--1989 oil spill off coast of Alaska– Billions of dollars in clean-up costs and losses to

the environment (AND Exxon’s reputation)

Drug-Free Workplace Act• Requires all companies of

more than $25,000 worth of business with the federal government to certify they have “drug-free” workplace: – Publish policy statement– Establish drug awareness

program– Make known availability of

program– Require employees to

notify employers of any drug related convictions

State Standards May Vary

• Specific restrictions on substance testing.

• MN: Only employees in safety-sensitive positions may be drug tested.

• ME: Employee must be notified if fails drug test and given another test before employer is notified.

• Employers must comply with particular state’s rules.

• Issue Spotter, “How Does an Employer Handle an Employee Who Flunks a Drug Test?”

Elements of Substance Abuse Policy

• Pre-employment screening usually OK (many states say testing after job offer is extended)

• Safety sensitive jobs• Notification; make policy clear• Voluntary nature--employee knew of policy• After accidents--OK• Reasonable suspicion--document this well in

employee file• Use Certified labs for drug testing results• Give all employees copy of company policy and

keep a signed receipt from employee• Check with attorney or specialist in drug

testing

Worker Health & Safety

• Occupational Safety and Health Act of 1970 (OSHAct) created Occupational Safety and Health Administration (OSHA)

• Safety Inspections• 4th Amendment prohibits searches

without warrant (but warrants are usually easy to get)– Marshall v. Barlow’s Inc. (OSHA inspectors

routinely obtain administrative warrants that don’t require show of probable cause; the warrant requirement is not difficult.)

• Penalties can be stiff for violations!• See R. Williams Construction Co. v. Occupational Safety &

Health Review Commission

R. Williams Construction Co. v. Occupational Safety & Health

Review Commission• Williams dug a 12’ deep trench at construction

site. Employees regularly cleaned up submersible pump at bottom of trench.

• Palomar and Aguiniga entered trench with no supports.

• One side collapsed--killed Aguiniga and seriously injured Palomar.

• OSHA inspected: Cited company for 1) failing to instruct employees about safety and 2) failing to properly build and maintain trench.

• 3 serious violations ($7,000 each); 1 willful violation ($70,000) = $91,000 total in fines.

• ALJ held hearing; heard employees testify of minimal safety training and little control over the trench.

• Managers claimed there was adequate safety. • (Continued On Next Slide)

R. Williams Construction Co. v. Occupational Safety & Health

Review Commission• ALJ downgraded willful violation to serious and

reduced total fines to $22,000 because company had a good history.

• Williams appealed to the commission, which was denied.

• Williams appealed to Appeals Court.• HELD: Affirmed.• Williams failed to instruct employees in proper

safety measures. Williams made no effort to ensure employees not to enter trench on day it collapsed.

• Employees should not be expected by management to take greater care to avoid placing themselves in danger. If this kind of risk is placed on employees, it “misconstrues the purpose of the OSHA safety standards.”

OSHA’s Toxic Substance Standards

• Covers asbestos, vinyl chloride, coke-oven emissions, and other industrial carcinogens

• “Must adequately insure to the extent feasible... that no EE will suffer material impairment of health or functional capacity”

• OSHA must have scientific evidence that there is “significant health risk” before it can regulate

• See Exhibit 16.1 – Ten Most Common Workplace Safety Violations

Hazard Communication Standard (HazCom)

• “Worker-Right-To-Know Laws” re: employee exposure to hazardous chemicals

• Chemical producers and users conduct a “hazard determination” of chemicals they use/produce

• Written Communication Standard• Labels for chemical containers• Material Safety Data Sheets (MSDS)• Employee Training Programs

– Concerning requirements under the law

– Training to detect hazards and protect themselves in emergency actions

Workers’ Compensation

• States enact worker’s comp laws to provide employer paid insurance for work-related accidents

• Gives employers immunity from tort suits by employees

Objectives:1) provide benefits to work-accident victims regardless of fault2) provide a certain remedy; relieve hassles of tort litigation3) protect public and private charities from undue burden4) reduce fees to lawyers and expert witnesses5) encourage ER safety w/accident rating based premium6) provide open communication of accident for future safety

Juarez v. CC Services, Inc.

• Juarez worked for Westarz Homes at construction sites for 5 years. Bever was a superintendent at the sites—supervised sub-contractors and moved trash.

• Bevers presented himself as an independent contractor under the name of T. Bever Construction.

• Westarz provided Bever a truck to move trash. Truck insured by Westarz’s insurance company, Country Insurance.

• Bever was backing truck up at site, and hit Juarez. • Crushed his left arm and shoulder, leaving him unable to

work.• Juarez filed for workers’ compensation.• Westarz paid no workers’ compensation premiums,

claiming it only used independent contractors and had no employees.

• Site was investigated; determined Juarez was an employee.

• Juaraz awarded workers’ compensation benefits from a Special Fund for such circumstances.

• Juarez also sued Bever Construction for negligence for Bever’s hitting Juarez with the truck.

Juarez v. CC Services, Inc.• Country defended, saying Bever and Juarez were both

employees of Westarz, and workers’ compensation was the only remedy.

• Jury held Bever was an independent contractor and awarded Juarez $600,000 for negligence by Bever (which was covered by the insurance policy on the truck).

• Country moved for summary judgment that it would not have to pay the claim.

• HELD: Country’s motion for summary judgment is granted. Country does not have to pay the $600,000 claim.

• There is a master-servant relationship between Westarz and Bever.– Westarz had control over Bever’s activities; Bever furthered

interest of Westarz; Westarz provided materials for Bever’s job; Westarz dictated where Bever would work; Bever and Westarz had 4-year exclusive relationship; Bever was paid a set amount each week; Bever provided vital service to Westarz’ Business.

• Juarez and Bever were co-employees.• Juarez already sought workers’ compensation benefits.• Therefore, Arizona law precluded Juarez from bringing suit

against Bever for additional compensation, and Country Insurance doesn’t have to pay for any claim.

Issue Spotter: “Reducing Risks and Improving Looks”

• To save workers from being injured; reduce likelihood of OSHA violation; and reduce # of worker’s compensation claims:– Impose dress code?– Code covers safety and looks?– Improves professionalism of

workplace?– Can employers do what they want?– Does this change nature of work

contract with workers?

General Regulation of Labor Markets

– Family & Medical Leave– Hiring Immigrants– Federal Minimum Wage

Requirement– Occupational Licensure &

Regulation– Warning Employees of Plant

Closings– Employee Retirement Plans

Family & Medical Leave

• Family & Medical Leave Act (FMLA)• Private ER’s with 50+ employees• All government jobs• Pertains to “serious health condition”• 12 weeks unpaid leave

– after childbirth or adoption– care for seriously ill child, spouse,

parent, or self• Exempts “key” employees--10%

highest paid that would cause economic harm to ER

• See Callison v. City of Philadelphia

Callison v. City of Philadelphia

• Callison worked for city for two years. Diagnosed with deep anxiety reaction caused by stress at home and on the job.

• Used a lot of sick leave; was place on Sick Abuse List.

• Required to get medical certification for all sick days; subject to penalties for violations of policy.

• Employee on sick leave must call a hotline if they leave home.

• Sick leave investigator calls homes to see if employees are there.

• Callison took 3 months FMLA leave.• City checked on him. He often was not

home.• Suspended for failure to follow policy.

Callison v. City of Philadelphia

• Callison sued, saying he was not subject to discipline while on FMLA leave. Said discipline by the City was retaliatory.

• Trial court held for City. Callison appealed.• HELD: Affirmed.• City did not engage in prohibited acts

through their policies.• There is no right in the FMLA that employee is

“left alone” when under the act.• Employers may check to ensure employees on

leave do not abuse their leave, especially if they are on the employer’s Sick Abuse list.

• Internal call-in policy does not diminish protections of the FMLA.

Restrictions On Immigration• For every person hired,

employer must have an I-9 form on file.

• Documents must be presented for proof of identity and employment eligibility.

• Can’t hire illegal immigrants

• Fines & criminal Penalties• Policy: Protection of US

workers• Policy: Reduce

governmental costs• See www.uscis.gov

Federal Minimum Wage Requirements

• Initiated in 1938 as part of Fair Labor Standards Act

• Averages about 50% of the average manufacturing wage

• Minimum wage of $7.25/hour as of 2009.

• Employers must also pay Social Security tax of 7.65%

Occupational Licensure and Regulation

• Licensing requirements at federal and (mostly) state level

• Usually a state commission determines entry criteria– I.e. formal education– Sometimes apprenticeship– Testing

• Ability through certificate to practice as lawyer, doctor, nurse, dentist, veterinarian, barber, architect, psychologist, dog groomer, beekeeper, massage parlor operator, etc. etc.

Warning Employees of Plant Closings

• Worker Adjustment and Retraining Notification Act (WARN)

• Employers with 100+ full-time employees must give advance notice of plant closing or mass layoff if 50+ employees affected.

• Notice given directly to each affected EE 60 days in advance of closing or layoff.

• Notices also sent to collective bargaining agents, local elected officials, and state labor departmental officials.

• Notices must be for permanent termination and reduction in work time of 50% or more for 6 months or longer.

• EE’s who do not receive proper notice may sue for up to 60 days back pay, benefits, interest & attorney’s fees.

• Local government may sue company for up to $500/day for each day there was no notice.

• Some states have plant closing requirements beyond federal requirements.

Retirement Plans• Employee Retirement Income

Security Act (ERISA)• Guarantees expectations of

retirement plan participants-- protects benefits after reasonable length of employment

• Vesting requirements – participants receive benefits after certain length of employment

• Mandatory vesting – 3 different options established by ERISA

• Protects workers in case of closing--will still get their benefits

• Issue Spotter: “How Do You Count Hours for Telecommuters?”

Major Labor Relations Acts -

Unions in America

• 1932 Norris-La Guardia Act: • Federal Courts can’t issue

injunctions in nonviolent labor disputes--insures right to strike, picket, quit work, etc.

• Prohibits “yellow-dog contracts” (requiring employees to agree not to join a union; if they do, they are fired)

National Labor Relations Act (NLRA)

• 1935 Wagner Act (NLRA): Right of workers to unionize; created National Labor Relations Board (NLRB)

• 1947 Taft-Hartley Act ~ Labor-Management Relations Act: (Amended NLRA) Employers have right to go to NLRB - protects employers. Unions are prohibited from:– 1) coercing employees to support union– 2) refusing to bargain in good faith with employers– 3) carrying out certain kinds of strikes “secondary

boycotts,” charging “excessive” union fees, or “featherbedding”

– 4) going on strike during 30-day “cooling off” period or during 60-day period ordered by the President.

• 1959 Landrum Griffin Act ~ Labor-Management Reporting & Disclosure Act: (Amended NLRA) Increased reporting, regulation of internal union affairs; protects union members from improper actions by leaders through:

monitoring leadership and union member bill of rights

National Labor Relations Board

• Administrative agency created to monitor unfair labor practices and assure that union representation elections are fair

• Jurisdiction: labor dispute “affects interstate commerce”

• About 30,000 cases a year, most are unfair labor charges

• “Unfair labor practices” - actions that impede the goals of the NLRA

• See Examples of Employer Conduct That Violates the NLRA (in text)

• see also www.nlrb.gov

NLRB Remedies

• Posting a notice in the workplace

• Issuing a cease and desist order

• Providing back pay for lost wages

• Reinstating dismissed workers

• Issuing an order to bargain with the union

“The Power of German Unions”

• Competitive U.S. economy has limited strength of unions in U.S.

• In Germany competition among firms is limited:– most workers belong to trade unions– most employers belong to industry

associations– one collective bargaining agreement

traditionally covered all employees and all employers - wages and conditions same at all firms.

• German companies are now building plants in countries with lower employment costs, including the U.S.

Unionization

• Representation Elections • Employees sign authorization cards - need

30% to go to NLRB for an election• Campaign - by union and management• NLRB supervised election:

– more than 50% vote yes?– If so, union is certified as exclusive

bargaining agent for all employees. If not, union fails.

• Can also have 30% call for election to decertify union

• NLRB and courts do not permit access to company property by outside organizers.

Right-To-Work Laws

• NLRA prohibits Closed Shops - Where employee must be a union member before going to work

• NLRA prohibits Union Shops - Where employee must join union as a condition of employment

• Agency Shops - Majority of employees vote to be represented by Union– members pay union dues– non-members pay agency fees– Unions give $ to support political candidates

—may do this under strict requirements• States pass right-to-work laws that prohibit

agency shops. Have right to work without joining a union, even if majority of workers voted for union

Collective Bargaining

• Union is exclusive bargaining agent for employees• Collective bargaining covers whole process from initial

contract negotiations up through contract administration– Most collective bargaining agreements contain

dispute resolution clauses (grievance arbitration clauses)

• Requires Good Faith Bargaining– certain subjects mandatory, i.e.,

• wages, hours, other terms and conditions of employment

– can back up positions with strike by union or lockout by employer

Cyberlaw: “Employee Blogs”• Large employers control e-mail, with policies that company has right

to access e-mails on company computers and accounts.• Software scans e-mails for red flag words – sex, guarantee, social

security number, etc. Helps to reduce lost work time, litigation due to harassment claims, and loss of secure information.

• Blogs now are a concern.• Some employees have been dounced—fired—due to blogging.• Since blog comments posted anonymously, it is difficult and costly

to track down the negative blogger.• If firm can show defamation/trade secret infringement, then have

right to obtain discovery from court to uncover blogger’s trail.• Courts do not wish to issue injunctions against blogs – 1st

Amendment freedom of speech issues.• If blog is dedicated to complaining about company employment

policies, speech may be protected as a concerted activity under national Labor Relations Act.

• Company policies concerning blogs have included financial information of the company (securities laws and fiduciary obligations), personnel matters (employee privacy rights), and proprietary information (trade secrets).

• Employees who violate these company policies based on legal rights of the company can be fired.

Concerted Activities• To promote productive collective bargaining,

Congress provided certain activities to be protected.

• Protected Activities: Right to engage in concerted activities for mutual aid or protection– i.e. most union organizing efforts or refusal to

work due to unreasonable hazards or concerns re: working conditions

• Unprotected Activities: Threats or acts of violence not protected – Employers may fire employees for

insubordination, disobedience or disloyalty unless activity is part of protected concerted activity

– Primary boycott (strike against employer in collective bargaining dispute) is legal

– Secondary boycott (when union uses economic pressure to force others to stop doing business with an employer not directly involved in primary labor dispute) is illegal

Employer Economic Responses

• Employers may not retaliate against employees for engaging in protected activities

• Have right to use some economic pressure• May lock out employees until dispute with

union is settled– Legal if evidence of bad intent is not shown,

such as trying to break the union – Lockout is usually a defensive move and okay

if in an effort to promote settlement• Replacement of employees by non-union

workers can be okay– If collective bargaining agreement expires

with no agreement to a new contract and union calls for strike, the ER can hire new workers and keep using existing union workers who cross picket lines.