Overview of U.S. Employment Law

Friday, June 1Beijing 2007

The Old Deal: 1880 - 1935

Growth of large corporations Rise of the at-will rule Premised on freedom of contract

between equalsLack of governmental regulation

Three Objectives

Efficiency – Enhanced productivity and administrative ease

Equity – Fair and balanced outcomesVoice – Ability to communicate wants

and needs

Efficiency Prevails

Efficiency

Equity Voice

The “Labor Problem”

Poor working conditionsLow wages, long hoursWeak job securityLittle employee voice

The New Deal: 1933 - 1965

Perceived inequality of bargaining power

Rise of governmental regulationNLRA & growth of unionsSocial safety net Internal labor markets

Internal Labor Markets

Employers train and retain employees– Provide attractive wages and benefits– Provide continued work absent cause

Employees climb internal ladder of long-term employment– Loyalty to employer

Implicit social contract

Employment Law Era: 1965-90

Rise of human resource managementPerceived shared interests of

employees and management Increase in laws affecting individual

employment relationshipDecline in union density

The Global Era: Post 1990

Trade and technology enable a global economy

Capital mobility and a changing equilibrium

Rise of “flexible” work practicesExternal labor markets

External Labor Markets

Employers bid for labor as neededCapital mobility enables low-cost hiring

and productionHire trained employees as neededFlexible hiring and layoff in response to

economic needs

Four Eras

Old Deal – Market and efficiency dominates

New Deal – Government intervenes to bolster equity and voice

Employment Law – HR and Gov’t displace Unions (less voice)

Global – Efficiency concerns again dominate

Global Era Attributes

MoreContingent Work Involuntary

TerminationsLabor MobilityShareholder

power

LessJob SecurityJob TenureEmployee loyaltyUnion densityEmployee power

Bammert v. Don’s Super Valu

Did Don Williams have a good reason for firing Karen Bammert?

Why did the court reject Bammert’s wrongful discharge claim?

Employment at Will

In general, an employer may fire an employee for any reason: good, bad or non-existent

Similarly, an employee may terminate employment without cause

Public Policy Exception

State courts have recognized that the at will rule should not apply where the employer’s reason for discharge violates a clearly established public policy

Public policy must be articulated in either constitution or statute

Types of Public Policy Claims

Refusal to commit unlawful actExercising statutory rightPerforming public functionWhistleblowing (reporting unlawful

conduct)

Question

What are the policy pros and cons of the employment-at-will doctrine?

At-Will Doctrine: Pro’s

FlexibilityEconomic efficiencyLow administrative costs

At-Will Doctrine: Con’s

Unfair if employee doing a good jobEconomic power imbalanceLoss of job falls more harshly on

employee than employer

ILO Convention 158

“The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker based on the operational requirements of” the employer’s business.

Exceptions to at-will Rule

Collective bargaining agreementsAnti-discrimination lawsExpress and implied contractsCovenant of good faith & fair dealingTort actions

– Public policy exception– Intentional infliction of emotional distress

WARN Act Requires

60 days advance noticeTo union, or, if none, each employeeOf a “plant closing” or “mass lay-off”For employers with 100 or more

employees

Mass Lay-Off

A reduction in force that results in an “employment loss” at a “single site of employment” during any 30-day period of at least either:– 33% of the employees at that site and at

least 50 employees, or– 500 employees regardless of the

percentage affected.

Partial Exclusions

Only such notice as is “practicable” required if losses result from:

Unforeseeable business circumstances, or

Unforeseeable natural circumstances

Arthur Andersen Timeline

11/2001 - SEC subpoena; AA destroys documents

2/22/02 - AA negotiating w/ DOJ3/1/02 - DOJ informs of indictment3/14/02 - Indictment made public4/8/02 - AA gives lay-off notices4/23/02 - layoffs begin

Unforeseen Biz Circumstance

Must be caused by circumstances outside of employer’s control

Must be such that a reasonable employer would not have foreseen the circumstances necessitating the lay-off

Employee Arguments

Andersen’s own misdeeds caused its predicament

Andersen should have foreseen that lay-offs were likely to result once DOJ begins investigation of destruction

It was practicable for Andersen to give notice far before 4/8/02

Questions

How does the court deal with each of these arguments?

Who has the better position on these issues?

U.S. Employment Discrimination Law

Monday, June 4Beijing 2007

Three Federal Statutes

Title VII (race, gender, religion, color, national origin)

Age Discrimination in Employment Act (ADEA)

Americans with Disabilities Act (ADA)

Title VII Section 703(a)

It shall be an unlawful employment practice for an employer

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of race, color, religion, sex or national origin.

Procedure

Employee must file charge with the Equal Employment Opportunity Commission w/n 300 days.

EEOC has sole jurisdiction to investigate for 180 days

Employee then has 90 days to file suit in federal court

McDonald v. Santa Fe Trails

Two employees steal company property designated for delivery to customer

Employer fires McDonald, a white employee.

Employer does not fire Jackson, a black employee

Two Employer Defenses

1) Title VII is only meant to protect minorities, not “reverse” discrimination against more generally favored race

2) Employer should be able to discharge an employee who steals company property

McDonnell Douglas Test

Plaintiff must establish prima facie case of discrimination

Burden of production shifts to employer to show action based on legitimate, nondiscriminatory reason.

Plaintiff bears ultimate burden to show that employer’s reason is pretext and that discrimination = true cause.

Hernandez

Ee claims Er refused to hire cuz of past addiction to drugs

Er claims nondiscriminatory application of no rehire policy

9th Circuit: Such policy is unlawful as applied to former employees whose only work-related offense was testing positive because of addiction.

The ADA’s Formula

An Employer shall not discriminate against a qualified individual with a disability

If that individual can perform the essential functions of the job with or w/o reasonable accommodation

Unless such accommodation would impose an undue hardship

Definition of ADA “Disability”

(A) A physical or mental impairment that substantially limits one or more major life activities; or

(B) a record of such impairment; or

(C) being regarded as having such an impairment.

Questions

Why does the Supreme Court reverse the decision of the 9th Circuit?

Would it still be possible for Hernandez to prevail on remand? What would he have to show?

Two Different Types of Claims

Disparate Treatment: Claim alleging intentional discrimination

Disparate Impact: Claim alleging facially neutral practice that has a disproportionate effect on a protected class

Different types of claims have different proof structures

McDonnell Douglas Test

Plaintiff must establish prima facie case of discrimination

Burden of production shifts to employer to show action based on legitimate, nondiscriminatory reason.

Plaintiff bears ultimate burden to show that employer’s reason is pretext and that discrimination = true cause.

Hypothetical

Could Hernandez have succeeded on a timely disparate impact claim if he could show that the no-hire rule has the effect of disproportionately disqualifying individuals with a record of addiction?

Disparate Impact Claims

Employee must demonstrate that an employer uses a particular employment practice that causes a disparate impact on the basis of a [protected classification], and

Employer fails to demonstrate that the practice is job related and consistent with business necessity.

Disparate Impact: Plaintiff’s Case

Show a significant statistical disparity as compared to relevant labor market

Identify the specific employment practice allegedly causing disparity

Show a causal nexus between employment practice and the disparity

Business Necessity Defense

Respondent must “demonstrate that the challenged practice is job related for the position in question and consistent with business necessity”

Unless, complainant can show the existence of a less discriminatory “alternative employment practice.”

Compare Defenses

Disparate Treatment: Employer must show that only members of one race or gender could perform the job (BFOQ)

Disparate Impact: Employer need only show that neutral factor strongly correlates with successful job performance (business necessity)

Preferences

Should it violate Title VII for an employer to provide a hiring preference to a currently under-represented minority group?

Is the reasonable accommodation requirement of ADA = to affirmative action? Are individuals with disabilities more “deserving” of AA than others?

Before Desert Palace

Cases involving direct evidence analyzed under mixed motive formula of Price Waterhouse (& CRA 1991)

Cases involving only circumstantial evidence analyzed under pretext formula of McDonnell Douglas

Evidence

Direct: Statements made by a decision-maker that overtly demonstrates a discriminatory intent linked to a specific employment action.

Circumstantial: Other evidence that suggests or infers that a decision was made “because of” discrimination.

Mixed Motive Proof Structure

Plaintiff must show that discrimination was “a” motivating factor in employment decision. If so, employer violates Title VII.

Employer can limit liability by showing it would have made the same decision for a nondiscriminatory reason

Desert Palace

Supreme Court holds that, under Title VII, “direct evidence of discrimination is not required in mixed-motive cases.”

Strong circumstantial evidence may be sufficient to establish that discrimination is a motivating factor in employment action.

Rachid: Merged Proof Construct

Plaintiff – prima facie caseDefendant – proof of legitimate reasonPlaintiff avoids summary judgment if

can show either– Pretext, or– Discrimination was a motivating factor

Rachid Compares

Pretext issue: Whether discrimination was the determinative motive.

Mixed motive issue: Whether discrimination was a motivating issue.

Griffith (8th Circuit)

McDonnell Douglas still applicable at summary judgment stage.

Plaintiff can avoid summary judgment only by submitting – causally strong “direct” evidence of

discrimination, or– Prima facie showing, plus sufficient

circumstantial evidence to show pretext.

Circuit Split

Rachid: No summary judgment if plaintiff shows discrimination was a motivating factor.

Griffith: Summary judgment appropriate if plaintiff cannot establish a legitimate fact issue as to whether employer explanation is a pretext.

Discrimination Remedies

Back payReinstatementCompensatory damages (pain &

suffering)Punitive damagesAttorney fees

Harassment and Privacy in the United States

Tuesday, June 5Beijing 2007

Two Types of Harassment

Quid pro quo: Supervisor conditions work terms on sexual favors

Hostile working environment: Either supervisor or co-worker(s) harass employee because of sex so as to alter terms and conditions of employment

Meritor: Hostile Environment Elements

Severe and pervasive harassment,Because of sex (or other class trait),That is unwelcome, andThat affects working conditions

Severe or Pervasive

Level of offensivenessFrequencyLength of timeContextPsychological harm relevant, but not

required (Harris)

Whose Perspective?

Reasonable Person?Reasonable Woman?Reasonable person who is the target of

sexually oriented remarks or conduct?

Oncale v. Sundowner Offshore

One of 8 employees on a roustabout crew

Verbal taunts, physical attacks, threatened with rape by male co-workers, including 2 supervisors

Quit = constructive discharge

Supreme Court in Oncale Rules

Same-sex sexual harassment may be actionable under Title VII so long as harassment is severe and “because of sex”

Limitations Stressed in Oncale

Harassment is actionable only if: It is “because of sex,” It is severe or pervasive in nature, and It is objectively offensive to the degree that it

alters terms and conditions of employment when viewed from the perspective of a reasonable person in similar context

Inference of Discrimination

May be shown where:Motivated by sexual desire

(homosexual)Hostility to presence of a particular

gender at work; orWhere direct comparative evidence

shows differential treatment based on sex.

Question

On remand, is Oncale likely to be able to succeed in establishing a claim under any of these three approaches?

In general, in which of these circumstances can a plaintiff most easily make out a case for sex harassment liability?

Question

Does a bisexual supervisor violate Title VII by harassing both women and men?– Always?– Never?– Sometimes?

Should “bullying” be illegal regardless of sexual motivation?

Burlington v. Ellerth

Severe and pervasive harassing actions by supervisor

But, threats of negative working conditions not carried out

Employee did not use Employer’s internal complaint procedures

Standard # 1

If a supervisor inflicts harassment in the form of a tangible employment action

The Employer is strictly liable for the harm inflicted

Standard # 2

If a supervisor harassment does not affect a tangible employment action

The Employer is liable unless it shows as an affirmative defense that: – Employer took reasonable steps to

prevent and correct harassment, and– Employee unreasonably failed to use

Employer anti-harassment policy

Standard # 3

If harassment results from the conduct of a co-worker rather than a supervisor

The Employer is liable only if it acted negligently– Which means: Employer knew or should

have known of harassment, but failed to take proper steps to stop it.

Questions

Does this hierarchy of standards make sense? What purposes does it serve? – Is it appropriate to hold the employer strictly liable

for unauthorized supervisor behavior?– Is it appropriate to require an employee to report

harassment as a prerequisite to a successful suit?

Which standard should govern the context of Ellerth itself?

Luedtke v. Nabors Alaska Drilling

Employee worked on an oil drilling rigEmployer required Ee to undergo a

physical exam which revealed illegal drug use

Employer had no pre-announced drug testing policy

Ee fired when he refused follow-up test

Luedtke’s Claims

Constitutional right to privacy under state law

Wrongful discharge claim based upon violation of public policy

Common law invasion of privacy

Fourth Amendment – U.S. Constitution

Is the most common basis for challenging drug testing programs

But, such claims require “state action,” and can only be asserted with respect to public employment

Luetdtke: Alaska constitution also limited to realm of public employment

Fourth Amendment Standard

Is there a search?– A search occurs where a public employer

intrudes upon an employee’s reasonable expectation of privacy

Even so, plaintiff can prevail only if shows that degree of intrusion is not outweighed by legitimate governmental interests

Van Raab Decision

U.S. Sup. Ct. finds urinalysis to be a “search”

Court rules that testing of Customs Officials is valid for employees who carry firearms and search for drugs

Court implies testing may not be valid for jobs not implicating health or safety concerns

Public Policy & Privacy Claims

Why does the Luedtke court dismiss these remaining claims?

Although court finds that Alaska recognizes a public policy in certain spheres of privacy,

Job-related safety and health concerns warrant testing in this context

Luedtke Court Suggests

Drug testing is more likely to be upheld if the employer provides advance notice of testing policy, and

Where testing is conducted at a time “reasonably contemporaneous with the employee’s work time.”

U.S. Summary

At-will rule is the default legal relationship of employer and employee

But, patchwork of exceptions by which an employee may challenge employer actions in courts of general jurisdiction

Including a robust body of anti-discrimination law

Maze of Multiple Claims

Federal Claims

Antidiscrimination Laws—Title VII—ADEA—ADA

Other Statutory Claims—NLRA—unfair labor practice—Retaliation—FMLA, ERISA, OSHA

Constitutional Claims—First Amendment—Due Process—Equal Protection

Collective Bargaining Agreement—grievance arbitration

State Claims

Statutory Claims—antidiscrimination statutes—whistleblower statutes

Common Law Claims—public policy tort—contract—covenant of good faith & fair dealing—defamation—intentional infliction of emotional distress

Collective Bargaining Agreement—public sector grievance arbitration

U.S. Employment Law Pecking Order

EfficiencyEquityVoice