Monday, September 3, 2018

After Epic Systems, It’s Striking What’s Left for Workers…Literally!

Suppose you think that your employer is engaging in wage theft by intentionally misclassifying you as exempt from overtime (or substitute many other possible grievances that are shared by co-workers, such as being misclassified as contractors, enduring systematic discrimination or harassment, or being forced to work off the clock). In the absence of a union, what alternatives do you have?

One classic response is “if you don’t like your job, quit.” But this is far from satisfactory. This puts most of the burden on the employee. Even if it is possible to find a similar job relatively easily (which isn’t always the case), there are still significant adjustment costs like switching health insurance providers. Indeed, employers have increasingly forced workers to sign non-compete agreements which makes it even harder for workers to find comparable new jobs. Moreover, if the worker has been denied something they are entitled to, like overtime, then quitting doesn’t make them whole. And if an employer has broken the law, quitting doesn’t hold it accountable, nor does it provide a deterrent against other violators. So we shouldn’t force workers to rely on quitting.

Instead of quitting, perhaps a worker can complain internally. But let’s be realistic. If an organization is intentionally misclassifying workers, engaging in systematic gender or racial discrimination, or other unethical practices, it’s hardly likely to respond positively to an internal complaint.

So, of course, the natural venue for trying to redress potential legal violations is to file a lawsuit. But over half of the U.S. workforce is now forced to sign a mandatory arbitration agreement. This prevents them from filing a lawsuit. To be fair, arbitration could have some advantages for employees, primarily in terms of being able to access a more affordable venue for resolving this issue. But there are potential drawbacks because employers have the resources and expertise to dominate the arbitration process. In fact, it’s the employer that determines the structure of the process that will be used. Within some modest boundaries, the employer can structure the process as it desires, and presumably does so in ways that serves its own interests, not those of aggrieved workers. Moreover, note that the employee has to sign away his or her rights to file a lawsuit in very unfair circumstances: they won’t get the job if they don’t sign, they haven’t yet experienced the workplace firsthand, and they are waiving their rights far in advance of any grievance materializing so they don’t really know what they are giving away or signing up for.

Because of these disadvantages, some workers have filed class action lawsuits in order to get to their case into court, even when seemingly prevented by a mandatory arbitration provision. For example, employees at Epic Systems, a Wisconsin-based health IT company, filed a class action lawsuit accusing Epic Systems of denying them overtime due to intentional misclassification. Even though they had previously been required to agree to submit wage-and-hour claims to individual arbitration, they argued that filing a class action lawsuit is a form of collective activity protected by the National Labor Relations Act (NLRA). Indeed, this argument was successful in the lower courts.

But Epic Systems appealed to the Supreme Court, which then ruled earlier this year that the arbitration agreements must be enforced. So employees who are forced to sign individual arbitration agreements—far in advance of any actual dispute—are prevented from any kind of legal action. Rather, they must seek justice in individual arbitration hearings. Low-paid workers are unlikely to be able to afford an attorney, and broad-based violations are less likely to come to light. And since the employer but not workers are repeat players in arbitration, arbitrators have incentives to favor employers.

So what’s left for workers? Well, they could try to unionize but that’s very time consuming. So perhaps ironically, it’s striking what’s left after the Epic Systems ruling. Yes, I mean that literally. Employees who face a similar grievance such as misclassification or discrimination can go on strike. The NLRA seeks to protect workers who band together to enhance their collective power and voice in determining wages, hours, and terms and conditions of employment. This is because the NLRA is premised on a belief that the employment relationship is an unequal one, and it will work better for all if workers act together rather than individually to better balance corporate power.

So collective activities to have a voice over wages, hours, and terms and conditions of employment are protected, which means that workers cannot be discharged, disciplined, or other discriminated against for engaging in these activities. When multiple workers feel aggrieved by work-related issues, they should remember these protections. If things are so bad that workers are ready to quit, they should instead think about going on strike. That is, as a group, they can collectively refuse to work until their grievances are resolved. The company doesn’t have to pay them or give into their demands. But it cannot fire them for this protected activity.

When there are mandatory arbitration agreements in place, the employer would likely claim that these would trump the right to strike. So we’d have a similar legal controversy as faced in Epic Systems. But unlike class action lawsuits, going on strike is clearly protected by the NLRA so I would expect a different legal outcome that allows striking even in the presence of an arbitration agreement (though I’m not a lawyer…so maybe I’m missing something).

In any case, going on strike isn’t ideal. Workers lose their pay and they can be replaced. Business and customers suffer, too. In fact, one of the major goals of the NLRA is to promote labor peace, along with a more balanced and therefore healthier employment relationship. Rulings like Epic Systems and Janus v. AFSCME, push us in exactly the opposite direction. So what may look like victories for employers might actually turn out differently in the longer run if the quality of employment relationship deteriorates and workers become more desperate. Those championing these rulings should be careful for what they wish for. Instead, our Labor Day 2018 wish should be for a healthier balance in the world of work.

Tuesday, August 21, 2018

Paid Family Leave: The Lack of a National Policy Isn’t the Only Barrier

Paid family leave is back in the U.S. news again, this time with a proposal by Senator Mario Rubio called the Economic Security for New Parents Act, which would provide paid leave to parents who agree to delay taking social security benefits by an amount to offset the paid leave. I’m not going to get into the merits and controversies of this approach (for that, see this by the proposal’s originator, Kristin Shapiro, and this piece).

Rather, my key point is that simply offering a family leave policy does not automatically alleviate workers’ concerns about income loss or other potential negative consequences of taking a leave. So while new ideas about universal policies are important—and actually enacting policies would be even better!—we also need to better understand the factors that prevent workers from taking a leave, and ways to reduce these barriers.

So to think about the barriers to a leave, Tae-Youn Park (Vanderbilt), Eun-Suk Lee (KAIST), and I develop a four-part framework consisting of all A’s: availability, awareness, affordability, and assurance. These four elements reflect the key considerations for whether any worker takes many kinds of leave from work: 1) the policy needs to be available, 2) if available, the worker needs to be aware of it, 3) even if aware of an existing policy, the worker needs to believe he or she can afford a leave, and 4) even if affordable, the worker needs to have assurances against negative consequences that might result from taking a leave (e.g., a promotion going to someone else). We think this framework can help guide research into leave-taking barriers.

In a paper titled “What Do Unions Do for Mothers? Paid Maternity Leave Use and the Multifaceted Roles of Labor Unions,” the three of us focus specifically on the potential impact of labor unions. For starters, based on existing research on what unions do, it’s clear that unions have the potential to positively affect all four of these key steps (and not only in the United States). They can bargain for (better) leave policies; help spread awareness through newsletters, one-to-one interactions, and the like; make leaves more affordable through higher wages and better insurance coverage; and combat reprisals through bargaining, grievance procedures, and other means. But what happens in practice?

To find out, we turned to the National Longitudinal Survey of Youth 1997 (NLSY97) which, importantly, is a nationally-representative sample. Due to some data peculiarities, we are only able to analyze women taking paid maternity leave, but future analyses of paternity leave taking would also be valuable. Our final data set has 27,472 observations from 4,108 female workers across a 15-year period. Ultimately we find that union-represented workers are at least 17 percent more likely to use paid maternity leave than comparable nonunion workers, and that unions facilitate this leave-taking through the availability, awareness, and affordability channels. We also find that mothers who take a paid maternity leave experience a post-leave penalty—specifically, their wage growth is slower when compared to those who did not take a leave. Surprisingly, we did not find that labor unions lessen this penalty, which would be one aspect of the assurance dimension.

At one level, this research is about what unions do with respect to the important issue of helping new parents take the amount of leave they deserve after a birth or adoption. In looking at the aggregate picture, they appear to be helping in some ways, with perhaps room for expanding their activities. What happens on a case-by-case basis, we cannot observe. But at a higher level, this research is about continuing to deepen our understanding of the barriers to parental leave taking, which can help with policy design when (hopefully!) a policy is (finally!) enacted in the United States.

Source: Tae-Youn Park, Eun-Suk Lee, and John W. Budd (forthcoming) "What Do Unions Do for Mothers? Paid Maternity Leave Use and the Multifaceted Roles of Labor Unions," Industrial and Labor Relations ReviewClick here to read the full paper.

Monday, July 2, 2018

What Happens in the Aftermath of the Janus Ruling?

In 2018, all eyes in the labor relations community were focused on the Supreme Court in anticipation of its ruling in Janus v. American Federation of State, County, and Municipal Employees, Council 31. Workers who are represented by a labor union cannot be forced to join a union and pay full dues, but in the absence of a right-to-work law, it has been possible to require them to pay an agency fee (equivalently, “fair-share fee”) to cover the costs of representing them. The question in Janus was whether mandatory agency fee arrangements in the public sector violate an individual’s free speech rights. This is only a question relevant to the public sector because the Constitution only prohibits the government from infringing on speech—there are no prohibitions against a private sector employer limiting an employee’s speech.

The free-speech argument against public sector agency fees is that mandating these payments means that a governmental body is forcing someone who does not belong to the union to subsidize the speech of others (the union) who they don’t agree with. Note carefully that this requires seeing public sector collective bargaining as rising to the level of public expression that enjoys constitutional protections. Opposed to this view is a counter-argument based on seeing collective bargaining as part of the employment relationship, not part of public discourse. So if states want to allow agency fees and prevent free-riding, then this should continue to be within their authority as regulators of the public sector employment relationship, consistent with other precedents in which public sector employees do not have free speech rights when speaking as workers rather than citizens.

When the Janus decision was issued last week, no one was surprised by the verdict: five conservative justices outnumbered four liberal justices in declaring that mandatory  agency fee arrangements in the public sector are unconstitutional free speech violations. This makes the entire U.S. public sector a right-to-work sector in which public sector unions will only be financially supported by union members. As such, this is arguably the most significant Supreme Court ruling affecting labor relations in a long time. It is also a highly-charged decision because Janus and related cases have been funded by conservative political groups seeking to weaken the labor movement as a counterweight to Republicans in the political arena. Indeed, President Trump’s tweet in support of the ruling boasted “Big loss for the coffers of the Democrats!”:

So this case is about much more than individual free speech. But will it be successful in weakening the labor movement?

In the short-term, Janus is likely to reduce the financial strength of public sector labor unions in non-right-to-work states (agency fees were already prohibited in right-to-work states) as nonmembers stop paying dues. Labor unions might also have to spend more time and money fighting additional lawsuits that will likely be filed by conservative groups seeking to get previously-paid agency fee amounts returned to workers. But it might not be all bad news for organized labor.

Some states might take legislative steps to lessen the impact of the Janus ruling. Possibilities include not requiring unions to represent nonmembers in grievance hearings; allowing unions to charge nonmembers for specific services such as grievance representation or arbitration; giving unions time during new employee orientation to meet new workers; making it difficult for anti-group workers to contact workers; and giving union members paid release time to recruit others into the union. It might also be legal for public sector unions to negotiate an agency fee arrangement that includes an opt-out clause allowing objectors to donate their fee to a charity.

At an even more fundamental level, recall that the Janus decision relies on elevating collective bargaining to a level of public speech that is entitled to constitutional protection. Ironically, then, this could bring new levels of legal protection to public sector collective bargaining. For example, state laws that restrict collective bargaining to narrow occupations or prohibit it altogether might be now be unconstitutional violations of free speech. Attempts to legislate further limitations on public sector bargaining, as in the case of Wisconsin, could also be challenged on this same basis. These issues will take years to work through the legal system, however.

So without waiting for favorable legislative or legal action, what can the labor movement do? The labor movement has had several years to prepare for this kind of ruling, and the primary response is to focus on internal organizing. This emphasizes relationship-building with bargaining unit members so that workers feel that they are a necessary part of a vibrant organization that effectively represents their interests. When this is successfully, not only will workers join their union and pay dues, but they will also be more engaged which further creates a more dynamic organization. Janus might also contribute to a feeling among public sector workers that they are under attack, making them receptive to collective action, as was demonstrated earlier this year in the statewide teacher strikes in West Virginia, Oklahoma, and Arizona. So there is the distinct possibility that the labor movement ends up stronger than it was before the Janus decision.