Friday, October 4, 2019

(Incomplete) Reflections on the Sanders and Warren Labor Plans

Bernie Sanders ("The Workplace Democracy Plan") and Elizabeth Warren ("Empowering American Workers and Raising Wages") have now both released labor plans as part of their presidential election campaigns. If enacted, each ambitious plan would bring the deepest and most far-ranging reforms to labor law since…well, ever. Both plans include provisions for union certification based on card checks followed by first contract arbitration when needed, reducing employer interference in union drives, banning permanent strike replacements and right-to-work laws, and extending protections for unionization to public sector workers, independent contractors, graduate students, and others who have been excluded. These are all sorely needed reforms, and it's great to see labor law getting serious attention.

Both plans also call for sector bargaining in which wages and other basic employment standards would be established at an industry level, as is often the case in Europe. But European countries are small, have weaker links between being a union member and having union representation (a link that is at the heart of the U.S. system), and have stronger employer associations, traditions of social dialog, and other supporting institutions. Technically, sector bargaining isn’t prohibited under existing U.S. labor law (and has occurred, as in the steel industry in the 1950s), but it requires everyone to be unionized and employers to agree to it. So to make this a reality, policy change is necessary. It’s very difficult to see how this would be imported to the United States on a large scale. Philosophically, will workers see this as a step towards workplace democracy when unions they haven’t supported are speaking for them? Practically, how will sectors be determined along with representatives of labor and business in each? Legally, how will sector bargaining and agreements be enforced? I’m all for learning from international experience and importing good ideas, but I think this is a stretch in this particular case. In fact, Germany represents a classic case of strong sector bargaining, but it recently established a minimum wage because of the decline of sector bargaining. So while I understand the rationale for raising wages and standards on a broad rather than piecemeal basis, and for taking wages out of competition, I'm skeptical that sector bargaining can be a U.S. reality even if there was the political will. Maybe I'm not alone--while Sanders plan actually calls for “a sectoral collective bargaining system with wage boards”—so in other words, wage boards which are more akin to reforming minimum wages than actual sector bargaining.

Both plans also seem to have an underlying mindset that workers are ripe for unionization, but are prevented from doing so either because they are excluded from protections (e.g., gig workers) or the election process favors employers (e.g., greater access to employers, minimal penalties for firing union supporters). This is undoubtedly true. Research consistently shows that many nonunion workers want a union—maybe as high as 50 percent. But only partly true: this same research also shows that others want more voice in other forms. As such, both plans seem to miss opportunities to promote localized, participatory forms of worker voice. Specific possibilities here include mandatory safety and health committees and works councils. As workers experience voice directly in their own workplace, they can see its benefits, and push for stronger forms of involvement and representation. This might even lead to majority support for a traditional union with full-fledged bargaining rights. In this way, others have labeled this “training wheels voice.” I would add training wheels voice to the Sanders and Warren plans.

Stepping away from the areas connected to labor relations and collective bargaining, the Warren plan goes much further than the Sanders plan. For example, the Warren plan would prohibit non-compete clauses and “no-poach” agreements which limit worker mobility and thereby suppress wages and benefits, and would also ban forced arbitration agreements. The Warren plan also addresses worker scheduling, discrimination, and labor policy enforcement issues, and also provides for worker representative on corporate boards of directors. There are sound bases for all of these proposals. But one area where the Sanders plan goes beyond the Warren plan is in ending at-will employment by prohibiting workers from being fired when there isn’t just cause.

Ten years ago in our book Invisible Hands, Invisible Objectives: Bringing Workplace Law and Public Policy Into Focus, Steve Befort and I advocated for an “American Good Cause Termination Act” in which employees can only be fired if there is “good cause” for such an action. A just cause standard is nearly universal in U.S. union contracts and CEO contracts (and has also been in effect in Montana since 1987). Decades worth of decisions by labor arbitrators applying this standard have created a reasonably coherent framework for determining if an employer has good cause to discharge an employee. This proposed universal good cause standard does not prevent employers from terminating employees because of substandard performance or changes in the direction of the business. To balance employer and employee interests, we propose that a U.S. good cause standard be remedied by a maximum of one year’s back pay, except in cases of unlawful discrimination in which case double or treble damage awards would be allowed. It is difficult to argue that U.S. employers would be at a competitive disadvantage in the global economy because the United States virtually stands alone in failing to a provide general statutory protection against unjust terminations.

The benefits of an American Good Cause Termination Act would be widespread. Social justice (equity) is served by outlawing both bad and irrelevant reasons for dismissing employees. Other employment policies would also be enhanced as workers would have greater protections for exercising their rights, such as by filing a valid workers’ compensation claim or taking a family or medical leave. Also, employee voice would be facilitated because employee free speech, autonomy, and unionization would be protected as terminations in retaliation for pursuing these activities would not possess good cause unless they interfered with job performance. Efficiency could even be promoted by reducing the regulatory burdens of the current system--including multiple forums and an expensive litigious approach--with a streamlined system that is quicker and cheaper. So this is an omission from the Warren plan that could help support the broader objectives of that plan, and I think it merits serious consideration.

Among many other things that Steve and I proposed (some of which overlap with the Sanders and/or Warren plans), I will highlight just one that is missing from both which could be the easiest of all to implement: mandatory disclosure of employment terms and conditions. Workers simultaneously over-estimate the extent to which they can only be fired for a good reason and under-appreciate the availability of other benefits (e.g., family leave) or protections (e.g., NLRA protections of collective voice). The employment relationship would work better if employees better understood their actual terms and conditions of employment. As Richard Edwards noted many years ago, lenders are required to disclose accurate interest rates for loans and manufacturers must reveal the ingredients of food products. Given the importance of employment to individuals, disclosure of employment terms also should be required. This should include wage and benefit information, leave policies, dismissal policies, and descriptions of their rights under the law. At-will employees, for example, should be told that they can be dismissed for any reason. Subject to relevant laws, employers would still be free to unilaterally determine and change these policies, but those changes should be transparent to employees.

This proposal for mandatory disclosure of the terms and conditions of employment has international precedents. China requires written contracts for employees that specify wages and benefits, the length of the working day, vacation policies, disciplinary policies, and methods for changing, renewing, or terminating the contract. Closer to our proposal are European Union requirements that employers must provide written notices to employees detailing key elements, including wage payments, leave policies, and the expected duration of employment for temporary employees. These requirements date back to 1991, and were just renewed in 2019. Who can be opposed to greater accuracy and transparency?

In closing, as someone who advocated for broad-scale policy reform 10 years ago, it’s great to see such comprehensive plans being proposed and debated. Of course the path to actual enactment is a lengthy and uncertain one. But ideas are important for highlighting the deficiencies and imbalances in the current system, and for starting to shape new norms and expectations that can one day lead to substantive reform and ultimately, employment with a human face.

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