Overview of U.S. Employment Law

1. Overview of U.S. Employment Law Friday, June 1 Beijing 2007

2. The Old Deal: 1880 - 1935 • Growth of large corporations • Rise of the at-will rule • Premised on freedom of contract between equals • Lack of governmental regulation

3. Three Objectives • Efficiency – Enhanced productivity and administrative ease • Equity – Fair and balanced outcomes • Voice – Ability to communicate wants and needs

4. Efficiency Prevails

5. The “Labor Problem” • Poor working conditions • Low wages, long hours • Weak job security • Little employee voice

6. The New Deal: 1933 - 1965 • Perceived inequality of bargaining power • Rise of governmental regulation • NLRA & growth of unions • Social safety net • Internal labor markets

7. 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

8. Employment Law Era: 1965-90 • Rise of human resource management • Perceived shared interests of employees and management • Increase in laws affecting individual employment relationship • Decline in union density

9. The Global Era: Post 1990 • Trade and technology enable a global economy • Capital mobility and a changing equilibrium • Rise of “flexible” work practices • External labor markets

10. External Labor Markets • Employers bid for labor as needed • Capital mobility enables low-cost hiring and production • Hire trained employees as needed • Flexible hiring and layoff in response to economic needs

11. 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

12. More Contingent Work Involuntary Terminations Labor Mobility Shareholder power Less Job Security Job Tenure Employee loyalty Union density Employee power Global Era Attributes

13. 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?

14. 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

15. 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

16. Types of Public Policy Claims • Refusal to commit unlawful act • Exercising statutory right • Performing public function • Whistleblowing (reporting unlawful conduct)

17. Question • What are the policy pros and cons of the employment-at-will doctrine?

18. At-Will Doctrine: Pro’s • Flexibility • Economic efficiency • Low administrative costs

19. At-Will Doctrine: Con’s • Unfair if employee doing a good job • Economic power imbalance • Loss of job falls more harshly on employee than employer

20. 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.

21. Exceptions to at-will Rule • Collective bargaining agreements • Anti-discrimination laws • Express and implied contracts • Covenant of good faith & fair dealing • Tort actions • Public policy exception • Intentional infliction of emotional distress

22. WARN Act Requires • 60 days advance notice • To union, or, if none, each employee • Of a “plant closing” or “mass lay-off” • For employers with 100 or more employees

23. 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.

24. Partial Exclusions Only such notice as is “practicable” required if losses result from: • Unforeseeable business circumstances, or • Unforeseeable natural circumstances

25. Arthur Andersen Timeline • 11/2001 - SEC subpoena; AA destroys documents • 2/22/02 - AA negotiating w/ DOJ • 3/1/02 - DOJ informs of indictment • 3/14/02 - Indictment made public • 4/8/02 - AA gives lay-off notices • 4/23/02 - layoffs begin

26. 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

27. 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

28. Questions • How does the court deal with each of these arguments? • Who has the better position on these issues?

29. U.S. Employment Discrimination Law Monday, June 4 Beijing 2007

30. Three Federal Statutes • Title VII (race, gender, religion, color, national origin) • Age Discrimination in Employment Act (ADEA) • Americans with Disabilities Act (ADA)

31. 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.

32. 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

33. McDonald v. Santa FeTrails • Two employees steal company property designated for delivery to customer • Employer fires McDonald, a white employee. • Employer does not fire Jackson, a black employee

34. Two Employer Defenses • Title VII is only meant to protect minorities, not “reverse” discrimination against more generally favored race • Employer should be able to discharge an employee who steals company property

35. 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.

36. 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.

37. 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

38. 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.

39. 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?

40. 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

41. 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.

42. 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?

43. 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.

44. 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

45. 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.”

46. 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)

47. 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?

48. 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

49. 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.

50. 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