Accelerated Capital Mobility and Labor

Roadmap

Going out of Business
Bankruptcy (Reorganization under Chapter 11)
Restructuring to Cut Costs
(1) Just fire people
(2) Voluntary separations with benefits
(3) Early retirement incentives
(4) Cost as a factor in decisions to close operations
(5) Union considerations
Transfer of Ownership

Fair Treatment of the Worker

Employment at Will
Rule
Exceptions: Tort law and K law
Equal Employment Opportunity
Models of Proof
Affirmative Action
Reasonable Accommodation
Harassing Behavior
Pregnancy
Age
Disability

Participation in Workplace Governance (Labor)

Overview
Unfair Labor Practices -- 8(a)(2)
Exclusivity
Representation
Collective Bargaining
Economic Weapons

Health and Safety in the Workplace

Statutorial Intepretation

Most Concrete => Most Abstract
Statutory Text => Specific and General Legislative History => Legislative Purpose => Evolution of the Statute => Current Policy

I Economic Security: Theories and Capital Mobility

1. Introduction

Options available to wronged employee
Grievance with Union
Union goes to arbitration on behalf of employee

A. Dau-Schmidt – Changes in market & labor require FG involvement

Lifetime employment governed by an internal labor market, has been the dominant paradigm of employment relationships in America throughout 20th century…during the last three decades
Schulz – Consequences for workers and communities
Declining job security is one of the hallmarks of new order
Stable work is the experience through which we create coherent life stories
Corporations have turned to various forms/contingent work
Increase in wage and inequality, something more than wages is lost

B. Hailstones –Free enterprise capitalistic system

A free enterprise capitalistic system or market economy is distinguished from other types by the fact that the decisions as to what and how much to produce and the manner in which goods are to be produced are made primarily by the actions of individuals and firms in the economy, not the state
Competition is not always effective, it is deemed the responsibility of the government to restore competitive conditions
There must be competition, so no monopolies
NO bailouts, FG should promote competition
S: The guiding principle of competitive capitalism is that privately owned firms should produce the goods and services wanted by the…

2. Legal Responses to Accelerated Capital Mobility and Labor

For each of the following, know the non-labor legal claims and the labor/union legal claims

A. Going out of Business

There is no common law, statutory law, or constitutional law “property right” to employment (U.S. Steel).
Π claim: Breach of K – Promissory Estoppel – reasonable reliance on working harder will allow the plant to remain open
Court: There is no property right nor a definite promise
Certain employers must give employees 60-day notice of “mass layoffs” or plant closings, but failure to give notice cannot prevent closing or layoffs. (WARN)
Under LMRA 301, unions can sue to enforce provisions of the CBA, but courts are limit relief to express agreement between the parties, and reluctant to prohibit business closings without such agreement. (Singer)
Employer arg: while it was obligated to spend $ to restructure the plant to make it more efficient, at no time surrendered the prerogative of any company to go out of business when it so desires
N: There are no direct constraints on going out of business

(B. Bankruptcy (Reorganization under Chapter 11)

(1) Company can use Bankruptcy as means to Reject CBA

A court will approve a company’s application to reject a CBA in bankruptcy pursuant to §1113 ONLY:
(1) Trustee’s proposal provides for modifications in employee benefits necessary to permit reorganization and assures that all creditors and the debtor and all affected parties are treated fairly and equitably AND
Debtor (trustee) makes proposal to the union
(2) The authorized representative has rejected ‘without good cause’ AND
(3) the balance of the equities clearly favors rejection of such agreement
Two policy goals to §1113
(1) halt unilateral changes by employers to the collective bargaining terms and conditions during reorganization
(2) reduce the perceived tendency of bankruptcy judges to approve rejection of CBAs without regard for national labor policy
N: This is the only place the government reviews the substantive contents of a CBA
The proposal can modify employee benefits to the degree such modifications are necessary to permit long-term reorganization, with necessity encompassing more than the bare minimum of modifications (Carey).
I: Necessity is requirement emphasizing debtor’s GF in seeking to modify CBA
(1) HOW NECESSARY and
(2) To WHAT GOAL must they be necessary?
Union arg: Company did not prove that managers & non-union workers didn’t get pay cut to same degree as union
Court: Not required to, especially when union workers are getting paid above industry standard
Company arg: Union failed to participate in post-petition negotiations
Court: This behavior shows lack of justification in rejecting proposed modifications to CBA

(2) Company cannot get out of Retiree Benefits in Bankruptcy

Debtors are required to pay retiree benefits in bankruptcy, assuming such benefits are vested and debtor has no right to amend the contract/plan (Retiree Insurance Benefits §1114).
Retiree Insurance Benefits
Under section 1114, “notwithstanding any other provision of this title,” the debtor “shall timely pay and shall not modify any retiree benefits” except upon court order or agreement with the retirees’ authorized representative. 11 U.S.C. § 1114(e).

C. Restructuring to Cut Costs

(1) Just fire people

Whole departments can be eliminated and work K’d for at low cost
IF a terminated employee is needed subsequently, she can be hired as a consultant or on a yearly K
Departments can be consolidated and only needed employees with particular skill sets can be retained

(2) Voluntary separations with benefits (severance)

Severance benefits are in consideration for an employee signing a waiver of legal claims; also employee is compensated for unanticipated loss of a job
Employer is getting among other things a covenant not to sue
To make a waiver enforceable follow guidelines for waivers set out by OWBPA (an amendment to ADEA)
Age Discrimination and Employment Act
Under the ADEA, it is unlawful to discriminate against a person because of his/her age with respect to any term, condition, or privilege of employment, including hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training
The Older Workers Benefit Protection Act of 1990
amended the ADEA to specifically prohibit employers from denying benefits to older employees

(3) Early retirement incentives

The statutory requirements of the OWBPA, and not common law doctrines, determine the validity of employee releases (Oubre).
An employee ‘may not waive’ an ADEA claim unless the waiver or release satisfies the OWBPA’s requirements.”
Covenants Not To Sue - Under the ADEA, a union cannot place restrictions on future employment opportunities of retired employees based on their receipt of pension funds (EEOC v. Local 350).
[A]n employer discriminates ‘because of’ age whenever age is a ‘but for’ cause of discrimination
Union arg: Not age based discrimination but pension based
Court: justification fails because it rests on pension receipt, a status closely related to age
ERISA does not limit the exercise of employer discretion in determining which employees to offer early retirement (McNab).
Worker arg: (ERISA) forbids GM to implement an early-retirement system that leaves participation to the discretion of the managers
Court: Subject to a few explicit rules in the statute, an employer may design a pension or welfare plan with features of its choosing, provided that it is willing to pay the cost
No-hire agreements related to the sale of a segment of business generally do not violate the Sherman Act, but in some cases violate ERISA where a specific intent to interfere with a pension fund can be demonstrated (Eichorn)
Generally, restraints that promote competition are reasonable and restraints that restrict competition are unreasonable
Courts evaluate the effect of the behavior on the competitiveness of the market.
Plaintiff must show that the restraint creates anti-competitive effects.
Defendant must show that the anti-competitive effects create pro-competitive benefits
Plaintiff must show that the restraint is not necessary to accomplish the stated goal; the same pro-competitive end could be achieved through less competitive means

(4) Cost as a factor in decisions to close operations

Replacing older workers with younger workers for financial reasons does not violate the ADEA (Allen v. Diebold).
“[T]he ADEA prohibits only actions actually motivated by age and does not constrain an employer who acts on the basis of other factors – pension status, seniority, wage rate – that are empirically correlated with age.”
There is no claim when employer lets workers go b/c they were expensive not b/c they were old

(5) Union considerations

Where there is a strike breach of a no-strike clause, an arbitrable grievance, an order to arbitrate as a condition for receiving the injunction, evidence of continuing breaches that cause irreparable injury, with the employer harmed most, a federal court can grant an injunction under §301 without violating the Norris-LaGuardia Act (Boys Market)
A federal court may grant an injunction under §301 where:
Ps seek to enjoin a strike in violation of a no-strike K
Both parties are bound to arbitrate
The court first finds that the K binds both to arbitration
Breach is continuing
P will suffer irreparable harm
Irreparable harm is required for an injunction under §301, and must be proven prior to the issuance of an injunction (Aluminum Workers).
no more fundamental policy in our national labor laws than that which favors peaceful resolution of labor disputes through voluntary arbitration
“Irreparable harm is injury so great that an arbitrator's award, if forthcoming, would be inadequate to fully recompense the injured party. It renders the award an ‘empty victory,’ and thereby undermines the integrity of the arbitral process as thoroughly as did the union's violation of the no-strike clause in Boys Markets.”
Norris-LaGuarida §7(b)
No court of the United States shall have jurisdiction to issue a temporary or permanent injunction in any case involving or growing out of a labor dispute… and except after findings of fact by the court, to the effect-
That substantial and irreparable injury to complainant's property will follow

D. Transfer of Ownership

Contracts that prevent employees from retaining their jobs that are entered into without employee knowledge are generally against public policy and are unenforceable (Freund).
The situation was thus that one employee obtained a contract whereby fellow employees would lose their jobs if he lost his
The concealment of the provision from the employees was gratuitous, and a gratuitous interference with employment is unenforceable
Golden parachutes are not against public policy and are generally enforceable unless the product of gross negligence (Campbell).
Π arg: golden parachutes violate public policy, and therefore that the assumption agreement promising them is void and
because they were approved after the merger had been approved, and therefore served no legitimate corporate purpose
Court: No court has ever ruled that and get protection of BJR
directors are charged with an unyielding fiduciary duty to the corporation and its shareholders. BJR exists to protect and promote the full and free exercise of the managerial power
presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company
π would have to allege serious negligence
Oral promise to plaintiff concerning “just cause” employment status binds successor to employer where successor does not alter employment relationship (Conard).
An employee can enforce an employer’s promise not to terminate employment except for just cause. Such an enforceable agreement can result from either:
(1) an employer's ‘express agreement, oral or written’ or
(2) ‘an employee's legitimate expectations grounded in an employer's policy statements
Successors are not bound by the substantive provisions of a collective-bargaining contract negotiated by their predecessors but not agreed to or assumed by them (Burns).
I: whether Burns refused to bargain with a union representing a majority of employees in an appropriate unit and whether the NLRB could order Burns to observe the terms of a collective-bargaining contract signed by the union and Wackenhut that Burns had not voluntarily assumed
Policy: Congress has consistently declined to interfere with free collective bargaining and has preferred that device, or voluntary arbitration
A corporate employer is required to arbitrate with union under CBA between union and another corporation which had merged with corporate employer where business entity had remained the same, there was wholesale transfer of the merged employer's employees to corporate employer's plant and union had made its position known well before merger (Wiley).
Union arg: despite the merger it continued to represent the covered I employees taken over by W, and that W was obligated to recognize certain rights of such employees which had ‘vested’ under the I bargaining agreement
Employer arg: asserted that the merger terminated the bargaining agreement for all purposes
Court: arbitration was described as ‘the substitute for industrial strife
The transition from one corporate organization to another will in most cases be eased and industrial strife avoided if employees' claims continue to be resolved by arbitration
CBA is not an ordinary K, calls into being a new common law-the common law of a particular industry or of a particular plant
BUT, there may be cases in which the lack of any substantial continuity of identity in the business enterprise before and after a change would make a duty to arbitrate something imposed from without, not reasonably to be found in the CBA and the acts of the parties involved
Where there is no substantial continuity of identity in the work force hired, a corporate entity purchasing the assets of another has no duty to arbitrate with employees of the former company that it subsequently hires (Howard Johnson).
B/c the Grissom corporations continue as viable entities with substantial retained assets, the Union does have a realistic remedy to enforce their contractual obligations.
Grissoms have agreed to arbitrate the extent of their liability to the Union and their former employees; presumably this arbitration will explore whether the Grissoms breached the successorship provisions of their CBA, and what the remedy for this breach might be
Where there is ‘substantial continuity in enterprise,’ a successor employer has an obligation to bargain with that union once the employer obtains a ‘substantial and representative complement’ of employees from the former company.” (Fall River).
The successor is under no obligation to hire the employees of its predecessor, subject, of course, to the restriction that it not discriminate against union employees in its hiring
R: If the new employer makes a conscious decision to maintain generally the same business and to hire a majority of its employees from the predecessor, then the bargaining obligation of § 8(a)(5) is activated
Policy: makes sense when one considers that the employer intends to take advantage of the trained work force of its predecessor
Substantial continuity Factors
1. whether the business of both employers is essentially the same;
2. whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors; and
3. whether the new entity has the same production process, produces the same products, and basically has the same body of customers.
Substantial and Representative Complement Rule
Purpose is to fix the moment when the determination as to the composition of the successor's work force is to be made.
If, at this particular moment, a majority of the successor's employees had been employed by its predecessor, then the successor has an obligation to bargain with the union that represented these employees
Continuing Demand Rule
When a union has made a premature demand that has been rejected by the employer, this demand remains in force until the moment when the employer attains the “substantial and representative complement

Ch.2 Fair Treatment of the Worker

I. Employment At Will

In the absence of express limitations on the power to terminate the employment K and in the absence of a stated specific period of employment, either employers or their employees have the unilateral power to abrogate their relationship for good reasons, bad reasons, or no reasons at all.
Policy: it would otherwise be unreasonable for a man to bind himself permanently to a position, thus eliminating the possibility of later improving that position. Moreover, a K of permanent employment is by its very nature indefinite, and thus any effort to interpret the duration of the contract and assess the amount of damages becomes difficult

A. The Contractarian Understanding of Work Relations

1. Theories

Epstein - it works to the mutual benefit of both parties, where the benefits are measured, as ever, at the time of the contract's formation and not at the time of dispute
principle of freedom of contract also rules out the use of force or fraud in obtaining advantages during contractual negotiations
Holmes - But the certainty is only an illusion, nevertheless. Views of policy are taught by experience of the interests of life. Those interests are the fields of battle.
Whatever decisions are made must be against the wishes and opinions of one party, and the distinctions on which they go will be distinctions of degree
Alternatives to At Will K’s
Term contracts (contract defines duration)
Good cause (contract defines cause for termination)
Must have a legitimate reason
Just cause (contract defines cause for termination)
Tenure
Model Employment Termination Act (Supp. p. 153)
“Good cause” (includes poor performance)
Arbitration remedy

B. Looking Beyond the Agreement

1. Case Law

a. Discharge that Contravenes public policy

The decision as to whether to enjoin striking behavior at common law rested in large part on the balancing of the interests of the worker and the employer (Vegelahn).
Holmes – Dissent
Eternal conflicts out of which life is made up is that between the effort of every man to get the most he can for his services, and that of society, disguised under the name of capital, to get his services for the least possible return
Where public policy justifies protecting the employee against discharge, a terminated employee may have a cause of action (common law tort action) for wrongful discharge (Sheets).
‘Just cause’ substantially limits employer discretion to terminate, by requiring the employer, in all instances, to proffer a proper reason for dismissal, by forbidding the employer to act arbitrarily or capriciously.
It is enough to decide that an employee should not be put to an election whether to risk criminal sanction or to jeopardize his continued employment

b. Implied-In-Law Good Faith and Fair Dealing