States With Pro-Employee Laws: No At-Will Employment Equals Fewer Employee Suits

(Or, States That Don't Suck For Employees, Part II)

I was doing some research for this series on pro-employee state laws and ran across a piece by that bastion of liberalism, the U.S. Chamber of Commerce rating states either Good, Fair or Poor for employers. It's been a fantastic source of information for my upcoming pieces in this series, since all I have to do is look for the "Poor" rated states to find a rant about their pro-employee laws.

What I found most interesting, though, was what they wrote about Montana. Montana is notable as the only state in the nation that requires just cause for employers to terminate employees. It's the only non-at-will state, which is something I frequently mention when I write or speak about employment law. Almost as an afterthought, the U.S. Chamber says this about Montana:

The state is also among the nation’s leaders in the fewest number of labor and employment lawsuits filed per 10,000 employees.

Really? So not only did Montana not fall off the map under the weight of employee suits by employees claiming they weren't fired for just cause, but they have fewer employee suits than places like Florida that it rates "Good" for employers due to the utter lack of pro-employee laws. Here's what they say about supposedly pro-employer Florida:

Perhaps the most surprising element of Florida’s generally favorable labor and employment-law climate is its litigation problem. The state has an extraordinary number of labor and employment related lawsuits, with 5.69 such lawsuits filed per 10,000 employees. Only Alabama has a higher ratio.

Alabama, by the way, is also rated "Good" for employers.

Hmm. So states that allow employers to be jerks to employees at-will have more employee suits, and states that make employers treat employees decently have few employee suits. Coincidence? I think not. I think if you treat a person decently they're much less likely to sue you. Doctors have found that out, so when will employers learn?

Treating employees like stuff at the bottom of your shoe equals more lawsuits. Treating employees will and firing only for just cause equals fewer lawsuits.

Are any legislators listening?

States With Pro-Employee Laws: Discrimination Against Unemployed

(Or, States That Don't Suck For Employees)

I have the sad duty of informing my clients pretty much daily just how bad Florida law is for employees. It's pretty depressing how few legal protections my home states offers employees. So I thought I'd periodically celebrate some states that actually have laws protecting employees. Today, I'm celebrating the states that have enacted laws protecting the unemployed from discrimination.

During the not-so-Great Recession, some help-wanted ads started popping up saying only those already employed need apply. While it had always been illegal to discriminate against the unemployed, going this blatant backfired on employers. Public and media outrage ensued and New Jersey became the first state to make it illegal to discriminate against the unemployed. 

New Jersey's law actually only makes it illegal for employers  to advertise that they'll only hired the employed, but doesn't make it illegal to refuse to hire the unemployed, and prospective employees can't sue for violations. Still, it's an improvement. At least the long-term unemployed don't have to see their plight in print when looking through the classifieds.

Oregon, DC and Chicago soon followed with similar legislation that prohibited advertising but not actual refusal to hire the unemployed. A number of states tried and failed to pass legislation prohibiting unemployment discrimination.

Along came New York, a city that never sleeps on worker rights, and passed a law not only prohibiting unemployment discrimination but allowing aggrieved applicants to file a complaint with the city's Commission on Human Rights or sue, including bringing a class action. Madison, WI has also passed a similar ordinance.

Not to be outdone, New Jersey legislators passed another bill, this one actually prohibiting using the fact of being unemployed in employment decisions, but Gov. Christie vetoed it. Federal legislation proposed to help protect the unemployed against discrimination failed.

Why should all taxpayers push to make unemployment discrimination illegal? Because we have a huge problem with long-term unemployment, and it is getting worse. If you've been unemployed 6 months or more, your chances of getting a job drop drastically. Who bears the brunt of this? Taxpayers. As these folks lose their homes, file for bankruptcy, and apply for public assistance, we're paying for this employer nonsense. 

Can anyone show me a single data point saying being unemployed has anything at all with a person's ability to do a job? How is this the unemployed person's fault? Why should we, as taxpayers, have to pay for hiring managers' wild hair idea carried over from their middle school days that a person is only worthwhile if someone else has them?

Kudos to the states and cities that have passed laws to help their citizens with this employer-created problem. Will my home state and other states that allow employers to trash their economies with this nonsense wake up?

"Jail 'Em" Says Pennsylvania Senator About Employers Who Misclassify

I've written here recently about the one-sided Criminalization of Employment Law. It seems that employees are getting tossed in jail while scofflaw employers sail off in their yachts laughing at the 99%. Well, at least one state Senator is doing something to balance things out.

Senator Mike Stack has proposed a bill in Pennsylvania to toss employers who misclassify employees in jail. Employers who declare employees to be independent contractors are illegally avoiding paying worker's compensation premiums, overtime and employment taxes, and at least Senator Stack is doing something about it.

Pennsylvania already has a law, as do many other states, providing civil penalties to employers who misclassify, but it isn't working. Employers are wiping their collective you-know-whats with this law and the Fair Labor Standards Act. Some states have cut deals with the Department of Labor to help enforce these laws. However, Pennsylvania reports that only 1/3 of pending cases have been resolved.

This new proposed law will allow prosecutors to step in and press criminal charges against recalcitrant employers. Stack said this about the need for the law: “Pennsylvania’s record of enforcement is a disservice not only to working families, but also to every taxpayer in the state. Federal officials understand that misclassification of workers means payroll taxes are not withheld, resulting in reduced tax collections. Everyone pays while a few benefit.”

While some state and local governments have passed wage theft laws cracking down on nonpayment of wages, wage theft remains rampant. Some municipalities have tried to deny licenses to thieving employers. Some states are finally passing laws that allow prosecution of wage thieves, but they're a small minority. There have been some prosecutions, but employers landing in jail are few compared with employees being prosecuted for trade secrets, eating cookies, blowing the whistle, and being disloyal.

This proposed bill in Pennsylvania may help balance the equities. After all, it hurts legitimate businesses, taxpayers and voters to have employers running around evading taxes, injuring employees without having insurance, and not paying wages. Will legislators in other states (yeah, I won't hold my breath in Florida) follow suit? Will we finally start demanding these corporation-persons be held accountable for their misdeeds?

Stay tuned.

President Obama Orders Contractors To Disclose Labor Violations, Stop Mandatory Arbitration

In a gutsy and controversial move, President Obama signed an executive order placing new tough restrictions on federal contractors. If your employer contracts with the federal government it may have to disclose all labor violations in order to bid, and also have to stop mandating arbitration of employment disputes.

The pre-bid disclosure language is tough. It requires anyone bidding for a contract of $500,000 or greater to disclose:

[A]ny administrative merits determination, arbitral award or decision, or civil judgment, as defined in guidance issued by the Department of Labor, rendered against the offeror within the preceding 3-year period for violations of any of the following labor laws and
Executive Orders (labor laws):
(A) the Fair Labor Standards Act;
(B) the Occupational Safety and Health Act of
1970;
(C) the Migrant and Seasonal Agricultural Worker
Protection Act;
(D) the National Labor Relations Act;
(E) 40 U.S.C. chapter 31, subchapter IV, also known as the Davis-Bacon Act;
(F) 41 U.S.C. chapter 67, also known as the Service Contract Act;
(G) Executive Order 11246 of September 24, 1965
(Equal Employment Opportunity);
(H) section 503 of the Rehabilitation Act of
1973;
(I) 38 U.S.C. 3696, 3698, 3699, 4214, 4301-4306, also known as the Vietnam Era Veterans' Readjustment Assistance Act of 1974;
(J) the Family and Medical Leave Act;
(K) title VII of the Civil Rights Act of 1964;
(L) the Americans with Disabilities Act of 1990;
(M) the Age Discrimination in Employment Act of
1967;
(N) Executive Order 13658 of February 12, 2014
(Establishing a Minimum Wage for Contractors); or
(O) equivalent State laws, as defined in guidance issued by the Department of Labor.

This means employers won't be able to hide under the confidentiality of arbitrations any longer. They'll have to disclose safety violations, unpaid wages and discrimination/retaliation violations. Employers won't have to disclose settlements, so this will be an extra incentive for them to resolve claims quickly.

The arbitration language will be pretty easy for employers to get around. It only applies if the bid is for a contract of $1 million or more, and it doesn't apply if the employee has an arbitration agreement in place before the bid is made. You can expect employers to start racing around demanding employees sign arbitration agreements right before the bid goes out. However, employers whose contracts say they can change the terms of the contract (which most of them say) will still be out of luck on mandatory arbitration, so you may still be able to force them into court.

There are some other nice provisions of this order, like paycheck transparency and providing guidance to contractors to help them improve, so if you want to see the whole order, it's here.

This order comes on the heels of orders requiring contractors to pay a minimum of $10.10/hour, stop discriminating based on sexual orientation, and stop retaliating against employees who compare and discuss pay.

The message is clear: the United States is going to stop wasting taxpayer dollars on companies that don't comply with U.S. laws. It's about time.

Fourth Florida Court Recognizes Gay Marriage

Adding to the landslide of cases coming down in Florida, a Palm Beach court ruled that it must recognize a Delaware same-sex marriage. In this case, another silly result from Florida's constitutional amendment banning recognition of same-sex marriages was that a widower couldn't be designated as a personal representative for his spouse's estate.

“There is no justification in denying Mr. Simpson the privilege of acting as the fiduciary, based solely on the gender and sexual orientation of his now-deceased spouse,” ruled the judge.

No clerks of court have started issuing marriage licenses in Florida, and all the cases are stayed pending appeal. I'll keep you posted here of the latest developments.

And now that I have your attention, I want to remind you that the American Bar Association's nomination period for the ABA Blawg 100, in which this blog has had the honor of being included the past several years, ends Friday at 5 p.m. Eastern time. The nomination form is here. If you enjoy my posts, I'd sure appreciate your nomination. They'll ask you for some links to posts you liked. Some I can suggest are:

When Is A Company A Joint Employer With Its Franchise Operators?

What Does It Mean Now That My Employer Has A Religion?

The Criminalization of Employment Law 

Florida Legalizes Medical Marijuana But You Can Still Be Fired For Using It

Third Florida Court Strikes Gay Marriage Ban (But No Licenses Being Issued Yet)

Broward County Circuit Judge Dale Cohen ruled Monday that the silly Florida constitutional amendment saying Florida won't recognize gay marriages done in other states is unconstitutional. No surprise there. In this new case, Judge Cohen couldn't grant a divorce without first acknowledging there was a marriage. The amendment would force gay couples who move to Florida to be trapped in marriages. Can you say Full Faith and Credit?

The ruling was stayed, just like the ones in Key West and Dade. In the meantime, folks on both sides of the issue are pushing for the Florida Supreme Court to weigh in on the issue.

I'm still waiting for some brave clerk of court to start issuing licenses, but none have yet. I think it's their duty as officers who obey the constitution to issue marriage licenses to gay couples. If couples do apply and are turned away, they may have some nice legal claims since the clerks are on notice that failure to issue is a constitutional violation. Stay tuned.

When Is A Company A Joint Employer With Its Franchise Operators?

The National Labor Relations Board made a finding that has caused management-side employment lawyers to blow several gaskets, namely, that McDonald's is a joint employer with a franchise owner and is thus responsible for labor law violations that occurred in a McDonald's workplace. And you're thinking, "duh," right? I mean, why wouldn't McDonald's be responsible for what happens in a McDonald's?

As with everything else in my chosen profession, it's not that simple. For many years, corporations have escaped liability for discrimination, labor law issues, overtime and unpaid wages by pointing the finger at the poor schmo who bought a franchise from them instead of manning up and taking responsibility for what happened under their name. (And yes, I said "manning," which could be sexist, but if companies are people and what kind of people is based on who is on the board, then almost all corporations are male people, aren't they?)

In general, two employers are considered joint employers if both exert significant control over employees. There are lots of complicated tests for this that make sense only to lawyers. I've pretty much always thought that franchisors (the parent companies) should be considered joint employers under most of these tests, but the companies have frequently managed to escape liability.

In the McDonald's case, employees were able to show that McDonald's provides software to franchise operators that tells them how many employees should work at any given time, and that the company also weighed in on how much employees should be paid. I can also point to some other types of control these parent companies have. They frequently train employees or provide training materials, provide uniforms, inspect uniforms, decide the very specifics of how employees are to do their jobs all the way down to portion size and customer greetings, send secret shoppers to gauge how employees are performing, and exercise other control over these employees.

Why do we care? Two reasons:

• Deep pockets: While the small company that bought the franchise may be tiny and barely solvent, the mega-parent companies can usually pay big bucks judgments.
• Counting employees: Federal discrimination laws don't cover employers with fewer than 15 employees. Family and Medical Leave Act doesn't kick in unless the employer has 50 employees within a 75 mile radius of the employee work location. There are quite a few employment laws that require minimum numbers of employees. If you can count all the franchises and parent-owned entities, you can count to 15 or 50 pretty easily, which means liability on both parent and franchise owner.

This ruling will have parent companies scrambling to exercise less control over franchise operations, which, in my opinion, is penny wise and pound foolish. If you can't count on all McDonald's restaurants looking the same, serving the same quality food and having employees look and act the same, they lose their brand. Instead, companies should be scrutinizing their franchises to make sure they are complying with employment laws instead of saying, "It's not my problem."