Archive for October, 2003
Wednesday, October 29th, 2003
Despite all the happy news on jobs these days coming out of Washington, there’s a whole lot of misery going on out there where work is concerned. Studies show a significant number of people who are staying in jobs solely because of the difficult economy, and not because they’re satisfied with their current jobs. And of the people who are still unemployed, many are giving up hope while they continue their struggle to find the resources just to survive. So don’t believe all you’re hearing right now.
First the good news: headlines trumpeting an economic turnaround: New Jobless Claims Fall, Fueling Optimism (Chicago Tribune); Finally, a Break in Unemployment (Kinston Free Press (NC)) are much more common these days than they have been in recent months. Desperate for signs of good news, economists and Administration officials praise the recent unemployment statistics. But as Bob Herbert’s excellent New York Times column reminds us,
The president tells us the economy is accelerating, and the statistics seem to bear him out. But don’t hold your breath waiting for your standard of living to improve….In the real world, which is the world of families trying to pay their mortgages and get their children off to college, the economy remains troubled.
(See There’s a Catch: Jobs)
Those who have jobs don’t show up in the weekly unemployment statistics, yet their misery can be measured in other ways, and should be of significant interest to those who care about the well-being of the American workplace. There are far too many people like John Van Ness. Two years ago, Van Ness earned six figures and supervised employees as a Sun Microsystems manager. Now, the laid-off manager sells plumbing supplies at Home Depot. (See USA Today article.) Or Barbara Saunders: Saunders, 36, has a degree from Stanford University and attended graduate school for two years. She formerly earned $48,000 annually as a writer, but now holds several low-paying jobs: grant-writing for a non-profit, and selling candles, incense and post cards at a head shop, and working the door at a nightclub. She says of her plight: “I’m not really getting enough money to get by. I’m frustrated that so much of my time is spent hustling for money.” Bob Herbert reminds us:
According to government statistics, there are nearly 4.5 million people working part-time because they have been unable to find full-time work. In many cases…the part-time worker is “earning far less money than his or her background and experience warrant — i.e. a computer programmer working at a coffee shop.”
(See There’s a Catch: Jobs)
When workers are surveyed about job satisfaction, their dissatisfaction is rampant. According to a recent article, “workers are registering the highest levels of job dissatisfaction in years. Experts in the field…say workplace anxiety is near epidemic.” (See Chicago Tribune article.) In one recent survey of 5,000 U.S. households, less than half of respondents described themselves as satisfied with their jobs. That was the highest percentage of disgruntled workers since 1995 in the survey by the New York-based business research group Conference Board. In a Monster.com Web survey, 57 percent responded that they feel overworked and 83 percent of them are not satisfied with their jobs.
As bad as it is to have a job you don’t like, it’s obviously much worse to have no income coming in, and to feel like your situation isn’t about to change any time soon. Just ask Wichita resident Kris Ta, who has to figure out how to provide food and formula for four young children on $333 a week, which is supposed to cover her husband’s tuition at a local university. Ta, 31, was laid off in December 2001 from her job at Raytheon, while her husband, Kent, 34, was laid off from his job as a Boeing machinist in February 2002. When they were working, she earned $300 a week at Raytheon, her husband $1,200 every two weeks at Boeing. She says of her current situation, “Compared to what we’re living off right now, it’s different as night and day. When you have kids, they ask for things, and you can’t provide it. Kids are too young to understand.” (See Wichita Eagle article.)
Desperation is driving some people to employ bold strategies to end their unemployment. One man, borrowing his technique from the homeless, stands in high-traffic areas with a sign: “Have graduate degree, homeless, need living wage nonprofit job” and a stack of résumés. Dana Briggs, with a master’s degree in management, and a background in technical writing and corporate training, has been unemployed for 17 months and now moves between homeless shelters and friends’ homes after selling his Washington home at a loss 10 months ago. While he acknowledges the sign has not yet proven effective, neither have his 2,500 job applications nor his 165 visits to local businesses. (See Seattle Times article.) Another Seattle resident, Torsten Reinl, has purchased signs for local buses, which contain his picture, phone number, and the words “Hire Me!” For every Dana Briggs and Torsten Reinl, there are those such as Kris Ta who have largely suffered in silence while their means are exhausted and they lose hope of finding work that will even cover their childcare expenses, much less support their families at an adequate level. But many of them vote, and will be a force to be reckoned with in November 2004 if their plight does not significantly improve.
Will it improve? Despite what the numbers might say, there are those who think the situation for unemployed and underemployed workers may not improve any time soon. The jobs that are now being created are a mismatch with the skill set and former income level of the unemployed and underemployed. As New York Times reporter David Leonhardt analyzes the situation,
Many of today’s longtime unemployed, whether they are outcasts from the bubble in the technology and finance sectors or laid-off factory workers, are unlikely to find new work that pays as well anytime soon. For people who have held onto their jobs, by contrast, an economic pickup would keep wages rising and start extending the workweek, too….the disappearance of manufacturing and other blue-collar jobs, vanquished by some of those technologies and jobs moving overseas, means that people who lose a job are facing far tougher prospects.
(See A Rosy Picture, but for Those Who Saw Pink, Pain Lingers) As John Petergal, a Chicago graphic designer who was laid off in January puts it, “The jobs that have been lost are not coming back.” Petergal now works part-time at Best Buy, after 10 months of looking for comparable employment. Labor law professor Charles Craver, notes that a sense of job permanence and solid pay has eroded with the shift from manufacturing to a service economy, dominated by low-paying jobs at stores and fast-food chains. (See Chicago Tribune article.)
It’s hard not to be miserable and despondent, although those advising the unemployed say that feeling that way is counterproductive to finding a new position. One advisor reminds the unemployed not to cut their expenses too much, saying,”I always remind people doing job searches that their state of mind has a lot to do with their salability. If you cut too much, then you become miserable and depressed and that makes it difficult to your being hired.” (See Jobless: Survival Tips for the Short Term and the Long) And retraining and additional education may seem futile, when the available jobs seem to call for less education and training, rather than more, and so many highly skilled workers have found that their surfeit of skills and education has contributed to, rather than insulated them from, long-term unemployment.
There may not be any easy solution, but the unemployed and employed alike need to remember the misery caused by unemployment, and demand economic solutions that directly create jobs–not just menial jobs far beneath the education and experience of the unemployed, but real jobs that make it possible to support families. Your members of Congress and the President need to know that the statistics will not mean a thing in the voting booth unless the needs of working men and women now take on a primary urgency, rather than waiting for a trickle-down effect. Tax policies putting more money in corporate coffers only work when America works. Right now, America isn’t working, because far too many of its citizens are pondering daily survival instead of working in productive jobs.
Want to write your politicians? Use the Workplace Fairness Action Center today!
Tuesday, October 28th, 2003
They just keep coming: one of the latest (but unlikely to be the last) way-out-of-the-mainstream judicial nominees to come before the Senate Judiciary Committee is Janice Rogers Brown, who has been nominated to the D.C. Circuit Court of Appeals, the court that is widely viewed as the second most influential court in the country after the U.S. Supreme Court, due to its role in interpreting many federal laws and regulations issued by federal government agencies.
Brown currently serves as a justice on the California Supreme Court, a position she has held since 1996. Born in 1949, Justice Brown grew up in the Deep South as the daughter of Alabama sharecroppers, and one might think that she would thus be compassionate towards employees who experience workplace discrimination and harassment. But nothing could be further from the truth.
Instead, Justice Brown’s record shows a consistent opposition to efforts to remedy workplace injustice, with often outright hostility toward those seeking to remedy perceived injustice, including workplace discrimination claims. Her civil rights opinions have been characterized as “perhaps the most troubling area of a very troubling body of work,” as she has consistently taken positions hostile to discrimination claims based on race, age, gender, and disability, as well as affirmative action, and workplace privacy. (See People for the American Way/NAACP Report) In addition, serious questions have been raised about her ability to judge fairly and in a manner that is free of bias, as she tends to inject her own personal opinions and biases into her written opinions, raising serious questions about whether she is ruling based on her personal conservative views or on what the law requires.
Now that the Senate Judiciary Committee has concluded Justice Brown’s hearing, the Committee is likely to vote on her nomination soon, so please act now!
We urge you to oppose the nomination of Janice Rogers Brown for the following reasons:
Justice Brown believes free speech is more important than preventing workplace harassment. In a case involving a group of Latino employees who were subjected to a constant barrage of demeaning racial comments and other discriminatory conduct by their supervisor, Justice Brown stated in a dissenting opinion that racially discriminatory speech in the workplace is “free speech” protected by the First Amendment and can never be limited by an injunction, after the lower court had issued an injunction prohibiting the supervisor from uttering racial slurs. Justice Brown’s position that laws against workplace harassment might be unconstitutional under the First Amendment would lead to uncontrollable chaos in the workplace. Rather than employers having a duty to discourage and prevent harassment, management would be powerless to prevent minority employees from being subjected to demeaning comments from racist coworkers. (Aguilar v. Avis Rent A Car Systems, Inc. pdf)
Justice Brown disregards existing civil rights law and legislative intent. In a case involving a landlord’s discriminatory renting practices, Justice Brown was alone in dissent, stating that the state agency charged with enforcing California’s anti-discrimination laws does not have the authority to award emotional distress (pain and suffering) damages to victims of housing discrimination, even though the California Legislature had made specific attempts to ensure the availability of emotional distress awards in administrative proceedings. (Konig v. Fair Employment and Housing Commission pdf) In another discrimination case, Justice Brown went even further than the U.S. Supreme Court and Clarence Thomas in a California case holding that discrimination could include evidence of acts which occurred outside the statute of limitations as long as they were sufficiently connected to other acts within the statute of limitations (known as a “continuing violation.”) Justice Brown in dissent argued that it was unfair to hold employers responsible for their ongoing discriminatory behavior without providing some notice of the intent to sue. Instead, she argued, victims ought to be obliged to file a lawsuit for each individual wrongful act, which would only clog the courts and administrative agencies, and prevent discrimination cases from being considered in their entirety, rather than a series of discrete events. (Richards v.Ch2m Hill, Inc. pdf)
Justice Brown lacks compassion for employees seeking to preserve their workplace rights. In a case involving workplace drug testing, Justice Brown rejected the 30-year old balancing test used by California courts in all privacy cases, reasoning that employees wanting to preserve their privacy rights could avoid a drug test altogether by not applying for a job or promotion. While purportedly acknowledging the difficult choice between taking a drug test and getting a promotion, Justice Brown stated: “Such choices are neither easy nor comfortable. But that is life. Sometimes beauty is fierce; love is tough; and freedom is painful.” (Loder v. City of Glendale pdf) She demonstrated a similar lack of compassion for age discrimination victims in a dissent where she wrote that “[d]iscrimination based on age is not, however, like race and sex discrimination. It does not mark its victims with a ‘stigma of inferiority and second class citizenship’; it is the unavoidable consequence of that universal leveler: time,” and argued that in a society in which the number of jobs are finite, it makes sense in many cases to replace older workers with younger ones, so that policies against such replacement are not necessarily in the public’s interest. (Stevenson v. Superior Court pdf)
In reviews of Justice Brown’s competency to be a judge, she has frequently been found “not qualified.” The California Judicial Nominees Evaluation Commission twice found Justice Brown not qualified for a seat on the California Supreme Court, and a substantial minority of the American Bar Association Federal Judiciary Committee found her not qualified for a seat on the D.C. Circuit. While some dismiss these evaluations as politically motivated, both groups have extensive review processes designed to objectively evaluate a potential judge’s qualifications. (See Alliance for Justice Report on Janice Rogers Brown)
Justice Brown’s opinions indicate hostility to plaintiffs who bring employment discrimination and civil rights cases and an overwhelming tendency to substitute her personal views for the law. Brown’s view of employment discrimination and civil rights cases seriously place in doubt her ability to maintain an open mind about these matters were she to be confirmed as a federal judge. Your voice is needed to help insure that your Senators look closely at Brown’s anti-civil rights record.
Take Action Now: Demand Fair Judges: Stop Janice Rogers Brown
More Information on Janice Rogers Brown:
Judicial Pick Not Fit for U.S. Court (Atlanta Journal Constitution editorial)
Will Democrats Keep Right-Wing Judge in Limbo? (San Francisco Examiner editorial)
Out of the Mainstream, Again (New York Times editorial)
Another Clarence Thomas? (MSNBC article)
Bush Appeals Court Choice Under Fire (Los Angeles Times article)
Alliance for Justice Report on Janice Rogers Brown
Alliance for Justice Law Professors’ Letter
NELA Position Statement on Janice Rogers Brown Nomination
Loose Cannon: People for the American Way/NAACP Report
(note: some information for this blog entry was provided by the National Employment Lawyers Association and the Alliance for Justice.)
Wednesday, October 22nd, 2003
Some good news today from the U.S. Senate: today, in a 59-39 vote, the Senate lacked the 60 votes necessary to stop a Democratic-led filibuster which prevents the Class Action Fairness Act (S 1751) (pdf version) from moving forward. The vote is a victory for workers everywhere, especially those who work for larger employers, who may need to vindicate their rights by bringing a class action lawsuit against their employer. The vote also represents a rare defeat for big business and the Administration’s agenda in this session of Congress.
As previously reported here in April and June, the Class Action Fairness Act was anything but fair to class action plaintiffs. The proponents of this bill had an interest in moving class actions to federal court, as federal court litigation can be more complex and costly. There are a number of rules applicable in federal courts that most states have not yet adopted that make litigation in federal court more time-consuming and expensive, and juries tend to be more conservative in federal court. The bill also contained a number of other provisions all designed to make it hard for employment and civil rights plaintiffs, as well as other groups of individuals who are taking on big business, to file a group lawsuit.
This bill was also an important component of the Administration’s legislative agenda, and with Republicans in charge of both houses of Congress, business groups sensed an opportunity to move the bill forward. (See New York Times article.) They were only one vote away from success, as several Democrats defected to join the Republicans attempting to pass the bill. There were ultimately eight Democratic senators (and Sen. James Jeffords of Vermont, an independent who often votes Democratic) in favor of the bill (Senators Evan Bayh of Indiana, Thomas R. Carper of Delaware, Dianne Feinstein of California, Herb Kohl of Wisconsin, Joseph I. Lieberman of Connecticut, Blanche L. Lincoln of Arkansas, Zell Miller of Georgia and Ben Nelson of Nebraska). The lone Republican to join the Democratic opposition was Sen. Richard Shelby of Alabama, who practiced law for 14 years before joining Congress.
Sen. Mary Landrieu of Louisiana, known as a centrist Democrat, was heavily pressured to join the senators voting in favor of moving the bill forward, and noted, “I could have easily been the 60th vote. They knew my vote was important, I knew my vote was important.” Landrieu, her fellow home state senator John Breaux, and Senate Minority Leader Tom Daschle had all urged the authors of the bill to consider making some compromises designed to attract further Democratic support; however, the bill moved forward unchanged, necessitating the Democratic effort to kill the bill. Sen. Richard Durbin of Illinois said of the bill, “Defendant corporations don’t want to be held liable for their misconduct and if held responsible they want to pay less money and that’s what it comes down to. That’s what this is all about. They want to protect themselves and limit their liability.” (See USA Today article.)
We couldn’t agree more.
Wednesday, October 15th, 2003
Every day it seems we hear about a new strike, and more often than not, the issue is not primarily wage increases any more. The central issue of many labor negotiations right now involves health benefits, and whether workers can rely on their employers to have most of their health care expenses covered by employer-provided health insurance plans, or whether cutbacks are going to enforce employees to assume a large share of rising health care costs. And whether workers are unionized or not, health care benefits are extremely important, and are likely to be the result of many more negotiations between employees or employers. In return, it’s likely that employers are going to play more of a role in overseeing the health of their employees, and will implement more wellness programs that promote weight loss, exercise, and disease management. Is a workable solution in sight?
Grocery workers are on strike in Southern California, with health benefits, not wages, as the primary focus of the strike. (See New York Times article.) So are transit mechanics and sheriff’s deputies in the same region, with health care also at issue. (See San Diego Union-Tribune article.) Last month, members of the United Auto Workers, in reaching agreements with the Big Three U.S. Automakers, accepted wage freezes and plant closings which in previous negotiations would have been unthinkable, but in return, were able to hold the line on their members’ health care costs. (See New York Times article.) Workers who do get higher wages in labor negotiations often get those wage increases in exchange for greater health care costs, as was recently the case at Hormel. (See Kansas City Star article.)
As one labor expert noted, this is a trend that is only likely to escalate in the months ahead. “The underlying issue is the whole issue of health care costs,” said Edward Lawler, a labor expert at the University of Southern California’s Marshall School of Business. “Unless there’s some change in legislation that completely redefines how health care gets delivered, I think we’re going to see this time and time again as a labor issue.” (See San Diego Union-Tribune article.) The same concerns were echoed by Greg Denier, director of communications for the UFCW, the union involved in the grocery workers strike. “This battle is growing nationwide. What’s happening is that contracts are up across the country in different areas. The employers are dedicated to eliminating affordable health care for employees, so the national health care crisis is being played out on the picket line.”
Rising health care costs have placed employers and employees in a financial bind: will employers absorb the costs, in the face of declining profits, or will they attempt to pass along some or most of the increase to their employees? All over, employees are being asked to pay higher co-payments coupled with reduction of coverage for prescription drugs and some medical services. And don’t think they haven’t noticed or don’t care, either. A poll of workers last year found that health-care coverage is the most important benefit, outscoring compensation by a margin of two to one. For two-thirds of those responding to the survey, health coverage was a primary factor in their employment decision. Since two-thirds of the American public rely on their employers for health care, this trend is bound to affect million of American workers. (See CNN/Money article.)
Setting aside a drastic shift in how health care costs are paid, such as a government-sponsored universal health care program, how can policymakers even begin to address this vast problem? At every step in the process of providing health care, from doctors to HMOs, from insurers, to employers, to workers, someone is going to have to absorb the costs which have dramatically escalated in recent years. Health premiums for businesses have risen at a double-digit clip for four straight years, and a similar rise is expected in 2004. The surge has caused workers to pay, on average, 50 percent more in out-of-pocket expenses since 2000, according to a survey released last month by the Kaiser Family Foundation. (See Philadelphia Inquirer article.)
Will it ultimately fall primarily on the backs of the American worker, or will all of the entities involved cooperate towards a solution which keeps the model of employer-provided health insurance a viable one? One of the methods that various employers are exploring involves paying employees to shift insurance costs to a spouse’s employer. This method shifts the burden of insuring a particular employee to a larger employer’s plan, which may not be so dramatically affected by one employee’s age and health status as that of a smaller employer’s plan. The smaller employer pays the lower premium to the employee, who in term remits it to his or her spouse’s employer for coverage. That method shifts the underwriting cost to the insurer, in essence, but of course, only works where an employee’s spouse has adequate coverage. (See Philadelphia Inquirer article.)
Some employers are focusing on “disease management,” which is an effort to control the costs incurred by workers with serious chronic diseases, such as diabetes, asthma, and heart disease, as those workers often consume the overwhelming majority of health care expenses. Disease management programs are intensive case management programs that use individualized care coordination for high-risk patients with multiple or complex medical conditions. However, some critics claim that these programs have yet to show the desired results. (See Nashville Business Journal article.) Other employers are building wellness programs into every aspect of corporate life, from the design of their campuses to the speed of the building elevators. Some large corporations have deliberately designed key buildings to be at a great distance from one another, to encourage more walking during the work day, and have chosen slower elevators, designed to get employees to take the stairs more frequently. (See New York Times article.)
While all of these efforts to promote employee health and reduce health care costs are laudable, it still appears that employees are increasingly being asked to bear the brunt of increased costs. And while unionized employees have some leverage in negotiating health care costs as part of the larger contract with the employer, non-unionized employees have little ability to influence their employer’s coverage decisions, especially as the economy limits workers’ mobility and renders empty the threat to move to another employer with better coverage. If costs continue to increase, and those costs continue to be shifted to workers, a significant crisis is surely on its way, if not already here, that could shake the model of employer-sponsored health coverage to its very core.
Tuesday, October 14th, 2003
It is rare to find unanimity in the U.S. Senate, and almost unheard of to find unanimity on a bill that benefits workers more than businesses and insurers. Yet it happened today in the Senate, which unanimously (in a 95-0 vote) passed the Genetic Information Nondiscrimination Act (S 1053), a bill that would bar employers and insurance companies from discriminating against people based on their genetic histories. And what may be the most virtually unprecedented development of all: the bill is also supported by the Bush administration. Even that might not be enough to guarantee action in the House of Representatives, this year, however, and that’s a real shame. Once again, it may be up to how loudly workers speak out urging the House to take action this year on this bipartisan bill.
The scientific progress made in the last decade in mapping the human genome and identifying the source of many genetically caused illnesses and conditions makes it more important than ever to protect those who might be adversely affected by the disclosure of this information. As Dr. Francis Collins, head of the National Human Genome Research Institute, notes, “[genetic discrimination] could cause this wonderful revolution fueled by the genome project to actually be stillborn because people would be afraid of getting the information that otherwise be of great advantage to them for medical purposes.” (See ABC News article.) Dr. Collins also characterized the bill, as quoted in the title to this blog entry, as “a bill for people with DNA,” or a bill for everyone, which may explain at least in part, the bipartisan support. (See New York Times article.)
In short, the bill would bar health insurance companies from using genetic information to deny coverage or to set premiums, and would prohibit employers from using such information to hire or fire workers. Neither insurers nor employers could ask for genetic information or require people to take genetic tests. According to a more detailed summary prepared by the Senate’s Health, Education, Labor & Pensions Committee, which originally heard the bill, the bill:
Protects against genetic discrimination from health plans and insurance companies:
• Prohibits health insurance plans from denying an individual enrollment in the plan because of individual’s or family member’s genetic information.
• Prohibits health insurance plans from charging higher premiums to individuals because of individual’s or family member’s genetic information.
• Prohibits health insurance companies from basing premiums of a group health plan on genetic information of members (including family members) of the plan.
Keeps genetic information private:
• HHS privacy rules govern the use and disclosure of genetic information, except this bill also:
• Bans the use and disclosure of genetic information for insurance underwriting purposes.
• Bans the collection (i.e., requesting, requiring, and purchasing) of genetic information for purposes of underwriting.
• Prohibits insurance companies from collecting genetic information prior to enrollment in any plan.
Structure and Enforcement of Health Provisions:
• Creates a single federal standard for protection of genetic information, which does not exist today.
• Generally builds on the existing law framework under HIPAA. In doing so, this ensures that genetic
information is treated consistently with other health information and individuals, who face
discrimination, whether they are healthy, sick or disabled, have the same rights and remedies.
• The non-discrimination provisions are enforced in same manner as current law, however some
procedural protections are established for group health plan participants including the ability to seek
injunctive relief and to have retroactive reinstatement of coverage for violations. Penalties may be
payable to the individual or levied against the plan.
• The privacy provisions are enforced in the same manner as HIPAA privacy rules through HHS Office
of Civil Rights; with the same civil penalty and criminal enforcement structure.
Protects employees from genetic discrimination at the workplace:
• Prohibits the use of genetic information in employment decisions, such as hiring, firing, job
assignments, and promotions.
• Prevents the acquisition and disclosure of genetic information.
• Applies the same procedures and remedies as other forms of employment discrimination, such as race
under the Civil Rights Act of 1964 and disabilities under the Americans with Disabilities Act of 1990.
Supporters say the bill is long past due, given the advances in technology, including the mapping of the Human Genome and the development of tests that can predict whether a patient is vulnerable to a wide array of genetic disorders like breast cancer and neurological ailments like Huntington’s disease. But many people shy from the tests that might save their lives or lead to major scientific advances, fearing the loss of health insurance or a threat to their work. Some companies have even started performing genetic testing on their employees, even in the face of much legal uncertainty about whether such testing is legal. Last year, Burlington Northern Santa Fe Railway paid over $2 million to settle claims with employees who after developing symptoms for carpal tunnel syndrome, were forced to submit to genetic testing. (See Reuters article.) The passage of this legislation would prevent such future abuses, and encourage the lawful use of testing to promote scientific advances and better health, rather than impede employees’ employment and advancement.
The bill was first introduced in the Senate in 1997 (1997 version) by Sen. Olympia J. Snowe (R-ME), and then was aimed only at health insurers. While the idea attracted the support of prominent senators such as Sen. Bill Frist (R-TN), now the Republican leader, and Sen. Tom Daschle (D-SD), the Democratic leader, the measure nonetheless languished for several years. Insurers objected to language that they said would prevent them from collecting information that could help them manage the health care of patients with genetic diseases, so that section was removed. While Republicans wanted to limit the bill to health insurers, Democrats wanted to see it expanded to include employers; it now includes employers.
Business groups and insurers still object to the bill, however, which could doom its progress in the more conservative House of Representatives. One insurance group, the Health Insurance Association of America, called the bill “a solution in search of a problem.” (See New York Times article.) However, according to Dr. Collins of the Genome Project, fears of discrimination already have deterred potential participants of genetic research projects. In two studies of breast cancer and one of colon cancer, one-third of the individuals who were qualified to participate ultimately declined after hearing that there was no federal law against such discrimination, he said. (See Los Angeles Times article.) More incidents like this are certain to occur without more legal protections for those who participate in such research.
While the bill easily passed the Senate, its fate is more uncertain in the House of Representatives. A similar measure, the Genetic Nondiscrimination in Health Insurance and Employment Act (HR 1910), has been introduced in the House by Rep. Louise McIntosh Slaughter (D-NY), and already has over 140 cosponsors. Even though enacting the Senate bill instead of the House provision would move things forward more quickly, the House may slow things down by requiring that the bill have hearings. This would mean the bill would not pass this year before Congress adjourns, which could happen as early as the end of this month. (See Washington Post article.)
Workers must speak out now to demand that the House take action on the Senate bill this year; otherwise, the bill will languish at least until Congress resumes next January, and most likely even later, given that 2004 is an election year. Ask your representative to push for a vote on the Senate version of the bill this year in our Action Alert, as the House needs to be reminded how important this bill is for both scientific advancement and the protection of workers from discrimination.
Stop Genetic Discrimination: Support The Genetic Information Nondiscrimination Act
More resources on genetic discrimination:
Genetic Alliance Genetic Discrimination Resources
Genetic Information and the Workplace Enacted State Legislation
ACLU Genetic Discrimination in the Workplace Factsheet
Tuesday, October 7th, 2003
A recent decision on the taxability of damage awards highlights the significant differences in taxes paid by workers who successfully sue their employers, based upon little more than where they live. In Banks v. CIR, the 6th Circuit Court of Appeals held that workers do not have to pay taxes on the amount of the worker’s settlement which goes to his or her attorney. In doing so, the 6th Circuit strongly rejected the notion that the specific language of a state’s attorneys’ lien law makes a significant difference when it comes to assessing taxation, contrary to the logic followed by several other circuits who look closely at lien law language when assessing taxes on some awards but not others.
John W. Banks II worked for the California Department of Education (“CDOE”) as an educational consultant from 1972 to 1986, when he was fired. After his termination, he filed an employment discrimination against the CDOE and some of its employees. This case proceeded to trial in 1989 before a judge, as this case was brought before the 1991 Civil Rights Act was passed, giving plaintiffs a right to a jury trial. Although plaintiff’s original complaint had included a claim for emotional distress under California state law, those claims were dismissed before trial. During the trial, the judge urged the parties to pursue settlement talks, and reached a settlement. Although plaintiff had requested $850,000 during settlement discussions, he ultimately agreed to the amount of $464,000, based at least in part on the parties’ agreement to characterize the settlement as a non-taxable settlement for emotional distress (although even then, the parties and attorneys were unsure whether this strategy would ultimately succeed.) The parties settled for $464,000, with $150,000 of that amount going to plaintiff’s attorney under a contingency fee arrangement, and plaintiff did not declare any of the settlement as taxable income.
Fast forward several years later, after plaintiff had presumably moved to a state within the 6th Circuit (Ohio, Michigan, Kentucky or Tennessee). (The opinion does not state how this happened, but it was certainly a fortuitous move as far as his tax situation is concerned.) In 1997, the IRS assessed a deficiency for the money plaintiff received in tax year 1990, claiming that Banks should have paid taxes on a portion of the settlement proceeds and that he now owed $101,168.00 in back taxes. Banks appealed this decision to the Tax Court and lost. His next stop in appealing his tax deficiency was the 6th Circuit Court of Appeals.
At the 6th Circuit, Banks found a far more receptive audience regarding at least some of his tax claims. Banks made three arguments (although one, about an alimony payment, is presumably of lesser interest to our audience and will not be discussed here. His first argument was that he did not owe taxes on the amount of the award that he kept, as it was a non-taxable award for personal injury, while his second was that he did not owe taxes on the $150,000 portion of the award which was used to pay his attorney. While the 6th Circuit did not accept his first argument, the court agreed with Banks and ruled that he did not owe back taxes on the attorneys’ fee portion of the award.
Between 1990, when Banks received his settlement award, and 1997, when he heard from the IRS that he owed additional taxes, the law on the subject of taxation of damage awards went through some significant changes. One of these changes involves two cases decided by the U.S. Supreme Court, U.S. v. Burke and Commissioner v. Schleier. In 1992, the Supreme Court ruled in Burke that awards under Title VII prior to 1991 were taxable, because they were for economic damages (back pay) only, and could therefore be distinguished from non-taxable personal injury awards which under Internal Revenue Code section 104(a)(2) are not taxable.
The question then arose as to what tax treatment awards under Title VII should receive after 1991, since the law was amended then to provide for non-economic compensatory (emotional distress) damage awards. The Supreme Court answered that question in 1995, in the Schleier case, when it ruled that even though the Age Discrimination in Employment Act (like Title VII amended in 1991) now contained a right to jury trial and additional damages provisions, an ADEA award was still nonetheless taxable. Schleier established the test the 6th Circuit applied to Banks’ claim: (1) there was an underlying tort claim; (2) the claim existed at the time of the settlement; (3) the claim encompassed personal injuries; and (4) the agreement was executed “in lieu” of the prosecution of the tort claim and “on account of” the personal injury. According to the 6th Circuit, Banks’ Title VII claim did not satisfy that text. While he had other claims that might properly have served as the basis of a tort (personal injury) claim, those claims were abandoned prior to trial, and could not be resurrected in the settlement agreement, no matter what the language of that agreement said and the parties intended. So as a result, Banks must pay back taxes on the portion of the award that he kept, as none of it could be allocated to personal injury.
Banks fared better, however, on the portion of the award given to his attorney under their contingency fee arrangement, as the 6th Circuit determined that he did not owe back taxes on that portion of the award. As noted by the court, there is a split in the circuits about whether this amount can be taxed twice (once to the plaintiff and again to the attorney). Footnote 7 in the decision provides helpful cites for all of the federal circuit decisions on this point, in case you’re interested in reading all of these decisions:
The Fifth, Sixth, and Eleventh Circuits have held that contingency fees are excludable. See Foster v. United States, 249 F.3d 1275 (11th Cir. 2001); Srivastava v. Comm’r, 220 F.3d 353 (5th Cir. 2000); Estate of Clarks v. United States, 202 F.3d 854 (6th Cir. 2000). The Third, Fourth, Seventh, Ninth, Tenth, and Federal Circuits have taken the opposite view. See Campbell v. Comm’r, 274 F.3d 1312 (10th Cir. 2001); Kenseth v. Comm’r, 259 F.3d 881 (7th Cir. 2001); Young v. Comm’r, 240 F.3d 369 (4th Cir. 2001); Benci-Woodward v. Comm’r, 219 F.3d 941 (9th Cir. 2000); Coady v. Comm’r, 213 F.3d 1187 (9th Cir. 2000); Baylin v. United States, 43 F.3d 1451 (Fed. Cir. 1995); O’Brien v. Comm’r, 38 T.C. 707 (1962), aff’d, 319 F.2d 532 (3d Cir. 1963) (per curiam).
As noted, the 6th Circuit had previously ruled that this amount was not taxable; however, since Banks’ case was brought in California, it was necessary for the 6th Circuit to determine whether it would agree with the 9th Circuit courts analyzing California law, which have found the attorneys’ fee portion taxable (see Benci-Woodward and Coady) or whether it would remain true to its own existing precedent.
Thankfully for Banks and all of us representing the workers’ perspective who care about this subject, the 6th Circuit stuck with its own precedent, and determined that Banks’ award was not taxable. Unlike the 9th Circuit, which has made the decision based upon decades-old attorneys fee statutes (leading to confusing results within the circuit itself where awards are taxed on California but not Oregon–see Banaitis v. CIR for the Oregon decision), the 6th Circuit has recognized that the problem needs to be analyzed consistently, regardless of the state of residence and the language in the attorneys’ fees statute. The 6th Circuit first adopted the rationale in Estate of Clarks that the income obtained with an attorney’s assistance was akin to a partnership between the plaintiff and attorney, where the attorney’s skills contribute to the success of the award (and without the attorney, plaintiffs are unlikely to obtain the award on their own.) As the court explains it:
Here the client as assignor has transferred some of the trees in his orchard, not merely the fruit from the trees. The lawyer has become a tenant in common of the orchard owner and must cultivate and care for and harvest the fruit of the entire tract. Here the lawyer’s income is the result of his own personal skill and judgment, not the skill or largess of a family member who wants to split his income to avoid taxation. The income should be charged to the one who earned it and received it, not . . . to one who neither received it nor earned it.
While the IRS acknowledged the prior 6th Circuit decision, they argued that it did not apply due to the language of the California lien statute applicable to Banks’ award when Banks received it (and certainly if Banks had remained in California, the 9th Circuit would have agreed and taxed Banks on his award.) However, the 6th Circuit rejected the rationale of the 9th Circuit and other circuit courts which have hinged their decisions on the state attorney lien statute. As the 6th Circuit noted, when choosing to follow the 5th Circuit’s approach
We likewise are not inclined to draw distinctions between contingency fees based on the attorney’s lien law of the state in which the fee originated. Given the various distinctions among attorney’s lien laws among the fifty states, such a “state-by-state” approach would not provide reliable precedent regarding our adherence to the Cotnam doctrine or provide sufficient notice to taxpayers as to our tax treatment of contingency-based attorneys fees paid from their respective jury awards
The 6th Circuit also reiterated the importance of 4 additional factors, regardless of the attorneys’ fee language in any particular state:
(1) the fact that the claim, at the time the contingency fee agreement was signed, was “an intangible, contingent expectancy,” (2) taxpayer’s claim was like a partnership or joint venture in which the taxpayer assigned away one-third in hope of recovering two-thirds; (3) no tax-avoidance purpose was at work with the contingency fee arrangement… and (4) double taxation would otherwise result by including the contingency fee in taxpayer’s income.
The 6th Circuit decision, which is among the most persuasive out there on this subject, is nonetheless in the majority when compared to other circuits around the country. If the IRS appeals this ruling to the U.S. Supreme Court, there exists a possibility the Court will hear the case in order to resolve the conflict between the circuits. (The Supreme Court has previously refused to hear cases going the other way, including many if not most of the decisions listed above.) The decision does provide certainty to those who live and/or pay taxes in the states affected by the 6th Circuit, and plenty of wisdom that will hopefully serve to persuade those courts which have not yet ruled on this issue, such as the 1st, 2nd, 8th, and DC Circuits, to follow the Banks precedent rather than poring over attorneys’ lien statutes to tax discrimination awards twice. The need for Congress to resolve this problem has never been more apparent, when you consider the disparity (often amounting to tens or hundreds of thousands of dollars) between workers in the 5th, 6th, and 11th Circuits and the rest of the country, so please write your member of Congress today:
Stop Taxing Discrimination Awards Unfairly
Current Plaintiffs in Civil Rights Cases
Friday, October 3rd, 2003
Congress has been busy this week, in the waning days of this year’s session. There’s some good news and some bad news for workers, and believe it or not, the good news is from the House of Representatives, which voted yesterday to support efforts to prevent new overtime regulations from going into effect. The bad news came from the Senate Judiciary Committee, which also voted yesterday to move forward the 5th Circuit nomination of Charles Pickering. However, the fight on both of these fronts is only just beginning.
Overtime: As previously reported here earlier in the week, the House had an opportunity to reverse a prior vote where it narrowly voted to support the new overtime regulations. In the meantime, the Senate had voted to deny funding to implement the overtime regulations. Opponents of the overtime changes were successful in scheduling a non-binding vote in the House that would instruct those members conferring with the Senate to support the inclusion of a proposal denying funding to implement the regulations. In that vote, which occurred on Thursday, October 2, the House voted 221-203 to support the resolution.
This change would not have happened if House members had not heard from their constitutents. Typical of those changing sides is Rep. Todd Tiahrt, a Kansas Republican, who stated when questioned, “This is just one area where I thought it was in the best interest of the people of the 4th District that I support this initiative.” (See Kansas City Star article (registration required).) In Tiahrt’s district is a Boeing facility, where 10,000 white-collar aerospace workers would be affected. Tiahrt said engineers at Boeing Co.’s Wichita facility would see overtime become a bargaining chip “the second their labor agreement expires. They’ll have to give something up in order to regain what they have today.” Over 700 messages to Congress were generated at this site alone, along with all of the messages generated by other organizations on this issue, which the American public cares about strongly.
More pressure on members of the House is needed, however. The House conferees will be under strong pressure from the House leadership and the Administration to omit the overtime-related proposal from the final version of the Labor/HHS/Education appropriations bill. The President has also threatened to veto the funding bill if it contains the overtime provision. However, it is clear that overtime is no longer a strictly partisan issue, and that even House Republicans can be persuaded to dissent from the party line when it is in the interests of their constitutent voters to do so. Please act now to thank supporters for their vote and to encourage them to pressure conferees to follow the will of both the House and Senate majorities to prevent these overtime regulations from ever seeing the light of day. Or some workers will never again see the light of day…as they will be working too many hours without extra compensation to see any sunlight.
PROTECT YOUR RIGHT TO OVERTIME PAY: Keep Pressuring the House to Oppose Proposed Overtime Changes
Pickering Nomination: On Thursday, October 2, the Senate Judiciary Committee again took up the nomination of Charles Pickering. To no one’s great surprise, the vote was 10-9 to move Pickering’s nomination forward. The committee vote on Pickering in February 2002 was also 10-9, but at that time, it prevented Pickering’s nomination from moving ahead. This vote reflects the changing composition of the committee majority: last year, the Senate and accordingly the committee had a majority of Democratic members, while this year, control has switched to the Republican party.
It is unprecedented for a president to renominate a failed nominee after the control of the Senate has switched from one party to another, and it is not yet clear whether Senate Democrats will allow this effort to succeed, or whether another filibuster will be used to stall Pickering’s nomination indefinitely. Pickering’s nomination has the support of Sen. Jeffords, the Vermont Independent who has tended to vote with Democrats on most nominations, and may have the support of enough Democratic senators to prevent a successful filibuster. (See Washington Post article.) Your voice is needed to ensure that Pickering’s nomination will not move forward before the Senate.
Demand Fair Judges: Stop Charles Pickering
Wednesday, October 1st, 2003
Many people think that if you have been discriminated against or otherwise harmed in the workplace, that you have a right to take that case to court and to have a jury of your peers determine whether or not your employer’s conduct violated the law. In an increasing number of cases, that assumption would be incorrect. Why? Because employers are increasingly turning to arbitration to settle disputes, which means no courtroom, judge and jury, and few of the protections contained in laws and prior court cases. And yesterday (9/30), the 9th Circuit Court of Appeals, which previously had been one of the only courts nationwide to resist this development, overruled its own prior ruling to allow employers to force their employees to sign away their rights to a jury trial as a condition of getting a job.
Donald Lagatree applied for a legal secretary position at the law firm of Luce, Forward, Hamilton & Scripps, when he was told that he must sign an agreement with the law firm that in the event of any dispute about his employment, he must submit any future employment-related legal claims to arbitration. He thought this was “unfair,” and worked for two days without signing the agreement, before he was fired simply for his refusal, because Luce Forward considered the practice “non-negotiable.” (See EEOC v. Luce, Forward, Hamilton & Scripps, p.14524) So Lagatree decided to fight back and challenge whether employers really could force their employees to sign their rights away in order to get a new job.
Why is arbitration such a bad thing that Lagatree didn’t just give in and sign the form like everyone else at Luce Forward? After all, we frequently hear about how clogged our courts are, and how long it takes to resolve lawsuits, so perhaps an alternative to a long expensive legal battle isn’t a bad idea. (And it isn’t a bad idea if it’s voluntarily chosen by both sides.) However, an increasing number of employers, instead of waiting until a dispute arises and then working with the employee to figure out the best way to resolve it, now require arbitration, and you can believe that they would not require it if it was not in their best interest to do so.
What is the most important reason that employers choose to implement mandatory arbitration programs? It is because they believe that they have a better chance of winning in these programs than they do in a courtroom, and they’re generally right. Here are some of the many objectionable aspects of mandatory arbitration, from an employee’s perspective:
Arbitration Often Limits or Eliminates Essential Procedural Protections
• Arbitrators do not have to know or follow the law
• Arbitrators do not grant injunctive or remedial relief
• Arbitration does not contain the procedural safeguards of court
• Arbitrators do not have to abide by the Federal Rules of Evidence
• Arbitrators do not have to abide by the Federal Rules of Discovery
• Limited compensatory and attorneys’ fees makes hiring a lawyer difficult
• Arbitrators do not have to be lawyers
• Arbitrators rarely issue written opinions
• Arbitrators do not have to justify their rulings
• Arbitrators are only regulated in two states
Arbitration Interferes with the Ability to Fully Enforce Civil Rights Laws
• The EEOC, DOL and NLRB agree that arbitration interferes with their agency’s
ability to fully enforce civil rights laws
• Undermines Congress’ intent in passing civil rights laws
Arbitration Often Favors Employers
• Studies show that arbitrators favor large corporations
Arbitration Often Requires Workers to Pay for the Process
• High fees discourage or make it impossible for individuals to pursue their cases
• Arbitration fees can reach the tens of thousands of dollars, depending on the case
Arbitrators Often Have Conflicts of Interest
• Some arbitration firms have financial ties to the companies they preside over
(See NELA Fact Sheet: Mandatory Arbitration Subverts Civil Rights Laws.)
Back to the ruling: here’s what the 9th Circuit Court of Appeals had to say, in an 8-4 majority en banc (decided by a larger 12-judge panel) opinion: Writing for the majority, Judge A. Wallace Tashima, stated that the court’s prior precedent, in the case of Duffield v. Robertson Stephens was incorrect, and must be overruled. While Lagatree and the Equal Employment Opportunity Commissiobn (EEOC), supporting Lagatree, had argued that Duffield prevented employers from imposing mandatory arbitration agreements, this view was rejected by the court.
A little history is now in order to explain the court’s ruling: over a decade ago, Congress passed the Civil Rights Act (CRA) of 1991, designed to overturn several decisions of the U.S. Supreme Court that had been considered detrimental to workers. A key provision of the CRA provided for a right to certain damages and to trial by jury, previously unavailable under federal law. However, the CRA also contained language encouraging the use of “alternative dispute resolution,” that is, resolution of legal disputes by means other than the courts, such as arbitration and mediation. Workplace advocates maintained that the alternative dispute resolution clause did not trump the jury trial provision–otherwise, the jury trial provision would have little meaning.
In a case decided about six months prior to the 1991 CRA going into effect (before the jury trial right was established), Gilmer v. Interstate/Johnson Lane Corp., the U.S. Supreme Court approved of arbitration in a case involving an age discrimination claim under the Age Discrimination in Employment Act (ADEA), which muddied the waters considerably because it was not clear whether the 91 CRA was intended to incorporate that case or not, and whether the case’s holding could be extended to Title VII claims brought under a different statute that the ADEA. Duffield attempted to clarify this by holding that “what Congress intended to prohibit in the 1991 Act [was] mandatory requirements under which prospective employees agree as a condition of employment to surrender their rights to litigate future Title VII claims in a judicial forum and accept arbitration instead.” However, both before and after the Duffield decision, every other court which looked at the same issue disagreed with the Duffield ruling, leaving the 9th Circuit standing alone when it came to prohibiting mandatory arbitration agreements.
The court’s ruling essentially says “oops, we were wrong and they were right,” and not much more than that. It analyzes each of the grounds that Duffield was based upon, and determines that they were incorrectly decided. While there has been an intervening 2001 U.S. Supreme Court case (Circuit City v. Adams) that some thought could provide a basis for overturning the decision, the court makes clear that its ruling is not based on the Circuit City case. Otherwise, it almost appears to be a matter of peer pressure: “when other courts looked at this issue, they ruled the other way, so maybe we should too.” This statement in the ruling typifies the court’s approach to analyzing this issue: “In the post-Gilmer world, our decision in Duffield stands alone. All of the other circuits have concluded that Title VII does not bar compulsory arbitration agreements.” (See EEOC v. Luce, Forward, Hamilton & Scripps, p.14530)
This approach provoked bitter dissents from two of the members of the panel participating in the decision. Judge Pregerson in one of the dissents writes “The underlying purpose was not to allow employers to shove arbitration provisions down the throats of individual employees as a non-negotiable precondition of employment. But sadly that is the consequence of the majority’s holding.” (See EEOC v. Luce, Forward, Hamilton & Scripps, p.14552) In the other dissent, authored by Judge Reinhardt, the judge forcefully chastises his colleagues who joined the majority, stating “my colleagues continue the current judicial trend of closing the doors to the federal courts to those who most need our protection. This time the majority closes those doors to employees against whom employers discriminate on the basis of race or sex. Regrettably, my colleagues in the majority have joined a number of other circuits in rewriting Title VII’s mandates to comport with the judiciary’s historic disregard for workers’ rights and its elitist preference for fewer jury trials and less crowded appellate dockets.” (See EEOC v. Luce, Forward, Hamilton & Scripps, p.14554) Strong stuff, but it is clear that Judge Reinhardt understands what is at stake in this decision.
Here’s what Cliff Palefsky, Lagatree’s attorney, has to say about the decision:
Arbitration is not a separate but equal forum. The civil rights laws have no meaning if you are forced to waive the right to have them enforced correctly as a condition of getting a job. The very purpose of the 1991 amendments was to give employees the right to have these claims heard by a jury in a public court, not secret tribunals with no right of appeal.
What is the effect of this ruling? After all, it merely adopts what is already the law in many other courts around the country, but it is nonetheless a significant opinion. After this week’s ruling, more and more employers, especially those in the eight states that are part of the 9th Circuit, are likely to implement mandatory arbitration programs, to the extent that it benefits the employer’s financial interest to do so (and it often does.) National employers who want to have uniform policies for their employees throughout the country are no longer held back by a differing 9th Circuit view. There no longer exists an alternative precedent for courts which have not yet resolved this issue, so thus more courts are likely to join the overwhelming judicial tide (just like the 9th Circuit did) now in support of these agreements.
Since employers in California are bound by a state court decision, Armendariz v. Foundation Health Psychcare Services (PDF), which requires that the agreements be fair and not overwhelmingly biased in favor of the employer, the battle in California will now shift to whether a particular agreement is fair, and not whether it is legally permissible in the first place. Armendariz requires such minimum protections as neutrality of the arbitrator, the provision of adequate discovery, a written decision that will permit a limited form of judicial review, limitations on the costs of arbitration, and the availability of all types of relief (damages, attorneys’ fees, etc.) that would otherwise be available in court. However, one way that California residents can fight back is to encourage Gov. Gray Davis to sign pending legislation, AB 1715, which would prohibit mandatory arbitration agreements in California regarding rights guaranteed by the state’s Fair Employment and Housing Act. To write a letter to Gov. Davis urging him to sign AB 1715, please visit our site’s new Action Alert.
Those of you in the rest of the country, especially in the seven other Western states affected by this legislation, should consider urging your representatives to pass similar legislation to that proposed in California, and should support Congress taking action to outlaw mandatory arbitration agreements passed on the federal level. To learn more about federal legislation, see NELA’s Mandatory Arbitration page. (This legislation has not been reintroduced this year, but is expected to be reintroduced soon.)
Only if employees and others affected by these decisions speak out will legislators be motivated to stem the tide of mandatory arbitration sweeping our country; it is now clear that not many courts will any longer protect the interests of employees when confronted with mandatory arbitration agreements.
Additional Information About EEOC v. Luce Forward:
9th Circuit Tosses ‘Duffield’ in Dustbin (The Recorder article)
Appeals Court OKs Workplace Discrimination Arbitration (AP article)