Outten & Golden: Empowering Employees in the Workplace

Archive for October, 2004

You’re Getting Short-Changed, So Vote!

Sunday, October 31st, 2004

With perhaps the most important election of our lifetime just days away, we are acutely aware of the issues our nation faces and the choices we make that determine our future. Many of the most critical issues today are those faced by the working people of America. With each passing day, more and more of them struggle to make ends meet and worry about their future. Regardless who wins the election, it’s clear it’s time for a change.

That’s why Workplace Fairness has added a new area to its website called Short-Changed: America’s Workers Are Giving More and Getting Less. This area offers a comprehensive look at many of the most important workplace rights issues today, including the growing income gap, the crisis in healthcare and retirement benefits, the imbalance between work and family, and a justice system that is closing its doors on the American worker.

Here are the topics we cover in more detail in Short-Changed, and why we think they’re so critical to workers today:

Short-Changed explains how America’s workers are giving more and getting less with every passing day. Get started with this overview of the issues that make it harder and harder for working people to get by, then find out more about each issue and what you can do to bring fairness back to the American workplace.



Help Wanted (jobs): Many jobs that allow blue- and white-collar workers to be part of the middle class and adequately support their families have gone away and are never coming back. Too many working people are now stuck in low-paying, dead-end jobs. Unemployment remains high, and the statistics do not even account for the millions of underemployed workers who struggle to get by or those who simply have given up looking for work. Find out more about the loss of good jobs.



Profits Before People (income gap): The income gap between corporate executives and the average worker is wider than ever and still growing. Corporate profits and executive salaries are surging, while workers are having difficulty just making ends meet. Millions of Americans must work two or even three part-time jobs to keep up with bills. Many of the jobs being created today lack benefits, the chance for mobility, and long-term job security. Find out more about income inequality.



Critical Condition (healthcare): In response to dramatic increases in healthcare costs, employers are reducing benefits for workers and their families, or shifting costs to employees through increased employee contributions, co-pays and deductibles. Some employers have been forced to eliminate benefits entirely, leaving workers and their families without coverage. Some employees may never recover from the financial devastation of a major injury or illness. Find out more about the healthcare crisis.



Broken Promises (retirement): Will today’s workers be able to retire comfortably, if at all? Traditional pensions are quickly becoming a thing of the past, as corporations reduce or eliminate them to save costs. Some workers lost their retirement security to corporate scandals and declines in the stock market. Social Security may not provide an adequate safety net when today’s younger workers approach retirement. Find out more about retirement insecurity.



Nobody Home (work & family): Workers are finding it increasingly difficult to balance their work and family responsibilities. A majority of workers say they already do not have enough time with their families, yet many employers are further restricting programs such as paid family leave, flexible work hours, job sharing, telecommuting, and compressed work weeks which allow employees to harmonize their work and family life. Find out more about work and family balance.



Hidden Barriers (discrimination): Although some of the worst employment discrimination was eliminated by the 1964 Civil Rights Act and other anti-discrimination laws, there has been strong resistance to enforcement of existing laws and political opposition to remedial affirmative action. As discrimination has become more subtle and more difficult to identify and correct, many Americans continue to endure unfair and unlawful discrimination in the workplace. Find out more about workplace discrimination.



In Harm’s Way (health & safety): Having a job shouldn’t be a matter of life or death, yet each year millions of workers get killed, injured, or seriously ill at work. Workplace safety regulation has become virtually non-existent, while the frequency of repetitive stress injuries climbs due to a lack of ergonomic standards. The workers compensation system fails too many workers, who are discouraged from filing claims or retaliated against once claims are filed. Whistleblowers who report the most egregious health and safety violations can quickly find themselves out of a job, with very little recourse. Find out more about occupational health and safety.



No More Secrets (privacy): American employers increasingly show a lack of regard for the personal privacy of employees. Workers who endure telephone and computer monitoring, video surveillance, drug testing, medical and genetic screening, credit checks, or lifestyle regulations have few protections from these unwarranted invasions of their privacy. Find out more about privacy in the workplace.



Hidden America: undocumented workers: Undocumented workers are among the most vulnerable and exploited workers in America. They are often victims of unpaid wages, dangerous conditions and uncompensated workplace injuries, discrimination, and other labor law violations. Undocumented workers who try to stand up for their rights routinely face physical and immigration-related threats and retaliation. Find out more about undocumented workers.



Divide and Conquer (unions): The dramatic decline in union membership over several decades–in large part the result of deliberate, effective, and often illegal tactics by employers–has a substantial negative impact on the welfare of all American workers. Organized labor not only protects and strengthens the rights of union workers, it is the most powerful voice for fair treatment of all employees and the most effective check on corporate influence in Congress and legislatures across the nation. Find out more about the attack on unions.



Here Today, Gone Tomorrow (legal protections): While union members and government employees generally have some protection from unfair treatment by their employers, and certain forms of discrimination are illegal in any workplace, most workers are employed “at will” and therefore have no rights when they are treated unfairly or terminated without a good reason. Find out more about diminishing legal protections for workers.



Case Closed (court access): Most workers believe that if their employers violate the law, their rights will be protected and preserved by the courts. Many now find, however, that the courthouse doors are closed to them as a result of mandatory arbitration and conservative judges who are not sympathetic to employee lawsuits. Find out more about the obstacles to justice for workers.

Each issue area is designed to build awareness of the need for change, with resources for further information and action. Short-Changed already has a wealth of information and it’s going to get better and better as we add new features such as multimedia presentations of real life stories. We also hope that you will help us build Short-Changed. As you see good resources–books, articles, statistics, and even cartoons—that are relevant to the twelve topics contained in Short-Changed, please submit them to us at shortchanged@workplacefairness.org. (Or just tell us what you think about Short-Changed at the same address.) That way, we can keep Short-Changed chock full of the latest and greatest resources out there (which we intend to do anyway, but we need your help.)

After reading Short-Changed, you’ll see that the evidence that the vast majority of Americans are giving more and getting less from their jobs isn’t just clear, it’s overwhelming. But there’s something you can do right now (or by Tuesday, anyway) and that’s vote!

But, you say, “I’m busy on Tuesday, trying to make a living.” In most of the country, that’s not an excuse not to vote. We have also included on our site information about voting rights in each state of the union. See your voting rights. In 30 states, you have a right to take time off from work to vote. Depending on state law, your employer could be fined or lose its corporate charter if you’re denied permission to vote. And even in the states where there is no law, your employer may not want the bad publicity that could result when employees are denied the right to vote. If you need information about where to go on Election Day, or anything else to do with voting, we have that too. See JustVote, which contains a wealth of information about all you need to know to just vote on Tuesday.

See it for yourself, and tell everyone who cares about workplace fairness to check out Short-Changed at www.workplacefairness.org/sc. Together we can help turn the tide for the working people of America!

The Long and Winding Road: Workers Finally Will Experience Tax Relief (and Fairness)

Thursday, October 14th, 2004

Buried at page 343 in the midst of a corporate tax bill spanning more than six hundred pages may very well be the most significant piece of civil rights legislation passed in the last decade (and certainly in the past four years). While the existence of this particular tax break might not mean very much to reporters covering the most significant provisions of this bill, it means all the world to workers and their advocates who seek to be “made whole” after enduring discrimination, harassment, and other illegalities in the workplace. Efforts to include this piece of legislation into a bill primarily designed for pet projects simmering on Capitol Hill for years is a true example of “The Little Engine that Could.”

Since 1997, the National Employment Lawyers Association (NELA, our allied organization) has been combatting a tax problem that might seem relatively obscure at first blush, but can be financially devastating to those who fight against discrimination and win. Put simply, a person who is successful in an employment discrimination or civil rights case would, in many states, not only pay taxes on the portion of the award they received to compensate them for their injuries, but on the money they never saw: the fees and costs their attorneys receive for handling their case. Of course the attorneys pay taxes on that money too, so the same amount of money is taxed twice. This may not sound like a huge problem, but there are several reasons why it is.

First, it prevents those who fight discrimination from getting full compensation for what they’ve gone through, so they’re not in the same position as they would have been absent discrimination. Second, given the rigors of bringing a lawsuit, for example, being asked by your employer’s lawyer about every detail of your work experience and often the most intimate aspects of your personal life; waiting for years to receive some small measure of justice; and worrying whether your career will be over as a result of challenging your employer–any reasonable person would ask why go through all that and not even be made whole? Third, the “double tax” costs everyone more, which makes cases drag on longer and more difficult to resolve, while crowding our courts. Finally, due to the way our tax system works, there are people who go through the process and win, but still owe the IRS more money than what they received from their employer. That’s right: it’s possible to owe money as a result of winning your case.

This problem first came to more widespread public attention in 1997 as a result of a bill that became law in 1996: the Small Business Job Protection Act. A relatively obscure provision in this tax bill decreed that workers would now pay income taxes on the part of their award that compensates them for their non-economic damages (emotional pain and suffering). Workers filing tax returns in early 1997 found that not only were they paying those taxes for the first time, but also income taxes on the portion of the award for fees and costs that went to their attorneys. These individuals faced astronomical tax bills which were far higher than was ever contemplated.

The IRS took the position that the money going to the attorneys was in essence money received for extinguishing a debt. If someone gives you money that you then must use to pay someone else, that’s still considered income. That rationale, however, didn’t take into account that without the attorney’s assistance, there most likely wouldn’t be any income at all, as it generally takes the attorney’s skills to bring cases to a successful fruition in the first place.

Some courts adopted the “joint venture” rationale, which kept individuals from being taxed on the attorney’s portion of the award, but in a majority of the court cases where the issue was considered, the IRS’s position carried the day. And even where the law wasn’t clearly established and courts had not yet spoken, taxpayers faced the worry and uncertainty of potentially even more litigation down the line–against the IRS, a prospect perhaps even more frightening than taking on one’s employer.

While the battle for tax fairness continues to be fought in the courts, including the U.S. Supreme Court which will hear two cases in November, efforts were underway to persuade Congress to grant tax relief once and for all. The first was in 1997, when the late Rep. Gerald Solomon introduced the Employment Discrimination Award Tax Relief Act, introduced as a personal favor to his friend, the late Truman Crabbe, who was among a group of 32 age discrimination plaintiffs first hit with this problem. The Solomon bill garnered only three cosponsors quietly went away when Rep. Solomon left Congress in 1998.

In 1999, Rep. Deborah Pryce of Ohio, after being urged to address this issue by former NELA President Fred Gittes of Columbus, introduced the first version of what is now known as the Civil Rights Tax Relief Act. It was then called the Civil Rights Tax Fairness Act, and had 69 cosponsors by the end of 2000. In 2000, the bill was first introduced in the Senate, by Sen. Charles Grassley of Iowa, who learned about the experience of one of his constituents, the client of NELA member Victoria Herring of Des Moines. Since neither the House nor the Senate version of the bill was passed before the end of the 106th and 107th Congressional sessions, it was necessary to reintroduce the bills in 2001 and in 2003.

The original version of the Civil Rights Tax Relief Act included three separate components: 1) to end the double taxation of attorneys fees, 2) to allow income averaging so that people receiving lump sum awards for their back pay didn’t pay higher taxes, and 3) to eliminate the tax on non-economic damages in discrimination cases. While all three changes to the law were critical, along the way it became clear that the attorneys’ fee provision was the most likely one to be passed. Everyone understood the unfairness of double taxation and being taxed on money that you never received. The other two provisions, however, were a tougher sell on Capitol Hill. Although all vexing problems, the attorneys’ fees issue captured Congress’ interest.

The battle for the CRTRA was never easy, and rarely followed a traditional path. Those involved worked extremely hard to put together a bipartisan coalition of supporters, both inside and outside of Congress. The CRTRA’s Congressional cosponsors included the most liberal and conservative members of their respective houses, while it’s supporters were clearly “strange bedfellows.” Not many bills could claim the simultaneous support of the U.S. Chamber of Commerce, trial lawyers, and civil rights groups, who understood the importance of the bill for the varied constituencies represented in the broad coalition. Together, these groups presented a compelling argument for tax fairness when walking through the halls of Congress.

In Spring 2003, the Senate passed a provision to address the double taxation of attorneys’ fees as part of President Bush’s economic stimulus package. Unfortunately, the House version of the package did not include the attorneys’ fees fix and so the matter was left for another day. This year, there was again demonstrable progress in moving this part of the CRTRA through Congress. In May, the Senate passed a tax bill which included the attorneys fees provision of the CRTRA. Finally, after so many years of lobbying Congress, one provision of the CRTRA was “in” a viable bill. It was not part of the tax bill that passed the House of Representatives, and efforts to include it during the joint House-Senate conference were rejected. (See blog entry of 5/21/04.) So, it was necessary to keep lobbying for the inclusion of the attorneys fees provision in another tax bill. Since Congress adjourned in August without passing any more tax bills, it was uncertain whether there would be another possibility to include the CRTRA in another bill before Congress recessed again for the November elections.

There was immense pressure on Congress, however, to resolve a tariff issue that had subjected the U.S. to significant fines from the World Trade Organization. Since the matter had to be resolved by Congress to avoid further escalation of the fines imposed on the U.S., it was more likely than not that Congress would pass one last tax bill. As it turned out, over the Columbus Day weekend, a consensus emerged from the House and Senate on the American Jobs Creation Act of 2004. By Monday, October 11, both houses of Congress had passed the 600-plus page bill that included the most important provision of the Civil Rights Tax Relief Act: ending the double taxation of attorneys’ fees. (House vote/Senate consent agreement)

Once signed into law by President Bush, individuals who are successful in various employment cases can take what is known as an “above-the-line” deduction of their attorneys’ fees. Those who itemize may be familiar with the difference between “above-the-line” deductions, such as certain business expenses, which are 100% deductible from income, and “below-the-line” deductions. “Below-the-line” deductions are subject to certain limitations, the most significant of which is they are not applicable to the calculation of the alternative minimum tax. This equalizes the tax treatment of legal fee deductions for both workers and employers, as defendant employers were already allowed to fully deduct the cost of their legal defense.

One unfortunate note: it is not retroactive. In fact, it is doubly prospective, in that it applies to cases where a settlement agreement or verdict is reached after the effective date (which is when the President signs the bill into law), and the attorneys’ fees are also paid after the effective date. If possible, anyone currently in settlement negotiations should wait to finalize the agreement until the President signs the bill, as the effective date of the settlement could be very critical for tax purposes. All versions of the CRTRA contained some measure of retroactivity, to prevent the judicial system from grinding to a halt while parties awaited the outcome of the legislation, and to provide tax fairness to as many workers as possible. Thankfully, this bill has moved very quickly, with the President expected to sign the bill at any time. (As was pointed out in last night’s presidential debate, President Bush is the first president in a hundred years not to veto a bill during his presidency.)

Congress has always been resistant to retroactive tax laws, regardless of how compelling the reason for retroactivity might be, because it complicates tax calculations and invites a surge in substitute filings. There is still a possibility that the Supreme Court’s upcoming decision in the two pending tax cases, (see blog entry of 03/30/04) could resolve the cases in a way that allows for retroactivity for some of those who have already been harmed, so that is the best that can be hoped for at this point. Since the bill also doesn’t contain the non-economic damages and income averaging provisions that were part of the original CRTRA, that battle will have to wait for another day and another more receptive Congress.

This civil rights battle for tax fairness would not have been possible without an outpouring of effort by many people. The efforts of Bruce Fredrickson of Washington, DC, who devoted thousands of hours (and dollars) to this cause over the last five years, and the law firm of Bendich, Stobaugh & Strong, of Seattle, Washington, which provided key financial support for the CRTRA’s lobbying effort, are particularly noteworthy. This victory is also the result of hard work by every single advocate who educated their clients, provided financial support, wrote letters, and otherwise supported this historic “movement for tax fairness.”

The commitment and passion of those workers who are most affected by the Civil Rights Tax Relief Act was critical to this successful outcome. Politicians listen to their constituents! So, if you ever supported the Civil Rights Tax Relief Act by writing, calling or visiting your members of Congress or educating someone about the intricacies of the tax code, you played a role in this tremendous victory. And whether you call it “fairness” or “relief,” this bill has done more to promote civil rights and reduce discrimination than any legislation in the last several years, so it truly is a victory worth celebrating.

More information:

Law.com article: Corporate Tax Law Wipes Out ‘Double Taxation’ on Contingency Fees

NELA Amicus Brief in Banks and Banaitis

Got Health Insurance? You Don't Know How Good You Got It

Friday, October 1st, 2004

If you have health insurance provided by your employer, you can consider yourself among the lucky, because there are over eighty-five million Americans who went without insurance in the last two years. Workers used to be able to take for granted that health insurance coverage would come with a full time position, but that assumption is fading, as employers also attempt to cope with spiraling health care costs. Even those workers who still have health coverage are finding that it is costing them more: higher employee contributions, deductibles, and co-pays all net workers less coverage than ever before. Quite simply, workers who can are paying more and getting less. Workers who can’t pay must go without, with the devastating personal and societal consequences that can entail.

It used to be that if you got a new job, part of your consideration was how good the health benefits were. Now, the consideration is more likely to be whether the job comes with benefits at all. Over five million jobs that used to come with health insurance benefits prior to 2001 no longer carried such coverage in 2004: a decline from 64% to 61%. (See Washington Post article.) As more jobs are created in the service sector and by smaller businesses, it is unlikely that this trend will change.

For workers who have health insurance benefits, it is costing them more. According to a recent study by the nonpartisan health care watchdog group Families USA, health care costs have outpaced wages by a 3 to 1 ratio in the last four years. The cost of health insurance premiums rose by nearly 36 percent on average from 2000 to 2004 in 35 states, while average earnings rose just 12 percent over the same time. (See New York Times article.) For workers struggling to get by on wages that are barely keeping pace with inflation, you’re damned if you do and damned if you don’t. You cannot afford to be without insurance, if it’s made available to you, but you can’t afford to have it taking up such a significant portion of your take-home wages. The number of Americans who had total health costs that consumed more than one-quarter of their earnings rose from 11.6 million in 2000 to 14.3 million in 2004 — an increase of almost 23 percent. The overwhelming majority of these people (10.7 million) had health insurance. (See New York Times article.)

Who gets hit hardest by these trends? Of course, it’s the lowest-wage workers who can least afford adequate health care, but who make too much to be eligible for Medicaid. “The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum-wage worker,” says Drew Altman of Kaiser Family Foundation. Clearly, then, any family who is primarily supported by a full-time minimum wage worker is not going to have insurance coverage, especially considering that the kind of jobs that pay no more than the minimum wage are also unlikely to offer adequate health benefits. But the problem is not restricted to low wage workers. A recent Kaiser analysis of recent economic and insurance trends reported that

Most (three quarters) of the increase in the number of uninsured adults occurred among those below 200% of the federal poverty line. This occurred both because of a large growth in the number of low-income adults as well as an increase in the rate of uninsurance. This does not mean that the middleclass was not affected, rather many in the middle income range became part of the low-income population during this period.

(See The Economic Downturn and Changes in Health Insurance Coverage, 2000-2003.) Health coverage may very well represent the difference between being part of the middle class, or remaining one of the working poor. This phenomenon is not without a cost, however. The same Kaiser report shares the “real success story…the fact that children did not lose

health coverage.” But the explanation makes clear that taxpayers are instead picking up the tab: the decrease in children covered by family health coverage offered by employers was offset by an increase in the number of children eligible for enrollment in Medicaid and the State Children’s Health Insurance Program (SCHIP). Working adults without health coverage also often end up being treated in public hospitals, where their care is also subsidized by all taxpayers rather than their employers.

Both presidential candidates understand the importance of health care reform, and the need for solutions that enable more working adults to have adequate health care coverage. Their policy proposals are very different, however.

  • Sen. John Kerry would encourage employers to offer their workers health insurance by having the federal government reimburse them for 75 percent of the cost of their most expensive beneficiaries – those whose medical costs are $50,000 or more a year. He would also create a new Congressional Health Plan that would allow both individuals and businesses to buy US-subsidized coverage.
  • President Bush’s plan to help cover the currently uninsured revolves around tax credits. He proposes a new credit for low-income people of $1,000 – $3,000 for families – that could be used to help buy health policies on the open market. Bush also wants to expand Health Savings Accounts, which currently allow taxpayers who purchase high-deductible insurance plans to sock away cash tax-free, and later withdrawn to help pay their correspondingly high out-of-pocket healthcare costs. This expansion would occur in part by providing small businesses a tax credit of $200 per person ($500 for families) for HSA contributions.

(See Christian Science Monitor article.) It is clear that whoever is elected President next month will have to address the health care system, as health care coverage is not merely inadequate, but increasingly out of reach for a significant number of American workers. Voting may be the single most important thing that workers can do right now to immediately affect the quality of their own and their family’s future health care. So please be sure that you are registered to vote (time is running out in most states), and familiar with the candidates’ health care positions: it’s no exaggeration to say that it could be a matter of life or death.

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