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Archive for July, 2017

New CFPB Rule – a Poster Child for Regulation

Tuesday, July 25th, 2017

The new CFPB rule is critically important in its own right, but it is also interesting to view the battle over this rule as a microcosm of the fight we so often see between free market devotees and fans of regulation. Bankers, credit card issuers, payday lenders and the Chamber of Commerce have urged for many years that consumers should be free to “choose” to resolve disputes through individual arbitration – supposedly a quicker, cheaper better mode of dispute resolution as compared to litigation and class actions.  In contrast, those who oppose forced arbitration assert that such arbitration is unfair for consumers and bad for society as a whole.  Ultimately this battle between free marketeers and pro-regulation forces turns on principles of economics, psychology, and political philosophy, as I have detailed elsewhere.

While those who oppose regulation urge that financial consumers should be free to choose to resolve future disputes through individual arbitration rather than through class actions, empirical studies and common sense tell us that consumers do not knowingly choose a contract based on the arbitration clause.  We do not focus on such clauses, we do not usually understand them and our human psychology leads us to be overly optimistic that no disputes will arise in any event.  Nor would it make sense for all consumers to spend the time and energy to try to figure out such clauses.

We also cannot count on the miracle of Adam Smith’s invisible hand to ensure that financial service companies act in the best interest of consumers.  The lack of perfect competition, customers’ lack of complete information, the impact of clauses on third parties and the unequal initial distribution of resources all ensure that the market will not miraculously do what is best for customers.

Philosophically, how can one argue with a straight face that clauses imposed unknowingly in small print contracts are supported by principles of freedom or autonomy?  As Professor Hiro Aragaki has explained, perhaps autonomy supports freedom from contracts of adhesion more than freedom of contracts of adhesion.

So, we need regulation. What should the regulation look like? Is forced arbitration the quicker, cheaper, better form of dispute resolution that its advocates suggest? Do class actions help consumers or do they only enrich the lawyers who bring them? The CFPB used extensive empirical investigation to answer these questions.  It found that (1) financial consumers are typically unaware of the arbitration clauses to which they are subjected; (2) only miniscule numbers of financial consumers actually bring claims in arbitration; and (3) financial class actions, e.g. over improper check bouncing charges, have brought billions of dollars of benefits to millions of consumers and also imposed non-monetary sanctions, all helping to deter future illegal conduct.  Thus, CFPB concluded that, at minimum, it should prevent financial companies from using arbitration to insulate themselves from class actions.  It issued the rule to achieve that end.  The new CFPB rule also requires companies to submit additional information to CFPB regarding their arbitration programs so that CFPB can conduct additional analyses and decide whether more/different regulation may be needed.

Hurrah for the CFPB!   Its new rule is supported by psychology, economics, and political philosophy.  Nonetheless, the new rule is under serious threat.  Congress may consider proposals to gut the rule as early as next week, and the Acting Comptroller of the Currency is threatening to void it on the ground that allowing financial consumers to sue in class actions would threaten the soundness of the banking system.

The CFPB says otherwise, and expresses surprise that such a claim is being made at the tail end of a very public three year study.

Let’s now all take what steps we can to preserve this rule against the attacks that are coming in Congress, from elsewhere in the bureaucracy, and in the courts.

The Consumer Financial Protection Bureau (CFPB) just issued a new rule prohibiting financial service providers from using forced arbitration to prevent their customers from suing the company in class actions.  While many of us believe this rule is a “great win for consumers,” others are trying to gut it in Congressin the courts, or through administrative action by the Comptroller of the Currency.

Eight years after the last minimum wage increase, Democrats want to give 41 million workers a raise

Monday, July 24th, 2017

The federal minimum wage has been stuck at $7.25 an hour since July 24, 2009—for eight years. Thanks to Republicans in Congress and the White House, it won’t be going up any time soon, and though many states have raised their minimum wages, 21 states remain stuck at $7.25 an hour. That’s a poverty wage. A new analysis from the National Employment Law Project shows what the Democrats’ Raise the Wage Act of 2017—which would take the minimum wage up to $15 by 2024, a gradual raise by any standard except the Republican “no raise ever” standard—would do for low-wage workers:

  • 20.7 million workers would see pay raises in the 21 states whose minimum wages are stuck at $7.25.
  • Fully half of the 41.5 million workers who would see pay increases are in the 21 states stuck at $7.25.
  • In the 13 other states with minimum wages of less than $9, nearly 13 million more workers also would see their hourly pay rise.
  • Of all the workers nationwide who would receive raises, 8 in 10 are in the 34 states with the lowest minimum wages.
  • In 19 of the 21 states at $7.25, more than 30 percent of wage-earners would benefit from raising the federal minimum wage to $15 by 2024; the highest share is in Mississippi, with 44.4 percent.

Republicans want these workers stuck at poverty wages. There’s no other serious explanation for their refusal to raise the minimum wage over the past eight years.

 This blog was originally published at DailyKos on July 24, 2017. Reprinted with permission.
About the Author: Laura Clawson is labor editor at DailyKos. 

On the CFPB’s Birthday, Stand Against Sharks

Friday, July 21st, 2017

July 21 marks the six-year anniversary of the Consumer Financial Protection Bureau, which was created in the wake of the Wall Street crime wave that led to the financial crisis of 2008.

The CFPB was first conceived by law professor Elizabeth Warren, now Senator Warren from Massachusetts, as an agency that could protect the American people from being mistreated, defrauded, and otherwise ripped off by powerful bankers who ran institutions that engaged in massive criminal behavior and yet never spent a day in jail.

It is a day to celebrate, and a day to fight.

Why Celebrate?

Why celebrate? Because, despite a number of attempts to tie its hands, the CFPB has been enormously successful. It has provided almost $12 billion in relief to 29 million victims of bank malfeasance.

It has provided nearly 50 million borrowers with new protections from dirty mortgage tricks – including surprise fees and mistreatment for those who fall behind in their payments.

The CFPB has rewritten credit card rules, saving customers more than $16 billion in hidden fees. It has helped stay-at-home spouses and Americans serving in the armed forces.

Why fight? Because Republicans – helped at times by some venal Democrats – are doing their best to gut the CFPB and leave consumers defenseless against the predators on Wall Street.

Inside the Shark Tank

Does the word “predator” seem too harsh a word for bankers? William Dudley, then President of the Federal Reserve Bank of New York, said in 2013 that Wall Street’s big banks suffered from “deep-seated cultural and ethical failures” and “the apparent lack of respect for law, regulation and the public trust.”

2015 survey of banker ethics found an extraordinary tolerance for corrupt behavior and “a marked decline in ethics” since the study was first conducted in 2012. More than one-third of bankers earning $500,000 or more per year said they “have witnessed or have first hand knowledge of wrongdoing in the workplace.”

One in four said they would break the law themselves if they could make $10 million or more by doing it.

Wall Street’s offenses include “price fixing, bid rigging, market manipulation, money laundering, document forgery, lying to investors, sanctions-evading, and tax dodging.”

At last count, banks had paid more than $200 billion in fines and settlements to settle fraud charges. Bank of America had paid more than $77 billion.

Checkered Citi and Chase

Citigroup, the megabank created with bipartisan cooperation from Republican Senator Phil Gramm and Clinton Treasury Secretary Robert Rubin (who later became the bank’s chief executive), had paid nearly $20 billion.

JPMorgan Chase CEO Jamie Dimon considers himself a worthy commentator on economic issues. But, under his leadership, his bank paid nearly $30 billion for crimes over a four-year period.

These include, according to an investors report, violations of the Bank Secrecy Act; money laundering for drug cartels; violations of sanction orders against Cuba, Iran, Sudan, and Liberia; violations of the Servicemembers Civil Relief Act; the fraudulent sale of unregistered securities and derivatives; bribery of state officials; and, obstruction of justice, including refusal to release documents in the Bernie Madoff case.

Voters Aren’t Fooled

new poll finds that “More than nine in ten Americans (91%) believe it is important to regulate financial services, including 71% who believe it is very important. Strong bipartisan majorities say financial regulation is very important.” That includes Democrats (81%), independent voters (75%), and Republicans (58%).

They’re right. When Trump budget director Mick Mulvaney boasts that the fiction he calls “MAGAnomics” will lead to economic growth of more than 3 percent per year, he doesn’t explain that we routinely had that level of growth until unregulated bank fraud led to the financial crisis of 2008.

If we let the Republicans deregulate Wall Street again, it will set the stage for another crisis.

Republicans Are a Shark’s Best Friend

These bankers may break the law – and be unpopular with voters – but they’ve still got friends on Capitol Hill. Right now Republicans like Sen. Tom Cotten are working to undermine the CFPB’s new arbitration rule, which is set to take effect in September.

This rule ends banks’ ability to force customers into arbitration, a process that’s skewed in Wall Street’s favor. The CFPB rule would make it possible for customers to once again file class-action suits. Given Wall Street’s deep pockets for attorney’s fees, class-action suits are one of the few tools customers have for defending themselves in court.

House Republicans also passed the so-called “Financial Choice Act” – “Financial Carnage Act” might be a better name – a bill that would gut the CFPB and strip away other consumer protections.

When the Republicans fight the CFPB, they’re standing with the student loan predators at Navient. That’s the loan servicing company the CFPB sued earlier this year for cheating borrowers of their rights. That means they’re standing against the 44 million Americans who owe more than $1.4 trillion in student debt.

When the Republicans fight the CFPB, they’re standing with the bankers who defrauded mortgage holders and fraudulently foreclosed on American families. That means they’re standing against the millions of Americans who currently hold more than $14 trillion in mortgage debt.

When the Republicans fight the CFPB, they’re standing with the payday lenders who have trapped hundreds of thousands of lower-income Americans into a debt trap that can lead to annualized interest rates of 300 percent. That means they’re standing against the estimated 12 million Americans who pay an average of $520 per year in interest on eight $375 loans. These borrowers would be protected by the CFPB’s proposed payday lending rules.

People’s Action is repeating its annual “shark week” tradition, which draws attention to  this year, with anti-payday lender actions timed to coincide with the Discovery Channel’s “shark week” programming.

The CFPB has provided an extraordinary amount of help to millions of Americans in just six years. Now it needs our help.

This blog was originally published at OurFuture.org on July 21, 2017. Reprinted with permission.

About the Author: Richard (RJ) Eskow is a writer and radio journalist who has worked in health insurance and economics, occupational health, risk management, finance, and IT. He is also a former musician.

As Media Focuses on Russia Collusion, Trump Is Quietly Stacking the Labor Board with Union Busters

Thursday, July 20th, 2017

It might not get as much press coverage as other Donald Trump administration calamities, but the U.S. president is set to appoint a known union buster to the National Labor Relations Board (NLRB), push the body to a Republican majority and reverse Obama-era protections that rankle Big Business.

On July 13, the Senate Health, Education, Labor and Pensions (HELP) Committee held hearings on Trump’s two NLRB selections and his deputy labor secretary pick. All three of these men are expected to be confirmed.

William Emanuel, one of Trump’s NLRB appointees, is a management-side attorney and a member of the conservative Federalist Society. He is also a shareholder of Littler Mendelson, an infamous union busting firmthat was most recently brought in by Long Island beer distributor Clare Rose to negotiate a contract full of pay cuts.

After being selected, Emanuel disclosed 49 former clients and declared he would recuse himself for up to a year if any of the companies found themselves in front of the NLRB. The list included multiple businesses that have clashed with the labor board, including JPMorgan Chase Bank, MasTec Inc, Nissan and Uber.

Uber’s ongoing skirmishes with the NLRB have, perhaps, been the most publicized. At the end of 2016, the ride-share company battled with the NLRB after the agency sent out subpoenas aimed at gleaning information about whether Uber drivers were statutory employees.

In 2016, Emanuel authored an amicus brief that defended class-action waivers in employment contracts. Workers often depend on class actions to fight sexual and racial discrimination, and their existence is an important part of upholding wage laws. The NLRB ruled that such waivers were illegal under Obama.

Emanuel was asked about Littler Mendelson’s anti-union work by Massachusetts Senator Elizabeth Warren. “You have spent your career at one of the country’s most ruthless, union-busting law firms in the country,” she said. “How can Americans trust you will protect workers’ rights when you’ve spent 40 years fighting against them?”

In response, Emanuel claimed that he would be objective whenever making decisions for the agency.

Emanuel is not the only appointee raising concern among workers’ rights advocates. Marvin Kaplan, another Trump nominee to the NLRB, is a public-sector attorney and current counsel to the commissioner for the Occupational Safety and Health Review Commission. The Kaplan pick excites business executives and their advocates, who envisioned him helping overturn Obama-era labor regulations.

At the time of the announcement, Kristen Swearingen, chair of the anti-union group Coalition for a Democratic Workplace, declared that “Marvin Kaplan will begin to restore balance to an agency whose recent and radical decisions and disregard for long standing precedent have injected uncertainty into labor relations to the detriment of employees, employers and the economy.”

The excitement is well-founded. Kaplan served as counsel for Republicans on the House Committee on Education and the Workforce. The New York Times reports, “The committee held hearings during his tenure scrutinizing prominent NLRB actions in which the witnesses skewed toward business representatives and other skeptics.” Kaplan also helped develop the The Workforce Democracy and Fairness Act, legislation that would kill a labor board rule that shortened the amount of time between when the board authorizes a workplace unionization vote and when the vote actually takes place. Since 2014, the number has been set at 11 days. But this act would increase it to at least 35, thus allowing more time for union efforts to be squashed. The legislation hasn’t passed in congress yet.

Concerns do not stop at the NLRB. Trump’s Labor Department nominee is Patrick Pizzella, a Federal Labor Relations Authority Member who was grilled by Minnesota Senator Al Franken on his ties to the infamous lobbyist Jack Abramoff. Pizzella worked with Abramoff during the 1990s to exempt the Northern Mariana Islands from federal labor regulations.

The Senate has only been in session for 10 days since the Pizzella and Kaplan nominations, and only four days since Emanuel’s. A group of civil rights and labor organizations sent the committee a letterasking for the hearings to be postponed. During her opening remarks, Sen. Patty Murray called Trump’s attempt to jam through the nominees without proper oversight “unprecedented.”

Roughly 10 workers representing the pro-labor organization Good Jobs Nation stood up during Thursday’s hearing, put blue tape over their mouths and walked out of the room in silent protest. Groups like Good Jobs Nation are concerned about a pro-business majority in the agency amidst Trump’s proposed cutsto the Labor Department.

Trump is putting the NLRB in the position to undo a number of important Obama-era labor decisions. His NLRB could potentially reverse rulings that made it easier for small groups of workers to unionize, established grad students as employees, put charter school employees under NLRB jurisdiction, and held parent companies jointly liable for with franchise operators who break labor laws. Writing about the imminent anti-union crackdown on this website in May, Shaun Richman wrote, “Unions and their allies should be convening research teams to plot out a campaign of regulatory and judicial activism. That work should begin now.”

Early in the hearing, Washington Senator Patty Murray asked Emanuel if he had ever represented a union or a worker. Emanuel explained that he worked exclusively for management for his entire career. “You just don’t do both,” he told her. “It’s not feasible.”

This piece was originally published at In These Times on July 14, 2017. Reprinted with permission.

About the Author: Michael Arria covers labor and social movements. Follow him on Twitter: @michaelarria

Republicans Working Against Workers

Wednesday, July 19th, 2017

Ever-worsening is the chasm between the loaded, who luxuriate in gated communities, and the workers, who are hounded at their rickety gates by bill collectors.

Even though last week’s Bureau of Labor Statistics report showed unemployment at a low 4.4 percent, wages continue to flatline, killing both opportunity and the consumer economy. Meanwhile, corporations persist in showering CEOs and their cronies with ever-fatter pay packages and golden parachutes when they mess up.

This would all be sufferable if workers felt those in control in Washington, D.C. were striving to turn it all around. But the Republicans, who boast majorities in both houses of Congress, are just the opposite.

Their legislation shows they’re indentured to big business. Ever since they took power, they’ve labored tirelessly to destroy worker protections. They’ve swiped money from workers’ ragged pockets and handed it to 1 percenters on a silver platter – a plate bought with massive campaign contributions by the 1 percent.

The most blatant example is Republicans’ so-called health insurance bill. Both the House and Senate versions would strip health care from tens of millions of Americans while granting corporations and the nation’s richest tax cuts totaling $700 billion.

The Tax Policy Center determined that households with incomes above $875,000 a year would get 45 percent of those benefits. For the wealthiest, the annual tax cut would be nearly $52,000, a big fat break that is almost exactly the entire household income for the median American family.

In other words, Republicans want to hand millionaires a check that equals what a typical family earns by working an entire year.

Those massive tax breaks for the rich cost workers big time. Republicans’ so-called health insurance bill slashes Medicaid, so workers’ frail, elderly parents will lose the coverage they need to remain in nursing homes, babies born with cancer and crippling congenital diseases will be cut off care, and relatives who are victims of the opioid epidemic will be denied treatment. But, hey, the rich get richer!

Meanwhile, Republicans are pushing legislation in Congress to hobble labor unions and suppress wages. One House bill would delay union elections, giving corporations more time to bully and fire workers who consider joining. This proposed legislation would also stop workers from organizing small groups instead of the entire roster of employees.

Yet another GOP proposal would change the definition of democratic election. As it is now, a congressional candidate wins when he or she receives the highest number of votes cast. Candidates aren’t deemed losers if they receive votes from fewer than half of all potential voters.

Securing ballots from more than half of potential voters would be a very hard standard to meet because in many elections little more than a third of eligible voters go to the polls. In the 2016 Presidential election, 58 percent of potential voters exercised their franchise. That means neither Donald Trump nor Hillary Clinton would have won under the more than 50 percent of eligible voters standard.

Even so, the bill under consideration in Congress would impose that standard on unions. When workers want to form a union, this legislation would require that they get positive votes from more than half of all eligible workers, not more than half of those who actually vote.

It is a standard no politician would want to be held to, but Republicans are willing to require it of workers to prevent them from organizing and bargaining jointly for better wages and working conditions.

At the bidding of corporations, Republicans are working against workers because labor organizations succeed through concerted action in wresting from fat cat CEOs a more fair share of the fruit of workers’ labor. Workers in labor unions receive higher wages, better health benefits and pensions and safer conditions.

When more workers were unionized, the space between rich and poor was more like a crack than the current chasm. In the 1950s, 33 percent of workers participated in labor organizations. Now it’s 10.7 percent. In the ’50s, the ratio of CEO-to-worker pay was 20-to-1. That means for every dollar a worker made, the CEO got $20. Now the ratio is 347-to-1. For every dollar a worker earns, the top dog grabs $347. CEOs of S&P 500 corporations pulled down an average of $13.1 million in total annual compensation in 2016, while their typical worker received $37,632.

The high point of unionization in America, the 1950s, was the low point in income inequality. It is called the time of the great compression. And a new study published by the National Bureau of Economic Research reaffirms that unionization produced better wages.

In a report titled “Unions, Workers, and Wages at the Peak of the American Labor Movement,” scholars Brantly Callaway of Temple University and William E. Collins of Vanderbilt University analyzed new data and determined “the overall wage distribution was considerably narrower in 1950 than it would have been if union members had been paid like non-union members with similar characteristics.”

They go on to say, “Our historical interpretation is that in the wake of the Great Depression, workers sought and policymakers delivered institutional reforms to labor markets that promoted  unions, reduced inequality, and helped lock in a relatively narrow distribution of wages that lasted for a generation.”

That time is gone. Unions have been declining for decades, largely as a result of onerous requirements legislated by Republicans. As unions shrank, so did worker bargaining power. The result is that while workers’ productivity increased, their wages stagnated for the past three decades.

Still, Republicans are squashing unions even more by, for example, reversing a rule requiring corporations to report when they hire union busters to strong-arm workers into voting against organizing.

And Republicans are working hard on other measures to ensure workers make even less money. For example, Missouri Republicans reversed a minimum wage increase in St. Louis and prohibited the state’s cities from requiring union-level wages on public construction projects.

In addition, in Washington, the Republican administration refused to defend in court a new rule that would have made millions more workers automatically eligible to receive time-and-a-half pay when they work overtime.

If workers feel like the system is rigged against them, that’s because it is. Republicans working at the behest of CEOs and the U.S. Chamber of Commerce have created a government by corporations for corporations.

And none of the government welfare and benefits that corporations and one percenters got for themselves in this process ever trickled down to workers.

This blog was originally published at OurFuture.org on July 14, 2017. Reprinted with permission.

About the Author: Leo Gerard is the president of the United Steelworkers International union, part of the AFL-CIO. Gerard, the second Canadian to lead the union, started working at Inco’s nickel smelter in Sudbury, Ontario at age 18. For more information about Gerard, visit usw.org.

Washington state gets paid family leave

Tuesday, July 18th, 2017

 Paid family leave is becoming law in Washington state. The state legislature passed and Gov. Jay Inslee has signed a law giving workers up to 12 weeks of paid family leave for birth, adoption, or the worker’s own or a family member’s medical condition, and up to 16 weeks in a year:

The Washington state program would benefit low-wage workers because those earning less than half of the state’s weekly average would receive 90 percent of their income—to a maximum of $1,000 per week. The benefits are based on a percentage of the worker’s average weekly wage and the state’s weekly average wage, which was $1,133 in 2016.

The program is largely funded by workers, who will pay a premium of 0.4 percent of their wages each paycheck into a state-run insurance fund. This would cost a minimum-wage worker about 3 cents an hour, according to the bill’s sponsor. Employers are responsible for picking up at least 55 percent of the medical leave premium—or more if they choose to do so.

“This new law is an affordable and predictable solution to providing an important benefit for life’s emergencies,” Sara Reilly, co-owner of Darby’s Café and Three Magnets Brewing Co. in Olympia, Washington, said in a statement.

How’s that for a much-needed piece of good news? But of course every time a state or city passes a minimum wage increase, paid sick leave, or paid family leave, it’s a reminder of how far short our federal laws fall, and how much of a fight we have to elect Democrats to Congress and the presidency before we can change this.

 This blog was originally published at DailyKos on July 8, 2017. Reprinted with permission. 
About the Author: Laura Clawson is labor editor for DailyKos. 

Working People Need to Know If We Can Trust Donald Trump’s NLRB Nominees to Protect Our Freedoms

Monday, July 17th, 2017

President Donald Trump chose two nominees for the National Labor Relations Board whose commitment to the freedom of working people to come together and negotiate is seriously in doubt. These two men, Marvin Kaplan and William Emanuel, have records of actively trying to strip working people of their freedoms.

Republicans are rushing to get these nominations through, but it is imperative that the Senate uses upcoming hearings and meetings to find out whether these nominees will side with working people or the richest 1% of Americans. NLRB decisions and actions have a real impact on the lives of working people, particularly the ability to join together with co-workers to advocate for positive change.

Of the nominations, AFL-CIO President Richard Trumka said:

Marvin Kaplan has never practiced labor law, and his experience comes from crafting legislation for politicians that rigs the rules against working people. William Emanuel has a long record of practicing labor law on behalf of employers, most recently at one of the most infamous union-busting law firms in the country. On their face, the resumes of both nominees appear to be in direct conflict with the mission of the NLRB.

Emanuel, a member of the staunchly anti-working people legal organization,  the Federalist Society, has extensive experience representing employers in collective bargaining, union elections and unfair labor practice proceedings under the National Labor Relations Act. Recently, he filed a brief before the U.S. Supreme Court arguing that employers should be allowed to require employees to waive their right to file class-action lawsuits or any other method of joining with others in seeking relief for rights violations. Emanuel has directly worked on numerous issues currently before the NLRB, raising serious questions about his ability to be impartial on those cases.

Kaplan hasn’t ever practiced labor law. His only related experience is in staffing a couple of Republican, anti-worker committees in Congress and helping run a series of oversight hearings criticizing the NLRB under President Barack Obama. He drafted legislation to overturn several NLRB actions that strengthened the freedom of working people join together. Like Emanuel, Kaplan has actively worked on numerous issues he would have to rule on if confirmed to the NLRB, calling into question his own impartiality on those cases.

This blog was originally published at AFLCIO.org on July 11, 2017. Reprinted with permission.

About the Author: Kenneth Quinnell is a long-time blogger, campaign staffer and political activist. Before joining the AFL-CIO in 2012, he worked as labor reporter for the blog Crooks and Liars. Previous experience includes Communications Director for the Darcy Burner for Congress Campaign and New Media Director for the Kendrick Meek for Senate Campaign, founding and serving as the primary author for the influential state blog Florida Progressive Coalition and more than 10 years as a college instructor teaching political science and American History. His writings have also appeared on Daily KosAlternet, the Guardian OnlineMedia Matters for AmericaThink ProgressCampaign for America’s Future and elsewhere.

Jimmy John’s Fired Workers for Making a ‘Disloyal’ Meme. A Court Just Ruled That’s Okay.

Friday, July 14th, 2017

In a decision emblematic of the new climate of Trumpian governance, a federal appeals court in St. Louis ruled on July 3 that it is acceptable for the boss of a fast-food chain to fire workers for the sin of being “disloyal.”

The U.S. Court of Appeals for the Eighth Circuit reversed a ruling issued by the Obama-era National Labor Relations Board (NLRB) in a case spawned by a labor organizing drive at the Jimmy John’s fast-food chain. The court held that Miklin Enterprises, the owner of Jimmy John’s franchises in Minneapolis, had the right to fire six pro-union advocates because they demonstrated “disloyalty” by distributing flyers in 2011 that implied the company was selling unsafe food contaminated by employees obliged to work while sick with the flu.

The organizers designed and distributed memes that showed images of identical Jimmy John’s sandwiches. One was “made by a healthy Jimmy John’s worker,” the other by a “sick” worker. “Can’t tell the different?” the poster continued. “That’s too bad because Jimmy John’s workers don’t get paid sick days. Shoot, we can’t even call in sick. We hope your immune system is ready because you’re about to take the sandwich test.”

The Minneapolis union campaign, launched by the Industrial Workers of the World (IWW or ‘Wobblies’), has been high-profile from the start. First erupting in 2010, the effort quickly developed into an intense legal fight at the NLRB before advancing to the federal courts. It even spilled over into the U.S. Congress in 2014 with the revelation that Jimmy John’s routinely required its low-paid sandwich makers to sign questionable “non-compete agreements.”

Threatened with punitive action by the attorneys general in several states, Jimmy John’s rescinded its non-compete policies in 2016, but not before the company’s reputation had been tarnished.

Like the non-compete agreements, the July 3 court decision is an unwarranted attack on labor rights, says William B. Gould IV, a labor law professor at Stanford University and former chairman of the federal labor board.

“The first thing that strikes you is how archaic this feels,” Gould tells In These Times. “The legal basis is from a case in the 1950s when people had a whole different concept of loyalty owed to their employer.

“In those days,” Gould continues, “the assumption was that loyalty was a two-way street: You were loyal to the company and the company was loyal to you. Now, with Uber and Lyft and the others, companies are even refusing to admit that you are one of their employees, so there isn’t much talk about loyalty owed to the employer anymore.”

The July 3 decision turns on the interpretation of ‘loyalty’ articulated in the 1953 Supreme Court case National Labor Relations Board v. Local Union 1229 International Brotherhood of Electrical Workers, known as “Jefferson Standard” for short. Earlier in the process of the more recent NLRB case, the labor agency’s Obama appointees had ruled that the firing of the workers was an illegal violation of their rights to form a union. But the appeals court decision reversed that decision, asserting that the disloyalty displayed by the pamphlets gave the employer the right to fire the workers, Gould explains.

The court stated, “(W)hile an employee’s subjective intent is of course relevant to the disloyalty inquiry—”sharp, public, disparaging attack” suggests an intent to harm the Jefferson Standard principle includes an objective component that focuses, not on the employee’s purpose, but on the means used—whether the disparaging attack was ‘reasonably calculated to harm the company’s reputation and reduce its income,’ to such an extent that it was harmful, indefensible disparagement of the employer or its product.”

Erik Forman was fired six years ago for organizing a union at a Jimmy John’s in Minneapolis. He told In These Times, “The big takeaway for me is that this ruling means workers do not have the right to tell the truth about their employer,” he said, adding: “The ruling is incredibly slanted towards the employer. They frame our campaign for sick days as an attack on the employer and turn logic on its head. We told the truth about the risk to the public.”

“Employers’ motivation wasn’t just to stop the sick-day campaign,” Forman continued. “It was to stop our unionization effort.”

According to Gould, “This case comes from the 8th Circuit which is the most conservative in the country. It’s the worst circuit in the country for a labor union, or for labor rights.”

The ultra-conservative nature of the ruling may have the unintended benefit of limiting its applicability to workers other than the Minneapolis Jimmy John’s employees, the former NLRB chairman adds. Other judicial districts may not be eager to follow its lead because many traditionally defer to the NLRB in matters of this kind, he says, and few employers will want to take the legal risk of relying on a circuit court ruling that has not been confirmed by the Supreme Court.

The reversal of the Obama-era NLRB decision mirrors action in Congress, where several measures are under consideration to roll back pro-worker measures adopted by the labor board during Obama’s tenure. This week, the U.S. Senate is considering thenomination of two Trump NLRB appointees, both of whom have been criticized as anti-worker by the AFL-CIO.

Carmen Spell, an NLRB representative at the agency’s Washington, D.C. headquarters, would only comment that “(w)e are considering options at this time” on how the agency will respond to the court ruling.

Jane Hardey, a spokeswoman for Jimmy John’s, declined any comment, asserting that the legal case involved only the Minneapolis franchise owner, and did not involve the sandwich chain company itself. Hardey did not respond to a request from In These Times for a telephone interview with Jimmy John Liautard, the controversial founder of the franchise.

According to the Jimmy John’s web site, the rapidly growing chain currently has 2,701 locations in 48 states. The number of employees is estimated at over 100,000.

“The fact that we were fired over six years ago in retaliation for union organizing should tell everyone that you cannot rely on labor law in this country,” says Forman. “Every single decision can now be appealed up to a Trump Supreme Court. We need to find new ways of building and exercising power on our own.”

This article was originally published at In These Times on July 13, 2017. Reprinted with permission.

About the Author: Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA’s Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper’s New York City headquarters and in the Washington, D.C. bureau.

Get Back Your Right To Take Your Bank To Court

Thursday, July 13th, 2017

Wall Street, the U.S. Chamber of Commerce and right-wing Republicans are ganging up again this week against consumers who want to hold financial institutions that rip them off accountable.

The target this time is a rule issued this week by the Consumer Financial Protection Bureau that is designed to restore the ability bank and credit card customers, as individuals or as a group, to take a financial dispute to court.

“Our new rule will restore the ability of groups of people to file or join group lawsuits. In some cases, not only will companies have to provide relief, they will also have to change their behavior moving forward,” said a statement issued by the agency. “People who would otherwise have to go it alone or give up, will be able to join with others to pursue justice and some remedy for their harm.”

However, unsurprisingly, it took less than a day for the guardians of Wall Street profiteering to attack the rule. They are the same people – like Sen. Tom Cotton, R-Ark., in the Senate and Rep. Jeb Hensarling, R-Texas, in the House – who are working to either get rid of the CFPB entirely or render it toothless.

That’s why People’s Action is launching a petition asking Congress to keep the CFPB arbitration rule and protect the ability of ordinary people to go to court against corporate wrongdoers.

Cotton announced Tuesday that he would be introducing legislation to undo the rule under the execrable Congressional Review Act, the same tool Republicans have been using since President Trump took office to undo a host of Obama-era regulations.

Quoted in The Washington Examiner, “Cotton accused the bureau of “going rogue again” and said that the rule “ignores the consumer benefits of arbitration and treats Arkansans like helpless children, incapable of making business decisions in their own best interests.”

Reuters reported that “the U.S. Chamber of Commerce is contemplating a legal challenge and Trump administration officials are also looking at ways to kill the rule.”

Many customers don’t realize that right now, if they believe their bank or credit card customer has ripped them off or otherwise harmed them, they can’t take the matter to court.

That’s because buried in the fine print of more than 50 percent of the nation’s credit card account agreements and more than 40 percent of the bank account agreements, accoording to a 2015 Consumer Financial Protection Bureau report, there’s language that says if you want to challenge wrong or unfair charges to your account, you are required to go into a binding arbitration process, rather than take the dispute to a court.

The arbitration process is rigged to favor the financial institution. When The New York Times looked at this process in 2015, it found that few customers used the arbitration process, and when they did, consumers lost roughly two-thirds of the time. The process is also explicitly designed to keep consumers with similar complaints from banding together to confront patterns of bad behavior.

Among other things, arbitration clauses shielded Wells Fargo from a class action lawsuit when its employees were creating thousands of bogus consumer accounts in order to meet sales quotas.

It’s only fair: If you steal from a bank, you’ll be brought before a judge. The same should happen if a bank steals from you – and thousands of others. That’s what the CFPB rule says.

The use of the Congressional Review Act is particularly pernicious because ff these Republicans succeed this won’t be a temporary setback. This fundamentally unfair and undemocratic practice that keeps Wall Street from being held legally accountable for its actions would be permanently locked in, because the act not only invalidates the rule but prohibits an agency from writing a similar rule in the future.

Sign this petition so Congress hears you loud and clear: Keep the CFPB arbitration rule and protect our right to challenge corporate wrongdoers in court.

Republican leaders in Congress are hell-bent on neutering the CFPB or eliminating it altogether, precisely because it takes actions like this to even the playing field for consumers going up against the financial giants.

This blog was originally published at OurFuture.org on July 13, 2017. Reprinted with permission.

About the Author: Isaiah Poole is communications director of People’s Action, and has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.

News from Congress: VA Employees' Civil Service Protections Slashed

Wednesday, July 12th, 2017

On June 23, 2017, the President signed into law Pub.L. 115-41.  The new statute reduces civil service protections for employees of the Department of Veterans Affairs (DVA).

Pub.L. 115-41 renews the push to cut back VA civil service protections, after the prior attempt under the last Administration saw adverse actions reversed at the Merit Systems Protection Board (MSPB) and portions of the statute struck down as unconstitutional.

Pub.L. 115-41 is more expansive than the prior statute.  Instead of just applying to Senior Executive Service (SES) employees at DVA, the statute applies to all DVA civil service employees, but different rules apply to different categories of employees.

SES employees and certain other individuals in executive or administrative positions can be removed, suspended, reprimanded, involuntarily reassigned or demoted by the Secretary, with notice and opportunity to respond to the proposal limited to 7 business days and the overall period from proposal to decision limited to 15 business days.  Affected DVA employees lose MSPB appeal rights.  Instead, adverse actions taken under this mechanism may solely be grieved to a new DVA internal grievance process, with a final decision due within 21 days.  Final decisions by DVA are then subject to judicial review.

Other DVA employees also suffer cuts to their civil service protections.  Under Pub.L. 115-41, affected employees may receive proposed adverse actions from the Secretary, with notice and opportunity to respond to the proposal limited to 7 business days and the overall period from proposal to decision limited to 15 business days.  MSPB appeal rights are retained, but the appeal deadline is cut to 10 business days.  The MSPB administrative judge must issue a final decision within 180 days.  The VA’s burden of proof to support its charges is cut to mere substantial evidence.  The MSPB may not mitigate to a lesser penalty (it must uphold the penalty or reverse entirely).

Pub.L. 115-41 moves into statute the DVA whistleblower office created by Executive Order 13,793.  The Secretary cannot remove, demote or suspend non-executive whistleblowers with active cases before the Office of Special Counsel (OSC) or the DVA whistleblower office without permission of the relevant whistleblower office.

Pub.L. 115-41 also allows the Secretary to disallow retirement service credit for DVA employees who are convicted of felonies.  Pub.L. 115-41 also allows the Secretary to claw back bonuses, awards and relocation expenses paid to DVA employees under certain circumstances.

This blog was originally published by The Attorneys of Passman & Kaplan, PC on July 7, 2017. Reprinted with permission.

About the Authors: Founded in 1990 by Edward H. Passman and Joseph V. Kaplan, Passman & Kaplan, P.C., Attorneys at Law, is focused on protecting the rights of federal employees and promoting workplace fairness.  The attorneys of Passman & Kaplan (Edward H. Passman, Joseph V. Kaplan, Adria S. Zeldin, Andrew J. Perlmutter, Johnathan P. Lloyd and Erik D. Snyder) represent federal employees before the Equal Employment Opportunity Commission (EEOC), the Merit Systems Protection Board (MSPB), the Office of Special Counsel (OSC), the Office of Personnel Management (OPM) and other federal administrative agencies, and also represent employees in U.S. District and Appeals Courts.

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