Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘Corporation’

Last Chance to Make Corporations Come Clean on Tax Havens

Friday, July 22nd, 2016

Isaiah J. PoolePeople who want multi;national corporations to be held accountable for their tax-dodging tactics only have a few more hours Thursday to tell the Security and Exchange Commission to support a tough rule that would go a long way toward making that happen.

The SEC is soliciting comments until 11:59 p.m. Eastern time on a new business and financial disclosure rule that would require corporations to make public more information about their overseas subsidiaries.

This rule would affect the estimated $2.4 trillion in profits that corporations ranging from Apple to Walmart have shunted offshore in order to avoid paying U.S. corporate taxes. Right now, the rules for disclosing corporate use of offshore tax havens is, as the tax code itself, riddled with loopholes.

For one thing, companies are not required to report their tax liabilities on a country-by-country basis, so the public – including investors in these companies – have no way to accurately judge how a company is lowering its tax liabilities or what would happen if a country decides to radically change its tax policies. Nor do companies routinely report the names and locations of their subsidiaries; no one knew, for example, that Walmart had 78 subsidiaries in overseas tax havens, with $76 billion in assets, before researchers for Americans for Tax Fairness ferreted out the information.

Another Americans for Tax Fairness report found that the pharmaceutical company Pfizer was holding twice as much of its offshore profits in overseas subsidiaries as it was reporting to the public.

This lack of transparency does harm to investors – who should know details of how the companies they invest in are funneling their profits and the risks associated with their tax-avoidance strategies – and harms the public as a whole, which is shortchanged every time corporations game the system to avoid paying the taxes they owe.

That is why it’s important for people to take a few minutes now to tell the SEC to require corporations to tell the truth about their overseas subsidiaries. After all, expecting a corporation to be honest about how and where it earns its profits should not be too much to ask.

This blog originally appeared at OurFuture.org on July 21, 2016. Reprinted with permission.

Isaiah J. Poole worked at Campaign for America’s Future. He attended Pennsylvania State University and lives in Washington, DC.

A Bill of Rights That Puts Workers Above Corporations

Thursday, November 5th, 2015

in these timesRalph knows firsthand that non-unionized workers lack basic rights. Last year he got a text from his boss while at a cancer clinic in Spokane, Wash. After receiving chemotherapy treatment, Ralph learned he was being terminated from his job in the produce transportation industry—a decision his employer had no legal obligation to justify. According to Ralph, he was fired for “insubordination” after he began to question the business’s finances. Now, he’s been forced to take a minimum-wage job and file for bankruptcy, and could lose his home.

“I will not recover from this in my lifetime,” Ralph tells In These Times. “Tell me where the justice is in that.” (Ralph wished to remain pseudonymous because he is exploring filing a suit against his former employer, though lawyers have told him that he probably does not have a viable case.)

Workers without a union contract lack any guarantee of due process on the job, let alone a dignified wage. Other than Montana, no state—nor the federal government—requires employers to give a “just cause” for firings. But a movement in Spokane has gotten a first-in-the-nation Worker Bill of Rights on November’s ballot, which, if passed, would act as a kind of union contract for all workers in the city.

The proposition is being championed by Envision Spokane, a labor-community coalition. Envision Worker Rights, a sister political committee of the group, announced that it would introduce a new, worker-focused measure, and gathered more than 2,600 signatures to ensure its place on the city’s ballot.

Spokane’s Worker Bill of Rights would amend the city charter to provide several new on-the-job protections. It would give all Spokane workers rights to equal pay for equal work and to not be wrongfully terminated, as Ralph believes he was. It would also guarantee a “family wage” sufficient to cover basic necessities such as food, housing, utilities and childcare for workers of large employers. When employers run afoul, workers would be entitled to sue.

This may seem straightforward, but typically workers must hash out these protections through the arduous process of bargaining a union contract. Granting them proactively to all workers represents a promising new paradigm.

Thomas Linzey, executive director of the Community Environmental Legal Defense Fund, which is supporting the Worker Bill of Rights, explains that under current law, “in non-unionized, private workplaces, workers have no constitutional rights. It’s why e-mails can be read, urine can be tested, lockers searched. … By prohibiting firings without cause, due process constitutional rights would be afforded to all people working within the City of Spokane.” This departs from the “state-action” doctrine, the bedrock legal principle that the Constitution only protects citizens from the government, not from private entities.

When faced with efforts to protect workers and communities, corporations have often carped that their own rights are being violated. The International Franchise Association (IFA), for example, sued the City of Seattle over a $15 minimum-wage ordinance passed in June 2014, saying, among other things, that it discriminated against franchises and violated their constitutional right to equal protection. A U.S. appeals court ruled otherwise, and Spokane’s initiative is clearly not afraid of violating so-called corporate rights. The amendment declares that corporations “shall not be deemed to be ‘persons’ ” with legal rights if this interferes with the workers’ rights outlined in the measure. While Spokane is unlikely to reverse longstanding legal precedent on its own, advocates see the Worker Bill of Rights as part of a national movement to challenge corporate personhood.

This concept is resonating with many in the region and beyond. Some nine local unions and two regional labor councils have endorsed the initiative, along with community groups such as 15 Now Oregon and national figures like Noam Chomsky. Beth Thew, secretary-treasurer of the Spokane Regional Labor Council, the regional arm of the AFL-CIO, tells In These Times that the Worker Bill of Rights is “basically everything that organized labor stands for.” Given the decline in union density nationwide, she says, it makes sense “to take a more radical tactic.”

The list of backers also includes Democratic and Green Party-endorsed Spokane mayoral candidate Shar Lichty, the self-proclaimed “Bernie Sanders of Spokane.” Lichty acknowledges that “poverty is a huge issue here in Spokane”—more than 15 percent of residents live below the poverty line—and says she will defend the measure if elected.

As a result, Envision Spokane’s message is winning support from people like Ralph, who, though struggling to stay out of poverty himself, is phone banking for the campaign. “People today are just trying to fricking survive till the next day,” he tells In These Times.

The Worker Bill of Rights builds on Envision Spokane’s previous efforts to pass a Community Bill of Rights, which similarly challenged corporate personhood. The measure would have given neighborhoods power over local development and increased local environmental protections, among other provisions. First introduced on the ballot in 2009, the proposition failed to gain a majority of votes, and an updated version lost narrowly in 2011. The measure qualified again in 2013, but that vote has been delayed by a pre-election lawsuit brought by a coalition of county commissioners and business groups. The Washington Supreme Court will hear the case in November.

In August, the Worker Bill of Rights dodged a similar legal challenge, this time by Spokane’s own Republican Mayor David Condon, who sought to keep the measure off the ballot. The City of Spokane filed a lawsuit arguing, among other things, that the provision denying corporate personhood was unconstitutional because it would deny corporations access to the courts. A superior court judge ruled that the mayor did not have legal standing to keep the measure off of ballots, but city officials have persisted in their opposition. City Council members have also added controversial advisory questions about the potential costs of the initiative—whether, for example, the city should raise taxes to pay for it—that could sway voters against the measure.

Brad Read, a longtime Spokane high school English teacher and Envision Spokane organizer, is hoping that voters recognize the critical importance of the Worker Bill of Rights.

“It’s about the rights of real people … taking precedence over corporations,” he says. “If we don’t start to chip away at this edifice that has been carefully crafted for over 200 years, then we’re screwed.”

This article was originally printed on InTheseTimes.org on October 26, 2015.  Reprinted with permission.

About the Author: Simon Davis-Cohen is a New York City-based writer examining the powers of local governments and corporations in the United States.

Corporations Deploy Anti-Worker Weapon

Thursday, September 10th, 2015

Leo GerardInstead of picnicking, Steelworkers in six states spent this Labor Day picketing the gates of a dozen Allegheny Technologies Inc. (ATI) specialty mills.

These 2,200 Steelworkers are not on strike. They never even took a strike vote to threaten a walkout.

ATI locked them out of their jobs.

ATI threw them out of the mills on Aug. 15 even though the Steelworkers clearly told the corporation that they were willing to work – that they wanted to work – while negotiating a new labor agreement.

A lockout like this is a weapon increasingly deployed by corporations to injure workers, families and communities. And corporations are doing it even as workers engage in significantly fewer strikes. The growing use of lockouts to force workers to accept corporate demands demonstrates that the already powerful – corporations – have secured even more might in their relationship with workers. Corporations’ lopsided hold on power in the United States has suppressed labor unions and contributed significantly to wage stagnation and income inequality.

USW District Director David McCall holds Marlee Grinage, daughter of Steelworker Jaimee Grinage, aloft at Steelworker rally.

A century ago, the power imbalance between corporations and workers looked like Jabba the Hutt commanding one end of a seesaw and Yoda clinging to the other. By the 1930s, workers fumed about this inequity and labor unrest was rampant. In 1935, Congress passed the National Labor Relations Act (NLRA) encouraging collective bargaining and giving a little weight to the workers’ end of that seesaw.

For several decades, workers organized and secured gains in pay and benefits. By the 1960s, a third of the U.S. workforce was unionized. Because organized workers had the power to win labor agreements calling for better wages, income inequality declined significantly from its peak in 1929. Thirty years after the NLRA passed, CEOs earned about 20 times the pay of average workers.

Since the day the NLRA took effect, though, corporations lobbied to recover the small measure of power Congress gave workers. Congress, courts and too many state legislatures complied with corporate demands, handing them more muscle in their dealings with workers.

As a result, now only 11 percent of U.S. workers are represented by labor unions, about the same portion as before the NLRA passed. The number of strikes in a given year is down to a sixth of what it was just two decades ago. Income inequality is back to 1929 levels. CEOs now pull down nearly 300 times what workers get.

ATI is an example. It locked out workers to force them to accept massive benefit cuts. Just one year ago, however, it handed its top management team raises of up to 70 percent, so that the top five executives pulled down more than $19 million.

Between 1978 and 2013, corporations increased compensation for their CEOs by 937 percent, while raising worker pay a paltry 10.2 percent.

The situation worsened for workers recently. A study by the National Employment Law Project released last week found that considering inflation, median worker wages actually fell by 4 percent between 2009 and 2014.

This occurred even while worker productivity increased. Another report released last week, this one by the Economic Policy Institute, shows that the benefits of better productivity have nearly all gone to corporations, shareholders and top executives. Workers produced more and got less.  Instead of investing in workers, research and development, corporations are increasingly spending virtually all profits on stock buybacks, a practice that increases CEO compensation.

Corporations are using lockouts to try to take even more from workers. That’s what the Minnesota company American Crystal Sugar did. It was earning record profits, yet demanded concessions from workers. When the 1,300 members of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union said they wanted a fair share of the wealth that their labor had created, the company locked them out on Aug. 1, 2011.

American Crystal Sugar contracted Strom Engineering to find replacement workers. That’s the same company ATI hired in an attempt replace its hardworking, highly-skilled Steelworkers. American Crystal Sugar paid the inexperienced replacement workers more than it did its veteran workers – just as ATI is doing.

They’re willing to do that because their goal is eventually to kill the union, just as robber baron Andrew Carnegie and his henchman Henry Clay Frick did in 1892 when they locked workers out of the Homestead Steel Works.

That lockout cost the lives of six steelworkers and at least four Frick-hired Pinkerton guards. But Frick and Carnegie didn’t care about that. In the end, with the help of troops sent by the state, they got what they wanted – the ability to impose wage cuts and hazardous working conditions with no threat of pushback from organized workers.

In Minnesota, after 22 months locked out, a slim majority of Bakery, Confectionery, Tobacco Workers and Grain Millers Union members voted to accept the concessions American Crystal Sugar demanded. That seemed to give the company what it wanted – the ability  to more easily stuff into the fists of executives all the sweet profits produced by the hands of labor. But the Bakery, Confectionery, Tobacco Workers and Grain Millers Union is fighting back to protect its members.

Labor is not down for the count. Far from it. Check out the thousands of Steelworkers who rallied in Pittsburgh, Chicago and Burns Harbor last week, demanding fair contracts from ATI, U.S. Steel and ArcelorMittal. Check out the success of the Fight for Fifteen movement, strongly supported by the Service Employees International Union and other labor groups. Check out the polls showing surging support for labor unions.

Larry Curry, 61, drove from Maple Heights, Ohio, to Pittsburgh to join the Steelworkers’ rally last week. The retiree from ArcelorMittal said he was making a stand. He explained, “The corporations are getting greedier and greedier. They want to give us peanuts. If we continue like this, with them cutting everything, we can’t take care of our families.”

Carl LeDonne, 48, a Teamster, joined the Steelworker rally because he felt he had to defend unions against the current corporate assault on labor. “We can’t give away what my dad’s generation fought and died for,” he said as he marched on Grant Street. “They are coming after all of us. Today it is the Steelworkers under attack, tomorrow it is my union. They want to destroy all unions and force people to work for $2 an hour, 80 hours a week, like a Third World country.”

Eric Martin, 45, of Fombell, a member of the International Union of Operating Engineers, marched in the rally because he believes the ATI lockout specifically, and lockouts in general, are attacks on workers. “Corporations are trying to break anyone who they think is standing in their way. I am standing with my brothers in this struggle,” he said.

As the rally began at the United  Steelworkers (USW) International Headquarters on the Boulevard of the Allies in Pittsburgh, David McCall, who is Director of USW District 1, held aloft 7-year-old Marlee Grinage, daughter of Steelworker Jaimee Grinage. “This is what this fight is all about,” McCall said. “It is about a decent future for our children!”

On this Labor Day, with the public at its back, organized labor demands an end to lockouts and to this new age of robber barons who impose them.


This blog originally appeared at OurFuture.org on September 8th, 2015. Reprinted with permission.

Leo W. Gerard, International President of the United Steelworkers (USW), took office in 2001 after the retirement of former president George Becker.

The Consultants Have No Clothes

Monday, April 26th, 2010

Image: Bob RosnerThis week’s blog should get me in a lot of trouble. But I think it’s time that someone points out that many of the biggest business consultants, authors and speakers run really crappy businesses of their own.

Okay, I’ve heard all the jokes about consultants. All go basically down the same path—a consultant is someone who borrows your watch and then tells you what time it is. But this is someone much worse. I’ve discovered that many of the biggest advisors to business run shops that are much more poorly managed than many of the corporations that pay them such lofty fees.

Ironic isn’t it?

Take consultant number one—I’ve confided the real names to my editor, but dear reader you’ll have to give me some slack here, because these guys are my colleagues, and in some cases my friends.

Consultant number one has had a series of best selling books, he commands top dollar on the speakers circuit and chances are that you’ve heard or seen him at one time during your career. He is so volatile that he is barely able to hold on to staff for more than a year. He says he’s a great listener, but his staff says to me that he yells far too much to ever hear a word they say. His office might as well have a revolving door on it.

Consultant number two is one of the nicest guys you’ll ever meet. But his company is remarkably dysfunctional. Its top leadership seems to change with the seasons. More than any other, this company almost seems to be dedicated to violating every principal that it espouses in its publications and presentations with its own people. It is a rudderless, often contradictory and cruel place that talks about sharing the credit but seldom does.

Consultant number three has built a company with some of the lowest morale anywhere. It’s hard to sort out where the battle lines are worse, in the executive suites or in the trenches. At one point I actually got to see some of the company’s internal survey results and couldn’t imagine that any of this company’s customers own results were that pathetic. Employees felt that management was more likely to knife them in the back then pat them on it. Although there was a lot of talk about values, the organization seems to only hold one value dear, and that is making the sale.

Woody Allen once said that those who can, do. And those who can’t, teach. Clearly those who really can’t do something become top-priced consultants.

So what can we do about this? I’m not suggesting that anyone throw out the baby with the bathwater. Each of these three people I referred to above has an important message and strategies to share. I just believe that corporations need to do a better job of due diligence with the messengers it picks before it starts ramming the fad of the week down its own people’s throats.

Look at each possible vendor as a little laboratory for their own principals. Ask for proof that they eat their own dog food and practice the very principals that they are foisting on you, and the rest of the business world.

Many of you are probably saying to yourself that this doesn’t really matter. It all goes back to the “Hawthorne Effect”, remember, that’s where a company turned up its lights and found that productive increased. Then when productivity stabilized they tried turning the lights down and found—like magic—that productivity magically increased again. The lesson, is that over the short haul almost anything you do can potentially increase productivity.

So Corporate America do your homework. Just because someone is a brand name, don’t assume that their principles work in the real world. That’s the bad news. The good news, is that the due diligence isn’t that hard to do. You just have to take the pulse of the employees who work for the company you are thinking about hiring. Ask to see recently survey results and staff turnover rates. I can guarantee that often you’ll be surprised by what you find.

About the Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

Bad Distribution of Income Led to Great Depression: History Repeats in 2008

Wednesday, June 24th, 2009

John Kenneth Galbraith wrote The Great Crash 1929, an economic history focused in part on the men of the market who brought on the crash, in graceful and snarky prose. In his last chapter, he tells us of five major weaknesses in the real economy that made it possible for the disaster to destroy a generation. At the top of his list is the badly unequal distribution of wealth.

He points out that the top 5% of the population earned about one third of all personal income in 1929. Those figures comport well with the figures from Emanuel Saez and Thomas Piketty, whose IRS data indicates that the top 5% earned about 37% of gross income in 1929. P. 194 (references are to the Penguin Books 1992 ed.). For a discussion of the 2006 figures, see this NYT article.

Productivity increased steadily from 1920 to 1929, but wages and prices were stagnant. P. 192 Costs fell, and profits increased, but how were the wealthy to dispose of the money? The choices were consumption of luxuries or capital investment. There is only so much even the rich can consume. If anything happened to reduce the flow of money to capital expenditures, consumer spending could not increase to take its place, and the economy was headed down. In the event, it looks like a huge part of it went to speculation. There is insufficient evidence, according to Galbraith, to be certain that this was the central cause, and bless him for his warning about theorizing with incomplete data, but he thinks the explanation is consistent with the observed facts available to him in 1954.

He identifies four other factors.

1. Bad corporate structures. Although the business press praised the businessmen of that day, the fact (P. 195.) was that

American enterprise in the twenties had opened its hospitable arms to an exceptional number of promoters, grafters, swindlers, impostors, and frauds. This, in the long history of such activities, was a kind of flood tide of corporate larceny.

2. Bad banking structure. Galbraith doesn’t think bankers were any worse or better in the 20s than the 50s, but the structure of banks made runs on banks easier and more likely.

3. The balance of trade. The US was a creditor to most of the world. As the decade wore on, that status increased every year. High US tariffs made it difficult for other nations to balance their imports from the US with exports to the US, so accounts were settled in transfers of gold, or in shaky and crooked loans, like the loans made by National City Bank (predecessor, somehow, of CitiGroup) to Peru. P. 198-9. As this became more difficult, other countries had to reduce imports from the US, which caused strains in sectors of the economy, particularly agriculture.

4. Incompetent economic advice. From p. 200:

The economic advisors of the day had both the unanimity and authority to force the leaders of both political parties to disavow all the available steps to check deflation and depression.

Two and three seem unlikely culprits this time. It looks to me like a good case can be made for one, with all the money lost by the great geniuses of Wall Street and their counterparts in the banking and other businesses. What kind of country did our corporate masters think would be left when they exported all the decent jobs to other nations? Actually, it doesn’t affect them a bit. They just whine that they are being put upon by the great unwashed, and have to pretend they aren’t really all that different from you and me. When Newsweek notices it, it must be real.

As to four, judging competence isn’t easy. What do you think about the economic crowd? If you liked them under Bush, you’ll love them in their new form under Obama, including their supporters in the money party, the Blue Dogs and the rump of the Republican party. John Kenneth Galbraith would recognize these people too.

About the Author: Masaccio has a law degree from Indiana University and is a graduate of the University of Notre Dame. He began his career as a corporate and securities lawyer. He then worked in consumer protection and securities law for several years before becoming the securities commissioner of his home state. He has practiced business and bankruptcy law for the past 25 years. Beginning with an expensive and slightly frightening experience with Small Martingale as a young man, he has had an opportunity to see, investigate, sue and prosecute a wide variety of fraud cases, including check-kiting, critter contracts, churning, insider trading, Ponzi schemes, and stock market manipulation. This background is helpful in his work for FDL, which focuses on explaining the financial industry of today.

This article originally appeared in Firedoglake on June 21, 2009. Re-printed with permission by the author.

Third Circuit Sends Wake Up Call to Employers About Discriminatory Hiring Practices

Thursday, April 30th, 2009

In the spirit of National Equal Pay Day on Tuesday, I wanted to share the important gender discrimination case of Donlin v. Phillips Lighting North America Corp. decided by the Third Circuit last week.

Here’s what happened in the case.

Colleen Donlin was hired by Phillips as a temporary warehouse employee at its Mountaintop, Pennsylvania distributions center. Her job was to help prepare orders for shipment.

Like other temporary workers, Donlin applied for a permanent position. She was not hired and her eight month temporary assignment ended.

Donlin got two other jobs after she left Philips. At the first job, Donlin earned  $14.70 an hour, but it was a 32-mile commute.

She left that job and found a job closer to home at which she made $13.00 an an hour. Had she been hired by Philips, she would have earned $14.67 an hour as a base salary

Donlin learned that Phillips hired several men for the position she had applied for after it refused to hire her.  She filed a Title VII lawsuit for gender discrimination,  won the trial and was awarded damages.

In discrimination cases, the compensation which can be awarded by a judge or jury is designed to make victims whole and put them in the position they would have been in had they not been discriminated against.

A winning employee can recover “back pay” and “front pay.”

  • Back pay represents losses from the the time of the discrimination up to the time of trial.
  • Front pay represents the losses that the victim will experience in the future if he or she does not find a comparable position.

Based on the premise that Donlin would have worked for another 25 years, an advisory jury awarded Donlin:

  • $63,050 in back pay
  • 395,795 in front pay
  • for a total of $458,845

The award was based on the difference in pay and benefits between the $13.00 hour job she was holding at the time of trial and the $14.67 hour job she would have had at Phillips had she not been discriminated against when Phillips refused to hire her.

The judge modified the front-pay award by reducing it to account for 10 years of damages instead of 25, finding that a 25 year period was too speculative — so the total award was $164,850.

Phillips appealed and the decision came out last week. The issues decided are very important for both victims of discrimination and their lawyers.

Here are the highlights:

1. Front Pay:

Donlin was in her 30’s at the time of her employment with Phillips and 40 at the time of trial. The question presented was: was how far into the future can a younger employee like Donlin claim economic loss?

For those of us who represent individuals in employment cases, the issue has always been a hard one to deal with when it comes to a younger worker.  The reason is because past damages can be calculated with certainty, but future losses can not:

  • Is the person going to get another job?
  • If so when and for how much?
  • How do we know what someone will be doing 20 or 30 years from now?

When we represent someone in an age discrimination case, and the terminated employee is 55 for example,  it’s easy for us to project damages until age 65 or 70  (whatever the age is that the person was likely to retire).

It’s not speculative to assume that the person would have worked for another 10 or 15 years, and it’s not hard to calculate what he or she would have earned and what the total losses are.

It’s much more complicated when we represent a younger person.  Since the law does not allow “speculative” damages, it’s simply very difficult to predict how far into the future the court will allow us to project.

In this case, the  district court judge ruled that Donlin was entitled to receive damages for economic loss for 10 years into the future. The Court of Appeals affirmed the ruling :

We note that there will often be uncertainty concerning how long the front-pay period should be, and the evidence adduced at trial will rarely point to a singe, certain number of weeks, months , or years.  More likely, the evidence will support a range of reasonable front-pay periods.  Within this range, the district court should decide which award is most appropriate to make the claimant whole …

We find that the District Court did not abuse it’s discretion when it awarded Donlin front- pay for 10 years.

This means that we now we have a decision with a sound analysis for front -pay involving a relatively young employee from a high level court.  It’s a decision that other victims and their lawyers can rely on and it’s a decision that carries considerable weight. It’s very good news.

2. Mitigation

In an employment case, the employee  who has lost a job has a duty to mitigate — which means that she  (or he) must make reasonable efforts to minimize her loss of income. The precise language of the statute says

Interim earnings or amounts earnable with reasonable diligence by the person or persons discriminated against shall operate to reduce the back pay otherwise allowable.

In other words:

  • a person who is claiming damages in an employment case has a duty to look for work
  • damages into the future end if an employee gets an equivalent job or better job

In this case, Donlin first got a job in which she earned $14.70 and hour.  The problem was that it was a 32 -mile commute. She worked at the job for two years, and then found a job closer to home at which she made $13.00 an an hour.

She would have received $14.67 an hour as a base salary had she been hired at Philips.

Phillips argued:

  • Donlin’s “voluntary transfer” to a lower-paying job was inconsistent with her “duty to mitigate”
  • Phillips should not have to make up the difference.

Donlin argued:

  • once you factor the cost of the commute
  • the the two jobs were substantially the same.

The Court of Appeals agreed with Donlin:

An employee need not seek employment which involves conditions that are substantially more onerous than [her] previous position…

It is well settled that a claimant has not failed to make a reasonable effort to mitigate damages when she refuses to accept employment that is an unreasonable distance from her residence.

[T]he job at Mission constituted a substantially equivalent opportunity as that available at Romark.  Donlin should not be penalized for accepting that opportunity.

Accordingly, the District Court’s finding that Donlin sufficiently mitigated her damages was not clearly erroneous …

Certainly our clients still have a duty  to mitigate and make a “reasonable effort” to find comparable work if they intend to claim damages in a lawsuit.  This decision does not change that fact.

But this decision certainly delivers great news since it clearly states that a person is not required take a job which places an onerous burden on him (or her)  in order the meet that obligation.

On many fronts,  this is a hugely helpful case on questions of damages in employment cases. While we deal with these problems every day, it’s certainly not every day that we get federal circuit court case law on these particular issues.

It’s also a wake up  to employers to be careful about their hiring practices.

The bottom line is that Donlin worked as a temp at a company for eight months. Because she was discriminated against when the company hired a man instead of her into a permanent position, she is now entitled to all of her past losses plus 10 years of damages into the future. That’s a big win.

Images: images.businessweek.com

About the Author: Ellen Simon is recognized as one of the foremost employment and civil rights lawyers in the United States. Ms. Simon is the owner of the Simon Law Firm, L.P.A., and Of Counsel to McCarthy, Lebit, Crystal & Liffman, a Cleveland, Ohio based law firm. She is also the author of the legal blog, the Employee Rights Post. Her website is www.ellensimon.net.

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