Litigation Litany

When employers and workers can't get along in today's economy

Back Longreads Oct 1, 2009 By Robert Celaschi

Even in the best economy, employers fight a financial tug of war with the people who work for them. One side wants more pay and benefits while the other side wants to trim costs.

When the economy takes a nose dive, though, the tug of war can get a lot rougher. State and local government jobs are getting much of the attention in Sacramento this year as furloughs and layoffs have increased tension with workers. But Sacramento’s private sector has seen temperatures rise, too.

“I’m seeing a real uptick in employment litigation; I’m seeing a lot in the wage-and-hour area,” says Tony DeCristoforo, a labor and employment attorney at Stoel Rives LLP in Sacramento. “I’m seeing a lot of age discrimination and race discrimination (cases), particularly as it applies to all the downsizing of the work force.”

Many employers are facing lawsuits after the fact, he says. They hand the employee a pink slip, and the employee hits back with a claim of discrimination. The volume of complaints is up as well, according to several area attorneys.

“One of the reasons might be that in this economy it is a lot tougher to find work if you are dissatisfied with your job [or] if you have lost your job,” DeCristoforo says. In a better economy, people might be happy enough to land a new job and not bother trying to get money or an admission of guilt out of a former employer.

“The harder it is to find a new job, the greater the damages are going to be in a lawsuit,” DeCristoforo says.

At employment and labor law firm Littler Mendelson PC, managing partner Ben Webster has seen the same increase in discrimination suits.

“We are also seeing many, many ADA access cases being filed,” he says. The Americans with Disabilities Act was amended and broadened earlier this year, opening new avenues for employees.

“With the sense of people being aware of the law changing and the expansion of how it should be applied, I’ve got to think there is going to be more disability discrimination litigation,” he says. “We are coachingour clients just to be very careful in dealing with disability claims rather than thinking we can win a summary judgment initially on whether the plaintiff has a disability.”

DiCristoforo says it is better to assume the answer is “yes” and see what reasonable accommodations can be agreed on.

In some respects the tug of war between labor and management plays out on two parallel tracks. Labor and employment law isn’t a redundant phrase but rather a way of recognizing two different types of practice. Labor law covers collective bargaining, while employment law deals with the individual worker. By the nature of the beast, unions tussle with employers on the front end as they hammer out new contracts, and individual workers tend to find themselves fighting their battles after a layoff or other action by the company.

But on both tracks, employers seem to be taking a tougher stance this year.

Take the state furloughs. Three mandatory days off each month, as ordered by Gov. Arnold Schwarzenegger, is not the deal the state workers union thought it had worked out.

“The furloughs haven’t been the cost-saving panacea that they were laid out to be.”

Jim Zamora,  spokesman, Local 1000 of the Service Employees International Union

The members had agreed to take a pay cut equivalent to only one day amonth, says Jim Zamora, spokesman for Local 1000 of the Service Employees International Union. Also, the day wasn’t fixed. The idea was that employees could take the time off on a flexible schedule, such as bunchingafew days together in the summer when their children would be out of school.

“We actually signed a contract with the governor’s representatives in February that made concessions, but it still hasn’t been approved by the Legislature,” Zamora says.

Instead, the governor imposed two furlough days a month then later raised it to three.

Local 1000 has filed four separate lawsuits to challenge the furloughs. The union lost the first one in January. The rest haven’t made it to court, Zamora says.

Local 1000 isn’t the only organization fighting the furloughs. In August, the California Association of Psychiatric Technicians filed a separate lawsuit, claiming that its members can’t take the furloughs because of mandated staffing levels. But the technicians are still getting paid only 32 hours out of a 40-hour workweek, the union says.

Also in August, the California Public Employees’ Retirement System filed its own suit contending that the furloughs endanger CalPERS from carrying out its duty under the state constitution to monitor investments and administer retirement benefits.

A small victory against the governor came in June when a Superior Court judge in San Francisco ruled that the furlough order shouldn’t apply to a few hundred legal professionals working in the State Compensation Insurance Fund. An even bigger victory came last month when a judge ruled that more than 6,200 State Fund employees are not only exempt from furloughs, but owed back pay plus interest for the days missed.

Those furlough cases all have unions behind them. How does the labor picture look in cases where individual employees have to deal with layoffs and cutbacks on their own?

“Two years ago there was much more room to negotiate with an employer, especially regarding the amount of severance,” says attorney Vida Thomas, a partner at Carlsen Thomas LLP in Sacramento. The change likely has more to do with the bad economy than corporate intransigence, she says. Especially when mass layoffs are involved, a company typically sticks to a formula based on years of service.

“The large employer, probably wisely, knows they can’t individually negotiate severance with 20 or 100 employees who have been laid off,” Thomas says. Only an employee with a compelling story of discrimination or harassment is likely to have any leverage.

Severance isn’t a given, either. Her firm still comes across employers offering none at all or even withholding money already owed, she says.

The more aggressive stance by employers means that unions, too, are dealing with more actions after the fact.

Kaiser Permanente announced in August that it would eliminate about 1,800 jobs, most of them in Northern California. The notices went out individually, much to the annoyance of the SEIU United Healthcare Workers-West. Soon after, the union organized protest rallies in front of Kaiser’s regional offices in Oakland and Pasadena. It also planned informational pickets at various Kaiser offices around the state in September.

“The harder it is to find a new job, the greater the damages are going to be in a lawsuit.”

Tony DeCristoforo, labor and employment attorney, Stoel Rives LLP

The union argues that Kaiser should offer at least some employees “generous, voluntary severance packages” that the union had already negotiated. The ultimate tactic for a union is, of course, to strike.

“We have taken a strike authorization vote, in which about three-quarters of the voting members voted to allow our leadership to take action up to and including a strike,” Zamora says. Although he wouldn’t lay out the union’s plans for publication, he recalled some actions it took a few years ago.

“The actions were that a whole building of state employees goes on break at the same time, goes outside, chants some slogans, and then goes back inside and goes to work,” he says. It was a way of showing unity and drawing some attention without really shutting down any state agency.

“We’re willing to help the governor come up with a number of cuts that he wants to make, but we wanted more flexibility about how you got there,” Zamora says. “The furloughs haven’t been the cost-saving panacea that they were laid out to be.”

Finding the right balance between cooperation and confrontation can be tough. “There are some cases now where union leaders recognize when an employer is under stress,” says Bill Camp, executive secretary of the Sacramento Central Labor Council, AFL-CIO. “So their attitude is to work out an agreement that says, ‘We recognize that you’ve got a real problem, and we need to work with you to come up with solutions.’ It’s been my observation that it doesn’t always work.”

But attorneys are warning employers not to get too aggressive. “When it comes to downsizing, I’m advising them to be really careful about how they go about that,” DeCristoforo says. With a lot of companies downsizing across all departments, they sometimes end up short in areas such as the personnel department.

“There are fewer people minding the store, and there are things that slip through the cracks as far as liability,” he says.

Take the increasingly popular furlough, essentially sending employees home for a day without pay. It may not be legal for companies to try that with workers who are salaried and classified as exempt from the federal Fair Labor Standards Act. Thomas has had to break the bad news to employers who have come in for her approval on a plan they had already worked out. And that’s just one federal law.

“The California wage-and-hour laws are so complex, and often so counterintuitive, an uninformed employer can easily break the law unintentionally.”

Vida Thomas, partner,  Carlsen Thomas LLP

“The California wage-and-hour laws are so complex, and often so counterintuitive, an uninformed employer can easily break the law unintentionally,” Thomas says.

In a quest for common ground, labor and management might take a look at some of the smaller employers around town. Attorneys say client companies with fewer than 100 employees tend not to find themselves in disputes as often.

One reason may be that the employees have more personal connections to the executives who are imposing pay cuts, layoffs or furloughs.

“They may not agree or be happy with it, but they tend to be more understanding. It’s not a cold, unknown individual making the decision,” DeCristoforo says. “Also, there is probably a little more comfort in knowing that employer can be taken at their word to bring the employee back.”

Nonprofits tend to be small, adds Thomas, “so these are vice presidents and executive directors who know all of the people being laid off personally. As a consequence it is an extremely difficult decision to make.”

In many cases they have already tried job sharing, job restructuring and other measures before cutting staff.

Unions, too, seem to be making some progress among smaller employers. “There are some unions that are growing,” Camp says. “We saw another hotel added to the union list here. We are going through negotiations and they are difficult negotiations, but in the hospitality industry we have seen improvements in people’s wages and benefits.”

It depends on the industry, Camp adds. Membership in the construction trades is down as that entire industry has been knocked for a loop.

Attorneys often say their job is to settle a case before it gets to the courtroom. Thomas and her partner, Susan Carlsen — the only two attorneys in the firm — are picky about the corporate clients they take on.

“Because of that we have clients who share that value of wanting to manage their work force in a collegial manner,” she says.

Big law firms are seeing value in that approach, too.

“I think the most important thing, and this would have been true five or 10 years ago: Communications are so important,” says Webster of Littler Mendelson. “If people are not kept in the dark about what management is planning and thinking, if people feel that they are getting the straight scoop from people managing the organization, I think that really helps a lot.” Employees who feel appreciated are less likely to start thinking about getting union representation, he says.

With the Employee Fair Choice Act now working its way through Congress, it may get easier for workers to do just that. And Camp says he’s already fielding more calls from workers interested in organizing.

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