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News and Issues Blog: Today's Workplace

Zuckerman Law

Clark Law Group

Your source for the latest developments in workplace rights and employment law. "Today's Workplace" is the the blog (weblog) written by Paula Brantner, Program Director of Workplace Fairness. In each entry, Paula focuses on legal and political information relevant to employee rights and fairness issues in the workplace. Whether you're an advocate trying to stay on top of the latest case developments and workplace trends, or a worker wanting to follow and understand the issues, keep up to date here!
Friday, June 13, 2003
Class Action Fairness Act Passes House
Yesterday (6/12), the House of Representatives passed the Class Action Fairness Act, a bill designed to move most class actions from state to federal court, where, it is perceived, judges will be less receptive to the rights of plaintiffs. (See Washington Post article.) The vote in the House was 253-170, generally but not exclusively along party lines, with a few Democrats joining the majority and two Republicans opposing the bill.

The bill now moves to the Senate, where a similar proposal, S 274, already has significant support, including endorsements from some Senate Democrats such as Sens. Dianne Feinstein of California, Blanche Lincoln of Arkansas, Herb Kohl of Wisconsin, Zell Miller of Georgia and Thomas Carper of Delaware. (See AP article.). While there have been efforts over the last several years to pass such legislation, and similar bills have passed the House three times, they have traditionally stalled in the Senate. If the Senate coalesces around a proposal this time, especially considering the support of the moderate Senate Democrats, then it is increasingly unlikely that this proposal can be stopped.

President Bush supports the proposal, and is expected to sign the bill if the two chambers can resolve the differences between the two bills. AP reports that the White House said Thursday that "[t]he bill will remove significant burdens on class-action litigants and provide greater protections for the victims whom the class-action device originally was designed to benefit." The bill is also part of the President's tort-reform agenda, driven by adviser Karl Rove (see Washington Post article) which includes medical malpractice reform and other measures designed to limit lawsuits and reduce the influence of trial lawyers.

The key differences between the House and Senate versions of the bill involve retroactivity. The House version is retroactive, and would apply to all class action lawsuits, even those already being heard. The Senate version is not retroactive, and only applies to class action lawsuits, and not to similar actions, including lawsuits consolidated into one case or state attorney general actions. House Republicans say the legislation needs to apply to all class action lawsuits, even the ones already being heard. That "language eliminates any incentive to rush to the courthouse to avoid the reforms contained in the legislation," said Rep. Lamar Smith, R-Texas. "It also prevents individuals from being made part of a frivolous suit that has been filed before enactment of the new laws." Both versions of the bill would require that class-action lawsuits in which the primary defendant and fewer than one-third of the plaintiffs were from the same state be heard in federal court.

As previously discussed in the April 1 blog entry, the Class Action Fairness Act is anything but fair to class action plaintiffs. The proponents of this bill have an interest in moving class actions to federal court, as federal court litigation can be more complex and costly. There are a number of rules applicable in federal courts that most states have not yet adopted that make litigation in federal court more time-consuming and expensive, and juries tend to be more conservative in federal court. The bill also contains a number of other provisions all designed to make it hard for employment and civil rights plaintiffs, as well as other groups of individuals who are taking on big business, to file a group lawsuit.

While it might not be possible to stop this proposal from charging forward, it is very important that your Senators hear from you. Let them know that your concept of "fairness" does not include proposals that make it much more difficult for those wronged by widespread and discriminatory practices to fight back in court.

Take Action Now: Oppose the Class Action "Fairness" Act

More Information on the Class Action Fairness Act:
Public Citizen's Unfairness Incorporated: The Corporate Campaign Against Consumer Class Actions
Thursday, June 12, 2003
Happy 40th Anniversary, Equal Pay Act
This week marks the 40th anniversary of the Equal Pay Act, landmark legislation which help pave the way for increased gender equality in the workplace. On June 10, 1963, President Kennedy signed the Equal Pay Act (EPA) into law, at a time when full-time working women were paid on average 59 cents to the dollar earned by their male counterparts, according to government data. (See The Equal Pay Act Turns 40). President Kennedy, at the White House signing ceremony, said the EPA: "Adds to our laws another structure basic to democracy" and "affirms our determination that when women enter the labor force they will find equality in their pay envelope." While as the Virginia Slims ads used to say, "you've come a long way baby," it's clear that even after 40 years, there is more ground to cover if women are to close the pay gap in the workplace.

The Equal Pay Act predated the passage of Title VII, the Civil Rights Act of 1964, by one year. In the debate before Congress on the bill, supporters argued that the bill would confer economic benefits on the nation at large, and that passage was also a matter of equality. (See Quotations from the Congressional Debate.) As Congresswoman Florence Dwyer of New Jersey pointed out,
Passage of a meaningful equal pay bill will end a long and unfortunate pattern of discrimination against women and it will place the Federal Government in the same desirable position as the 20 states which have enacted equal pay laws. It will help all areas of the economy, men as well as women, by stabilizing wage rates, increasing job security, and discouraging the replacement of men with women at lower rates of pay.
Debate on the bill also reflected one of the concerns on everyone's list at the time: beating the Russians.
Khrushchev has predicted that by 1970 Russia will overtake this country economically. We need all the incentive that we can provide to the labor force of this Nation to keep America superior in economic power and progress in the free world today.
(Congressman Pepper) Supporters also pointed out the benefits also accruing to males by the law's guarantees.
Another desirable product of this legislation would be discontinuance of the process of allowing unscrupulous employers to profit by exploiting women for the purpose of gaining a competitive advantage, while at the same time rejecting the services of men to whom they would have to pay better wages. Thus this legislation would establish fair play in the area of employment and wages for both men and women..."
(Congressman Rivers). The bill was not without its opponents, however. One member of Congress noted,
This bill does not take into account the higher cost, averaging about 30 cents an hour, involved in the employment of women. This is due to greater turnover and absenteeism, State laws limiting hours of employment of women and placing restrictions on lifting, longer lunch and relief periods for women, higher insurance rates for women, and the cost of providing women with special facilities
One group opposed to the legislation, the National Retail Merchant Association, expressed concern that employers would have to provide women with "additional facilities such as seats, lunchroooms, and toilet rooms." (Pretty outrageous stuff, I guess it seemed at the time.) However, the legislation ultimately passed through Congress, was signed by President Kennedy, and still exists today as the oldest law enforced by the Equal Employment Opportunity Commission (EEOC). (The EPA was enforced by the Department of Labor between 1963 and 1979.)

The Equal Pay Act simply states:
No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment and they rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs, the performance of which requires equal skill, effort, and responsibility and which are performed under similar working conditions...
Some facts about the EPA:

• It is unlawful for employers to reduce the wages of either sex to equalize pay between men and women;
• A violation may occur where a different wage is paid to a person who worked in the same job before or after an employee of the opposite sex;
• A violation may also take place where a labor union causes the employer to violate the law;
• An employer is permitted to base salary differences on seniority, merit, and quantity or quality of production - in fact, generally any other business-related factor, as long as it is not based on a person's sex; and
• Employers found in violation of the EPA can be compelled to pay back pay, punitive relief, and liquidated damages if the violation is shown to be willful.
For more information about pay discrimination, see our web site's page on sex/gender discrimination. And for highlights of some key Equal Pay Act cases brought by the EEOC, see Highlights of Equal Pay Act Cases. EEOC Chair Cari Dominguez released the following statement on Thursday, June 10, in observance of the EPA's 40th anniversary:
Since its enactment on June 10, 1963, the Equal Pay Act has withstood the test of time and has been helping to pave the way for equality in the workplace for four decades. When the EPA was signed into law 40 years ago, the American labor force was radically different than the one we see today. Women have slowly climbed the corporate ladder and made in-roads to many traditionally male dominated professions. Although pay discrimination still rears its ugly head in the 21st century workplace, the EPA continues to be an effective force to remedy and deter such injustices.

Employers should continue to be vigilant in preventing EPA violations and proactive in breaking down workplace barriers that operate to exclude on the basis of gender. We continue to see cases of blatant pay discrimination between men and women doing equal work. We continue to see cases of wage discrimination against people of color as well as individuals with disabilities. This should not be tolerated in the year 2003. Pay discrimination depresses the wages of working men and women and the families who rely on them for support. It also creates marketplace inefficiencies by not making optimum use of available labor resources.

The Commission is firmly committed to the task of ensuring that all individuals have the freedom to compete and advance in the workplace on a level playing field. Strong enforcement of the EPA, coupled with vigorous education and outreach, remains a key component of ensuring equality of opportunity in the workplace. As we observe this 40th anniversary of the Equal Pay Act, let us recommit to its principles and vision: a workplace that is fair and inclusive in all its aspects.
But where do we go from here? How relevant is the Equal Pay Act today? The wage gap between male and female employees still exists, and although some improvement was shown in this past year, many decry the lack of significant progress in closing the gap. (See Wage Gap Continues.)

A new study also reaches some interesting conclusions about how men and women negotiate pay. (See Study: Men negotiate better pay) Professor Lisa Barron, of the UC-Irvine Graduate School of Management, found that women who negotiate job offers generally ask for lower initial salaries than do men, in part because of different beliefs about worth, entitlement and proving oneself. (See UC-Irvine News Release.) The study included realistic mock negotiations between 38 “new hires” and four professional women recruiters for a mock position offering a salary of $61,000. After the negotiations, Barron interviewed the “new hires” to understand why the men tended to ask for higher salaries than women. She found that 71 percent of the men said they believed they were entitled to more money than other job prospects. Conversely, 70 percent of the women indicated they were entitled to a salary equal to other job candidates.

The study's results should not be cited in support of the conclusion that pay discrimination is all a result of gender differences in pay negotiations, and that no pay discrimination exists. A very limited study of a small number of MBA students is certainly not reflective of all that is happening in the workplace today. It does remind us, however, that the gender gap and continued lack of true equal pay, even after 40 years of the EPA's protections, is a multi-faceted and at times, seemingly intractable problem. Only through continued research of its dimensions and ongoing vigilance can we hope to erase it, even in the next 40 years.
Wednesday, June 11, 2003
Finally, a Judge that Gets the Tax Issue...With Humor, Even
Regular readers of this blog know that one of the subjects that gets covered on a regular basis is the taxation of damage awards. So bear with me as I write about the latest court case to tackle this issue...because it understands the magnitude of the problem and is considerably more funny than your average case about tax law.

In the case of Jalali v. Root, the California Court of Appeal, Fourth Appellate District, Division Three encountered a common problem, the double taxation of attorneys fees in employment cases, in an unusual way. Rather than the plaintiff battling the IRS over whether taxes are to be paid on the attorney's portion of the fee award, instead the plaintiff is up against her former attorney in a legal malpractice action., who she claims failed to inform her that she would be taxed on the attorney's portion as she considered whether or not to accept the settlement offered her by the company.

Jalali had brought a race discrimination and sexual harassment lawsuit against her (unnamed) former employer, and was represented by attorney Walter Root III. When she went to trial on her claims, the jury awarded her $750,000 in compensatory damages for her pain and suffering. The trial was ready to proceed to its next phase, where the jury would determine how much in punitive damages to award Jalali, when the defendant employer offered Jalali $2.75 million for all claims, with a condition of confidentiality. While we know relatively little about Jalali's underlying case, as a result, the opinion comments, "one could not say...that the circumstances behind Jalali’s claim were necessarily 'most egregious,' and that "[w]ithout in any way condoning the actions of the manager or (inferentially) her employer, it is fairly easy to find examples where the racial discrimination or sexual harassment was clearly more egregious." In addition, the U.S. Supreme Court, in the case of State Farm v. Campbell, has even further limited the possibilities of extremely high damage awards, which made it less likely that Jalali could have received an award greatly in excess of the $2.75 million she was offered to settle her case. All in all, it's fair to say that the court thought Jalali got offered a pretty good deal to settle her claim, concluding "Our point is not to minimize Jalali’s discrimination, but to note that in obtaining a large multimillion dollar settlement -- which is money now, not after years of briefs and appellate wrangling -- her lawyer had done a very good job for her."

The court was thus astonished (as Root must have been as well) that after receiving such a generous settlement, that Jalali chose to sue Root for legal malpractice. She claimed that during the settlement negotiations and before she accepted the settlement, Root told her that her taxes would be "'forty percent of your share,' that is, Jalali’s share after deducting Root’s contingency fee." After she settled the case and then paid taxes on her settlement, Jalali found that she was required to pay taxes on the entire $2.75 million, rather than just the portion she received after Root's fee was deducted. In her legal malpractice action, she sought, and was initially awarded, $310,000, the difference between what she expected to receive and what she actually retained, after taxes. Root appealed this judgment, bringing this case before the California Court of Appeal.

What was it exactly that Jalali was claiming in this case? Is it that she could have held out for more money in a settlement? Or is it that if she knew her award would have been so diminished by taxes, she would have preferred to take the case to trial? The court said that while Jalali could have claimed the former, that she would have received more money had it not been for her attorney's supposed negligence, that she did not do so. Even if she had made that particular claim, however, the court took a rather dim view of her ability to succeed under that theory, based on the relative strength of her case and restrictions on large punitive damage awards discussed above. The court does take more seriously the latter claim: that she would have preferred to go to trial. The court notes that
her theory is that, had Root not given her a faulty prophecy of what the tax law would do, she would have rejected the settlement offer, and forced a trial in open court of the punitive damage issue, even if it meant a lesser result. Her loss was thus not monetary. It was psychic. It was the loss of the opportunity to lay her employer’s dirty linen out for the world to see. It is the deprivation of that right -- the right to publicly expose her former employer -- that Root’s alleged malpractice caused Jalali to lose.
It is noteworthy for a court to recognize and seemingly understand that the so-called "psychic value" attached to litigation can be considerable. For many plaintiffs, having one's "day in court" personally means more than any amount of money that can be or is ultimately awarded, and many a reasonable settlement has been derailed by employees who would rather "lay out the dirty linen" than accept a settlement denying them that opportunity. Ultimately, however, the court determined that even if this "psychic value" was considered tangible, that Jalali did not set out sufficient evidence of harm. Jalali could not show that her case had a value significantly higher than $2.75 million, such that by bringing it to trial, she could have recovered the $1 million after taxes she expected to receive (instead of the $700,000 she did receive) in exchange for forfeiting the right to a public trial. Therefore, she was ultimately out of luck.

What is exceptional about this case, however, in the annals of taxation of damage awards cases, is how the court simultaneously understands the gravity of the double taxation of attorneys fees problem, and throws in a little humor along the way, making it significantly more interesting than your average tax case. (My apologies to any tax attorneys or other tax professionals who read this opinion--my intent is not to disparage your profession, but merely to point out that most don't consider it the most scintillating area out there.) The court recognizes that to understand Jalali's position, you have to look at what has been happening in regards to the taxation of damage awards generally, and takes a general tour through the field.
Since it strikes most people as highly counterintuitive (a fancy way of saying unfair) that a civil rights plaintiff should not be able to either exclude the fees she pays her contingency-fee attorney from her gross income, or at least get a deduction for those fees, it is worth taking a small detour to understand the problem that got Root into trouble.
Would that more people would be aware of and understand the patent unfairness! It immediately gets to the "root" of the problem (pun intended) by noting the often-insidious nature of the alternative minimum tax:
The alternative minimum tax was originally designed to insure that millionaires (back when millionaires were really millionaires) couldn’t use itemized deductions and tax credits to shield themselves entirely from federal taxes. However, it has metamorphosed into a terror for civil rights plaintiffs.
Yes, indeed, it has. The court alludes to the current tax debate over whether to tax dividents, stating
Taxation of civil rights awards is normally not a case of classic double taxation like corporate dividends -- successful civil rights plaintiffs still get to deduct their lawyers’ fees from their gross income on their regular 1040. The problem is that the alternative minimum tax doesn’t allow for the deduction of legal fees incurred in the production of income like the regular 1040 does. Because the successful civil rights plaintiff must include 100 percent of his or her recovery in calculating the alternative minimum tax, but can’t deduct the attorney’s portion, the plaintiff winds up paying taxes on income that he or she never really had. That is double taxation -- the winning plaintiff pays taxes on the same income which the attorney pays taxes on. If the attorney’s fees are too high in proportion to the recovery, the results can be downright ludicrous.
[Emphasis added.] Next, the court notes the division in authority around the country on this issue (which alone makes it a good resource for those needing sites to the various cases), noting the differences between courts which despite the policy inequities, feel constrained to apply the alternative minimum tax as required by law, and those which have taken a different approach, descriptively noted by the court as follows:
Courts which have taken the taxpayers’ side have likened an attorney’s right to receive a portion of a judgment to a partner’s right to receive a share of income from a partnership (citation omitted) and you do not have to pay taxes on your partner’s income. Or, to use the dominant metaphor of the [law review article cited for this theory], there is more than one tree in the orchard and you aren’t responsible for the fruit from the ones that aren’t yours.
Ultimately, the court concludes:
The whole area is tailor-made for a national moot court competition, since it involves a substantial split in the federal appellate courts, and ultimately turns on a common law doctrine (the “assignment of income” doctrine) on which reasonable minds could differ, depending on how you see contingency fee agreements. (citations omitted) It is enough to say here that for Jalali to have successfully excluded Root’s fee from her gross income would have required nonmoot participation in the real world equivalent of such a competition at the highest possible level.
I'm certain that all plaintiffs, attorneys and other tax professionals looking at this problem would absolutely concur.

Despite its insight and humor, this case will not on its face directly affect that many people. Hopefully, given the flux of the law and the growing expertise of employment practitioners in this area, there are not very many malpractice cases based on this issue anyway. However, it does represent the ever-growing and near-universal recognition by the courts that current tax law is patently unfair to civil rights plaintiffs. Perhaps someday soon, Congress will listen. If you haven't written your members of Congress yet, then do so today, and encourage them to listen to you!

Take Action Now: Stop Taxing Discrimination Awards Unfairly
Special Alert For Current Plaintiffs
More Information on the Civil Rights Tax Relief Act

Tuesday, June 10, 2003
Supreme Court Loosens Evidence Standard in Mixed-Motive Cases: Workers to Benefit from Ruling
In a rare unanimous decision (which is even more rare when you consider that it's an employee-friendly decision written by Justice Clarence Thomas), the U.S. Supreme Court today ruled in favor of the employee's position in Desert Palace, Inc. v. Costa. While employee advocates and attorneys are generally applauding this victory because of its modifications to the already-difficult proof standards in certain types of cases, and the likelihood that more cases will survive summary judgment, workers should rejoice as well, because the result most likely means that fewer employment cases will be thrown out of court prematurely.

The case was initiated by Catherina Costa, a warehouse worker and heavy equipment operator for Desert Palace, Inc., the owner of the famous hotel and casino in Las Vegas, Caesar’s Palace. For most of her life, Costa had worked in a male-dominated environment, operating heavy equipment and driving trucks, and this job was no different: she was the only woman in this job (operating the forklifts and pallet jacks) and in her local Teamsters bargaining unit. Before long on the job, Costa began to have trouble at work, experiencing a number of problems with management and her co-workers that led to an escalating series of disciplinary sanctions, including informal rebukes, a denial of privileges, and suspension. Costa ultimately was fired after she was involved in a fight in a warehouse elevator with fellow Teamsters member Herbert Gerber. Because the facts surrounding the incident were in dispute, both Costa and Gerber were subject to discipline, but since Gerber had a clean disciplinary record, he received only a 5-day suspension rather than termination like Costa. (See On the Docket for further factual information about this case.)

In response to her firing, Costa filed a lawsuit against her employer in the federal district court of Nevada, bringing claims of sex discrimination and sexual harassment under Title VII. The District Court dismissed the sexual harassment claim, but allowed the claim for sex discrimination to go to the jury. At Costa's trial, she presented evidence to a jury that (1) she was singled out for “intense ‘stalking’ ” by one of her supervisors, (2) she received harsher discipline than men for the same conduct, (3) she was treated less favorably than men in the assignment of overtime, and (4) supervisors repeatedly “stack[ed]” her disciplinary record and “frequently used or tolerated” sex-based slurs against her. Although her employer asked for the case to be thrown out at trial (called a "motion for judgment as a matter of law,") the judge denied that motion and submitted the case to the jury. The jury was given a set of instructions to help decide the case properly under the law, and two are relevant to this case. One instruction told the jury that >"[t]he plaintiff has the burden of proving … by a preponderance of the evidence" that she “suffered adverse work conditions” and that her sex “was a motivating factor in any such work conditions imposed upon her." The second jury instruction at issue was the following "mixed-motive" instruction:
You have heard evidence that the defendant’s treatment of the plaintiff was motivated by the plaintiff’s sex and also by other lawful reasons. If you find that the plaintiff’s sex was a motivating factor in the defendant’s treatment of the plaintiff, the plaintiff is entitled to your verdict, even if you find that the defendant’s conduct was also motivated by a lawful reason.

However, if you find that the defendant’s treatment of the plaintiff was motivated by both gender and lawful reasons, you must decide whether the plaintiff is entitled to damages. The plaintiff is entitled to damages unless the defendant proves by a preponderance of the evidence that the defendant would have treated plaintiff similarly even if the plaintiff’s gender had played no role in the employment decision.
The employer unsuccessfully objected to this instruction, claiming that Costa had failed to show any “direct evidence” (evidence that definitively proves a discriminatory motive by itself, with no further explanation or context necessary) that sex was a motivating factor in her firing or in any of the punitive actions taken against her. (Other courts had previously required that some direct evidence be shown (along with the defendant's lawful reason) before the jury would be allowed to decide whether a "mixed motive" (where a legitimate reason is combined with an improper, discriminatory one) entitled an employee to an award of damages. However, this judge rejected the logic behind those cases and allowed the case to proceed) The jury awarded Costa $364,377 in damages, including back pay, compensatory damages and punitive damages.

The employer then appealed this decision to the next highest court, the 9th Circuit Court of Appeals, and the 9th Circuit upheld the lower court's decision, ruling in favor of Hibbs. (A smaller panel of 9th Circuit judges initially ruled against Costa, but was later overruled by the larger panel of the 9th Circuit, in what is called an "en banc" review) In January, the Supreme Court decided to hear the case, and heard arguments in April about whether the jury in Costa's case had been given the appropriate jury instructions.

Here's what all nine members of the Supreme Court agreed to when ruling in Costa's favor: In 1991, when Congress amended Title VII (the federal antidiscrimination law) in the Civil Rights Act of 1991, Congress did not intend to create an additional burden for employees to win mixed-motive cases. Since direct or circumstantial (evidence that is not directly from an eyewitness or participant and requires some additional reasoning to prove a fact) evidence is permitted to show discrimination in other kinds of employment discrimination cases, in order to be consistent, it should be allowed in mixed-motive cases as well. While the Court engages in some additional analysis of the language found in various laws and previous rulings (and clears up some confusion about the import of some of its previous rulings) to reach this conclusion, this ruling is relatively very simple and straightforward: no direct evidence is required in mixed motive cases.

What does this mean for employees who bring lawsuits against their employer? It means that throughout the country, those who had mixed motive cases (estimated in the thousands) will have a much easier time moving forward, as the 9th Circuit was previously the only federal appellate court to permit circumstantial evidence in mixed motive cases. (See New York Times article.) There are a number of cases where courts have argued about whether certain evidence presented by the employee should be considered direct evidence or circumstantial evidence, because the distinction was critical as to whether the case would go forward; since cases will now be allowed to go forward in either event, fewer cases will be dismissed, either before trial in summary judgment (a pre-trial determination as to whether the case has sufficient legal merit to move ahead) or at trial after all the employee's evidence has been submitted. Eric Schnapper, a University of Washington law school professor who represented Costa, said the ruling should make companies pay more attention to discrimination complaints. "Now it's going to be easier to win these cases. Employers are going to have to be careful about their practices," Schnapper said. Defendants bemoaned the decision, as the Desert Palace lawyer claimed that "many employers accused of workplace discrimination will be considered guilty until they can prove themselves innocent." (See Washington Post article.) While this case may be of most interest to lawyers rather than members of the public, it is still a very good outcome for workers to celebrate.
Monday, June 09, 2003
Comp Time Bill Pulled From the House, But Still Poses a Threat
Yesterday (6/5), the House of Representatives pulled from consideration the Family Time Flexibility Act (HR 1119). The move signaled that Republicans in the House did not have enough votes secured in favor of the measure to guarantee passage. (See New York Times article.) This was extremely good news, both because it signaled that there are a few moderate Republicans who will listen to their constituents on labor issues, and because the Republican party leadership (at this time anyway) does not consider this battle one that requires adherence to the leadership party line.

As previously discussed here on April 12, the Family Time Flexibility Act promises flexibility and family time that it ultimately doesn't deliver. The bill does nothing to address the problem of mandatory overtime, and what's worse, it actually provides an incentive to require workers to spend many extra hours on the job. Employers, rather than directly paying employees each time they order overtime, instead can merely offer comp time at some later date convenient for the employer, so there is no financial "brake" on extra hours. Because the employer can ultimately refuse the use of comp time when the employee's absence would "unduly disrupt the employer's business operations," employers could actually deny comp time at the point at which it is most needed: during school vacations, teacher conferences, or when a family member is ill. Workers already complain that they are unable to spend vacation time when they need it (see USA Today article), so it is unlikely that spending accumulated comp time will be any easier.

HR 1119 also doesn't provide any solutions for low-paid workers who need to work overtime because they need the cash. Workers who need overtime assignments due to low pay on their jobs fear, and rightly so, a switch to comp time. The employer chooses who gets overtime assignments and if workers don't agree to time off instead of pay, it's likely they won't be chosen. What workers need is a higher minimum wage, not an erosion of the Fair Labor Standards Act's overtime pay protections. Also, why is Congress promoting a bill that is likely to increase the number of unemployed workers, rather than diminish it? Rather than hiring more employees and spreading excess work around, companies will instead just require more and more compensatory time--time that may never be taken by the employee when it's advantageous for him or her.

While it looks like HR 1119 is not going to move ahead right now, this situation could change at any time. Business leaders, including the U.S. Chamber of Commerce, have been pressing hard for the bill, and will not give up, despite this setback. Republican leaders will continue to push party moderates opposed to this bill to rethink their position. If you haven't done so already, it's very important that you contact your member of Congress, to make sure this bill stays where it belongs: in limbo and not going anywhere.

Take Action Now: Protect Your Right to Overtime Pay

Additional Reading:

All Work and No Play
The Naked Truth About Comp Time
Family Time Bad for Families

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