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The Workplace Fairness 2009 Labor Day Report

Where We Are Now: In the First Eight Months

Not the Depression But Still a Recession: The 2009 Economy and Layoffs

Possibly the worst economic slump since the Great Depression, most of the world’s countries have experienced a significant economic recession in 2009. Many major corporations (AIG, General Motors, Sprint Nextel and more) have already been weakened or face either major restructuring or bankruptcy. Many people have lost their jobs as more companies try to cut back costs to maintain profit in this economy. With the unemployment rate climbing and the stock market plummeting, this is not the first time that the global economy is going through recession and most likely will not be the last time.

This year’s recession is killing jobs at an alarming pace, with tens of thousands of new layoffs announced recently by some of the biggest names in American business including Pfizer, Caterpillar and Home Depot. Looking ahead, economists predicted a net loss of at least 2 million jobs and possibly more this year even with the enactment of President Barack Obama’s stimulus package of increased government spending and tax cut. Last year, the economy lost a net 2.6 million jobs, the most since 1945, though the labor force has grown significantly since then. The recession also caused many large layoffs at big law firms. The recession took a steep toll on the legal profession, an industry long seen as immune from the ups and downs of the economy. Trying to weather the financial crisis, the nation’s largest law firms are laying off attorneys and delaying the hiring of others. The Labor Department announced that the number of unemployed lawyers jumped 66 percent last year to a 10-year high of 20,000.

The unemployment rate, now at a 16 year high of 7.2 percent could hit 10 percent or even higher later this year or early next year, under the projections of some analysts. With the recession expected to drag on through much of this year, more damage will be inflicted on both companies and workers. In a survey by the National Association for Business Economics, 39 percent of forecasters predicted job reductions through attrition or “significant layoffs” over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans. About 17 percent thought hiring would increase. The deepest job cuts of the recession came in January when 741,000 jobs disappeared, the most in any month since 1949. The economy lost an average of 691,000 jobs each month during the first quarter. That slowed to an average of 436,000 a month in the second quarter.

A new report by the placement firm Challenger, Gray & Christmas found that companies are often turning to a creative combination of measures to cut cost beyond layoffs. Those measures include pay freezes or reductions, forced vacations, travel cutbacks and the elimination of year-end bonuses. However, the government reported last week that the economy shrank at a pace of just 1 percent from April to June, the strongest signal yet that the recession may be ending.

Citing fresh evidence that the recession is winding down, President Barack Obama says the country’s future economic prosperity depends on building a new, stronger foundation and recapturing the “spirit of innovation.” Crediting the $787 billion economic stimulus program for much progress, Obama believes that America has started to put the brakes on this recession. Many workers, however, especially those who are unemployed or underemployed, or who have lost significant amounts of their retirement savings, continue to take a “wait and see” approach before believing the recession is truly over.

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Working for Workers: The 2009 Economic Stimulus Package

Congress recently passed the American Recovery and Reinvestment Act of 2009 (ARRA or the 2009 Economic Stimulus Package). President Obama signed this Law on February 17th, 2009. The purpose of the Stimulus Bill is to assist the growing ranks of jobless workers and boost the economy. Furthermore, the package is supposed to help create jobs and promote economic recovery. The $789 billion stimulus package makes it one of the largest economic rescue programs since the New Deal.

The 2009 Economic Stimulus package contains several relevant employment provisions to work for workers with a few highlighted here:

  • Changes to Unemployment Insurance: The ARRA expands the amount of unemployment insurance benefits, eligible circumstances and duration of unemployment benefits. The Stimulus Package also contains some key measures to assist jobless workers who have exhausted state Unemployment Insurance (UI) benefits. For instance, the Act extends the existing Emergency Unemployment Compensation (EUC) program, a program to make additional funds available in times of economic crisis, otherwise due to expire in March 2009 until December 31, 2009 when benefits will phase out unless Congress acts to extend EUC. Under EUC, workers in most states (those with unemployment levels above 6%) are getting up to 33 weeks benefit extensions. Those in states with lower unemployment levels receive 20 added weeks of benefits. For more information on the Stimulus Package’s effect on unemployment click here.
  • COBRA Health Insurance Subsidies: Currently, the law provides that employers of 20 or more individuals with health plans must offer them an option under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to pay for continuation of their health insurance coverage. Regular COBRA payments are 102 % of the group health rate for either individuals or family members, depending upon the circumstances. The ARRA recognizes that the COBRA option is not affordable for most unemployed workers so ARRA offers a temporary measure under COBRA to expand the number of jobless workers maintaining health care coverage with COBRA by providing a subsidy of 65% of premium costs for up to nine months for individuals losing health care coverage because they were involuntarily terminated from their jobs on or after September 1st, 2008. For more information on the Stimulus Package’s effect on COBRA click here.
  • Whistleblower Protections: The ARRA includes robust whistleblower protections designed to ensure that employees can disclose waste, fraud, gross mismanagement or a violation of law related to stimulus funds. The Act provides that protected employers may not discharge, demote, or otherwise discriminate against an employee as a reprisal for disclosures to the Recovery Accountability and Transparency Board, the employee’s supervisor, a state or federal regulatory or law enforcement agency, a member of Congress, a court or grand jury, the head of a federal agency, or an agency’s inspector general that the employee reasonably believes is evidence of the following: Gross mismanagement of an agency contract or grant relation to covered funds; A gross waste of covered funds; A substantial and specific danger to public health or safety related to the implementation or use of covered funds; An abuse of authority related to the implementation or use of covered funds; or a violation of law, rule or regulation related to an agency contract (including the competition for or negotiation of a contract) or grant awarded or issued relating to covered funds.
  • Executive Pay Limitations: The Stimulus Package also imposes limitations on executive compensation and golden parachute payments where senior executives get a windfall payment for leaving their company. Recently, the Obama administration has introduced a new proposal to restrict executive pay. On June 10, 2009, the Treasury Department appointed a well-known Washington lawyer, Kenneth R. Feinberg, to oversee the compensation of employees at the seven companies who received billions of dollars in financial assistance during this economic crisis- the American International Group, Citigroup, Bank of America, General Motors, Chrysler and the financing arms of the two automakers. He will have broad discretion to set the salaries and bonuses for their five most senior executives and their 20 most highly paid employees. The new plan also calls on Congress to adopt legislation that would let shareholders vote on pay levels and require public companies to strengthen the independence of boards panels that set executive pay. While there is no salary cap at these companies, by electing to limit executive pay to less than $500,000, the companies will receive automatic approval from Mr. Feinberg. For more information, click here.

Whether the stimulus bill is exactly what every conservative or liberal thinks it should be to help this economy, many economists believe that anything pumping money into the economy is bound to help. “Most economists say that [the stimulus] is so big it will have to do some good. It will generate some GDP growth,” said U.S. Chamber of Commerce chief economist Martin Regalia. Although it may be too early to tell how much help this bill will do for workers, it seems that many take hope in something being better than nothing.

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The First Bill Sends a Message: Lilly Ledbetter Equal Pay Act

President Obama signed his first bill into law on January 29, 2009 approving the Lilly Ledbetter Fair Pay Act, approving equal-pay legislation that he said would “send a clear message that making our economy work means making sure it works for everybody.” The bill restores the longstanding interpretation of Title VII of the Civil Rights Act and other discrimination statutes, thereby protecting women and other workers. This act was named for Ms. Ledbetter, an Alabama woman who at the end of a 19-year career as a supervisor in a tire factory complained that she had been paid less than men. President Obama had long championed this bill and Lilly Ledbetter’s cause, and by signing it into law, he ensured that women like Ms. Ledbetter and other victims of pay discrimination could effectively challenge unequal pay. Justice Ginsburg’s dissent in Ledbetter v. Goodyear Tire & Rubber Co. summarizes the facts of Ledbetter’s complaint:

Lilly Ledbetter was a supervisor at Goodyear Tire and Rubbers plant in Gadsden, Alabama, from 1979 until her retirement in 1998. For most of those years, she worked as an area manager, a position largely occupied by men. Initially, Ledbetter’s salary was in line with the salaries of men performing substantially similar work. Over time, however, her pay slipped in comparison to the pay of male area managers with equal or less seniority. By the end of 1997, Ledbetter was the only woman working as an area manager and the pay discrepancy between Ledbetter and her 15 male counterparts was stark: Ledbetter was paid $3,727 per month; the lowest paid male area manager received $4,286 per month, the highest paid, $5,236.

The Lilly Ledbetter Fair Pay Act restored the law to where it was before the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co. In this case, the Court ruled that employees subject to pay discrimination like Lilly Ledbetter must file a claim within 180 days of the employer’s original decision to pay them less- even if the employee continued to receive reduced paychecks and even if the employee did not discover the discriminatory reduction in pay until much later. Restoring these rules means that complaints can be filed 180 days after any discriminatory paycheck. This legislation expands workers’ rights to sue in similar cases to Ms. Ledbetter’s and relaxed the statute of limitations, restarting the six-month clock every time the worker receives a paycheck.

Congress had tried to pass an earlier law after this 2007 court decision that would have effectively overturned the ruling while President George W. Bush was still in office, but the White House opposed it. Opponents contended it would encourage lawsuits and argued that employees could delay filing their claims in the hope of reaping bigger rewards. With President Obama signing the Lilly Ledbetter Fair Pay Act, his first official bill as president, he expanded the access to justice for equal pay.

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Significant Steps Backward: The Supreme Court’s 2009 Employment Cases

The Supreme Court concluded its most recent term with three significant employment law decisions involving age and race issues. The Supreme Court decided how an employee must prove intentional age discrimination under the Age Discrimination in Employment Act (ADEA). Furthermore, the Supreme Court decided whether an employer could violate Title VII of the Civil Rights Act of 1964 by discarding promotional test results that proportionately favor non-minority employees. A decision released earlier in the term prevented female employees from challenging discriminatory pension benefits that resulted from pregnancy leaves taken before the Pregnancy Discrimination Act (PDA) was enacted. These decisions have far-reaching implications for employers, and may be considered retreats in the area of workers’ rights.

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of race, color, religion sex, or national origin. The Age Discrimination in Employment Act of 1967 (ADEA) prohibits employment discrimination specifically on the basis of age. Both Title VII and ADEA prohibit intentional employment discrimination (disparate treatment) and, in some cases, facially neutral employment practices that are not intended to discriminate but disproportionately affect minorities or individuals who are age 40 or older (disparate impact).

Although Title VII expressly allows “mixed-motive” discrimination claims (i.e., when an employment action is motivated by both a legally permissible reason and a discriminatory reason), ADEA has no parallel provision. Nonetheless, courts have allowed mixed-motive age discrimination claims, offering the context of reductions-in-force and business restructurings. The Supreme Court has now confirmed in Gross v. FBL Financial Services that ADEA does not authorize such claims. This decision is potentially helpful to employers, as it makes it more difficult for workers to prove age discrimination cases when there are multiple discriminatory factors involved. At least in the near future, the decision may have a moderating effect on the filing of age discrimination claims, particularly in the context of reductions-in-force and business restructurings.

Gross addressed whether a plaintiff must present direct evidence of age discrimination in order to obtain a mixed-motives jury instruction in a suit brought under the Age Discrimination in Employment Act of 1967 (ADEA). In this case, Jack Gross began working for FBL in 1971. As of 2001, Gross held the position of claims administration director until 2003 when Gross was reassigned to the position of claims project coordinator and his previous position was given to Lisa Kneeskern. Although Gross and Kneeskern received the same compensation, Gross considered the reassignment a demotion because of FBL’s reallocation of his former job responsibilities to Kneeskern.

In Ricci v. DeStefano, the Supreme Court considered reverse discrimination under Title VII. The Court discussed steps employers should take before discarding a facially neutral test or employment practice that appears to adversely and disproportionately affect a protected class. In this case, New Haven, Connecticut used objective examinations to identify those firefighters best qualified for promotion. When the results of such an exam to fill vacant lieutenant and captain positions showed that white candidates had outperformed minority candidates, a rancorous public debate ensued. Confronted with arguments both for and against certifying the test results- and threats of a lawsuit either way- the City threw out the results based on the statistical racial disparity.

Petitioners, white and Hispanic firefighters who passed the exams but were denied a chance at promotions by the City’s refusal to certify the test results, sued the City and respondent officials, alleging that discarding the test results discriminated against them based on their race in violation of Title VII of the Civil Rights Act of 1964 (CRA). The defendants responded that had they certified the test results, they could have faced Title VII liability for adopting a practice having a disparate impact on minority firefighters. In sum, fear of litigation alone cannot justify the City’s reliance on race to the detriment of individuals who passed the examinations and qualified for promotions. Discarding the test results was impermissible under Title VII, and summary judgment is appropriate for petitioners on their disparate-treatment claim. If, after it certifies the test results, the City faces a disparate-impact suit, then in light of this holding the City can avoid disparate-impact liability based on the strong basis in evidence that, had it not certified the results, it would have been subject to disparate-treatment liability.

After this case, employment actions taken to avoid potential disparate impact claims will be subject to greater scrutiny. On the other hand, increased intentional discrimination claims alleging reverse discrimination may well follow. Although Ricci put some legal limits on how far employers can go in trying to achieve racial diversity before they unlawfully discriminate on the basis of race, it provides little practical guidance to employers as to how to reconcile the competing interests of different employee groups. Thus, employers may still have difficulty determining when race can be considered, when concerns over potential disparate impact claims will allow them to change course, or when doing so would open them up to reverse discrimination claims.

Finally in AT&T v. Hulteen, AT&T long based their pension calculations on a seniority system that relied on years of service minus uncredited leave time, giving less retirement credit for pregnancy absences than for medical leave generally. In response to the ruling in General Elec. Co. v. Gilbert, 429 U. S. 125, that such differential treatment of pregnancy leave was not sex-based discrimination prohibited by Title VII of the Civil Rights Act of 1964, Congress added the Pregnancy Discrimination Act (PDA) to Title VII in 1978 to make it “clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions,” Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U. S. 669, 684. On the PDA’s effective date, AT&T replaced its old plan with the Anticipated Disability Plan, which provided the same service credit for pregnancy leave as for other disabilities prospectively, but did not make any retroactive adjustments for the pre-PDA personnel policies. Each of the individual respondents therefore received less service credit for her pre-PDA pregnancy leave than she would have for general disability leave, resulting in a reduction in her total employment term and, consequently, smaller AT&T pensions. They, along with their union, also a respondent, filed Equal Employment Opportunity Commission charges alleging discrimination based on sex and pregnancy in violation of Title VII. The Court held that an employer does not necessarily violate the PDA when it pays pension benefits calculated in part under an accrual rule, applied only pre-PDA, that gave less retirement credit for pregnancy than for medical leave generally. Because AT&T’s pension payments accord with a bona fide seniority system’s terms, they are insulated from a legal challenge under the Pregnancy Discrimination Act.

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Workers Have Lost Their Champion: The Death of Senator Edward Kennedy

U.S. Senator Edward Moore “Ted” Kennedy, United States Senator from Massachusetts and a towering figure in the Democratic Party, died on August 25th, 2009 at age 77. Senator Kennedy had brain cancer, which was diagnosed in May 2008. He was buried in Arlington National Cemetery outside Washington, near the graves of his brothers President John F. Kennedy (assassinated in 1963) and Senator Robert Kennedy (fatally shot while campaigning for the 1968 Democratic presidential nomination). Sen. Kennedy took the helm of one of America’s most fabled political families after his two older brothers were assassinated, and during his Senate tenure led efforts that dramatically transformed the American workplace to improve conditions for workers.

First elected in November 1962, Senator Kennedy was elected nine times and served for a total of 46 years in the U.S. Senate. At the time of his death, he was the second most senior member of the Senate, and the third-longest serving senator in U.S. history. Through his long tenure and influence, Kennedy became known as “The Lion of the Senate,” widely respected on both sides of the aisle for his commitment to progress and his ability to legislate. He fought for and won many battles- on voting rights, education, immigration reform, the minimum wage, national service, the nation’s first major legislation to combat AIDS, and equality for minorities, women, the disabled and gay Americans. Since the 2006 elections, Senator Kennedy was Chairman of the Senate Health, Education, Labor and Pensions Committee, and played a leading role in virtually every legislative effort effecting workers.

Hailed as one of the most influential and longest-serving senators in U.S. history, Sen. Kennedy was a longtime advocate of healthcare reform, a signature issue of Obama’s presidency. Defining healthcare as “the cause of my life,” Sen. Kennedy was determined to provide healthcare to all Americans. He helped draft legislation to overhaul the $2.5 trillion U.S. healthcare system, but was sidelined while it was discussed in Congress. His interest in healthcare dated back to his own experience of back injury suffered during a 1964 plane crash that damaged his spine and left him with persistent pain, and later, his son’s bout with cancer in the 1970s. His death has energized and mobilized activists to continue his battle and ensure significant health care reform in his name.

Sen. Kennedy also helped enact measures to protect civil and labor rights, expand healthcare, upgrade schools, increase student aid and contain the spread of nuclear weapons, among the more than 2,500 bills he authored throughout his career in the United States Senate. Of those bills, several hundred have become Public Law, making a significant difference in the quality of life for all Americans, and especially workers. Among the many landmark laws enacted under his leadership and sponsorship are the Protection and Advocacy for Mentally Ill Individuals Act of 1986, the Americans with Disabilities Act of 1990, the Ryan White Comprehensive AIDS Resources Emergency Act of 1990, the National Institutes of Health Revitalization Act of 1993, the Health Insurance Portability and Accountability Act of 1996, the Food and Drug Administration Modernization Act of 1997, the creation of the Children’s Health Insurance Program (CHIP) in 1997 (“HIPAA”), the Children’s Health Act of 2000, the Pandemic and All-Hazards Preparedness Act of 2005, and the Genetic Information Nondiscrimination Act of 2008.

In addition to pursuing comprehensive health coverage, Kennedy’s vast accomplishments also include: providing resources for medical research; working to reduce medical errors and preventable death; enhancing mental health care; addressing disparities in minority health; fighting for fair elections; reforming the immigration system; promoting citizenship; preserving affirmative action; promoting gender equity; protecting religious freedom; pursuing fairness in courts and the administration of justice; protecting voting rights; raising the minimum wage; strengthening unemployment insurance; protecting workers’ pensions; helping Americans meet the needs of work and family; fighting for equal pay for equal work; enhancing worker safety; protecting the right to organize and associate freely; protecting the rights of federal employees; preventing genetic discrimination; and ensuring disabled Americans can live productive lives. For more information on Kennedy’s many accomplishments, click here.

Sen. Kennedy’s death greatly impacts America. As a leader in health care reform, this reform and many other issues leave hung in balance. Furthermore, the HELP committee lost their most effective legislator. Although pending legislation Sen. Kennedy supported and large battles may have unclear futures, we are certain the accomplishments of Sen. Kennedy will not be forgotten and that this leader who contributed so much to a better America will surely be missed.

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On the Horizon for Workers: Important Battles Ahead »