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$15 Minimum Wage In Florida

The Impact of a $15/hour Minimum Wage in Florida

From Florida Tax Watch, Jun 29, 2016

In states across the nation, minimum wage policies continue to dominate political and economic discussions. Recently, two of the nation’s largest states, New York and California, have both passed laws that will gradually raise the minimum wage in those states to $15 per hour. While these decisions have been met with support and criticism, the impacts in each state will be followed closely across the nation.

The idea of a $15 per hour minimum wage has also been discussed by state legislators in Florida. During the 2016 legislative session, Senate Bill 6 and House Bill 109 were introduced and proposed raising Florida’s minimum wage to $15 per hour starting in January of 2017.1 The bills would have replaced Florida’s existing floating minimum wage, which is currently $8.05 per hour. Florida’s minimum wage is reviewed each year, and either remains steady, or is increased to account for changes in the cost of living. While both bills died during the committee meeting process, the fight to raise Florida’s minimum wage to $15 per hour is likely to continue.2 With this in mind, it is important that taxpayers and policymakers understand how an increase in the minimum wage to $15 per hour would impact businesses, the job market, and the everyday lives of Florida residents.

Businesses

Currently, businesses in Florida employ approximately 183,000 minimum wage workers, roughly 2 percent of those employed throughout the state. While minimum wage workers are employed in a variety of fields, evidence points to the fact that a majority work in industries with small profit margins, such as restaurants and retail.3

The minimum wage in Florida has increased steadily over the past decade,4 but some businesses, such as JM Family Enterprises, have chosen to implement company-wide minimum wages that are above the state and federal guidelines.5 While these companies have had the ability to succesfully implement increases on their own, the vast majority of businesses may not be able to absorb an increase in the minimum wage to $15 per hour.

Using the most recent available data from the U.S. Bureau of Labor and Statistics, Florida TaxWatch estimated the overall labor costs of businesses employing minimum wage workers in the state of Florida. A conservative estimate shows that with an abrupt increase to $15 per hour Florida businesses could expect to see a nearly $2 billion ($1,834,618,188) increase in the cost of minimum wage labor. This estimate only accounts for an increase in the cost of those workers that are currently making minimum wage ($8.05 per hour); however, an increase in the minimum wage to $15 per hour would raise the cost of labor of all those employees making less than $15 per hour. Because the median wage in Florida is $15.29 per hour,6 the proposed increase would raise the cost of nearly half of Florida’s workforce, significantly impacting how businesses in Florida operate.

The Job Market
This Florida TaxWatch Economic Commentary is also available in PDF format:
“The Impact of a $15/hour Minimum Wage in Florida”

Such a dramatic increase in the cost of labor would force companies to adapt to a new business climate in the state, and the results could bring about unintended consequences that negatively impact the job market in Florida.

Recently, Seattle, Washington enacted a plan to steadily increase their minimum wage to $15 per hour.7 The affluent city with a relatively low unemployment rate seemed to be well-suited to absorb the higher labor costs that stem from an increase in the wage floor; however, data show that the city has experienced an increase in the unemployment rate and in the number of those unemployed since the implementation of a $15 minimum wage plan.8 Since April of 2015 (when the city began to phase in the minimum wage increase), Seattle has seen unemployment rise from 3.3 to 4.4 percent, and the number of those unemployed has risen by nearly 5,000 individuals.9 Many of the job losses can be attributed to businesses that have relocated, shut down, cut staff hours, or have put a freeze on hiring.10 Going forward, many business owners have raised concerns regarding their ability to adapt to the new minimum wage climate, understanding that failing to do so could result in having to close their businesses.11

In California, where they have also enacted a plan to raise their minimum wage to $15 per hour, the change in minimum wage laws has forced businesses to contemplate relocation in order to remain profitable. Fred Donnelly, president of commercial airplane parts manufacturer, California Composites, announced that he intended to move his company to Fort Worth, Texas. Donnelly claimed the increase in the minimum wage left him no choice but to move his company, and the primary factor in the decision came down to the fact that California Composites is already locked into long term contracts with set prices. With the increase in California’s minimum wage, Donnelly fears his company would fail to stay profitable if it were to stay in the state.12

Increasing the cost of labor also has companies looking for ways to adapt by automating more of their day-to-day functions. Businesses have already begun installing self-checkout stations that allow multiple checkouts to be overseen by one employee, cutting down on the number of cashiers that are needed;13 however, as wage floors continue to rise, companies will find it cost-effective to automate even more operations. Companies are already looking into various automated technologies that work in fields of customer service, order processes, and even cooking and preparing food at restaurants.14, 15 A significant increase in automation due to rising labor costs could cut down on the number of available jobs for low-skilled individuals, leaving many worse-off than they currently are.

1 The Florida Senate. Senate Bill 6. 2016.
2 The Ledger. Battle for $15 minimum wage coming to Florida. 17 April 2016.
3 Manhattan Institute for Policy Research. Issue Brief. July 2015.
4 Florida Department of Economic Opportunity. Florida Minimum Wage History 2000-2013.
5 Sun Sentinel. JM Family raises minimum wage to $16 an hour. 5 August 2015.
6 U.S. Bureau of Labor Statistics. Occupational Employment and Wage Estimates Florida. May 2015.
7 Office of the Mayor of Seattle. $15 Minimum Wage.
8 U.S. Bureau of Labor Statistics. Local Area Unemployment Statistics. May 2016.
9 U.S. Bureau of Labor Statistics. Local Area Unemployment Statistics. May 2016 *Data set used from April of 2015 to February of 2016.
10 NPR. Seattle Restaurants Scramble To Pay A Higher Minimum Wage. 9 May 2015.
11 NPR. Seattle Restaurants Scramble To Pay A Higher Minimum Wage. 9 May 2015.
12 89.3KPCC. Ahead of $15 minimum wage, 1 company leaves California for Texas. 25 April 2016.
13 Investor’s Business Daily. Wendy’s Serves Up Big Kiosk Expansion As Wage Hikes Hit Fast Food. 11 May 2016.
14 Business Insider. Here’s The Burger-Flipping Robot That Could Put Fast-Food Workers Out Of A Job. 11 April 2014.
15 Brookings. Rising minimum wages make automation more cost-effective. 30 September 2015.
The Economy and Everyday Lives of Consumers

Increasing the cost of labor, and thus the cost of operations, will force businesses to adapt. While this could include reducing staff hours, closing shop, or relocating, it will likely also lead to price increases for customers.

One example of labor costs being transferred to consumers can be seen in San Francisco, California. After the Bay Area enacted a plan to increase the city’s minimum wage to $15 per hour, fast food giant Chipotle responded by increasing the cost of menu items 10-14 percent in all the area’s restaurants.16 In response to the increase in prices, Chris Arnold, Chipotle’s Communications Director, stated that the increases were done “in part to offset higher labor costs.”17 The price increases are not just affecting burrito lovers. Data from the U.S. Bureau of Labor Statistics show that prices for dining out in San Francisco, California rose 4.8 percent over a 12 month period beginning in February of 2015,18 which is significantly higher than the 2.6 percent increase observed on the national level during the same period.19

With increases in the costs of goods and services, consumers are likely to react in a few different ways. For one, consumers can choose to do business in neighboring states that are not affected by high wage floors and therefore do not have to increase the cost of their products.20 In turn, local businesses that are not able to match the lower prices of their neighboring competitors would be at risk of losing customers. Secondly, consumers may choose to buy fewer goods in the market place due to higher prices,21 forcing businesses to close. If this were to happen, it could create a snowball effect of shrinking the market, therefore lowering the competition among businesses.

Conclusion

With many cities and states, including Florida, considering an increase in their minimum wage to $15 per hour, it is vital that taxpayers and policymakers understand the possible effects such an increase can have on the states’ businesses, job market, and economy. Early evidence has shown that even some of the most affluent areas in the U.S. have felt some negative effects, including an increase in unemployment and prices, after raising their wage floors. In a state like Florida, where the median wage is close to $15, an immediate increase in the minimum wage to $15 per hour would likely have negative effects on the state’s economy and job market. It is important that policymakers in Florida closely follow how businesses and economies in states like New York and California acclimate to increases in the minimum wage, and use the data to help make decisions regarding Florida’s minimum wage going forward.

16 American Enterprise Institute. Who’d a-thunk it? SF minimum wage increased 14% and local Chipotles just raised prices by 10-14%. 6 July 2015.
17 Entrepreneur. Chipotle Raises Prices in San Francisco After Minimum Wage Hike. 9 July 2015.
18 U.S. Bureau of Labor Statistics. Consumer Price Index, San Francisco Area. February 2016.
19 U.S. Bureau of Labor Statistics. CPI Detailed Report. February 2016.
20 Fortune. Seattle’s min wage is America’s highest, but here’s the downside. 6 June 2014.
21 NPR. Seattle Restaurants Scramble To Pay A Higher Minimum Wage. 9 May 2015.

 

Pizza Maker ordered to pay $800k in wage theft

5 June 2016

 

A Papa John’s pizza franchise in New York must pay its workers nearly $800,000 in unpaid wages over allegations the business underpaid employees and failed to pay overtime, a state judge ruled last week.

New York Attorney General Eric Schneiderman in December sued Emstar Pizza Inc., which operates seven Papa John’s franchise locations in Brooklyn and Queens, alleging that Emstar underreported hours worked by employees over the past six years, rounded employee hours down to the nearest hour, and did not pay overtime.

Attorney General Schneiderman is also considering legal action against the franchisor, Papa John’s International Inc., on the theory that it is a joint employer and thus liable for the actions of its franchisees, according to reporting from the New York Post.

The National Labor Relations Board in July ruled McDonald’s a joint employer and thus liable for labor or wage violations at its franchise locations in a first-of-its-kind decision that represents a significant victory for workers’ rights advocates. Corporations like Papa John’s and McDonald’s employ about two-thirds of the low-wage workers in this country, but have so far mostly avoided liability for the illegal actions of their franchise owners under the theory that, despite sharing a common corporate brand, each franchise is independently owned and operated.

OVERTIME PAY RULE REVISED

FROM USA TODAY, 16 MAY 2016

Moving to fatten low- and middle-income paychecks that have languished for years, the Obama administration on Tuesday unveiled a long-awaited rule that will make millions of Americans newly eligible for overtime pay.

While some businesses welcome the measure, many say it will simply force them to reshuffle salaries to get around the regulation. Others fear it will mean demoting white-collar workers and altering workplace cultures.

Businesses adopt myriad responses to overtime rule

The rule, slated to be formally released Wednesday, would essentially double the threshold at which executive, administrative and professional employees are exempt from overtime pay to $47,476 from the current $23,660. That’s expected to make 4.2 million additional workers eligible to receive time-and-a-half wages for each hour they put in beyond 40 a week.

Labor Secretary Thomas Perez said the salary threshold was originally intended to exempt high-paid executives but instead has denied overtime to low-level retail supervisors and entry-level office workers who often toil 50 to 70 hours a week.

“Too few people are getting the overtime that (federal law) intended,” he told reporters. “It’s simply not right.”

Vice President Biden called the change a critical part of the White House’s goal of “restoring and expanding access to the middle class. The middle class is getting clobbered.”

The rule represents the administration’s most prominent initiative to lift middle-class wages. President Obama’s call to raise the federal minimum wage from $7.25 an hour to more than $10 has been stymied by Republicans in Congress. The share of full-time workers who qualify for overtime has fallen from 62% in 1975 to 7% today, according to the administration. The new rule, which would take effect Dec. 1, would allow 35% of workers to qualify.

Many companies expect to convert salaried workers to hourly employees who will need to punch a clock and track their hours, hurting morale in some cases. Some will likely maintain the status of salaried employees, but will still have to monitor their hours and net the extra pay for logging more than 40. Others will lift workers’ base pay to the new threshold to avoid paying overtime.

Many small businesses can’t absorb the added cost and will instruct employees to work no more than 40 hours a week, bringing on part-time workers to pick up the slack, says Dan Bosch, head of regulatory policy for the National Federation of Independent Business. Perez said that will still be a plus because it will restore leisure time to overworked employees.

Yet some businesses plan to cut employees’ base pay to offset the overtime, effectively skirting the requirement.

“The Obama rule puts a huge cost and regulatory burden on employers, who will face pressure to cut back on benefits and full-time employees,” says Trey Kovacs, policy analyst with the Competitive Enterprise Institute.

But U.S. Rep. Mark Takano, D-Calif., said it’s “long overdue,” adding that “millions of employees are working long hours without fair compensation.”

The administration, which initially proposed the rule last summer, did make concessions in response to the 270,000 public comments it received. It lowered the new salary threshold to $47,476 from the proposed $50,544.

And it’s allowing employers to apply bonuses and incentive payments to up to 10% of the new salary threshold. The threshold also will be updated every three years instead of annually, rising to $51,000 on Jan. 1, 2020.

Perez said the new rule also clarifies the types of duties white-collar employees must perform to be exempt. That potentially makes eligible an additional 8.9 million workers now misclassified, he said, such as certain administrative employees who don’t supervise anyone.

Aribitration in wrongful termination

FROM THE NY TIMES, 15 MAY 2016

Tara Zoumer thought she had found her dream job when she was hired at WeWork, a $16 billion start-up that rents office space to young entrepreneurs. The walls were adorned with Pop Art. Neon light fixtures encouraged employees to “Hustle harder,” and there was beer on tap.

“It was like walking onto a set of a movie,” Ms. Zoumer said.

But shortly after she became an associate community manager in WeWork’s office in Berkeley, Calif., reality set in. Ms. Zoumer said she was feeling pinched because her annual salary was only $42,000, a sum that, on some weeks, left her without money to ride the subway.

She said she thought many of her duties — leading tours for prospective tenants, tidying up, answering phones and changing the kegs — were more suited to an hourly wage with a possibility for overtime.

Ms. Zoumer tried to enlist colleagues to file what she hoped would be a class-action lawsuit to fight for overtime pay. But the company had instituted a policy that could force employees to ultimately resolve disputes through arbitration instead of the courts, which essentially shut down Ms. Zoumer’s lawsuit, since arbitration bars individuals from joining in a class action.

When Ms. Zoumer refused to sign the new policy, she was fired.

As once-plucky start-ups like WeWork grow — the company’s work force has swelled to 1,500 from 300 a year ago — they are taking a page from the playbook of big corporations, which are increasingly using arbitration to thwart employees from bringing any meaningful legal challenge in court, an investigation by The New York Times found last fall.

Uber and Lyft, the ride-hailing services, make their drivers sign an arbitration clause. Square, the mobile payment processor, also requires that employees agree to bring disputes to arbitration. In advice to start-ups, Brotman Law, a tax firm in San Diego, promotes the benefits of arbitration for “companies doing business over the Internet,” emphasizing that it “can save significant costs.”

Amazon and Google also use arbitration to resolve disputes with customers.

Far from burying its arbitration clause in its employment contracts, WeWork is proud of its policy. The company’s top executives said they thought that by adopting an arbitration clause as part of a broader dispute resolution program, they were staying true to their principles, which prize all levels of employees as members of a single community. WeWork says its employees are eligible for bonuses and equity in the company in addition to their salaries.

Tara Zoumer, who was fired from WeWork for refusing to sign an arbitration clause. Ms. Zoumer earned a salary of $42,000, but she said she felt her duties were more suited to an hourly wage with the possibility of overtime. She tried to enlist her co-workers in what she hoped would be a class-action suit to gain overtime pay. Credit Jason Henry for The New York Times
For start-ups — many of which began in Silicon Valley — the clauses can seem to conflict with professed goals of upending business as usual and being open with employees. Arbitration, by its very nature, is a secretive process that is often lopsided in favor of the employer. That secrecy, federal labor officials said, can allow widespread problems to persist because the process bars employees from sharing their experiences with others who might be in similar positions.

“They give their young workers Ping-Pong tables and take away their constitutional rights,” said Cliff Palefsky, an employment and civil rights lawyer in San Francisco.

This month, the Consumer Financial Protection Bureau proposed a rule that would limit financial companies from using arbitration to prevent their customers from filing class-action lawsuits. But the rule does not apply to arbitration used in employment disputes.

As Silicon Valley companies grow from small start-ups into major employers, their labor practices are coming into focus. Despite the popular image that the industry is predominantly made up of nerdy millionaires, many of these growing companies depend increasingly on lower-paid employees.

And with some technology companies now working harder to raise money, there are growing pressures on these companies from investors to cut costs — pressures that can fall disproportionately on the workers at the lower rungs.

At WeWork, Ms. Berrent said, arbitration is part of a multistep process to resolve disputes. The company adopted the policy after months of discussion about how to deal most fairly with complaints.

At the outset of the process, WeWork requires employees to raise any complaints with their managers. If that does not work, the employee and WeWork must try mediation. Only if that fails does the issue go before an arbitrator, whose decision is binding.

Ms. Berrent said this process was in keeping with the company’s values, settling problems “through open collaboration” rather than the courts. She confirmed that Ms. Zoumer was fired for not signing the arbitration clause.

She said the employees who hold the job that Ms. Zoumer used to have were the “soul” of the company and its “brand ambassadors.” She said they performed tasks that were far from menial and were not suited to an hourly wage.

Ms. Berrent also notes that while lawsuits are both costly for the employee and confrontational, the company pays for arbitration no matter who wins.

Unprotected by an arbitration clause, companies can face litigation that could result in huge settlements. The drug company Novartis paid $175 million to settle a class-action suit brought by female employees over promotions and pay. And more than money can be at stake; Nike had to overhaul its business practices after African-American employees sued over discrimination.

At large corporations, many employees have come to expect the clauses as standard. But those working at smaller firms that claimed to treat their employees like family tend to be surprised when they collide with one.

When Kevin Ziober, a Navy reservist in Costa Mesa, Calif., first joined BLB Resources, which manages foreclosed properties, the company was just beginning; Mr. Ziober was the 18th person hired.

Mr. Ziober had already been at the company for several months when he was asked to sign the arbitration policy in January 2011. He did so without a second thought.

It was a decision he would regret. In the fall of 2012, he informed BLB Resources that he was being deployed to Afghanistan. On his last day, the company threw him a farewell party, complete with a cake shaped like an American flag.

“I was on Cloud 9,” Mr. Ziober said, recalling how he phoned his family to tell them about the party.

That afternoon, as Mr. Ziober said he was packing up his cubicle, he was called into the human resources office and was “summarily” fired, according to his legal appeal.

The reason for his termination, the company said, was that he was not being included in a federal contract that the company was applying for.

 

In 2014, after returning from Afghanistan, he sued BLB Resources for violating a federal law, known informally as Userra, that protects the jobs of service members while they are deployed. A California judge ruled that he would have to take his claim to arbitration.

Mr. Ziober’s lawyer, Peter Romer-Friedman, has appealed the case, arguing that Userra preserves the rights of service members to go to court.

BLB said in a statement that “the company is extremely disappointed about Mr. Ziober’s allegations and denies them wholeheartedly.”

With their appeal, Mr. Ziober has waded into an intense battle playing out across the country. In Washington, a group of bipartisan lawmakers introduced a bill in 2014 that would exempt service members from having to take claims of wrongful auto repossession or improper debt collection to arbitration. An almost identical bill was quashed after intense lobbying by big banks and credit card companies, never making it out of committee. A bill in California that would have prevented companies from requiring employees to sign arbitration clauses suffered a similar fate when Gov. Jerry Brown vetoed it last year.

The legislative skirmishes point to just how valuable arbitration has become to companies and just how far they will go to defend it.

Despite WeWork’s arbitration requirement, Ms. Zoumer decided to sue the company on her own, hoping she would prevail in overturning the clause. Ms. Zoumer’s lawyer, Ramsey Hanafi, filed her case in December over wrongful termination and unfair labor practices, and Boies, Schiller & Flexner, a top corporate defense firm, is representing WeWork.

Ms. Zoumer, 31, said she knew she was taking a risk when she challenged WeWork over arbitration. She told the company she needed at least a week to review the policy before deciding whether to sign it. In an email to colleagues, she encouraged them to do the same, citing The Times’s investigation into arbitration.

Ms. Berrent said Ms. Zoumer was the only employee who refused to sign other than two employees who had planned to leave the company anyway. Ultimately, no other employees joined Ms. Zoumer’s lawsuit.

“Younger people don’t want to pick fights, but we are losing our rights,” Ms. Zoumer said.

WON’T SIGN FOR HR HANDBOOK

FROM CHICAGO TIMES, 1 APRIL 2016

While employers are not required by law to provide a company handbook to employees, providing your workforce with an overview of company policies and procedures is generally considered a best practice.

An employee handbook ensures that important information (such as health benefits, disciplinary policies, and vacation accrual) is consistently shared with all workers. It also provides a ready resource for referencing such information when questions arise.

To document that all employees have received a copy of the handbook, many companies have employees sign a statement that they have read, understand, and will comply with the company policies listed in the handbook.

Some attorneys suggest, however, a simpler form that only states the employee has received the handbook and agrees to follow it, since he or she probably hasn’t read the content when signing the receipt.

So what happens when an employee refuses to sign any type of handbook receipt?

Policies still apply

Generally speaking, the policies within the handbook still apply to the employee even if he or she refuses to sign.

You may tell the employee that his or her refusal to sign will not result in an exemption from the policies contained in the handbook, and then finish by noting the date and that the employee refused to sign the receipt. The purpose of the receipt is to document that the employee was made aware of the existence of the policies, and this can still be accomplished with your notation.

The more pertinent issue, however, might be why the employee is refusing to sign. Employees refuse to sign handbook acknowledgements for a variety of reasons. Sometimes employees disagree with certain policies and have no intention of complying with them. But other times, employees don’t understand certain policies, so they don’t want to sign off that they do understand.

Even though policies apply regardless of the signature, you should ask why the employee is refusing to sign. Initiating the conversation gives you the opportunity to address any concerns the employee might have about the policies, and to potentially head off any future issues related to the policies.

Try opening the conversation with a curious, non-confrontational tone: “You are not required to sign the receipt, but you should understand that the policies will still apply to you. What is it about the policies or procedures that concerns you? The handbook is meant to be a helpful resource to you, so we want to ensure it is serving that purpose.”

The employee may expresses confusion over policies or procedures, and you will have the opportunity to clarify them. The employee may indicate that he or she cannot or will not comply with certain policies, and you will have the opportunity to discuss potential accommodations. (For example, your dress code might need to be adjusted to accommodate religious garb.)

Whatever you learn from the conversation, you will be better equipped to proactively address any future issues related to your company policies and procedures, which is arguably the point of publishing them in the first place.

“GIGS” INSTEAD OF JOBS

FROM THE NEW YORK TIMES, 31 MARCH 2016

If you believe the Silicon Valley sloganeers, we are in a “gig economy,” where work consists of a series of short-term jobs coordinated through a mobile app. That, anyway, is both the prediction of tech executives and futurists and the great fear of labor activists.

But anyone who cares about the future of work in the United States shouldn’t focus too narrowly on the novelty of people making extra money using their mobile phones. There’s a bigger shift underway. That’s a key implication of new research that indicates the proportion of American workers who don’t have traditional jobs — who instead work as independent contractors, through temporary services or on-call — has soared in the last decade. They account for vastly more American workers than the likes of Uber alone.

Most remarkably, the number of Americans using these alternate work arrangements rose 9.4 million from 2005 to 2015. That was greater than the rise in overall employment, meaning there was a small net decline in the number of workers with conventional jobs.

That, in turn, raises still bigger questions about how employers have succeeded at shifting much the burden of providing social insurance onto workers, and what technological and economic forces are driving the shift.

The labor economists Lawrence F. Katz of Harvard and Alan B. Krueger of Princeton found that the percentage of workers in “alternative work arrangements” — including working for temporary help agencies, as independent contractors, for contract firms or on-call — was 15.8 percent in the fall of 2015, up from 10.1 percent a decade earlier. (Only 0.5 percent of all workers did so through “online intermediaries,” and most of those appear to have been Uber drivers.)

And the shift away from conventional jobs and into these more distant employer-employee relationships accelerated in the last decade. By contrast, from 1995 to 2005, the proportion had edged up only slightly, to 10.1 percent from 9.3 percent. (The data are based on a person’s main job, so someone with a full-time position who does freelance work on the side would count as a conventional employee.)

This change in behavior has profound implications on social insurance. More so than in many advanced countries, employers in the United States carry a lot of the burden of protecting their workers from the things that can go wrong in life. They frequently provide health insurance, and paid medical leave for employees who become ill.

They pay for workers’ compensation insurance for people who are injured on the job, and unemployment insurance benefits for those who are laid off. They help fund their workers’ existence after retirement, at one time through pensions, now more commonly through 401(k) plans.

It’s true that the Affordable Care Act has made health insurance more easily within reach for independent contractors, for example, and temporary services firms can offer retirement benefits and workers’ comp. But over all, there’s little doubt that workers in these nonconventional work arrangements carry some of the burden of protecting themselves from misfortune that employers traditionally have carried.

That makes the question of why the shift has happened particularly important.

You could imagine a world in which more workers become independent contractors voluntarily, trading the social insurance functions of traditional employers for higher pay and greater flexibility. If the period from 2005 to 2015 had been one when workers had a lot of power in the job market, that might even be plausible.

It wasn’t. The unemployment rate was above 7 percent for nearly half of the period, from the end of 2008 to late 2013. Employers had the upper hand. That suggests it’s more likely that employers were driving the shift to these alternate arrangements.

But Mr. Katz and Mr. Krueger raise the possibility that something has changed beyond the weak job market of the last several years. And that’s technology.

When people working as a team need extensive experience working together, it can be tricky to contract out the work. But when there are clear, simple measurements of how successful each person is, and a company can monitor it, the employer now has flexibility.

“New technologies may allow some things to be shipped out and standardized and easily monitored,” Mr. Katz said. “Call center workers can be at home. Independent truck drivers can be monitored for the efficiency of their routes. Monitoring makes contracting more feasible.”

So Uber alone may not be a major force reshaping the nature of work. But the same technologies that made it possible could be making employers more interested in building a work force of nonemployees. A weak job market has probably given them more ability to make it a reality.

A big question for the next decade is whether this was a one-time shift or whether it will continue in the years ahead, even with a tighter labor market. The answer may determine if the employer-provided social insurance that was a staple of the 20th-century American economy will remain there in the 21st.

 

SCOTUS SIDES WITH WORKERS

FROM THE NY TIMES, 22 MARCH 2016

WASHINGTON — The Supreme Court on Tuesday sided with thousands of workers at an Iowa pork processing plant who had sought to band together in a single lawsuit to recover overtime pay from Tyson Foods.

Justice Anthony M. Kennedy, writing for the majority in the 6-to-2 decision, said the plaintiffs were entitled to rely on statistics to prove their case. The ruling limited the sweep of the court’s 2011 decision in Wal-Mart Stores v. Dukes, which threw out an enormous employment discrimination class-action suit and made it harder for workers, investors and consumers to join together to pursue their claims.

The Tyson workers performed tasks that were “grueling and dangerous” at a plant in Storm Lake, Iowa, Justice Kennedy wrote, slaughtering hogs, trimming the meat and preparing it for shipment. They sought to be paid for the time they had spent putting on and taking off protective gear to prevent knife cuts.

Tyson did not keep records, and the workers tried to prove their damages based on an expert witness’s statistical inferences from hundreds of videotaped observations of how long it took the workers to get ready.

The company objected, saying there was wide variation in how long the extra work took and that some workers were not entitled to overtime at all.

But Justice Kennedy said statistical proof was sufficient.

“A representative or statistical sample, like all evidence, is a means to establish or defend against liability,” he wrote. “Its permissibility turns not on the form a proceeding takes — be it a class or individual action — but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”

The Wal-Mart decision did not help Tyson, Justice Kennedy wrote.

“Wal-Mart does not stand for the broad proposition that a representative sample is an impermissible means of establishing classwide liability,” he said, adding: “While the experiences of the employees in Wal-Mart bore little relationship to one another, in this case each employee worked in the same facility, did similar work, and was paid under the same policy.”

The workers should not suffer because Tyson failed to keep records, Justice Kennedy added, citing a 1946 precedent, Anderson v. Mt. Clemens Pottery. “Where the employer’s records are inaccurate or inadequate and the employee cannot offer convincing substitutes,” the court said in 1946, it is enough for workers to rely on “sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”

In dissent, Justice Clarence Thomas, joined by Justice Samuel A. Alito Jr., said that approach “puts employers to an untenable choice.”

“They must either track any time that might be the subject of an innovative lawsuit,” Justice Thomas wrote, “or they must defend class actions against representative evidence that unfairly homogenizes an individual issue.”

Justice Thomas added that the Wal-Mart decision, rejecting evidence from about 120 women to show discrimination against 1.5 million employees, required a ruling against the Tyson workers.

“Just as individual managers inherently make discretionary decisions differently, so too do individual employees inherently spend different amounts of time donning and doffing” protective gear, he wrote. “And, just as 120 employee anecdotes could not establish that all 1.5 million class members faced discrimination, neither can” the Tyson workers’ evidence “establish that all 3,344 class members spent the same amount of time donning and doffing.”

The workers in the case, Tyson Foods v. Bouaphakeo, No. 14-1146, had won about $6 million. The money has not yet been distributed, and Justice Kennedy said the company remained free to challenge payments to workers who who were not eligible for overtime.

In a concurrence, Chief Justice John G. Roberts Jr. said that allocating the money could prove impossible. “If there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand,” he wrote.

The decision was the second victory for plaintiffs in the three class-action cases the court has heard this term. In January, in Campbell-Ewald Co. v. Gomez, No. 14-857, the Supreme Court on Wednesday ruled by a 6-to-3 vote that courts could not dismiss lawsuits simply because a defendant had offered to give the lead plaintiff everything he sought.

A third, Spokeo v. Robins, No. 13-1339, is yet to be decided. It asks whether Congress may authorize lawsuits by plaintiffs who cannot prove they suffered a concrete injury.

In a second development on Tuesday, the court said it had split 4-to-4 in Hawkins v. Community Bank of Raymore, No. 14-520. It was the first such tie vote since the death last month of Justice Antonin Scalia. The case was argued in October, and it had probably been headed for a 5-to-4 ruling with Justice Scalia in the majority.

Tuesday’s unsigned ruling, saying only that “the judgment is affirmed by an equally divided court,” left in place an appeals court decision siding with a bank in a dispute over whether it could enforce a spouse’s loan guarantee.

Based on Justice Scalia’s questions at the argument in October, he was inclined to support the bank’s position, meaning it would have won the case either way. But the Supreme Court’s tie vote established no national precedent, and it left unresolved a legal question that had divided federal appeals courts.

MARIJUANA LAWS

FROM BLOOMBERG NEWS, 22 MARCH 2016

March 14 — With a growing number of states having decriminalized marijuana, employers face some uncertainty on how to deal with the drug, attorney R. Scott Oswald, managing principal at the Employment Law Group, said March 14.

Speaking at the Society for Human Resource Management 2016 Employment Law & Legislative Conference in Washington, Oswald said an employer’s approach depends on many factors.

“All over the country we have different laws that are applying at the state level, and for a multi-state employer it is enormously challenging,” he said. While the national conversation may be moving toward an increase in legalization of marijuana, he said, federal law still prohibits it.

According to Oswald, the bottom line in the workplace is that employers can continue to terminate employees for failing a drug test. In states where marijuana use is legal, he said, “decriminalization is a defense to criminal prosecution and not an affirmative right to use.”

Considerations Under the ADA

Employers also will likely need to address whether they are willing to consider medical marijuana as a reasonable accommodation under the Americans with Disabilities Act, Oswald told conference attendees.

There are several medical conditions that are ameliorated or treatable with marijuana and qualify as disabilities under the ADA, he said. For example, he said, marijuana has proven effective for treating muscle spasms caused by multiple sclerosis; nausea from cancer chemotherapy; poor appetite and weight loss caused by chronic illness, such as HIV or nerve pain; seizure disorders; and Crohn’s disease.

“The key here is flexibility,” Oswald said, adding that employers will never have to allow for an employee who is impaired by drug use and can’t perform his or her job.

Best Drug-Testing Practices

For drug-testing policies in general, Oswald recommended the following:

  • Comply with state law. For example, some states require employers to use state-licensed labs for testing, and some states have banned random drug testing and blanket drug testing.
  • Have the policy in writing, distributed to employees and signed by employees.
  • Never take disciplinary action against an employee without confirming the drug test result via a second test of the same sample.
  • Review the legality and appropriateness of the drug policy on an annual basis.
  • Separate the organization’s drug policy from its alcohol policy.

Oswald noted that employers are generally free to set their own drug policies, whether zero tolerance or otherwise. If an employee contests the legitimacy of testing results, he recommended employers make sure they are partnered with an experienced and reputable drug-testing company so that all procedures are sure to be followed, including compliance with chain of custody, privacy and state and federal regulations.

Employers also should direct an employee contesting results to contact the third-party testing facility.

Question isn’t taboo in the workplace anymore

FROM BLOOMBERG NEWS, 3 MARCH 2016

Are you gay? The question isn’t taboo in the workplace anymore, for better or worse.

JPMorgan Chase & Co.’s human resources department is asking employees for the first time this year if they’d like to disclose their sexual orientation or gender identity. Companies including Facebook Inc., Deutsche Bank AG, IBM Corp. and AT&T Inc. also collect the data. By one measure, nearly half of the largest U.S. businesses — under pressure to be inclusive as they compete for talent — seek to gather information on who on the payroll is homosexual, bisexual or transgender so better benefit plans can be designed and managers can consider diversity enhancing promotions.

“Collecting the data is not weird now,” says Gary Gates, a retired demographer from UCLA Law School’s Charles R. Williams Institute. With the U.S. Supreme Court having legalized same-sex marriage and the military abandoning its don’t ask, don’t tell policy, “there’s much less fear and stigma.”

That may be true, but there’s enough peril that Chevron Corp. decided not to pose the question after a review identified data-security risks. Many that have studied the issue opted not to proceed, says Michelle Phillips, a lawyer with Jackson Lewis in White Plains, New York, who advises companies on employment law. Phillips says one worry is that a rogue employee might leak the information about a colleague to do him or her harm.

‘Totally Contrary’
There are a host of concerns — including that it’s legal in 28 states, from Montana to Virginia, to discriminate against anyone who isn’t heterosexual. The issue is more urgent for people who work in or travel for work to the more than 76 countries where homosexuality is a crime. Companies are careful: American Express Co., which has been collecting sexual-orientation specifics in the U.S. for 10 years, is adding a question about gender identify only in countries where that’s legal, says Chris Meyrick, the chief diversity officer. Businesses that do ask the questions make it clear it’s voluntarily to answer.

For former Ford Motor Co. Chief Financial Officer Allan Gilmour, who came out as gay in the 90s after twice being passed over for chief executive officer, it’s a pleasant surprise that employers are interested. “I never would guessed 20 years ago that questions of this kind would be asked,” he says. Back then, it was best to operate as though “this is nobody’s business except mine.”

Tom Barefoot, a strategic planning manager and senior vice president at Wells Fargo & Co. in Charlotte, North Carolina, was one of the employees who encouraged the bank to adopt the self-identify policy in 2011. “When I finally clicked that one field on my sexual orientation, it was just like time had stopped,” he says. “I’m actually putting into our HR system that I’m gay? It felt really good.”

JPMorgan began posing the question in 2007 in anonymous surveys, and LGBT workers approached management about making it part of the human resources system. They wanted “to make themselves visible,” says Therese Bechet Blake, head of diversity for the corporate sector. But at EY, “there was some outrage” when after five years of the anonymous approach the consulting firm in 2014 put the query on human resources paperwork, says Chris Crespo, the inclusiveness director.
The most concerned were those who travel to countries where their lifestyle is a crime, she says. “There were very mixed feelings.”

Michael Elliott, an executive director in Dallas for EY’s consulting practice, says his initial worry was that “we didn’t make people feel like we were forcing them out.” And Elliot says that when he checked the not-straight box last year it was anti-climactic.

Few Objections
“It totally amazes me that the mindset has started to shift,” he says. “As little as 10 years ago, at smaller companies, you could either be easily fired or they were following the military idea of don’t ask, don’t tell.”

About 2.1 percent of EY workers reported being LGBT in the anonymous surveys. The HR data collected is too new for comparison, Crespo says, though EY estimates 2.1 is half the actual percentage. At EY and many other companies, she says, about 4 percent of people prefer not to answer, saying they don’t trust the question or consider it inappropriate.

“Voluntary self-identification is something that seems innocuous at first blush, and generally could be a good idea, but it’s actually much more complicated,” says Phillips, the lawyer. “No question, everything being equal, it’s better to collect than not collect. The problem is that everything isn’t equal.”

 

IT IS SEX HARASSMENT, SAY HOOTERS MALES

MALE EMPLOYEES AT HOOTERS SUE, 3 MARCH 2016

HOLLYWOOD (CBSLA.com) — Hooters is known for their attractive servers and tasty wings, but two men who worked at the establishment claim their male boss sexually harassed them for years.

“Repeated, intense acts which were intended to cause mental harm to the plaintiffs, to humiliate them, to undermine them,” said Jason Oliver, an attorney who is representing both men.

Oliver’s clients PJ Cagnina and Scott Peterson filed a lawsuit Tuesday alleging multiple instances of harassment.

One of those instances accuses their boss of throwing one of the men “down to the parking lot ground” and forcibly engaging in simulated sodomy, according to the suit.

They also claim the defendant would “touch male employee’s buttocks when standing behind them.”

Oliver says both his clients were Hooters’ managers at multiple locations around the Southland, including downtown Los Angeles, Costa Mesa, and Hollywood.

They claim they confronted their boss about the behavior and the company investigated him. Within months, he was fired with no explanation as to why.

But soon after, Peterson was also let go, which his attorney argues was in retaliation.

“When they stood up to him, they paid the price. They were punished even more in terms of other types of mistreatment,” Oliver said.

Hooters released a statement that said: “This matter involves a franchised location and its employees in California. We have no independent knowledge of the facts and are therefore unable to comment.”

Neither men work for Hooters anymore and could not speak with CBS2 on-camera Wednesday night, but Oliver says this is not just about money, but is to want to make sure this kind of behavior doesn’t happen again.