House Subcommittee Examines Reforms to Federal Employees’ Compensation Act

Today, the House Committee on Education and the Workforce’s Subcommittee on Workforce Protections, chaired by Rep. Tim Walberg (R-MI), held a hearing entitled, “Reforming the Workers’ Compensation Program for Federal Employees.”

The press release about the Hearing states:

Enacted in 1916, the Federal Employees’ Compensation Act (FECA) provides workers’ compensation benefits to federal employees who become injured or ill through work-related activity. The program covers approximately three million civilian federal workers and paid out nearly $3 billion in benefits in 2014. The law has not been meaningfully updated since 1974, and there are concerns that current, outdated benefit policies may be too generous and discourage employees’ return to work. The Department of Labor, in its Fiscal Year 2016 budget request, has proposed a series of reforms intended to improve the program.  [The hearing] will provide committee members with an opportunity to further evaluate the administration’s proposed reforms, as well as other possible legislative changes to reform the law.

Witnesses (listed below, with links to their testimony) generally agreed on the need to reform the FECA program, which has not been “meaningfully updated” in 40 years.  They discussed a specific proposal included in the Obama administration’s fiscal year 2016 budget blueprint for the Department of Labor that are intended to improve return-to-work procedures, streamline claims processing, and update benefits levels.

Witness List

Mr. Leonard Howie – Director of Office of Workers’ Compensation Programs, Department of Labor (Washington, D.C.)

Mr. Ron Watson – Director of Retired Members, National Association of Letter Carriers (Washington, D.C.)

Dr. Andrew Sherrill – Director of Education, Workforce, and Income Security, Government Accountability Office (Washington, D.C.)

The Honorable Scott Dahl – Inspector General, Department of Labor (Washington, D.C.) Continue reading

Can the NLRB Order Bad Faith Bargainers To Pay A Union’s Negotiating Costs?

The NLRB’s power to remedy violations of §8 of the NLRA is usually quite limited: it can issue cease and desist letters, order the parties to bargain in good faith, and require reinstatement and backpay for individual employees (along with several less common remedies). The Board’s authority derives from §10 of the NLRA, which the Supreme Court has interpreted as being entirely remedial; under the Court’s caselaw, the Board is not empowered to issue punitive remedies. Some have criticized this remedial scheme as overly circumscribed, allowing for little flexibility to deter willful or repeat violations of the Act. In Fallbrook Hospital Corporation v. NLRB, the DC Circuit recently opened the door for unions to recover the costs incurred while dealing with an employer that has negotiated in bad faith—at least if the violations were repeated and egregious. A discussion of the case and its meaning for labor-management negotiations follows.

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Today’s News & Commentary — May 20, 2015

Los Angeles has become the latest city to implement a $15 per hour minimum wage, according to the New York Times.  In a 14-1 vote, the city council approved a plan to increase the minimum wage from $9 to $15 by 2020.  Los Angeles County, moreover, is considering a plan to similarly increase wages in surrounding areas that are not part of the city of Los Angeles.  According to the Times, “proponents of the wage increase say they expect that several nearby cities, including Santa Monica, West Hollywood and Pasadena, will also approve higher wages.”  The Los Angeles Times has further coverage.

The Washington Post reports that Democrats in Congress are increasingly skeptical about the proposed Trans-Pacific Partnership trade deal.  Of particular concern is whether the deal will adequately ensure that participating countries implement higher labor standards for their workers.  Taking Vietnam as an example, Democratic Representative Sander Levin told the Post that “[a]t this point, there are no commitments from Vietnam to take any steps” and said that he had “no confidence that it will be done before we vote.”  That the deal would include “enforceable improvements in the labor standards of participating countries” has been central to the Obama administration’s arguments in favor of the plan.

In her presidential campaign, Hillary Clinton has thus far remained neutral on the Trans-Pacific Partnership, although she was “a one-time booster of the pact,” according to the Wall Street Journal.  Despite this, she continues to enjoy the strong support of labor unions, who have been staunch opponents of the trade deal but who “don’t appear eager to bloody the Democrats’ front-runner for the nomination.”

In further international news, the Associated Press reports on the lack of labor rights for refugees fleeing the conflict in Syria.  Many of these refugees work in Jordan and Lebanon, “usually for far less than what local residents would accept, driving down wages across the board for unskilled labor.”  The humanitarian crisis has been further exacerbated by cuts to U.N. aid programs.

Uber and Lyft: Customer Reviews and the Right-to-Control

Yesterday, I moderated an ABA “webinar” on Uber, Lyft and the sharing economy with three great panelists: Shannon Liss-Riordan, Richard Reibstein, and Evan Spelfogel.  One of the most productive exchanges came during the discussion of how to determine whether Uber and Lyft (and similar “sharing economy” or “gig economy” firms) have sufficient control over the work carried out by their drivers to be deemed employers under the relevant employment laws.

In particular, we discussed the relevance of customer reviews to the “right-to-control” question; the question that is at the heart of essentially all tests of employment status. As is well known, both Uber and Lyft rely on customer ratings when deciding to terminate drivers. Both firms allow customers to rate their drivers with a 1-5 star system, and both firms terminate drivers – denying them future access to the relevant platforms – when the driver’s average star rating falls below a certain level.  For example, Judge Chen’s order states: “Uber may terminate any driver whose star rating ‘falls below the applicable minimum star-rating,’ and a significant amount of evidence in the record indicates that Uber does, in fact, terminate drivers whose star ratings fall below a certain threshold determined by Uber.”  It also appears that both companies may use the star ratings as a means of enforcing specific work rules: for example, rules regarding cleanliness, type of music to be played in the car, where and how to pick up passengers, etc…

My view – reinforced by yesterday’s discussion – is that the star rating system, as currently practiced, does suggest that Uber and Lyft are exercising employer-like control over termination decisions.  I think Judge Chen and Judge Chhabria have this right.  Yesterday’s discussion also suggested that this conclusion depends on the specific role that Uber and Lyft are themselves playing in the customer review systems.   Continue reading

Gig News — May 19, 2015

This post is part of an ongoing series on labor and the gig economy.

The Wall Street Journal published contrasting opinions on whether the gig economy is good for workers.  Rachel Botsman, who teaches a class on the collaborative economy at Oxford University, argues that the gig economy is “enabling individuals to take entrepreneurial risks they wouldn’t have taken otherwise” and that for many workers it is preferable to a traditional employment relationship.  She acknowledges the benefits that gig economy workers do not receive relative to traditional employees, but attributes the disparity to the gig economy being “caught in a historical cycle of technological innovation outpacing employment law.”  Author and Silicon Valley executive Andrew Keen, on the other hand, writes that the gig economy isn’t providing good jobs but rather “is compounding the increasingly precarious nature of 21st-century labor and creating a new class of networked workers.”  He finds the fact that gig economy workers don’t have legal benefits problematic and fears it is perpetuating inequality, concluding that “to create good jobs [the gig economy] must provide workers with the minimal benefits that guarantee a decent standard of living.”

The Federal Trade Commission is investigating gig economy firms, according to the Financial Times.  The FTC is looking to see how they “can regulate these new business models in a way that would protect consumers and not hinder innovation.”  In addition to the collection of personal data and the use of rating systems, the FTC is interested in legal liability for injuries.

The Hill reports that two California lawmakers have launched a bipartisan “Sharing Economy Caucus” in the U.S. House of Representatives.  Rep. Eric Swalwell said that “this Caucus will explore the opportunities made possible by the sharing model, and how Congress can foster innovation and address challenges posed by this emerging sector.”

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Guest Post: Pension Protection in the Illinois Supreme Court

David Skeel is a Visiting Professor at Harvard Law School.

On Friday, the Illinois Supreme Court released its much anticipated ruling in the challenge to the 2013 Illinois pension reforms referenced in my previous post.  (In re Pension Reform Litigation, 2015 IL 118585 (Ill S. Ct., May 8, 2015)).  As expected, the court struck down the reforms, deeming them incompatible with the pension protection in the Illinois state constitution.  The ruling’s most surprising feature was its breadth.  The court suggested that the pensions of current and retired public employees cannot ever be reduced, in any way, no matter how bleak the state’s financial condition might be.

As described by the court after a detailed discussion of Illinois’s long history of underfunding its pensions, the 2013 legislation would have increased the retirement age for employees who joined one of the pension systems before January 1, 2011, replaced the automatic 3% yearly increase in these employees’ annuities with a variable formula, and altered their pensions in three other ways.  The seven members of the Illinois Supreme Court unanimously agreed that these adjustments are forbidden by Illinois’s constitutional pension protection, which states that: “Membership in any pension or retirement system of the State … shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”  As it has done in the past, the court construed this provision as protecting a public employee from the moment she “first embarks upon employment in a position covered by a public retirement system,” and as prohibiting changes not just to benefits the employee has already earned, but also to benefits that may accrue in the future.

To appreciate the breadth of this protection, it is useful to compare it to the Michigan constitutional provision that came into play in the Detroit bankruptcy.  Continue reading

Today’s News & Commentary — May 15, 2015

Politico reports that two lawsuits against Chicago Mayor Rahm Emanuel’s pension-reform law will now commence after a judge placed them on hold. One lawsuit is being brought by public-sector unions and the other by public employees. A Cook County Circuit Court judge had placed both lawsuits on hold pending resolution of an Illinois case involving a similar law penned by then-Gov. Pat Quinn. On May 8, however, the Illinois Supreme Court held that the “fix” was unconstitutional. Mayor Emanuel had enacted the current law in 2014 to plug a $900 million shortfall. The pension cuts reduced the cost-of-living adjustments and increased employee contributions for 61,000 Chicago employees and retirees.

According to The LA Times, the L.A. County Board of Supervisors passed a measure by a 3-2 vote to sever the county’s contract with the U.S. Immigration and Customs Enforcement (ICE). Since 2005, the contract had allowed ICE agents to work in county jails and trained jail employees to determine the immigration status of inmates. At the same time, the Board expressed its support for a new measure known as the Priority Enforcement Program (PEP). President Obama had announced the program last year when he promised harsher immigration enforcement on “felons, not families.” PEP is meant to replace the problematic and often criticized Secure Communities program. However, many advocates and officials argue that PEP “falls short of resolving the issues that plagued Secure Communities.” Hilda Solis, L.A. County Supervisor, who voted in support of PEP, noted that the county would keep an open eye and take a “trust, but verify” approach to the new program.

In international news, the European Union has announced plans for a new quota system that it hopes will “more evenly” allocate the burden of migration emergency across member states. Currently, more than 70% of asylum applications in the EU are filed in Germany, Sweden, Italy, and France. The new system would provide for a more “equitable distribution of migrants” though Britain, Ireland, and Denmark will continue to be exempt due to an existing arrangement with the EU. The plan would reallocate the burden on each member state depending on each state’s gross domestic product, unemployment rate, total population, and the number of refugees the state has already accepted.