FIRST THE FOREST, THEN THE TREES: AN OVERVIEW OF EMPLOYMENT AND LABOR

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.Chapter 1

FIRST THE FOREST, THEN THE TREES: AN OVERVIEW OF EMPLOYMENT AND LABOR

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INTRODUCTION

Chapter one introduces the student to foundations of labor and employment laws and how political, social, and economic conditions have contributed to the rise and fall of 1) government intervention in the employer/employee relationship, and 2) the influence of organized labor. Historical examples date back to the New Testament of the Bible and should enlighten the student to the fact that the employer/employee struggle for power speaks directly to the nature of human psychology and the quest for power and resources.

After reading this chapter, students should realize that the balance of power in the employer/employee relationship is decidedly on the employer’s side, absent any government invention or organized opposition, as long as there is a ready and willing labor pool. Indeed, up until the Industrial Revolution, even the legal system favored the employer through laws which prohibited employees from leaving their employers in search of higher pay and prohibited them from organizing to demand higher wages, benefits, or better working conditions. However, developing social awareness for individual rights have led lawmakers in the United States to pass a long list of laws designed to balance the power in the employer/employee relationship.

Chapter one not only introduces students to all of the major legal theories and laws that will be covered in succeeding chapters, it portrays these laws within the social and political contexts that contributed to their evolution. It is critical that students understand this very important relationship because it will assist them not only in understanding how we arrived where we are today, but how employment laws may continue to change, as the stressors in our society change.

CHAPTER OUTLINE

I. INTRODUCTION

One may consider the craftsman guilds as the earliest forms of unions. As early as the Middle Ages, employment in many trades was restricted to those in the proper class or family.However, as these guilds grew, so also did corruption within the system. This ultimately led to working class revolts, spawning harsh reprisals from those in authority. The balance of power swung briefly to the worker’s side during the mid-14 th century when deaths due to the plague significantly reduced the labor pool. However, government response was to mandate lower wages, penalize would be employers who attempted to induce a worker to abandon his current job for promise of higher wages, and punish those who refused to work.

The tide began to turn with the birth of the Industrial Revolution. As challenges within the judicial system progressed, common law* swung to a seemingly more neutral position of employment-at-will. This doctrine espouses that neither the employee nor the employer are bound by any contract of continued employment and either can terminate the employment relationship, at any time, for any reason, so long as the reason is not otherwise illegal.However, in reality, the employer still holds the power in the relationship, as long as there is a ready and able labor pool.

(Employment and Labor Law, 9e Patrick Cihon, James Ottavio Castagnera ) (Solution Manual all Chapters) 1 / 4

Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.Since the balance of power remained with the employer, employees banded together into labor unions. Although early courts viewed them as criminal conspiracies, unions began to win favor with the courts beginning in 1842.

*Common law is law that is made through court opinions, rather than by a formal lawmaking process.

1-1 THE NEW DEAL AND THE RISE OF THE MODERN AMERICAN UNION

• New Deal Legislation passed at the urging of President Franklin D. Roosevelt

• The Social Security Act (1935) provides modest pensions to retired workers.

ii. The National Labor Relations Act (1935) sets the ground rules for the give and take between labor unions and corporate managers.

iii. The Walsh-Healy Act (1936) the first of several statutes to set the terms and conditions of employment to be provided by government contractors.

iv. The Merchant Marine (Jones) Act (1936) provides remedies for injured sailors.

• The Fair Labor Standards Act (1938) sets minimum wages, mandates overtime

pay, and regulates child labor.

• Despite the impressive list, changes did not come easy. The Supreme Court had

repeatedly refused to allow any employee protection laws, declaring them

unconstitutional. Then two things happened:

• President Roosevelt threatened to increase the number of Justices on the Supreme

Court (this was within his power), if the Court did not change it’s view of employment protection legislation, and

ii. The Court voted to validate state legislation that required employers to pay

women a minimum wage. (This case is commonly referred to as: “the switch in

time that saved the nine.”)

1. Case: West Coast Hotel Company v. Parrish

• Chambermaid, Elsie Parrish was required to “kick-back” a part of her

state mandated wages to the hotel, effectively reducing her minimum earnings.

• Washington Supreme Court found in her favor.

4. U.S. Supreme Court upheld the decision, reasoning:

• It is in the public interest to safeguard women’s health and

protect them from unscrupulous employers,

• the protection of women is a legitimate end of the exercise of 2 / 4

Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.state power, and

• the requirement of a fair minimum wage designed so the woman

can meet the “very necessities of existence” is a means of protection.

From this point forward, New Deal legislations gained a foothold and labor unions began to grow and increase in membership.

1-2 THE POST-WAR DECLINE OF ORGANIZED LABOR

Several significant issues and trends combined to cause the gradual decline of organized

labor:

• Union abuse of power: John L. Lewis, president of the United Mine Worker’s Union

called for a strike, at the height of WWII, making miners look unpatriotic and selfish, creating a very negative perception of unions; toward the end of the war, may other unions struck, as companies made big prophets while wages remained frozen. Believing that the American Federation of Labor/Congress of Industrial Organizations (AFL-CIO) had become too powerful, congress passed the Taft-Hartley Act (1947) making it illegal to require an employee to join a union in order to obtain or keep a job (and establishing other unfair labor practices on the part of union).

• Political scrutiny of illegal and unethical activity: Paranoia during the Cold War between

the U.S. and the U.S.S.R. led some politicians, notably Sen. Joseph McCarthy, to suspect Communist influence had infiltrated the International Longshoreman’s Union.Additionally, Sen. Estes Kefauver and others alleged a connection between organized labor and organized crime.

• Globalization: The U.S. manufacturing industry has been pressured by Japan’s post WWI

restructuring, Asian and European competition. The manufacturing sector was the bedrock of unionism.

Globalization is the integration of national economies into a worldwide economy due to trade, investment, migration, and information technology.

• Statutes protecting individual employee rights: Since the 1960s, there has been an

onslaught of legislation providing protections once only available through union negotiation.

Individual employee rights are rights enjoyed by workers as individuals, as against collective rights secured by unionization; sources are statutes and court decisions.

• Title VII of the Civil Rights Act of 1964 was the most significant legislation

protecting employees from discrimination on the basis of sex, religion, national origin, race, color, or religion.

ii. Age Discrimination in Employment Act (ADEA) prohibits discrimination against workers 40 years of age and older.

iii. Court decision recognizing a legal theory of wrongful discharge. 3 / 4

Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.

• Occasionally, statutory protections and terms of collective bargaining agreements

conflict.

F. Case: Alexander v. Gardner-Denver Company, 415 U.S. 36 (1974)

• The employer wanted to limit the aggrieved employee’s remedy to the

grievance/arbitration procedures in the collective bargaining agreement that Gardner-Denver had with Alexander’s union and cut off Alexander’s access to Title VII.

ii. The court found that the collective bargaining agreement governed contractual rights, and statutory rights are distinctly separate. The union cannot contract away the individual employee’s statutory rights. Thus, the doctrine of election of remedies did not apply.

Election of remedies is the requirement to choose one out of two or more means afforded under the law for the redress of an injury
to the exclusion of the other(s).

1-3 THE RESURRECTION OF THE ARBITRATION REMEDY

Whereas previously, these cases were frequently resolved through CBA arbitration clauses, after the Alexander ruling, cases rooted in individual employment rights swamped the courts.In 1991, the Supreme Court once again ruled on the subject.

Whistleblower is an employee who reports or attempts to report employer wrongdoing or actions threatening public health or safety to government authorities.

CASE 1.1 GILMER V. INTERSTATE/JOHNSON LANE CORPORATION

500 U.S. 20 (1991)

Facts: At age 62, Gilmer alleged that he had been discharged in violation of the Age Discrimination in Employment Act of 1967 (ADEA). The company moved to compel arbitration according to the application Gilmer signed, as a registered securities representative, agreeing to arbitrate such claims under NYSE Rule 347. The court denied the company’s motion, based on Alexander v. Gardner-Denver Co., concluding that Congress intended employee’s to have access to the judicial system for violations of employment protection laws. The Court of Appeals reversed.

Issue: Should the rule of Alexander v. Gardner-Denver Co. apply to an arbitration provision in an individual contract, as opposed to a collective bargaining contract?

Decision: No. The Court reasoned that although Gilmer was compelled to arbitrate, he was not precluded from also filing with the EEOC and enlisting them to pursue informal resolution methods. (However, he was precluding from filing suit, in the case that the EEOC was unable to resolve the issue.) The Court reasoned that other federal laws were subject to resolution by arbitration, and the NYSE Rule was not perceivably different.

Racketeer Influenced and Corrupt Organizations Act (RICO) is a federal law designed to criminally penalize those that engage in illegal activities as part of an ongoing criminal organization (e.g., the Mafia).

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