Tag Archive: Labor and Employment Law

Apr 12

Blowing the Whistle: An Employment Law Perspective on the Rutgers Basketball Situation, Part Two

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Photo Credit: The Fayj


Photo Credit: The Fayj

In Part One of this two-part series on the Rutgers basketball situation, we explored potential employment law issues surrounding Mike Rice and his actions.  In part two, we will look at one of the other major players in the Rutgers basketball story – Eric Murdock.  It should be noted that Murdock has filed a lawsuit claiming, among other things, that he should be afforded protection as a whistle-blower[1].  Although this piece looks at the same statute, it is in no way meant to demonstrate whether or not Murdock has a claim or to comment on the merits of his claim.  Rather, the purpose of this piece is to provide an overview of the statute and relevant case law, and to explain what needs to be shown in order for a claim to be successful.

For those not familiar with the events that have transpired at Rutgers University, here is a brief overview of the facts that have been reported as they relate to Eric Murdock.  (A comprehensive discussion of the overall incident can be found in Part One.)  Eric Murdock is the former director of player development for the Rutgers men’s basketball team[2].  The accounts of the circumstances under which Murdock left the university vary.  Murdock claims he raised concerns with the university regarding the behavior exhibited by Coach Mike Rice during practices[3].  He further contends that the evidence he presented was ignored for as long as six months[4].  Murdock believes that he was later targeted for termination because he raised concerns[5].  Rice allegedly told Murdock he was let go because he was insubordinate[6].  The charge of insubordination arises from a disagreement between the two regarding Murdock attending another event rather than an event the basketball team was conducting[7].  Rutgers contends that Murdock was not, in fact, terminated, but rather that his contract was not renewed upon its expiration[8].  Murdock presented video evidence of Rice’s behavior during practices to Rutgers in November[9].  The Federal Bureau of Investigations (FBI) is now looking into whether, along with the video footage, Murdock presented the university with an ultimatum[10].  Murdock’s lawyer attempted to settle with the university for $950,000[11].  Murdock has now filed a lawsuit claiming he was wrongfully terminated from his position[12].

New Jersey is an employment at-will state[13].  This means employers are free to terminate employees for any reason or no reason[14].  There are, however, protections in place to prevent workers from being fired for certain reasons.  One such protection prevents employers from removing employees who qualify as whistle-blowers.  This class of employees is protected under the Conscientious Employee Protection Act (CEPA)[15].

Under CEPA, employers are prohibited from taking retaliatory action against an employee who reports activity undertaken by the employer if the employee “reasonably believes” the activity is contrary to “a law, or a rule or regulation promulgated pursuant to law[16].”  An employee is also protected if he or she “reasonably believes” the activity being reported is “fraudulent or criminal” in nature[17].  Similarly, if an employee is being asked to participate in activity that he or she “reasonably believes” is against the law, is “fraudulent or criminal” in nature, or which “is incompatible with a clear mandate of public policy concerning public health, safety or welfare or protection of the environment,” the employee is free to refrain from participation without retaliation[18].  After reporting activity or failing to participate in activity described, supra, an employee may not be terminated, suspended, or demoted, among other forms of adverse employment action, as a result of reporting or failing to participate[19].  An individual who thinks he or she has been the victim of retaliation and should have whistle-blower status can file a lawsuit against his or her former employer within one year of the adverse action[20].  The employee, if his or her claim is successful, may be eligible for various forms of relief, including, but not limited to, an injunction, reinstatement, and “compensation for all lost wages, benefits and other remuneration[21].”  The employer may also be fined up to $10,000 for a first violation and up to $20,000 for additional violations[22].

In Dzwonar v. McDevitt[23], the Supreme Court of New Jersey considered the application of CEPA in a case where the employee of a union believed she had been fired for raising concerns about the union curtailing the ability of its members to participate in union activities[24].  The court held that in order for an employee to prevail on a CEPA claim, he or she must show that “(1) he or she reasonably believed that his or her employer’s conduct was violating either a law, rule or regulation promulgated pursuant to a law, or a clear mandate of public policy; (2) he or she performed a ‘whistle-blowing’ activity described [in the statute]; (3) an adverse employment action was taken against him or her; and (4) a causal connection exists between the whistle-blowing activity and the adverse employment action[25].”  The employee bringing the claim does not have to show that the law was actually broken, only that he or she reasonably believed that to be the case[26].  The trial court, however, must be able to make a connection between the conduct and a specific law or regulation[27].

Recently, the Appellate Division of the Superior Court revisited CEPA claims and reiterated the requirements that must be met[28].  The court also made clear that CEPA and its provisions are meant to secure “‘broad protections against employer retaliate[ion] for workers whose whistle-blowing activities benefit the health, safety and welfare of the public[29].’”

It is clear from the statue and case law that in order for Murdock to be successful on his CEPA claim against Rutgers University, he will have to demonstrate that he had provided information regarding behavior on the part of Mike Rice, which Murdock reasonably believed was contrary to a law or regulation, to the university.  But more than that, the court must be able to clearly and concretely draw a connection between Rice’s behavior and a law or regulation.  The next hurdle he will have to overcome is demonstrating that he was, in fact, terminated and not that the university simply failed to renew his contract, as is their contention.  In the alternative, he will have to show that the failure to renew his contract was an adverse employment action under the meaning of retaliatory action in CEPA.  Finally, if he is able to show he undertook whistle-blowing activity to bring to light a violation of the law or a regulation and that the university took retaliatory action against him, Murdock must then draw a direct link between the adverse action and his voicing of concerns regarding the coach’s behavior.

Although New Jersey is an at-will employment jurisdiction, there are still protections in place for certain classes of employees, including those who qualify for whistle-blower status under CEPA.  Now that Eric Murdock has filed a lawsuit claiming whistle-blower status for his role in the Rutgers basketball situation, it will be interesting to see how the case plays out.

 

[1] Christian Red and Michael O’Keeffe, Ex-Rutgers ass’t coach Eric Murdock files wrongful termination suit against University, New York Daily News, April 5, 2013, available at http://www.nydailynews.com/sports/college/ass-coach-hits-rutgers-lawsuit-article-1.1308948.

[2] Associated Press, Mike Rice fired from Rutgers after abuse video goes public, Newsday, April 3, 2013, available at http://www.newsday.com/sports/college-basketball/mike-rice-fired-from-rutgers-after-abuse-video-goes-public-1.4998367.

[3] Red and O’Keeffe, supra at note 1.

[4] Id.

[5] Associated Press, Report: FBI eyes possible extortion at Rutgers, USA Today, April 7, 2013 available at http://www.usatoday.com/story/sports/ncaab/2013/04/07/fbi-extortion-rutgers-mike-rice-eric-murdock/2061757.

[6] Red and O’Keeffe, supra at note 1.

[7] Id.

[8] ESPN, Rutgers AD Time Pernetti resigns, ESPN, April 7, 2013, available at http://www.espn.go.com/new-york/mens-college-basketball/story/_/id/9137089/tim-pernetti-rutgers-scarlet-knights-athletic-director.

[9] Red and O’Keeffe, supra at note 1.

[10] Associated Press, supra at note 5.

[11] Red and O’Keeffe, supra at note 1.

[12] Id.

[13] New Jersey State Department of Labor (NJDOL), Wage and Hour Compliance FAQs, accessed April 2013, available at http://www.lwd.dol.state.nj.us/labor/wagehour/content/wage_and_hour_compliance_faqs.html.

[14] Id.

[15] N.J. Stat. 34:19-1-8.

[16] N.J. Stat. 34:19-3(a)(1).

[17] N.J. Stat. 34:19-3(a)(2).

[18] N.J. Stat. 34:19-3(c).

[19] N.J. Stat. 34:19-2(e).

[20] N.J. Stat. 34:19-5.

[21] Id.

[22] Id.

[23] 177 N.J. 451 (2003).

[24] Id at 460.

[25] Id at 462 (brackets added), citing Kolb v. Burns, 320 N.J. Super. 467, 476, 727 A.2d 525, 530 (App. Div. 1999).

[26] Id at 462-63, citing Gerard v. Camden County Health Servs. Ctr., 348 N.J. Super. 516, 522, 792 A.2d 494, 497-98 (App. Div.), certify. Denied, 174 N.J. 40, 803 A.2d 636 (2002).

[27] Id at 463.

[28] Racanelli v. County of Passaic, 417 N.J. Super. 52 (Sup. Ct. of N.J. 2010).

[29] Id at 56, quoting Feldman v. Hunterdon Radiological Assocs., 187 N.J. 228, 239, 901 A.2d 322 (2006) (citation and internal quotations omitted).

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Apr 10

Foul Shot: An Employment Law Perspective on the Rutgers Basketball Situation, Part One

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Photo Credit: slgckg

Photo Credit: slgckg

By now, most have heard about the series of events that transpired at Rutgers University involving the head coach of the men’s basketball team.  Many have seen the video that has caused public outcry.  The actions of Coach Mike Rice and the response of Athletic Director Tim Pernetti raise a number of legal questions, including whether Rutgers, as the employer, had the ability to discipline Rice twice for the same underlying infractions and whether any of the students who played for Rice have claims against the university for negligent hiring, supervision, and retention.

For those not familiar with the story, here is a summary of the facts.  At various times between 2010 and 2012, video recordings were made of basketball practices conducted by Rice[1].  The videos showed Rice undertaking various forms of abuse[2].  His conduct included hitting and kicking players, throwing basketballs at players, and using, among other forms of verbal abuse, gay slurs to address the players[3].  The footage was given to Pernetti in November by a former employee of the basketball program[4].  Pernetti then sought outside review of Rice’s conduct[5].  A report prepared by Connell Lacey LLP allegedly concludes that Rice could have been fired for the behavior captured in the video[6].  Rather than fire Rice, however, Pernetti suspended Rice for three days and levied fines that ended up costing Rice a total of $75,000[7].  No further action was taken until the tape was made public; subsequent to the tape being aired and the resulting public outcry, Rice was terminated[8].  The firing came approximately four months after Rice was suspended[9].  In its announcement of the firing, Rutgers stated that officials based their decision on “recently reviewed information” and a “review of previously discovered issues[10].”  Rice’s termination was followed shortly by Pernetti’s resignation[11].  At the time he resigned, Pernetti claimed he had advocated for terminating Rice last year rather than issue the suspension, but that his suggestion was rebuffed by those senior to him[12].  Earlier this week, Rutgers announced it would be undertaking a further review of the situation and the way in which university officials responded[13].

Before delving into a discussion of the potential employment law implications related to Mike Rice’s coaching style and his termination, it is important to highlight a few factors.  First, New Jersey, where Rutgers University is located, is an at-will employment state, which means there is no cause requirement for an employee’s termination[14].  Second, there is no indication that Mike Rice’s employment contract with Rutgers contained provisions for discipline or requiring just cause (or any cause) in order to terminate his contract.  Finally, there has been no indication that Rice was a member of any union or had the protection of any collective bargaining agreement.

The most immediate question raised by Rice’s termination following the public release of videos showing his behavior during team practices is whether Rutgers could level a second punishment against Rice for the same incident of misconduct.  Remember, Rice had been suspended in December for the conduct displayed in the video[15].  Now, without new publicly-known facts (although Rutgers referenced new information it had considered[16]), Rice was fired for the conduct shown in the video.  Does this constitute an impermissible application of a second punishment for the same offense similar to the criminal law doctrine of double jeopardy?  The New Jersey courts have not dealt with the idea of double jeopardy in employee discipline in any cases that can be analogized to the present case.  There were, however, two recent arbitration decisions that can be.

In In re Calumet Specialty Products and United Steelworkers International Union, Local 13-245[17], a union grieved on behalf of an employee who failed to report for a scheduled shift after shifts for all employees had been altered[18].  The employee was given a notice stating the discipline being applied to him and the reasoning for it; the following day, he received an amended notice of discipline[19].  The union argued, in part, that the receipt of two separate notices for the same incident was double jeopardy[20].  In reviewing the case to determine whether double jeopardy was a claim that could be raised, the arbitrator looked to how double jeopardy had been viewed in relation to discipline in the employment setting.  The arbitrator concluded, “Once discipline for a given offense is imposed and accepted, it cannot thereafter be increased, nor may another punishment be imposed, lest the employee be unfairly subjected to ‘double jeopardy[21].’”  The arbitrator then held that the employee in Calumet Specialty Products had been subjected to double jeopardy[22].

Later that same year an arbitrator reached the same conclusion in In re Chicago Transit Authority and Amalgamated Transit Union, Local 241[23], where a union had filed multiple grievances on behalf of an employee[24].  The grievances involved challenges to discipline “other than discharge[25].”  The arbitrator held that applying two different disciplinary actions to the same employee for the same incident constitutes double jeopardy[26].

Applying these two cases to the Mike Rice situation, it appears that the concept of double jeopardy would generally apply.  Rice was disciplined for the conduct he was shown to engage in during practices in December by way of suspension[27].  Thus far, no evidence has been made public to show that he continued to engage in the inappropriate conduct during practices or other interactions with players.  And yet, last week, his employment was terminated because of the conduct displayed in the video[28].  Therefore, two separate punishments were meted out for the same acts of misconduct.  As Calumet Specialty Products and Chicago Transit Authority clearly demonstrate, such action by an employer constitutes impermissible double jeopardy[29].  Had there been intervening occurrences of the same misconduct or other forms of misconduct, the termination would be more likely to be seen as escalating discipline.  Again, however, it should be noted that New Jersey is an employment at-will state, meaning Rutgers does not have to provide a reason for terminating Rice’s employment with the univeristy[30].  Further, both cases discussed, supra, involve unionized workers.  It is unclear whether the concept of double jeopardy would apply to workers outside the unionized workplace who are subject to at-will termination.  As such, Rice would likely not enjoy the protection afforded by the rule against double jeopardy.

Turning attention now to the individuals who were on the receiving end of the behavior shown in the video, the second question raised by this incident is whether the players on the men’s basketball team have a claim against Rutgers for negligent hiring, supervision, and retention of Rice.  Tim Pernetti has said that prior to Rice being hired as the head coach, Rice and Pernetti had a lengthy discussion about Rice’s reputation when it came to his coaching style[31].  After Pernetti was made aware of how Rice was conducting practices, he chose to merely suspend Rice because the coach appeared to demonstrate that he knew the behavior was wrong[32].  Does this give rise to a situation in which the players would have a claim for negligent hiring, supervision, and retention for the timeframe represented by the video?  If the conduct continued after Rice served his suspension, would the players have a claim for the subsequent timeframe?  The New Jersey courts have looked at the issue of negligent hiring, supervision, and retention in two recent cases.

In Jafar v. Elrac, Inc.[33], the court defined negligent hiring, supervision, and retention as “broader forms of liability than under the doctrine of respondeat superior[34].”  One year later, in D.T. v. Hunterdon Medical Center[35], the court again looked at the requirements for negligent hiring, supervision, and retention under New Jersey law.  The court provided two requirements necessary for a claim to be successful[36].  The first requirement is that the employer was aware of the possibility that the employee may cause harm to others[37].  The second requirement is that the employee’s actions proximately caused the injuries claimed to have been suffered and this causation would not have been possible absent the employee being hired by the employer[38].  The employer must have “[known] or had reason to know” about the possibility that the employee could harm others[39].  The opinion points out that “The Court has explicitly recognized ‘the tort of negligent hiring or retention of an incompetent, unfit or dangerous employee and h[e]ld that one may be liable for injuries to third persons proximately caused by such negligence[40].’”

It appears clear from public reports that, at the very least, Tim Pernetti was aware of Mike Rice’s reputation as a coach and felt the need to counsel him about his coaching style prior to bringing him on board at Rutgers[41].  There are also indications that after Rice’s hiring, at least one of the employees of the basketball program raised concerns about Rice’s coaching techniques with Pernetti[42].  And lest Pernetti be held out as the only party who knew of the behavior at the administrative level, it should be noted that the President of Rutgers University was made aware of the video footage at the time it was presented to Pernetti and declined to watch the footage[43].  Given that it appears Rutgers was aware of Rice’s behavior at the time he was hired, the players shown being subjected to abuse in the video would likely meet the first requirement for a claim of negligent hiring, supervision, and retention.  Further, since the university was made aware of the behavior displayed by Rice after being hired as the head coach, if the conduct continued after the school was made aware and disciplined the coach, those students harmed at that time would also likely meet the first requirement of knowledge on the part of the employer.  What may be harder for the students to demonstrate is the second requirement.  A student hoping to prevail on his claim will have to be able to demonstrate that he was injured in some way by Rice’s conduct and that the university’s hiring and subsequent retention of Rice was the proximate cause of that injury.

It will be interesting to see how this story plays out going forward.  So far, Mike Rice seems not to be challenging his removal as the head coach of the men’s basketball team, but that could always change down the road.  Were he to attempt to challenge his termination as a double jeopardy punishment, Rice would likely not succeed, as New Jersey is an employment at-will state and he was not a unionized worker.  It also seems as though there are no players coming forward at this time to claim they were directly injured as a result of Rice’s conduct.  If they were to come forward in the future and can demonstrate the injury and the connection between the injury and Rutgers’ hiring of Rice, it is likely the students would prevail on a claim of negligent hiring, supervision, and retention.

[1] Steve Eder, Rutgers Fires Coach Over Abuse and Slurs, New York Times, April 3, 2013, available at http://www.nytimes.com/2013/04/04/sports/ncaabasketball/rutgers-fires-basketball-coach-after-video-surfaces.html?_r=0.

[2] Associated Press, Mike Rice fired from Rutgers after abuse video goes public, Newsday, April 3, 2013, available at http://www.newsday.com/sports/college-basketball/mike-rice-fired-from-rutgers-after-abuse-video-goes-public-1.4998367.

[3] Eder, supra at note 1.

[4] Associated Press, supra at note 2.

[5] Id.

[6] ESPN, Rutgers AD Tim Pernetti resigns, ESPN, April 7, 2013, available at http://www.espn.go.com/new-york/mens-college-basketball/story/_/id/9137089/tim-pernetti-rutgers-scarlet-knights-athletic-director.

[7] Associated Press, supra at note 2.

[8] Id.

[9] Eder, supra at note 1.

[10] Id.

[11] ESPN, supra at note 6.

[12] Id.

[13] Associated Press, Rutgers commissioning review of basketball scandal, USA Today, April 8, 2013, available at http://www.usatoday.com/story/sports/ncaab/2013/04/08/rutgers-basketball-scandal-mike-rice-tim-pernetti/2063013.

[14] New Jersey State Department of Labor (NJDOL), Wage and Hour Compliance FAQs, accessed April 2013, available at http://www.lwd.dol.state.nj.us/labor/wagehour/content/wage_and_hour_compliance_faqs.html.

[15] Associated Press, supra at note 2.

[16] Eder, supra at note 1.

[17] 130 Lab. Arb. Rep. (BNA) 563 (June 27, 2012).

[18] Id at 564.

[19] Id.

[20] Id at 567.

[21] Id at 570, citing Elkouri & Elkouri, How Arbitration Works, 6th Edition, 1997, 2003.

[22] Id at 570.

[23] 130 Lab. Arb. Rep. (BNA) 1575 (November 7, 2012).

[24] Id at 1576.

[25] Id.

[26] Id at 1581.

[27] Associated Press, supra at note 2.

[28] Id.

[29] See discussion, supra.

[30] NJDOL, supra at note 14.

[31] Don Van Natta, Jr., The coach, the assistant and the AD, ESPN, April 5, 2013, available at http://espn.go.com/espn/otl/story/_/id/9133038/bliss-hiring-tim-pernetti-mike-rice-rutgers-university-short-lived-coach-abuse-scandal.

[32] Associated Press, supra at note 2.

[33] 2011 N.J. Super. Unpub. LEXIS 974 (Superior Court of New Jersey, Appellate Division 2011).

[34] Id at 20, citing DiCosala v. Kay, 91 N.J. 159, 174, 450 A.2d 508 (1982); Lingar v. Live-In Companions, Inc., 300 N.J. Super. 22, 29-30, 692 A.2d 61 (App. Div. 1997).

[35] 2012 N.J. Super. Unpub. LEXIS 2204 (Superior Court of New Jersey, Appellate Division 2012).

[36] Id at 30.

[37] Id.

[38] Id.

[39] Id.

[40] Id, citing DiCosala v. Kay, 91 N.J. 159, 174, 450 A.2d 508 (1982).

[41] Natta, supra at note 31.

[42] Keith Sargeant, Rutgers’ Big Ten move could have delayed Mike Rice firing, USA Today, April 7, 2013, available at http://www.usatoday.com/story/sports/ncaab/2013/04/07/mike-rice-big-ten-rutgers-robert-barchi-tim-pernetti/2061579.

[43] Id.

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Mar 25

NLRB Appeals to Supreme Court

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The National Labor Relations Board (NLRB) announced on March 12, 2013, that it had decided it will not seek en banc rehearing of the Noel Canning v. NLRB decision. (Noel Canning Div. of Noel Corp., D.C. Cir., No. 12-1115, action announced 3/12/13).  In that decision, the U.S. Court of Appeals for the D.C. Circuit ruled that the January 4, 2012, recess appointments of three members to the Board were invalid.  After consultation with the Justice Department, the Board announced its intention to file a petition for certiorari with the Supreme Court to review the Noel Canning decision.

The Noel Canning court held that President Obama’s appointment of three members to the Board did not comply with the requirements of the Recess Appointments Clause.  It has been widely observed that the D.C. Circuit’s decision calls into question hundreds of decisions rendered by the National Labor Relations Board over the past year.  If the Supreme Court affirms the lower court’s decision, all of these decisions would appear to be invalid.  NLRB Chairman Mark Gaston Pearce vowed to fight the court’s decision shortly after the D.C. Circuit released its opinion. Chairman Pearce issued a statement that the NLRB “believes that the President’s position in the matter will ultimately be upheld.”  In the interim, Chairman Pearce announced that the Board will continue to fulfill its statutory mandate and issue decisions.  Although the Board’s decision has met with a fair amount of criticism, Chairman Pearce appears unfazed by calls that the Board should abide by the Circuit’s decision.

The Labor Board has until April 25th to file its petition for certiorari.

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Mar 20

President Obama Nominates Thomas Perez as Labor Secretary

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President Obama has nominated Thomas E. Perez as the next Secretary of Labor.[1] If appointed, Perez would replace former Secretary Hilda Solis, who stepped down in January,[2] and Acting Secretary Seth Harris.[3]

Perez has served as the Assistant Attorney General for the Civil Rights Division of the Department of Justice since 2009.[4] The son of two Dominican immigrants, Perez paid for college by working as a garbage collector and a warehouse worker,[5] later graduating from Harvard Law School.[6] Before becoming an Assistant Attorney General, Perez was Maryland’s Secretary of Labor for two years.[7] He had also served on the Montgomery County Council, giving him experience in local, state, and federal government at the time of his nomination.[8] While running the Civil Rights Division, Perez oversaw several initiatives that received widespread attention. The Division blocked voting rights laws in Texas and South Carolina, leading the U.S. District Court for the District of Columbia to strike down the Texas law requiring voters to present photo identification.[9] The Division also undertook unprecedented investigation into 17 police and sheriff’s departments.[10]

Obama’s nomination of Perez drew the expected reactions from various interest groups and politicians. Richard Trumka, president of the AFL-CIO, said, “[a]t a time when our politics tilts so heavily toward corporations and the very wealthy, our country needs leaders like Tom Perez to champion the cause of ordinary working people.”[11] James P. Hoffa, president of the Teamsters, praised Perez as “a fighter,”[12] and Mary Kay Henry, president of SEIU, called Perez’s nomination “an excellent choice.”[13] On the other side of the ideological spectrum, Republican Senator Jeff Sessions called Perez the “wrong man for the job,” criticizing his stance on immigrant labor.[14] Even before the official nomination, Republican Senator Charles Grassley said that Perez would have to answer questions about the Civil Rights Division’s role in a housing discrimination case in Minnesota.[15] Other Republicans soon joined in that scrutiny.[16]

During his announcement of the nomination, Obama pointed to Perez’s rich background in government and his strong history of defending civil rights.[17] He reiterated the familiar claims that a “top priority as President is doing everything we need to do to make sure that we’re growing our economy and that we’re strengthening our middle class,” and that his administration is dedicated to “mak[ing] sure that hard work actually pays off in a decent living.”[18] After applauding the Department of Labor for its work under Solis as Secretary, Obama alluded to Perez’s former role as Maryland’s Secretary of Labor, where “he helped implement the country’s first statewide living-wage law, because he understood that a minimum wage should be a wage that you can live on.”[19]

The President’s latter comment and his nomination of Perez might signal an attempt at real change to the federal minimum wage under the Fair Labor Standards Act. Obama announced his intention to raise the minimum wage to $9.00 by 2015 in his February, 2013 State of the Union address,[20] and his nomination of Perez is an encouraging, though tentative, first step in such a direction. Even the mention of a living wage in the President’s announcement shows an awareness of the minimum wage’s inadequacy, with the relative value of the statutory minimum falling steadily since the 1960s.[21] Although a meaningful increase to the minimum wage would be daunting politically for any Secretary, Perez would at least have the political experience from Maryland’s government to serve him.

In addition to that goal, Perez devoted some of his time as Maryland’s Secretary of Labor to combating the misclassification of workers as independent contractors.[22] The Department of Labor has considered stopping employers’ misclassification of workers a priority for several years now, beginning a deliberate initiative against it in 2011[23] and announcing a broad survey on the subject early in 2013.[24] In other words, Perez might be the right person to lead the federal agency into a new era of support for workers’ rights. If that is to be his role, he will likely face the wrath of the conservative end of a highly dysfunctional Congress, his first taste of which will be his confirmation hearings. If he survives that and gains the title of Secretary, many will be watching to see if he lives up to the President’s stated hopes.

[1] Remarks by the President Announcing the Nomination of Thomas Perez for Secretary of Labor, The White House, Office of the Press Secretary (Mar. 18, 2013), http://www.whitehouse.gov/the-press-office/2013/03/18/remarks-president-announcing-nomination-thomas-perez-secretary-labor [hereinafter Remarks by the President].

[2] Mark Lander & Steven Greenhouse, Solis Stepping Down as Labor Secretary, N.Y. Times, Jan. 9, 2013, http://www.nytimes.com/2013/01/10/business/solis-stepping-down-as-labor-secretary.html?_r=0.

[3] See Remarks by the President, supra note 1.

[4] Sari Horwitz & Lena H. Sun, Obama to Nominate Thomas Perez as Labor Secretary, Wash. Post, Mar. 10, 2013, http://articles.washingtonpost.com/2013-03-09/politics/37574465_1_voter-id-law-labor-secretary-civil-rights.

[5] Remarks by the President, supra note 1.

[6] Horwitz & Sun, supra note 4.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Peter Baker, Obama Nominates Justice Aide for Labor Post, N.Y. Times, Mar. 18, 2013, at A11, available at http://www.nytimes.com/2013/03/18/us/politics/obama-to-nominate-thomas-e-perez-as-labor-secretary.html.

[12] Id.

[13] President Obama Makes Right Choice for DoL Secretary, SEIU (Mar. 18, 2013), http://www.seiu.org/2013/03/president-obama-makes-right-choice-for-dol-secreta.php.

[14] Evan Perez et al., Labor Pick Assailed for Housing-Bias Deal, Wall St. J., Mar. 19, 2013, at A5, available at http://online.wsj.com/article/SB10001424127887323869604578368410082168122.html.

[15] Horwitz & Sun, supra note 4.

[16] See Perez et al., supra note 14.

[17] See Remarks by the President, supra note 1.

[18] See id.

[19] Id.

[20] Jim Puzzanghera, Obama’s State of the Union: Topic by Topic, L.A. Times, Feb. 12, 2013, http://articles.latimes.com/2013/feb/12/news/la-pn-state-of-the-union-topics-20130212.

[21] See Dean Baker & Will Kimball, The Minimum Wage and Economic Growth, Center for Economic and Policy Research (Feb. 12, 2013), http://www.cepr.net/index.php/blogs/cepr-blog/the-minimum-wage-and-economic-growth.

[22] Horwitz & Sun, supra note 4.

[23] See Memorandum of Understanding Between the Internal Revenue Service and the U.S. Department of Labor (Sept. 19, 2011), available at http://www.wage-hour.net/file.axd?file=2011%2f10%2fDOL+IRS+Memodandum+of+Understanding.pdf.

[24] Proposed Information Collection Request (ICR) for the Worker Classification Survey; Comment Request, 78 Fed. Reg. 2447 (Jan. 11, 2013), available at http://www.gpo.gov/fdsys/pkg/FR-2013-01-11/pdf/2013-00389.pdf.

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Jan 29

Labor Relations and the Future of Professional Baseball Symposium Transcript Published

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The transcript of Labor Relations and the Future of Professional Baseball, a symposium hosted by the St. John’s University School of Law’s Center for Labor and Employment Law, has been published by the Seton Hall University School of Law Journal of Sports and Entertainment Law. (22 Seton Hall J. of Sports & Entertainment L. 164.)  The symposium was held on November 18, 2011 and was widely attended by practitioners and students alike.

“I am thankful to the Seton Hall Journal of Sports and Entertainment Law for publishing the transcript of the symposium and to all those who took part in making the event a success,” said Professor David Gregory, Executive Director of the Center for Labor and Employment Law.   Jack Newhouse and Melissa Schneer, Class of 2012 officers of the St. John’s Law Labor and Law Society, were the driving forces of the Conference.  “The day provided an inside look at the history and current status of labor relations in the sport of baseball, as well as spirited debate about the course of its future.  It is my hope that the transcript will provide those who were not able to attend the opportunity to gain the insights and knowledge that came out of the symposium.”

The conference highlight was a keynote speech by Professor William B. Gould, IV of the Stanford Law School and former Chairman of the National Labor Relations Board during the Clinton Administration. He shared his childhood memories of baseball, and mapped out the development of the players union, from efforts to unionize in 1946 to the Messersmith-McNally arbitrations in 1975. (Id at 173-84.)  He also shared his thoughts on the future of baseball, including potential changes in drug testing and drafting. (Id at 187-90.)  Professor’s Gould’s remarks were followed by a panel discussion that covered a wide range of topics, including drug testing, international players, and what role considerations of giving back to the community should have in the collective bargaining discussion. (Id at 193-239.)

“The Labor Relations and Baseball symposium provides a terrific platform for our next major event.  Friday, April19, 2013, will be devoted to a day long panel discussion on the Role of Arbitration in Professional Sports.  Several of the world’s great arbitrators are confirmed speakers and our distinguished alumnus Gene Orza is confirmed as the program moderator.  It will be free of charge and open to the community,” said Professor David Gregory.

Anyone interested in obtaining a copy of the Journal issue in which the November 18, 2011 transcript appears should contact the Seton Hall Journal of Sports and Entertainment Law at: Seton Hall School of Law, 1 Newark Center, Newark, NJ 07102.  Phone: 973-642-8239.

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Jan 23

Remembering Marvin Miller: A Glimpse Inside the Memorial of a MLBPA Legend

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Fellow Student-Author Krystyna Baumgartner and I had the privilege of attending the Major League Baseball Players Association’s (“MLBPA”) memorial for Marvin Miller on Monday, January 21st at NYU’s School of Law. The memorial was a glorious tribute to the life and legacy of one of the most important and successful leaders in labor history.

 

The memorial featured thirteen speakers with clips of Marvin Miller inserted in between. The first speaker was Richard Moss, prominent General Counsel of the MLBPA after Miller was elected Executive Director in 1966.  Moss stated that Miller was especially gifted in explaining difficult concepts in a way that everyone could understand, without talking down to the listener, a skill that was echoed by speakers throughout the night.

 

Executive Director of the National Hockey League Players Association, Donald Fehr, also spoke. Fehr reflected on the emotional side of Marvin Miller that he deliberately concealed from the public. Miller was a brilliant tactician, even outside the negotiating room. For example, Fehr noted that Miller would intentionally speak quietly in order to make the players strain to pay attention.  Fehr also notably addressed why Marvin Miller is still remembered today, more than 30 years after he retired. He argued that Miller built the MLBPA into a symbol of what a union could be, if run properly. Since former President Regan’s firing of 11,000 striking air traffic controllers in 1981, there has been a general acceptance of attack on labor unions from management, which continues today. Despite the hostile environment, the MLBPA successfully struck in 1981 and 1994.  Finally, Fehr stated that Miller’s work to get individual members to take ownership of their union is the reason for the MLBPA’s success and claimed that unions in other industries would be much better off today if they were run with similar principles.

 

Of particular interest was the bevy of both current and former players in attendance. Speakers included Hall of Fame members Dave Winfield and Joe Morgan. Many players echoed sentiments that Miller’s most difficult job was to organize a group of individuals who feared for their job security if they joined a union and who wanted to focus on playing baseball rather than deal with labor relations issues. It took several years for the players to realize what could be gained from union solidarity. Buck Martinez and Jim Bouton described Miller as an educator. Current Director of Player Relations, Tony Clark, noted the lasting appreciation that the players have for Marvin Miller and the principles he stood for, inviting several current players in attendance to stand. Just about every single player expressed his offense to Miller’s exclusion from the Hall of Fame.

 

Finally, the clips of Marvin Miller were especially poignant. During his vignettes Miller expressed pride in his involvement with numerous unions and noted the value of speaking to each and every member. He also noted the conditions players faced prior to taking ownership of their union, and cautioned the players to not take their current position for granted. Miller stressed that educated, involved union members are necessary for the continuing success of the MLBPA.

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Jan 22

St. John’s Students Win 4/6 NYSBA Labor & Employment Section Awards

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DSC_3427

 

 

 

 

 

On January 26, 2013, the Labor and Employment Law Section of the New York State Bar Association will present three third-year students from St. John’s, Amanda Jaret, Andrew Midgen, and Alyssa Zuckerman, with awards at its annual meeting.

Amanda Jaret, Secretary of the Labor and Employment Law Society and Junior Fellow for the Center for Labor and Employment Law, is the first place winner of the Samuel M. Kaynard Memorial Student Service Award and second place winner in the Dr. Emanuel Stein and Kenneth D. Stein Memorial Writing Competition for her paper, titled “Other Mutual Aid Or Protection”: Collective Legal Claims as Concerted Activity in D. R. Horton, Inc. and Beyond. Amanda has worked as a research assistant and Junior Fellow for the Center during her entire tenure at St. John’s, supported by the 2011 John Boyd Scholarship, the 2012 Professor Lawrence Joseph Scholarship, and the Cesar Chavez Memorial Scholarship, awarded to the graduating third-year law student with the highest grades in the labor and employment law curriculum. She has worked for the United Auto Workers in Detroit, Michigan and for Cohen, Weiss and Simon LLP, a union-side labor law firm.

Andrew Midgen, Co-President of the Labor and Employment Law Society and Junior Fellow for the Center for Labor and Employment Law, is the first place winner of the 2012 Dr. Emanuel Stein and Kenneth D. Stein Memorial Writing Competition. His winning paper, titled The Future Scope of the Antitrust Exemption in Professional Sports, addresses a controversial and developing area of labor and employment law that has captured national attention during recent collective bargaining agreement negotiations for professional sports teams and players in the National Football League and, most recently, the National Hockey League. Among Andrew’s previous honors and accomplishments are the Inaugural Borrelli and Associates Scholarship and prestigious internships with UNITE HERE! Local 100, the United States Department of Labor Office of the Solicitor, and the National Labor Relations Board Division of Judges.

Alyssa Zuckerman, Co-President of the Labor and Employment Law Society and Junior Fellow for the Center for Labor and Employment Law, is the second place winner of the 2012 Samuel M. Kaynard Memorial Student Service Award. One of Alyssa’s chief initiatives as Co-President includes the successful launch of a new blog, the Center for Labor and Employment Law Forum (this blog). The Service Award also recognizes her consistently impressive leadership of the Society and the many successful events she has coordinated for the Center during her time at St. John’s. Alyssa has also received many other notable honors for her contributions to labor and employment law, including the 2012 Coca-Cola Refreshments Scholarship, which enabled Alyssa to work as a Summer Associate with Coca-Cola’s Labor Relations Department, the Cesar Chavez Memorial Scholarship, and an internship with Pasternack Tilker Ziegler Walsh Stanton & Romano LLP, a workers’ compensation law firm.

These three students follow in the footsteps of many of their predecessors who have received similar recognition from the New York State Bar Association. The students’ successes are a testament to the strength of St. John’s labor and employment law curriculum and the stalwart guidance and mentoring of Professor David L. Gregory.

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Jan 21

Drop the Puck: An Overview of the New NHL CBA

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The National Hockey League (NHL or League) has officially begun its new season.  As pucks dropped across the NHL Saturday night, a new collective bargaining agreement (CBA) was in effect.  Negotiating the agreement led to a lockout which lasted more than one hundred days[1] and had far reaching costs (as discussed here).  Much of the previous CBA will remain unchanged, however, there have been some important changes made to certain aspects of the relationship between the League and the National Hockey League Players Association (NHLPA or Union).  These changes are highlighted below.

The new CBA is a ten-year agreement[2], making it the longest agreement to be signed between the League and the Union[3].  Each side has a right to terminate the agreement in 2019[4].

Two of the central sticking points during negotiations – the division of hockey-related revenue and a pension plan for players – were resolved through the new agreement[5].  Under the previous CBA hockey-related revenue (HRR) was divided with a slight advantage for the players, who received 57%[6].  The new agreement splits HRR evenly between the players and the League[7].  Additionally, a defined benefit pension plan will be created[8].  A defined benefit plan is one that provides recipients with retirement benefits for the remainder of their lives[9].

Along with a new split in HRR, the agreement creates a new structure for revenue sharing, including the creation of a Revenue Sharing Oversight Committee (the Committee)[10].  The revenue sharing pool will equal 6.055% of HRR per year and will obtain half of its funds from the ten teams that have the highest gross revenue[11].  The remainder of the funds will be made up of money from league revenue and gate receipts for playoff games[12].  The Committee will control the revenue sharing program and will exercise oversight authority over any team that generates less than 75% of the league average in gate revenues[13].  The new agreement also creates an Industry Growth Fund (the Fund) which will provide assistance to any team that is struggling with generating revenue[14].

Individual player contracts (called Specific Player Contracts or SPCs) will remain the same for the remainder of the 2012-13 season, despite the shortened season[15].  After the end of this season, any player contract that provides for a lower salary for any given season that is lower than the minimum salary for that season will be adjusted so that the player receives the minimum[16].  The minimum salary begins at $525,000 and increases to $550,000 for next season[17].  After that, it increases by an additional $25,000 every two years until it jumps by $75,000 between the 2016-17 and 2017-18 seasons[18].  It then increases by $50,000 every other year until the end of the contract[19].  After four seasons players will be eligible for salary arbitration under the system that existed in the previous CBA[20].  The existing system of free agency is also carried over to the new agreement, meaning after seven seasons or at the age of 27 players become free agents and are able to talk to any team[21].

In addition to minimum salaries for individual players, the new CBA creates payroll ranges for the teams[22].  The upper limit, midpoint, and lower limit are set for the first two seasons, after which the three amounts are set through a formula[23].

The new CBA divides the discussion of discipline into two distinct sections – on-ice discipline and off-ice discipline[24].  The amount of fines that may be levied against a player for on-ice infractions is increased[25].  Further, the new agreement provides for an appeals process players can access if they are subject to discipline[26].  The first step in appealing on-ice discipline is going to the Commissioner; in certain cases, there may be an additional right to have an appeal heard by a neutral arbitrator[27].  There are a number of reasons a player may be disciplined for off-ice conduct, including participating in conduct that can ultimately harm the game of hockey[28].  In such a case a player may be subject to a range of penalties, from suspension to paying a fine to the nullification of the player’s contract[29].  If a player wishes to appeal discipline for off-ice conduct, the appeal goes directly to a neutral arbitrator[30].  The standard of review for all disciplinary appeals is substantial evidence[31]

The final major area covered by the new CBA is health and safety concerns.  The agreement begins by tackling substance abuse through a review of the Substance Abuse and Behavioral Health Program (the Program)[32].  A player who tests positive for drugs at “dangerous levels” must be referred to the program; the agreement sets a deadline by which the Program must create a definition of “dangerous levels[33].”  The list of banned substances is expanded and the testing program is expanded[34].  Additionally, the parties commit to a study of HGH testing[35], something that has been controversial in many professional sports.  Players will now be subject to four types of testing: testing during training camp, “team testing” during the regular season, random individual testing (which can occur at any point, including during the off-season), and testing based on reasonable belief the player is using a banned substance[36].  In order for the final type of testing to be utilized, probable cause must exist[37].  Importantly, a player who refuses to comply with drug testing is seen as having tested positive[38].  The strict liability provisions found in the old CBA remain in effect but the new agreement changes the defenses available to players who test positive[39].

The new CBA creates an Owner-Player Relations Committee which will meet at least twice each year to discuss a multitude of issues that affect both parties and the game of hockey as a whole[40].  Given the difficulty the two parties seemed to have during the most recent negotiations and lockout, this type of committee will hopefully help to foster a better working relationship between the League and the Union.

The remainder of the changes deal with issues like how a team may conduct fitness testing, how long training camps may last, the number of days off players get during the season, the amount of insurance coverage players and their families are eligible to receive, and other playing conditions[41].

The new CBA between the NHL and the NHLPA alters some significant portions of the relationship between the parties.  It is a document of compromise.  The players lost 7% of the HRR they received under the old agreement and the owners had to agree to the creation of a defined benefit pension plan.  However, each side received in return something that was important to it.  It will be interesting to see how some of the open-ended issues are resolved (i.e.: testing for HGH) and how the new provisions end up impacting the game.

[1] Katie Strang, NHL, union have tentative agreement, ESPN, January 8, 2013, available at http://www.espn.go.com/nhl/story/_/id/8817955/nhl-nhlpa-reach-tentative-agreement.

[2] NHLPA, Summary of Terms, January 10, 2013, available at http://www.cdn.agilitycms.com/nhlpacom/PDF/Summary-of-Terms-1-10-13.pdf.

[3] NHLPA Staff, NHL, NHLPA Sign Collective Bargaining Agreement, Press Release, January 12, 2013, available at http://www.nhlpa.com/news/nhl-nhlpa-sign-collective-bargaining-agreement.

[4] NHLPA, Summary of Terms, supra at note 2.

[5] Rick Baert, NHL players score new defined benefit plan, Pensions & Investments, January 21, 2013, available at http://www.pionline.com/article/20130121/PRINTSUB/301219982/nhl-players-score-new-defined-benefit-plan.

[6] Steve Zipay, NHL, players reach tentative deal; ratification would end lockout, Newsday, January 6, 2013, available at http://www.newsday.com/sports/hockey/nhl-players-reach-tentative-deal-ratification-would-end-lockout-1.4412276.

[7] NHLPA, Summary of Terms, supra at note 2.

[8] Id.

[9] Colleen E. Medill,  Introduction to Employee Benefits Law: Policy and Practice (2011).

[10] NHLPA, Summary of Terms, supra at note 2.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] Id.

[33] Id.

[34] Id.

[35] Id.

[36] Id.

[37] Id.

[38] Id.

[39] Id.

[40] Id.

[41] Id.

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Jan 19

The Silence of the Arenas: The Tangential Costs of Labor Disputes

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The National Hockey League (NHL or League) lockout is over, having lasted 113 days.[1]  Since it began, the lockout has led to the cancellation of 510 games[2] and the annual Winter Classic game, which should have been played at the turn of the new year[3].  Hockey fans will once again be able to watch their favorite teams compete, as a shortened season is scheduled to begin this weekend[4].  Although it is now a footnote in the history of labor-management relations in the NHL, the most recent lockout has provided an important reminder of the economic impact labor strife can cause.

Of course, the League and the National Hockey League Players Association (NHLPA or Union) both stood to lose a significant amount of money as a result of the lockout.  In an uninterrupted season, over 1,200 games are played[5].  Each game represents an estimated $975,000 in ticket sales alone[6].  The math works out to a total loss of $497.25 million over the course of the lockout.  In addition to lost ticket revenue, the League is losing around a quarter of its sponsorship revenue[7].  The Union has also suffered economic losses.  As of early January the players had lost six out of the thirteen paychecks they usually receive during a season[8].

But there are often costs associated with labor disputes that reach beyond the primary parties to the dispute.  This was certainly the case with the NHL lockout.  In addition to lost revenue from merchandise and concession sales at the arenas during games, the businesses surrounding the arenas have been impacted by the cancellation of games.  In Boston, one parking garage operator estimated a revenue loss of $6,000 for each game that was not played[9].  The nearby bars and restaurants were losing approximately $1 million per cancelled game[10].  In Pittsburgh, it is projected that city businesses lost a collective total of $2.2 million per cancelled game on top of the roughly $15.2 million lost as a result of losing traffic from four preseason games that were not played[11].

Local businesses were not the only entities affected by the lockout.  The municipalities in which the arenas are located also felt the sting of lost revenue.  In New York, Nassau County, home of the New York Islanders, was expected to lose around $1 million from lost tax revenue if the entire season was lost[12].  The expected loss is based on the $1.12 million the County received in hockey-related revenue in 2010; the sources of the revenue included sales tax, parking fees, and concession sales[13].  In Ohio, Columbus and Franklin Counties, which share hosting duties for the Columbus Blue Jackets, projected tax losses between $3 million and $4 million if the NHL season was ultimately cancelled[14].  The losses would be the result of unrealized income and sales tax receipts[15].  It is unclear how much tax revenue was lost by the three counties as a result of the lockout.

The decline in revenue for local restaurants, bars and other businesses that resulted from the NHL lockout is important not only for the survival of individual businesses, but also for the strength of local economies.  Once businesses start losing money and owners are unsure of when, if ever, the source of the lost revenue will return, they must make some choices.  One of these choices may ultimately be to reduce the size of its workforce.  If this occurs, there will be a further impact on the economy of the area as a result of the now-unemployed individuals having less money to spend.  The decrease in revenue to local restaurants and retailers will also have a trickle-down effect on other businesses in the supply chain.  With fewer customers, and ultimately fewer dishes served, restaurants may not order as much food as they would when they are routinely overbooked in the hours before or after a hockey game.  Stores in the area that saw increased sales as a result of the foot traffic of individuals going to and from the games may not be able to turn around merchandise as quickly and, therefore, will not need to order from their suppliers as often or in the same quantities.  Similarly, municipalities that lost revenue as the result of the lockout may have to make tough choices about how to fill the budgetary gaps left by the lost revenue.  The municipality may have to decide to lay off workers, to cut back on providing certain services, or to raise taxes in order to replace the revenue while maintaining a balanced budget.

The costs of a labor dispute can be high for the parties to the dispute, with each side ultimately losing income in one form or another.  But, as the recent NHL lockout has illustrated, there are also resulting costs for other entities that rely on the continued business and operation of the relationship between the two parties in order to help generate revenue.  These tangential costs are often lost in the focus on the progress, or lack thereof, being made by the employer and union that are attempting to reach a settlement, but can have wide-ranging impacts on local communities.

[1] Katie Strang, NHL, union have tentative agreement, ESPN, January 8, 2012, available at http://www.espn.go.com/nhl/story/_/id/8817955/nhl-nhlpa-reach-tentative-agreement.

[2] Id.

[3] Pat Leonard, NHL lockout that’s putting Winter Classic on ice is costing more than just one game, New York Daily News, December 29, 2012, available at http://www.nydailynews.com/sports/hockey/winter-classic-killing-lockout-costs-game-article-1.1229608.

[4] Ira Podell, NHL Lockout Over, Training Camps Set To Open Ahead of 2013 Season, Huffington Post, January 12, 2013, available at http://www.huffingtonpost.com/2013/01/13/nhl-lockout-over-training-camp_n_2465497.html.

[5] Joshua Berlinger, This Is How Much the Lockout Has Cost the NHL So Far, Business Insider, October 4, 2012, available at http://www.businessinsider.com/the-nhl-just-cancelled-the-first-two-weeks-of-the-regular-season-and-its-going-to-cost-them-at-least-xxxxx-2012-10.

[6] Id.

[7] Gregg Krupa, NHL lockout’s true cost is staggering, Detroit News, December 24, 2012, available at http://www.detroitnews.com/article/20121224/OPINION03/212240356.

[8] Steve Zipay, NHL, players return to bargaining, Newsday, January 2, 2013, available at http://www.newsday.com/sports/hockey/nhl-players-return-to-bargaining-1.4396453.

[9] Associated Press, NHL lockout costs Boston businesses millions, Boston Herald, December 27, 2012, available at http://www.bostonherald.com/business/business_markets/2012/12/nhl_lockout_costs_boston_businesses_millions.

[10] Id.

[11] Staff, NHL lockout’s cost to Pittsburgh business: $2.2M a game, Pittsburgh Business Times, October 26, 2012, available at http://www.bizjournals.com/pittsburgh/blog/morning-edition/2012/10/nhl-lockouts-cost-to-pittsburgh.html.

[12] Robert Brodsky and Randi F. Marshall, Officials: NHL lockout could cost LI economy $60 million in revenue, Newsday, September 16, 2012, available at http://www.newsday.com/sports/hockey/officials-nhl-lockout-could-cost-li-economy-60-million-in-revenue-1.4008466.

[13] Id.

[14] Lucas Sullivan, NHL lockout has tax cost, The Columbus Dispatch, December 23, 2012, available at http://www.dispatch.com/content/stories/local/2012/12/23/nhl-lockout-has-tax-cost.html.

[15] Id.

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Jan 14

Federal Judge, Former EEOC Lawyer, Offers Clerkship… for Free

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Judge William Martinez, a 2010 appointee to the United States District Court for the District of Colorado, recently solicited applications for year-long federal clerkships. Martinez is provided funding for two clerkships, but he desired a third. Without federal funding for a third applicant, Judge Martinez seeks an individual willing to work for no salary. The position was advertised as a “gratuitous service appointment.” To obtain employment, a candidate would have to waive any claim to compensation of any form.

The Fair Labor Standards Act (“FLSA”) establishes several standards to protect workers, including the imposition of a minimum wage for covered nonexempt employees. The federal minimum wage is currently $7.25 per hour.

In order for this minimum wage provision to apply, the employment at issue must be covered by the FLSA, of which there are two forms: “enterprise coverage” and “individual coverage.” Employment as a federal judicial clerk appears to constitute enterprise coverage, which includes employment with “the Government of the United States.”[1]

In addition, the worker must be nonexempt. FLSA Section 213(a) lists a significant number of exemptions, however even the “learned professional exemption” would not apply as the worker will not be compensated in excess of $455 per week.[2]

Further, in order for the FLSA to apply there must be an employment relationship with an “employer” and an “employee.” Essentially, employers often argue that the worker is an independent contractor rather than an “employee.” Courts have utilized the “economic realities test” for the purposes of the FLSA.[3]

The factors considered are as follows:

  • The extent to which the services in question are an integral part of the employer’s business
  • The permanency of the relationship
  • The amount of the alleged contractor’s investment in facilities or equipment
  • The nature and degree of control by the principal
  • The alleged contractor’s opportunities for profit and/or loss
  • The amount of initiative, judgment or foresight in open market competition with others required for success of the independent enterprise
  • The degree of independent business organization and operation

The factors substantially support there being an employment relationship here, rather than a clerk constituting an independent contractor.

Finally, the government can analogize to unpaid internships, which have been permitted under FLSA if satisfying certain requirements. These factors are considered in light of the FLSA’s definition of “employ,” defined as “suffering or permitting to work.”[4]

The criteria are as follows:

  • The training is similar to the training which would be given in an educational environment
  • The experience is for the benefit of the trainee
  • The trainee does not displace any regular employee and works under close supervision of existing staff
  • The employer providing the training derives no immediate advantage from the activities of the trainee and in some cases its operations may be impeded
  • The trainee is not necessarily entitled to a job at the conclusion of the training
  • Both the employer and the trainee understand that the trainee will not be paid any wages for their time spent as a trainee.

If any of one these criteria are not met, the worker would be considered an employee under the FLSA and therefore entitled to minimum wage.[5]

Under these circumstances, there is the potential that these factors will be met and therefore this employment relationship would be exempt from FLSA minimum wage requirements. The strictness with which a court evaluates these factors would play a crucial role.

As Professor Paul Campos notes, this employment relationship may violate “the letter and spirit of the FLSA.”

“Hiring one person to do a paid job, while at the same time hiring another person through exactly the same hiring process to do exactly the same job, but not paying him or her to do it, is precisely what the statute was designed to prohibit.”[6]

However, at this point it is unclear how this observation fits into the criteria regulating unpaid internships.

A major problem with this entire calculation may be the unwillingness of the law clerk to cooperate in any action against the employer. Considering the state of the legal job market, many will surely apply for a prestigious position like this one regardless of compensation. Law students frequently take internships that probably violate the FLSA. As Professor Campos wisely observes, this “is just another way of ensuring that only the children of the rich have access to [prestigious legal jobs].”[7]

 

 

h/t: http://www.salon.com/2012/11/21/a_judge_searches_for_free_labor/?source=newsletter


[1] See 29 U.S.C. § 203(x)

[3] See e.g. Donovan v. DialAmerica Mktg. Inc., 757 F.2d 1376 (3d Cir. 1985)

[4] See 29 U.S.C. § 203(g)

[5] See Walling v. Portland Terminal Co., 330 U.S. 148 (1947)

[6] http://www.salon.com/2012/11/21/a_judge_searches_for_free_labor/?source=newsletter

[7] http://www.salon.com/2012/11/21/a_judge_searches_for_free_labor/?source=newsletter

 

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