Responding To Crisis-Related Employment Issues

Saturday, November 1, 2008 - 01:00

Editor: Tell us about the scope of the firm's employment law practice.

Willert: It includes all aspects of employment law, ERISA, compensation and benefit issues. As to litigation, we cover the entire gamut of employment related issues, including, among others, wrongful discharge, breach of contract, sexual harassment, disability and discrimination. And, we cover all the traditional labor law matters - a practice area that is on the rise right now in the United States. We have well over 100 years of collective experience in these areas and many of us have been pounding the labor and employment sidewalk for upwards of 30 years. We have a tremendous depth of experience.

Editor: Do you feel that your firm's bench strength is sufficient to cope with the volume and variety of cases that are emerging as a result of the economic crisis?

Willert: The strengths we have both in terms of the depth and years of experience make it possible for us to give prompt and thorough attention to matters brought to us by businesses of all sizes. As to matters related to the current economic crisis, we developed valuable experience with the legal issues that arose in the dips in the economy back in the 1980s and '90s. At that time, we helped employers handle issues growing out of layoffs and reductions in force and adjustments in executive compensation and in benefits. We know how to address issues characteristic of bad times as well as good.

Editor: Do you see unions becoming more active as reductions in force and curtailments in health and other benefits are implemented?

Willert: Unions see the current economic crisis as a huge opportunity for growth. Union-management issues are going to be on the rise. Living in a city where we have the Boeing machinists on strike, we know that there are a number of issues that are fueled by what is happening in the economy. These issues are causing strikes not only to start but to last significantly longer than they might have. Spurred by a failing economy, we are in a situation where, because of the high cost of doing business in the U.S. and in particular cities and states, outsourcing to other cities and states and abroad has grown. The cost of living continues to outpace increases in compensation, with the spiraling cost of health care a particular concern. These are all issues that will be seized on by unions to increase their membership.

Editor: What is the single most important issue for employees today?

Willert: That of job security. With the economy failing and the rolls of the unemployed rising, people are facing the reality that, if they lose their jobs, they will have great difficulty finding a new job, they may be homeless because they can't make their mortgage payments and their kids may have to drop out of college because they can't get student loans. All of these factors contribute to the demand for job security, which will come up in labor negotiations. This is happening now in Seattle - the strike at Boeing is illustrative. Emerging in the more heavily unionized areas like the Northwest, concern for job security is now a national phenomenon.

Editor: Do you think there will be an increase in wage-hour claims?

Willert: The State of Washington has had its fair share of wage-hour claims. Our supreme court has handed down some decisions within the last few years that have made it much easier for employees to win. The focus on wage-hour claims has been increasing over the last three to four years and, as you probably are aware, the largest group of cases in the employment arena is wage-hour class actions. There is a drive on the part of regulators to restrict the number of exempt employees. They want to know what the job entails, whether or not they really are managers or supervisors and whether they exercise true discretion in their roles. As the economic vice tightens on more people, they will focus on possible wage-hour claims as a way to provide needed cash.

Editor: Do you find that Washington State authorities are more aggressive in pursuing wage-hour claims and in expanding the definition of nonexempt employees?

Willert: Absolutely. Yes on both counts. With the recasting of definitions of who was in the exempt category when the wage and hour laws were changed there has been greater scrutiny at the state governmental and regulatory level to make sure people are being appropriately paid.

Editor: Do you think there is greater vulnerability for medium-sized and small businesses?

Willert: I do, and part of the reason for their greater vulnerability is that smaller companies do not have in-house counsel to monitor compliance with the host of regulations affecting business. They only seek outside help when it is too late to correct mistakes and they are really under the gun. That usually means when they have been sued or are threatened with a lawsuit.

Editor:Do you have a service for businesses of all sizes whereby you can give them a wage-hour compliance check-up?

Willert: Yes.We do what we call an employer audit, which involves looking at your books, taking a look at your job descriptions, determining what the employees actually do as compared with what is on paper, and then making recommendations with respect to how categories of employees or individual employees should be classified.

Editor: Do you see the current economic environment stimulating certain types of claims and raising issues on which employers had not previously focused sufficient attention?

Willert: Generally in an economy like this, the thing that could trigger most litigation would be reductions in force. It is likely that people would claim that they were chosen for an inappropriate reason, whether it is whistle-blowing, discrimination, or something else. While we may see some claims of this kind, those are not the claims on which people are likely to prevail if the employer has done its homework.

A more likely source of litigation relates to the decline in retirement benefits. Employers need to look at their 401(k) plans to make sure there isn't a basis for someone to say that as fiduciary, you did not look after my assets. There might be a claim that you did not take timely steps to protect my assets in the plan or too much of my assets were left in Washington Mutual stock when it was clear that public confidence in that company was declining.

I think it is possible that we will see more litigation because of the whole retirement benefit concept. We will clearly see movements away from people who are willing to place all their retirement assets in stock. Taking shares of company stock was the big thing, but the results of a free-falling stock market in an economy like this illustrate that employers and employees were not as well educated as they should have been about these issues. Employers need to be more proactive than they have been in providing education to their employees.

Editor: How will the outcome of the elections affect the issues your clients will be confronting?

Willert: If theparty holding the presidency is changed in November, we are likely to see some change with respect to employment-related laws and in particular with activities involving unions. Traditionally, we see an acceleration of union growth and more labor issues with a Democratic administration. It also results in increases in the level of enforcement activity and in legislation that expands the rights of employees and fosters the growth of unions. The likelihood of the adoption of the Employee Free Choice Act by Congress will be greatly enhanced .

However, it is my hope that, even if the Democrats win the White House, they will take into account that Act's impact on the ability of the U.S. to attract foreign businesses to the U.S. and to encourage U.S.-based companies to locate facilities here rather than abroad. In the midst of the current economic downturn, we have to be careful that we don't do anything that will discourage the creation of jobs here in the U.S.

Before the Employee Free Choice Act is adopted, legislators and the new president need to step back and say, is it in the best interest of the employees who are union members right now to be on the picket line when being on the picket line might force the business to go to another location or force it to go out of business? There needs to be very serious consideration and balancing of all the issues in the face of what I believe is not going to be a short-term economic issue but most optimistically will grind out over the next 12 to 24 months.

Editor: What are some of the labor and employment issues that might be affected by the outcome of the election?

Willert: I am reminded of the discussion of the Ledbetter case in the final presidential debate. There has been a tightening of standards at the U.S. Supreme Court level with respect to the whole issue of when you need to bring a claim with respect to such things as age discrimination or equal pay. As you may recall, the statute of limitations in that case began to run before the plaintiff became aware that someone doing the same work was being paid more. The question as to whether the statute of limitations ought to apply on claims that have clearly accrued at a time significantly earlier than the lawsuit is filed and an attempt to recoup is made may be revisited depending on the outcome of the election. Also dependent on the outcome of the election will be issues relating to executive compensation.

Sheryl J. Willert is the Chair of the Board of the National Foundation for Judicial Excellence, and Past President of DRI, being the first female and the first African-American to serve as an officer of DRI.

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