(1) Established the principle Cuius regio, eius religio. (2) Established the principle of reservatum ecclesiasticum.
(3) Laid the legal groundwork for two co-existing religious confessions
(Catholicism and Lutheranism) in the German-speaking states of the Holy
Roman Empire.
The Peace of Augsburg has been described as "the first step on the road toward a European system of sovereign states."
The system, created on the basis of the Augsburg Peace, collapsed at
the beginning of the 17th century, which was one of the reasons for the Thirty Years' War.
Overview
The Peace elaborated the principle Cuius regio, eius religio ("whose realm, his religion"), which allowed the princes of states within the Holy Roman Empire to adopt either Lutheranism or Catholicism
within the domains they controlled, ultimately reaffirming their
sovereignty over those domains. Subjects, citizens, or residents who did
not wish to conform to the prince's choice were given a grace period in
which they were free to emigrate to different regions in which their
desired religion had been accepted.
Article 24 stated: "In case our subjects, whether belonging Augsburg Confession,
should intend leaving their homes with their wives and children to
settle in another, they shall be hindered neither in the sale of their
estates after due payment of the local taxes nor injured in their
honor."
Charles V had made an interim ruling, the Augsburg Interim
of 1548, on the legitimacy of two religious creeds in the empire, and
this was codified in law on 30 June 1548 upon the insistence of the
emperor, who wanted to work out religious differences under the auspices
of a general council of the Catholic Church. The Interim largely
reflected principles of Catholic religious behavior in its 26 articles,
although it allowed for marriage of the clergy, and the giving of both
bread and wine to the laity. This led to resistance by the Protestant
territories, who proclaimed their own Interim at Leipzig the following
year.
The Interim was overthrown in 1552 by the revolt of the Protestant elector Maurice of Saxony and his allies. In the negotiations at Passau
in the summer of 1552, even the Catholic princes had called for a
lasting peace, fearing that the religious controversy would never be
settled. The emperor, however, was unwilling to recognize the religious
division in Western Christendom as permanent. This document was
foreshadowed by the Peace of Passau,
which in 1552 gave Lutherans religious freedom after a victory by
Protestant armies. Under the Passau document, Charles granted a peace
only until the next imperial Diet, whose meeting was called in early
1555.
The treaty, negotiated on Charles' behalf by his brother, Ferdinand, gave Lutheranism official status within the domains of the Holy Roman Empire, according to the policy of cuius regio, eius religio. Knights and towns who had practiced Lutheranism for some time were exempted under the Declaratio Ferdinandei. Conversely, the Ecclesiastical reservation prevented the principle of cuius regio, eius religio from being applied if an ecclesiastical ruler converted to Lutheranism.
In practice the principle of cuius regio had already been implemented between the time of the Nuremberg Religious Peace of 1532 and the 1546–1547 Schmalkaldic War. Now legal in the de jure sense, it was to apply to all the territories of the Empire except for the Ecclesiastical principalities
and some of the cities in those ecclesiastical states, where the
question of religion was addressed under the separate principles of the reservatum ecclesiasticum and the Declaratio Ferdinandei,
which also formed part of the Peace of Augsburg. This agreement marked
the end of the first wave of organized military action between
Protestants and Catholics; however, these principles were factors during
the wars of the 1545–1648 Counter-Reformation.
This left out Reformed Zwinglians and Anabaptists, but not Calvinists who approved of the Augsburg Confession Variata. Practices other than the two which were the most widespread in the Empire was expressly forbidden, considered by the law to be heretical, and could be punishable by death.
Although "cuius regio" did not explicitly intend to allow the modern
ideal of "freedom of conscience", individuals who could not subscribe to
their ruler's religion were permitted to leave his territory with their
possessions. Also under the Declaratio Ferdinandei, Lutheran knights were given the freedom to retain their religion wherever they lived. The revocation of the Declaratio Ferdinandei by the Catholics in the 1629 Edict of Restitution helped fuel the Thirty Years' War of 1618–1648. The Edict of Restitution itself was overturned in the 1635 Peace of Prague,
which restored the 1555 terms of the Peace of Augsburg. Stability
brought by assortative migrations under the principle were threatened by
subsequent conversion of rulers. Therefore, the Peace of Westphalia
preserved the essence of the principle by prohibiting converting rulers
to force-convert their subjects and by determining the official
religion of Imperial territories to the status of 1624 as a normative
year.
Although some dissenters emigrated, others lived as Nicodemites.
Because of geographical and linguistic circumstances on the continent
of Europe, emigration was more feasible for Catholics living in
Protestant lands than for Protestants living in Catholic lands. As a result, there were more crypto-Protestants than crypto-Papists in continental Europe.
Main principles
The Peace of Augsburg contained three main principles:
The principle of cuius regio, eius religio
("Whose realm, his religion") provided for internal religious unity
within a state: the religion of the prince (either Lutheranism or Roman
Catholicism) became the religion of the state and all its inhabitants.
Those inhabitants who could not conform to the prince's religion were
allowed to leave: an innovative idea in the 16th century. This principle
was discussed at length by the various delegates, who finally reached
agreement on the specifics of its wording after examining the problem
and the proposed solution from every possible angle. Forms of Christianity other than the two specified - notably the emerging faith of Calvinism - were not recognised by the Empire.
The second principle, called the reservatum ecclesiasticum
(ecclesiastical reservation), covered the special status of the
ecclesiastical state. If the prelate of an ecclesiastic state changed
his religion, the inhabitants of that state did not have to do so.
Instead, the prelate was expected to resign from his post, although this
was not spelled out in the agreement.
The third principle, known as Declaratio Ferdinandei
(Ferdinand's Declaration), exempted knights and some of the cities from
the requirement of religious uniformity, if the reformed religion had
been practiced there since the mid-1520s. This allowed for a few mixed
cities and towns where Catholics and Lutherans had lived together. It
also protected the authority of the princely families, the knights and
some of the cities to determine what religious uniformity meant in their
territories. Ferdinand inserted this at the last minute, on his own
authority.
The third principle was not publicized as part of the treaty, and was kept secret for almost two decades.
Problems
The
document left some unresolved problems. While it gave legal basis for
the practice of the Lutheran confession, it did not Zwinglianism nor Anabaptism.
Although the Peace of Augsburg was moderately successful in relieving
tension in the empire and increasing tolerance, it meant that many
Protestant groups living in the empire still found themselves in danger
of the charge of heresy.
(Article 17: "However, all such as do not belong to the two above named
religions shall not be included in the present peace but be totally
excluded from it.") These minorities did not achieve any legal
recognition until the Peace of Westphalia in 1648.
Failure to secure a broader peace ultimately led to the Thirty Years' War. One precursor was the Third Defenestration of Prague
(1618) in which two representatives of the fiercely Catholic king of
Bohemia, Archduke Ferdinand, were thrown out of a castle window.
Aftermath
The principle of ecclesiastical reservation was tested in the Cologne War (1583–1588), which grew out of the scenario envisioned by Ferdinand when he wrote the proviso: the reigning prince-archbishop, Hermann of Wied, converted to Protestantism; although he did not insist that the population convert, he placed Calvinism on a parity with Catholicism throughout the Electorate of Cologne. This in itself came forth as a two-fold legal problem: first, Calvinism was considered a heresy; second, the elector did not resign his see, which made him eligible in theory to cast a ballot
for emperor. Finally, his marriage raised the possibility of convert
the electorate into a dynastic principality, shifting the balance of
religious power in the empire, as Protestants could potentially hold a
majority of electorates.
A side effect of the religious turmoil was Charles' decision to
abdicate and divide Habsburg territory into two sections. His brother
Ferdinand ruled the Austrian lands, and Charles' fervently Catholic son,
Philip II, became administrator of Spain, the Spanish Netherlands, parts of Italy, and other overseas holdings.
A contract of employment can always create better terms than statutory minimum rights. But to increase their bargaining power to get better terms, employees organize labor unions for collective bargaining. The Clayton Act of 1914 guarantees all people the right to organize, and the National Labor Relations Act of 1935 creates rights for most employees to organize without detriment through unfair labor practices. Under the Labor Management Reporting and Disclosure Act of 1959,
labor union governance follows democratic principles. If a majority of
employees in a workplace support a union, employing entities have a duty
to bargain in good faith.
Unions can take collective action to defend their interests, including
withdrawing their labor on strike. There are not yet general rights to
directly participate in enterprise governance, but many employees and
unions have experimented with securing influence through pension funds, and representation on corporate boards.
Since the Civil Rights Act of 1964,
all employing entities and labor unions have a duty to treat employees
equally, without discrimination based on "race, color, religion, sex, or
national origin". There are separate rules for sex discrimination in pay under the Equal Pay Act of 1963. Additional groups with "protected status" were added by the Age Discrimination in Employment Act of 1967 and the Americans with Disabilities Act of 1990. There is no federal law banning all sexual orientation or identity
discrimination, but 22 states had passed laws by 2016. These equality
laws generally prevent discrimination in hiring and terms of employment,
and make discharge because of a protected characteristic unlawful. In
2020, the Supreme Court of the United States ruled in Bostock v. Clayton County
that discrimination solely on the grounds of sexual orientation or
gender identity violates Title VII of the Civil Rights Act of 1964.
There is no federal law against unjust discharge, and most states also have no law with full protection against wrongful termination of employment. Collective agreements made by labor unions and some individual contracts require that people are only discharged for a "just cause". The Worker Adjustment and Retraining Notification Act of 1988
requires employing entities give 60 days notice if more than 50 or one
third of the workforce may lose their jobs. Federal law has aimed to
reach full employment through monetary policy
and spending on infrastructure. Trade policy has attempted to put labor
rights in international agreements, to ensure open markets in a global economy do not undermine fair and full employment.
Modern US labor law mostly comes from statutes passed between 1935 and 1974, and changing interpretations of the US Supreme Court. However, laws regulated the rights of people at work and employers from colonial times on. Before the Declaration of Independence in 1776, the common law was either uncertain or hostile to labor rights. Unions were classed as conspiracies, and potentially criminal. It tolerated slavery and indentured servitude. From the Pequot War in Connecticut from 1636 onwards, Native Americanswere enslaved by European settlers. More than half of the European immigrants arrived as prisoners, or in indentured servitude, where they were not free to leave their employers until a debt bond had been repaid. Until its abolition, the Atlantic slave trade brought millions of Africans to do forced labor in the Americas.
However, in 1772, the English Court of King's Bench held in Somerset v Stewart that slavery was to be presumed unlawful at common law. Charles Stewart from Boston, Massachusetts had bought James Somerset as a slave and taken him to England. With the help of abolitionists, Somerset escaped and sued for a writ of habeas corpus (that "holding his body" had been unlawful). Lord Mansfield, after declaring he should "let justice be done whatever be the consequence",
held that slavery was "so odious" that nobody could take "a slave by
force to be sold" for any "reason whatever". This was a major grievance
of southern slave owning states, leading up to the American Revolution in 1776. The 1790 United States census recorded 694,280 slaves (17.8 per cent) of a total 3,893,635 population. After independence, the British Empire halted the Atlantic slave trade in 1807, and abolished slavery in its own territories, by paying off slave owners in 1833. In the US, northern states progressively abolished slavery. However, southern states did not. In Dred Scott v. Sandford
the Supreme Court held the federal government could not regulate
slavery, and also that people who were slaves had no legal rights in
court. The American Civil War was the result. President Lincoln's Emancipation Proclamation in 1863 made abolition of slavery a war aim, and the Thirteenth Amendment
of 1865 enshrined the abolition of most forms of slavery in the
Constitution. Former slave owners were further prevented from holding
people in involuntary servitude for debt by the Peonage Act of 1867. In 1868, the Fourteenth Amendment ensured equal access to justice, and the Fifteenth Amendment required that everyone would have the right to vote. The Civil Rights Act of 1875 was also meant to ensure equality in access to housing and transport, but in the Civil Rights Cases, the Supreme Court found it was "unconstitutional", ensuring that racial segregation would continue. In dissent, Harlan J said the majority was leaving people "practically at the mercy of corporations". Even if people were formally free, they remained factually dependent on property owners for work, income and basic services.
Labor is prior to and independent of capital.
Capital is only the fruit of labor, and could never have existed if
labor had not first existed. Labor is the superior of capital, and
deserves much the higher consideration ... The prudent, penniless
beginner in the world labors for wages awhile, saves a surplus with
which to buy tools or land for himself, then labors on his own account
another while, and at length hires another new beginner to help him.
This is the just and generous and prosperous system which opens the way
to all, gives hope to all, and consequent energy and progress and
improvement of condition to all. No men living are more worthy to be
trusted than those who toil up from poverty; none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power
which they already possess, and which if surrendered will surely be
used to close the door of advancement against such as they and to fix
new disabilities and burdens upon them till all of liberty shall be lost.
Like slavery, common law repression of labor unions was slow to be undone. In 1806, Commonwealth v. Pullis held that a Philadelphia shoemakers union striking for higher wages was an illegal "conspiracy", even though corporations—combinations of employers—were lawful. Unions still formed and acted. The first federation of unions, the National Trades Union was established in 1834 to achieve a 10 hour working day, but it did not survive the soaring unemployment from the financial Panic of 1837. In 1842, Commonwealth v. Hunt, held that Pullis was wrong, after the Boston Journeymen Bootmakers' Society struck for higher wages.
The first instance judge said unions would "render property insecure,
and make it the spoil of the multitude, would annihilate property, and
involve society in a common ruin". But in the Massachusetts Supreme Judicial Court, Shaw CJ
held people "are free to work for whom they please, or not to work, if
they so prefer" and could "agree together to exercise their own
acknowledged rights, in such a manner as best to subserve their own
interests." This stopped criminal cases, although civil cases persisted. In 1869 an organisation called the Knights of Labor
was founded by Philadelphia artisans, joined by miners 1874, and urban
tradesmen from 1879. It aimed for racial and gender equality, political
education and cooperative enterprise, yet it supported the Alien Contract Labor Law of 1885 which suppressed workers migrating to the US under a contract of employment.
Industrial conflicts on railroads and telegraphs from 1883 led to the foundation of the American Federation of Labor in 1886, with the simple aim of improving workers wages, housing and job security "here and now". It also aimed to be the sole federation, to create a strong, unified labor movement. Business reacted with litigation. The Sherman Antitrust Act of 1890, which was intended to sanction business cartels acting in restraint of trade, was applied to labor unions. In 1895, the US Supreme Court in In re Debs affirmed an injunction, based on the Sherman Act, against the striking workers of the Pullman Company. The strike leader Eugene Debs was put in prison. In notable dissent among the judiciary, Holmes J argued in Vegelahn v. Guntner that any union taking collective action in good faith
was lawful: even if strikes caused economic loss, this was equally
legitimate as economic loss from corporations competing with one
another.[29]Holmes J was elevated to the US Supreme Court, but was again in a minority on labor rights. In 1905, Lochner v. New York held that New York limiting bakers' working day to 60 hours a week violated employers' freedom of contract. The Supreme Court majority supposedly unearthed this "right" in the Fourteenth Amendment, that no State should "deprive any person of life, liberty, or property, without due process of law." With Harlan J, Holmes J dissented, arguing that the "constitution
is not intended to embody a particular economic theory" but is "made
for people of fundamentally differing views". On questions of social and
economic policy, courts should never declare legislation
"unconstitutional". The Supreme Court, however, accelerated its attack
on labor in Loewe v. Lawlor, holding that triple damages were payable by a striking union to its employers under the Sherman Act of 1890. This line of cases was finally quashed by the Clayton Act of 1914 §6. This removed labor from antitrust law, affirming that the "labor of a human being is not a commodity
or article of commerce" and nothing "in the antitrust laws" would
forbid the operation of labor organizations "for the purposes of mutual
help".
Throughout the early 20th century, states enacted labor rights to advance social and economic progress. But despite the Clayton Act, and abuses of employers documented by the Commission on Industrial Relations from 1915, the Supreme Court struck labor rights down as unconstitutional, leaving management powers virtually unaccountable. In this Lochner era, the Courts held that employers could force workers to not belong to labor unions, that a minimum wage for women and children was void, that states could not ban employment agencies charging fees for work, that workers could not strike in solidarity with colleagues of other firms, and even that the federal government could not ban child labor. It also imprisoned socialist activists, who opposed the fighting in World War I, meaning that Eugene Debs ran as the Socialist Party's candidate for President in 1920 from prison. Critically, the courts held state and federal attempts to create Social Security to be unconstitutional.
Because they were unable to save in safe public pensions, millions of
people bought shares in corporations, causing massive growth in the stock market. Because the Supreme Court precluded regulation for good information on what people were buying, corporate promoters tricked people into paying more than stocks were really worth. The Wall Street Crash of 1929
wiped out millions of people's savings. Business lost investment and
fired millions of workers. Unemployed people had less to spend with
businesses. Business fired more people. There was a downward spiral into
the Great Depression.
Although people, in limited fields, could claim to be equally
treated, the mechanisms for fair pay and treatment were dismantled after
the 1970s. The last major labor law statute, the Employee Retirement Income Security Act of 1974 created rights to well regulated occupational pensions, although only where an employer had already promised to provide one: this usually depended on collective bargaining by unions. But in 1976, the Supreme Court in Buckley v. Valeo held anyone could spend unlimited amounts of money on political campaigns, as a part of the First Amendment right to "freedom of speech". After the Republican President Reagan took office in 1981, he dismissed all air traffic control staff who went on strike, and replaced the National Labor Relations Board
members with pro-management men. Dominated by Republican appointees,
the Supreme Court suppressed labor rights, removing rights of
professors, religious school teachers, or illegal immigrants to organize
in a union, allowing employees to be searched at work, and eliminating employee rights to sue for medical malpractice in their own health care. Only limited statutory changes were made. The Immigration Reform and Control Act of 1986 criminalized large numbers of migrants. The Worker Adjustment and Retraining Notification Act of 1988 guaranteed workers some notice before a mass termination of their jobs. The Family and Medical Leave Act of 1993 guaranteed a right to 12 weeks leave to take care for children after birth, all unpaid. The Small Business Job Protection Act of 1996
cut the minimum wage, by enabling employers to take the tips of their
staff to subsidize the minimum wage. A series of proposals by Democratic
and independent politicians to advance labor rights were not enacted, and the United States began to fall behind most other developed countries in labor rights.
In relation to federal government contracting, Executive Order 13673, entitled Fair Pay and Safe Workplaces, was issued by President Barack Obama
on 31 July 2014. It contained "new requirements designed to increase
efficiency and cost savings in the Federal contracting process", specifically referring to "contracting with responsible sources who comply with labor laws". The Occupational Safety and Health Administration published guidance on 25 August 2016.
The order listed 14 federal laws which were defined as "labor laws",
and extended coverage to "equivalent state laws". A breach of any of
these laws during the three year period preceding the contract award was
treated as non-compliance; for a contract valued over $500,000, contracting officers
were to consider such violations, and any corrective actions taken by
the business concerned, in determining contract award. Similar
provisions were built into sub-contracting arrangements. To support
compliance, each federal agency was required to appoint a "Labor
Compliance Advisor". The order was revoked by President Donald Trump on 27 March 2017 under Executive Order 13782.
Eleanor Roosevelt believed the Universal Declaration of Human Rights of 1948 "may well become the international Magna Carta of all". Based on the President's call for a Second Bill of Rights
in 1944, articles 22–24 elevated rights to "social security", "just and
favourable conditions of work", and the "right to rest and leisure" to
be as important as the "right to own property".
Contracts between employees and employers (mostly corporations) usually begin an employment relationship, but are often not enough for a decent livelihood. Because individuals lack bargaining power,
especially against wealthy corporations, labor law creates legal rights
that override arbitrary market outcomes. Historically, the law
faithfully enforced property rights and freedom of contract on any terms,
whether or not this was inefficient, exploitative and unjust. In the
early 20th century, as more people favored the introduction of
democratically determined economic and social rights over rights of property and contract, state and federal governments introduced law reform. First, the Fair Labor Standards Act of 1938 created a minimum wage (now $7.25 at federal level, higher in 28 states) and overtime pay of one and a half times. Second, the Family and Medical Leave Act of 1993
creates very limited rights to take unpaid leave. In practice, good
employment contracts improve on these minimums. Third, while there is no
right to an occupational pension or other benefits, the Employee Retirement Income Security Act of 1974 ensures employers guarantee those benefits if they are promised. Fourth, the Occupational Safety and Health Act 1970
demands a safe system of work, backed by professional inspectors.
Individual states are often empowered to go beyond the federal minimum,
and function as laboratories of democracy in social and economic rights, where they have not been constrained by the US Supreme Court.
Common law, state and federal statutes usually confer labor rights on "employees", but not people who are autonomous and have sufficient bargaining power to be "independent contractors". In 1994, the Dunlop Commission on the Future of Worker-Management Relations: Final Report
recommended a unified definition of an employee under all federal labor
laws, to reduce litigation, but this was not implemented. As it stands,
Supreme Court cases have stated various general principles, which will
apply according to the context and purpose of the statute in question.
In NLRB v. Hearst Publications, Inc.,
newsboys who sold newspapers in Los Angeles claimed that they were
"employees", so that they had a right to collectively bargain under the National Labor Relations Act of 1935. The newspaper corporations argued the newsboys were "independent contractors", and they were under no duty to bargain in good faith. The Supreme Court held the newsboys were employees, and common law tests of employment, particularly the summary in the Restatement of the Law of Agency, Second
§220, were no longer appropriate. They were not "independent
contractors" because of the degree of control employers had. But the National Labor Relations Board could decide itself who was covered if it had "a reasonable basis in law." Congress reacted, first, by explicitly amending the NLRA
§2(1) so that independent contractors were exempt from the law while,
second, disapproving that the common law was irrelevant. At the same
time, the Supreme Court decided United States v. Silk,
holding that "economic reality" must be taken into account when
deciding who is an employee under the Social Security Act of 1935. This
meant a group of coal loaders were employees, having regard to their
economic position, including their lack of bargaining power,
the degree of discretion and control, and the risk they assumed
compared to the coal businesses they worked for. By contrast, the
Supreme Court found truckers who owned their own trucks, and provided
services to a carrier company, were independent contractors.
Thus, it is now accepted that multiple factors of traditional common
law tests may not be replaced if a statute gives no further definition
of "employee" (as is usual, e.g., the Fair Labor Standards Act of 1938, Employee Retirement Income Security Act of 1974, Family and Medical Leave Act of 1993).
Alongside the purpose of labor legislation to mitigate inequality of
bargaining power and redress the economic reality of a worker's
position, the multiple factors found in the Restatement of Agency must be considered, though none is necessarily decisive.
Common law
agency tests of who is an "employee" take account of an employer's
control, if the employee is in a distinct business, degree of direction,
skill, who supplies tools, length of employment, method of payment, the
regular business of the employer, what the parties believe, and whether
the employer has a business.
Some statutes also make specific exclusions that reflect the common
law, such as for independent contractors, and others make additional
exceptions. In particular, the National Labor Relations Act of 1935
§2(11) exempts supervisors with "authority, in the interest of the
employer", to exercise discretion over other employees' jobs and terms.
This was originally a narrow exception. Controversially, in NLRB v. Yeshiva University, a 5 to 4 majority of the Supreme Court held that full time professors in a university
were excluded from collective bargaining rights, on the theory that
they exercised "managerial" discretion in academic matters. The
dissenting judges pointed out that management was actually in the hands
of university administration, not professors. In NLRB v. Kentucky River Community Care, Inc.,
the Supreme Court held, again 5 to 4, that six registered nurses who
exercised supervisory status over others fell into the "professional"
exemption. Stevens J,
for the dissent, argued that if "the 'supervisor' is construed too
broadly", without regard to the Act's purpose, protection "is
effectively nullified". Similarly, under the Fair Labor Standards Act of 1938, in Christopher v. SmithKline Beecham Corp., the Supreme Court held 5 to 4 that a traveling medical salesman for GSK
of four years was an "outside salesman", and so could not claim
overtime. People working unlawfully are often regarded as covered, so as
not to encourage employers to exploit vulnerable employees. For
instance in Lemmerman v. A.T. Williams Oil Co.,
under the North Carolina Workers' Compensation Act an eight-year-old
boy was protected as an employee, even though children working under the
age of 8 was unlawful. However, in Hoffman Plastic Compounds, Inc. v. NLRB,
the Supreme Court held 5 to 4 that an undocumented worker could not
claim back pay, after being discharged for organizing in a union. The
gradual withdrawal of more and more people from the scope of labor law,
by a slim majority of the Supreme Court since 1976, means that the US
falls below international law standards, and standards in other
democratic countries, on core labor rights, including freedom of association.
Common law tests were often important for determining who was, not just an employee, but the relevant employers who had "vicarious liability". Potentially there can be multiple, joint-employers could who share responsibility, although responsibility in tort law can exist regardless of an employment relationship. In Ruiz v. Shell Oil Co, the Fifth Circuit
held that it was relevant which employer had more control, whose work
was being performed, whether there were agreements in place, who
provided tools, had a right to discharge the employee, or had the
obligation to pay. In Local 217, Hotel & Restaurant Employees Union v. MHM Inc the question arose under the Worker Adjustment and Retraining Notification Act of 1988 whether a subsidiary or parent corporation was responsible to notify employees that the hotel would close. The Second Circuit
held the subsidiary was the employer, although the trial court had
found the parent responsible while noting the subsidiary would be the
employer under the NLRA. Under the Fair Labor Standards Act of 1938,
29 USC §203(r), any "enterprise" that is under common control will
count as the employing entity. Other statutes do not explicitly adopt
this approach, although the NLRB
has found an enterprise to be an employer if it has "substantially
identical management, business purpose, operation, equipment, customers
and supervision." In South Prairie Const. Co. v. Local No. 627, International Union of Operating Engineers, AFL-CIO,
the Supreme Court found that the DC Circuit had legitimately identified
two corporations as a single employer given that they had a "very
substantial qualitative degree of centralized control of labor", but that further determination of the relevant bargaining unit should have been remitted to the NLRB.
When employees are hired through an agency, it is likely that the
end-employer will be considered responsible for statutory rights in most
cases, although the agency may be regarded as a joint employer.
When people start work, there will almost always be a contract of employment that governs the relationship of employee and the employing entity (usually a corporation, but occasionally a human being). A "contract" is an agreement enforceable in law. Very often it can be written down, or signed, but an oral agreement is also a fully enforceable contract. Because employees have unequal bargaining power compared to almost all employing entities, most employment contracts are "standard form". Most terms and conditions are photocopied or reproduced for many people. Genuine negotiation
is rare, unlike in commercial transactions between two business
corporations. This has been the main justification for enactment of
rights in federal and state law. The federal right to collective bargaining,
by a labor union elected by its employees, is meant to reduce the
inherently unequal bargaining power of individuals against organizations
to make collective agreements. The federal right to a minimum wage, and increased overtime
pay for working over 40 hours a week, was designed to ensure a "minimum
standard of living necessary for health, efficiency, and general
well-being of workers", even when a person could not get a high enough
wage by individual bargaining. These and other rights, including family leave, rights against discrimination, or basic job security standards, were designed by the United States Congress
and state legislatures to replace individual contract provisions.
Statutory rights override even an express written term of a contract,
usually unless the contract is more beneficial to an employee. Some
federal statutes also envisage that state law rights can improve upon
minimum rights. For example, the Fair Labor Standards Act of 1938 entitles states and municipalities to set minimum wages beyond the federal minimum. By contrast, other statutes such as the National Labor Relations Act of 1935, the Occupational Safety and Health Act of 1970, and the Employee Retirement Income Security Act of 1974, have been interpreted in a series of contentious judgments by the US Supreme Court to "preempt" state law enactments.
These interpretations have had the effect to "stay experimentation in
things social and economic" and stop states wanting to "serve as a
laboratory" by improving labor rights. Where minimum rights do not exist in federal or state statutes, principles of contract law, and potentially torts, will apply.
Employment contracts are subject to minimum rights in state and federal statute, and those created by collective agreements.
Aside from terms in oral or written agreements, terms can be incorporated by reference. Two main sources are collective agreements and company handbooks. In JI Case Co v. National Labor Relations Board an employing corporation argued it should not have to bargain in good faith with a labor union, and did not commit an unfair labor practice by refusing, because it had recently signed individual contracts with its employees. The US Supreme Court held unanimously that the "very purpose" of collective bargaining and the National Labor Relations Act 1935
was "to supersede the terms of separate agreements of employees with
terms which reflect the strength and bargaining power and serve the
welfare of the group". Terms of collective agreements, to the advantage
of individual employees, therefore supersede individual contracts.
Similarly, if a written contract states that employees do not have
rights, but an employee has been told they do by a supervisor, or rights
are assured in a company handbook, they will usually have a claim. For example, in Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc. the Supreme Court of Connecticut
held that a promise in a handbook that an employee could be dismissed
only for a good reason (or "just cause") was binding on the employing
corporation. Furthermore, an employer had no right to unilaterally
change the terms.
Most other state courts have reached the same conclusion, that
contracts cannot be altered, except for employees' benefit, without new consideration and true agreement. By contrast, a slight majority on the California Supreme Court, appointed by Republican governors, held in Asmus v. Pacific Bell
that a company policy of indefinite duration can be altered after a
reasonable time with reasonable notice, if it affects no vested
benefits.
The four dissenting judges, appointed by Democratic governors, held
this was a "patently unfair, indeed unconscionable, result—permitting an
employer that made a promise of continuing job security ... to
repudiate that promise with impunity several years later". In addition, a
basic term of good faith
which cannot be waived, is implied by common law or equity in all
states. This usually demands, as a general principle that "neither party
shall do anything, which will have the effect of destroying or injuring
the right of the other party, to receive the fruits of the contract". The term of good faith
persists throughout the employment relationship. It has not yet been
used extensively by state courts, compared to other jurisdictions. The Montana Supreme Court has recognized that extensive and even punitive damages could be available for breach of an employee's reasonable expectations. However others, such as the California Supreme Court limit any recovery of damages to contract breaches, but not damages regarding the manner of termination. By contrast, in the United Kingdom the requirement for "good faith" has been found to limit the power of discharge except for fair reasons (but not to conflict with statute), in Canada it may limit unjust discharge also for self-employed persons, and in Germany it can preclude the payment of wages significantly below average.
Finally, it was traditionally thought that arbitration clauses
could not displace any employment rights, and therefore limit access to
justice in public courts. However, in 14 Penn Plaza LLC v. Pyett, in a 5 to 4 decision under the Federal Arbitration Act
of 1925, individual employment contract arbitration clauses are to be
enforced according to their terms. The four dissenting judges argued
that this would eliminate rights in a way that the law never intended.
While contracts often determine wages and terms of employment, the
law refuses to enforce contracts that do not observe basic standards of
fairness for employees. Today, the Fair Labor Standards Act of 1938
aims to create a national minimum wage, and a voice at work, especially
through collective bargaining should achieve fair wages. A growing body
of law also regulates executive pay, although a system of "maximum wage" regulation, for instance by the former Stabilization Act of 1942, is not currently in force. Historically, the law actually suppressed wages, not of the highly paid, by ordinary workers. For example, in 1641 the Massachusetts Bay Colonylegislature
(dominated by property owners and the official church) required wage
reductions, and said rising wages "tende to the ruin of the Churches and
the Commonwealth". In the early 20th century, democratic opinion demanded everyone had a minimum wage, and could bargain for fair wages beyond the minimum. But when states tried to introduce new laws, the US Supreme Court held them unconstitutional. A right to freedom of contract, argued a majority, could be construed from the Fifth and Fourteenth Amendment's
protection against being deprived "of life, liberty, or property,
without due process of law". Dissenting judges argued that "due process"
did not affect the legislative power to create social or economic
rights, because employees "are not upon a full level of equality of choice with their employer".
After the Wall Street Crash, and the New Deal with the election of Franklin D. Roosevelt, the majority in the US Supreme Court was changed. In West Coast Hotel Co. v. ParrishHughes CJ held (over four dissenters still arguing for Freedom of Contract) that a Washington
law setting minimum wages for women was constitutional because the
state legislatures should be enabled to adopt legislation in the public
interest. This ended the "Lochner era", and Congress enacted the Fair Labor Standards Act of 1938.
Under §202(a) the federal minimum wage aims to ensure a "standard of
living necessary for health, efficiency and general well being". Under §207(a)(1), most employees (but with many exceptions) working over 40 hours a week must receive 50 per cent more overtime pay on their hourly wage. Nobody may pay lower than the minimum wage, but under §218(a) states and municipal governments may enact higher wages. This is frequently done to reflect local productivity and requirements for decent living in each region. However the federal minimum wage has no automatic mechanism to update with inflation. Because the Republican Party has opposed raising wages, the federal real minimum wage is over 33 per cent lower today than in 1968, among the lowest in the industrialized world.
People have campaigned for a $15 an hour minimum wage, because the real minimum wage has fallen by 43% compared to 1968. In "tipped" jobs, some states still enable employers to take their workers' tips for between $2.13 and the $7.25 minimum wage per hour.
Although there is a federal minimum wage, it has been restricted in
(1) the scope of who it covers, (2) the time that counts to calculate
the hourly minimum wage, and (3) the amount that employers' can take
from their employees' tips or deduct for expenses. First, five US Supreme Court judges held in Alden v. Maine
that the federal minimum wage cannot be enforced for employees of state
governments, unless the state has consented, because that would violate
the Eleventh Amendment. Souter J, joined by three dissenting justices, held that no such "sovereign immunity" existed in the Eleventh Amendment. Twenty-eight states, however, did have minimum wage laws higher than the federal level in 2016. Further, because the US Constitution, article one, section 8, clause 3 only allows the federal government to "regulate Commerce
... among the several States", employees of any "enterprise" under
$500,000 making goods or services that do not enter commerce are not
covered: they must rely on state minimum wage laws. FLSA 1938 §203(s) explicitly exempts establishments whose only employees are close family members. Under §213 the minimum wage may not be paid to 18 categories of employee, and paying overtime to 30 categories of employee. This include under §213(a)(1) employees of "bona fide executive, administrative, or professional capacity". In Auer v. Robbins police sergeants and lieutenants at the St Louis Police Department, Missouri claimed they should not be classed as executives or professional employees, and should get overtime pay. Scalia J held that, following Department of Labor
guidance, the St Louis police commissioners were entitled to exempt
them. This has encouraged employers to attempt to define staff as more
"senior" and make them work longer hours while avoiding overtime pay. Another exemption in §213(a)(15) is for people "employed in domestic service employment to provide companionship services". In Long Island Care at Home, Ltd. v. Coke, a corporation claimed exemption, although Breyer J for a unanimous court agreed with the Department of Labor that it was only intended for carers in private homes.
Second, because §206(a)(1)(C) says the minimum wage is $7.25 per hour, courts have grappled with which hours count as "working".
Early cases established that time traveling to work did not count as
work, unless it was controlled by, required by, and for the benefit of
an employer, like traveling through a coal mine. For example, in, Anderson v. Mt. Clemens Pottery Co.
a majority of five to two justices held that employees had to be paid
for the long walk to work through an employer's Mount Clemens Pottery Co
facility. According to Murphy J
this time, and time setting up workstations, involved "exertion of a
physical nature, controlled or required by the employer and pursued
necessarily and primarily for the employer's benefit." In Armour & Co. v. Wantockfirefighters claimed they should be fully paid while on call at their station for fires. The Supreme Court
held that, even though the firefighters could sleep or play cards,
because "[r]eadiness to serve may be hired quite as much as service
itself" and time waiting on call was "a benefit to the employer". By contrast, in 1992 the Sixth Circuit
controversially held that needing to be infrequently available by phone
or pager, where movement was not restricted, was not working time. Time spent doing unusual cleaning, for instance showering off toxic substances, does count as working time, and so does time putting on special protective gear. Under §207(e) pay for overtime should be one and a half times the regular pay. In Walling v. Helmerich & Payne, Inc., the Supreme Court
held that an employer's scheme of paying lower wages in the morning,
and higher wages in the afternoon, to argue that overtime only needed to
be calculated on top of (lower) morning wages was unlawful. Overtime
has to be calculated based on the average regular pay. However, in Christensen v. Harris County six Supreme Court judges held that police in Harris County, Texas could be forced to use up their accumulated "compensatory time" (allowing time off with full pay) before claiming overtime. Writing for the dissent, Stevens J
said the majority had misconstrued §207(o)(2), which requires an
"agreement" between employers, unions or employees on the applicable
rules, and the Texas police had not agreed.
Third, §203(m) allows employers to deduct sums from wages for food or
housing that is "customarily furnished" for employees. The Secretary of Labor
may determine what counts as fair value. Most problematically, outside
states that have banned the practice, they may deduct money from a
"tipped employee" for money over the "cash wage required to be paid such
an employee on August 20, 1996"—and this was $2.13 per hour. If an
employee does not earn enough in tips, the employer must still pay the
$7.25 minimum wage. But this means in many states tips do not go to
workers: tips are taken by employers to subsidize low pay. Under FLSA 1938
§216(b)-(c) the Secretary of State can enforce the law, or individuals
can claim on their own behalf. Federal enforcement is rare, so most
employees are successful if they are in a labor union. The Consumer Credit Protection Act of 1968 limits deductions or "garnishments" by employers to 25 per cent of wages, though many states are considerably more protective. Finally, under the Portal to Portal Act of 1947,
where Congress limited the minimum wage laws in a range of ways, §254
puts a two-year time limit on enforcing claims, or three years if an
employing entity is guilty of a willful violation.
The Universal Declaration of Human Rights
of 1948 article 23 requires "reasonable limitation of working hours and
periodic holidays with pay", but there is no federal or state right to paid annual leave: Americans have the least in the developed world.
People in the United States work among the longest hours per week in the industrialized world, and have the least annual leave. The Universal Declaration of Human Rights of 1948 article 24 states: "Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay." However, there is no general federal or state legislation requiring paid annual leave. Title 5 of the United States Code §6103 specifies ten public holidays for federal government employees, and provides that holidays will be paid.
Many states do the same, however, no state law requires private sector
employers to provide paid holidays. Many private employers follow the
norms of federal and state government, but the right to annual leave, if
any, will depend upon collective agreements and individual employment contracts. State law proposals have been made to introduce paid annual leave. A 2014 Washington Bill from United States House of Representatives member Gael Tarleton
would have required a minimum of 3 weeks of paid holidays each year to
employees in businesses of over 20 staff, after 3 years work. Under the International Labour OrganizationHolidays with Pay Convention 1970 three weeks is the bare minimum. The Bill did not receive enough votes. By contrast, employees in all European Union countries have the right to at least 4 weeks (i.e. 28 days) of paid annual leave each year. Furthermore, there is no federal or state law on limits to the length of the working week. Instead, the Fair Labor Standards Act of 1938 §207 creates a financial disincentive to longer working hours. Under the heading "Maximum hours", §207 states that time and a half pay must be given to employees working more than 40 hours in a week.
It does not, however, set an actual limit, and there are at least 30
exceptions for categories of employee which do not receive overtime pay.
Shorter working time was one of the labor movement's original demands.
From the first decades of the 20th century, collective bargaining
produced the practice of having, and the word for, a two-day "weekend". State legislation to limit working time was, however, suppressed by the US Supreme Court in Lochner v. New York. The New York State Legislature
had passed the Bakeshop Act of 1895, which limited work in bakeries to
10 hours a day or 60 hours a week, to improve health, safety and
people's living conditions. After being prosecuted for making his staff
work longer in his Utica, Mr Lochner claimed that the law violated the Fourteenth Amendment on "due process".
Despite the dissent of four judges, a majority of five judges held that
the law was unconstitutional. The Supreme Court, however, did uphold
Utah's mine workday statute in 1898.
The Mississippi State Supreme Court upheld a ten hour workday statute
in 1912 when it ruled against the due process arguments of an interstate
lumber company. The whole Lochner era of jurisprudence was reversed by the US Supreme Court in 1937, but experimentation to improve working time rights, and "work-life balance" has not yet recovered.
Just as there are no rights to paid annual leave or maximum hours, there are no rights to paid time off for child care or family leave
in federal law. There are minimal rights in some states. Most
collective agreements, and many individual contracts, provide paid time
off, but employees who lack bargaining power will often get none. There are, however, limited federal rights to unpaid leave for family and medical reasons. The Family and Medical Leave Act of 1993
generally applies to employers of 50 or more employees in 20 weeks of
the last year, and gives rights to employees who have worked over 12
months and 1250 hours in the last year.
Employees can have up to 12 weeks of unpaid leave for child birth,
adoption, to care for a close relative in poor health, or because of an
employee's own poor health. Child care leave should be taken in one lump, unless agreed otherwise. Employees must give notice of 30 days to employers if birth or adoption is "foreseeable",
and for serious health conditions if practicable. Treatments should be
arranged "so as not to disrupt unduly the operations of the employer"
according to medical advice. Employers must provide benefits during the unpaid leave. Under §2652(b) states are empowered to provide "greater family or medical leave rights". In 2016 California, New Jersey, Rhode Island and New York
had laws for paid family leave rights. Under §2612(2)(A) an employer
can make an employee substitute the right to 12 unpaid weeks of leave
for "accrued paid vacation leave, personal leave or family leave" in an
employer's personnel policy. Originally the Department of Labor had a
penalty to make employers notify employees that this might happen.
However, five judges in the US Supreme Court in Ragsdale v. Wolverine World Wide, Inc.
held that the statute precluded the right of the Department of Labor to
do so. Four dissenting judges would have held that nothing prevented
the rule, and it was the Department of Labor's job to enforce the law.
After unpaid leave, an employee generally has the right to return to
his or her job, except for employees who are in the top 10% of highest
paid and the employer can argue refusal "is necessary to prevent
substantial and grievous economic injury to the operations of the
employer." Employees or the Secretary of Labor can bring enforcement actions,
but there is no right to a jury for reinstatement claims. Employees can
seek damages for lost wages and benefits, or the cost of child care,
plus an equal amount of liquidated damages unless an employer can show
it acted in good faith and reasonable cause to believe it was not
breaking the law. There is a two-year limit on bringing claims, or three years for willful violations. Despite the lack of rights to leave, there is no right to free child care or day care.
This has encouraged several proposals to create a public system of free
child care, or for the government to subsize parents' costs.
In the early 20th century, the possibility of having a "retirement" became real as people lived longer, and believed the elderly should not have to work or rely on charity until they died. The law maintains an income in retirement in three ways (1) through a public social security program created by the Social Security Act of 1935, (2) occupational pensions managed through the employment relationship, and (3) private pensions or life insurance that individuals buy themselves. At work, most occupational pension schemes originally resulted from collective bargaining during the 1920s and 1930s.
Unions usually bargained for employers across a sector to pool funds,
so that employees could keep their pensions if they moved jobs.
Multi-employer retirement plans, set up by collective agreement became known as "Taft–Hartley plans" after the Taft–Hartley Act of 194] required joint management of funds by employees and employers. Many employers also voluntarily choose to provide pensions. For example, the pension for professors, now called TIAA, was established on the initiative of Andrew Carnegie in 1918 with the express requirement for participants to have voting rights for the plan trustees. These could be collective and defined benefit
schemes: a percentage of one's income (e.g. 67%) is replaced for
retirement, however long the person lives. But more recently more
employers have only provided individual "401(k)" plans. These are named after the Internal Revenue Code §401(k), which allows employers and employees to pay no tax on money that is saved in the fund, until an employee retires. The same tax deferral rule applies to all pensions. But unlike a "defined benefit" plan, a 401(k) only contains whatever the employer and employee contribute. It will run out if a person lives too long, meaning the retiree may only have minimum social security. The Pension Protection Act of 2006 §902 codified a model for employers to automatically enroll their employees in a pension, with a right to opt out. However, there is no right to an occupational pension. The Employee Retirement Income Security Act of 1974
does create a series of rights for employees if one is set up. It also
applies to health care or any other "employee benefit" plan.
Five main rights for beneficiaries in ERISA 1974 include information, funding, vesting, anti-discrimination, and fiduciary duties.
First, each beneficiary should receive a "summary plan description" in
90 days of joining, plans must file annual reports with the Secretary of Labor, and if beneficiaries make claims any refusal must be justified with a "full and fair review".
If the "summary plan description" is more beneficial than the actual
plan documents, because the pension fund makes a mistake, a beneficiary
may enforce the terms of either.
If an employer has pension or other plans, all employees must be
entitled to participate after at longest 12 months, if working over 1000
hours. Second, all promises must be funded in advance. The Pension Benefit Guaranty Corporation
was established by the federal government to be an insurer of last
resort, but only up to $60,136 per year for each employer. Third,
employees' benefits usually cannot be taken away (they "vest") after 5 years, and contributions must accrue (i.e. the employee owns contributions) at a proportionate rate. If employers and pension funds merge, there can be no reduction in benefits, and if an employee goes bankrupt their creditors cannot take their occupational pension. However, the US Supreme Court has enabled benefits to be withdrawn by employers simply amending plans. In Lockheed Corp. v. Spink
a majority of seven judges held that an employer could alter a plan, to
deprive a 61-year-old man of full benefits when he was reemployed,
unbound by fiduciary duties to preserve what an employee had originally been promised. In dissent, Breyer J and Souter J reserved any view on such "highly technical, important matters". Steps to terminate a plan depend on whether it is individual, or multi-employer, and Mead Corp. v. Tilley a majority of the US Supreme Court held that employers could recoup excess benefits paid into pension plans after PBGC conditions are fulfilled. Stevens J, dissenting, contended that all contingent and future liabilities must be satisfied.
Fourth, as a general principle, employees or beneficiaries cannot
suffer any discrimination or detriment for "the attainment of any right"
under a plan. Fifth, managers are bound by responsibilities of competence and loyalty, called "fiduciary duties". Under §1102, a fiduciary is anyone who administers a plan, its trustees, and investment managers who are delegated control. Under §1104, fiduciaries must follow a "prudent"
person standard, involving three main components. First, a fiduciary
must act "in accordance with the documents and instruments governing the
plan".
Second, they must act with "care, skill and diligence", including
"diversifying the investments of the plan" to "minimize the risk of
large losses". Liability for carelessness extends to making misleading statements about benefits, and have been interpreted by the Department of Labor to involve a duty to vote on proxies when corporate stocks are purchased, and publicizing a statement of investment policy. Third, and codifying fundamental equitable principles, a fiduciary must avoid any possibility of a conflict of interest.
Fiduciaries must act "solely in the interest of the participants ...
for the exclusive purpose of providing benefits" with "reasonable
expenses", and specifically avoiding self-dealing with a related "party in interest". For example, in Donovan v. Bierwirth, the Second Circuit held that trustees of a pension which owned shares in the employees' company as a takeover bid was launched, because they faced a potential conflict of interest, had to get independent legal advice on how to vote, or possibly abstain. Remedies for these duties have, however, been restricted by the Supreme Court to disfavor damages. In these fields, according to §1144, ERISA 1974 will "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan". ERISA did not, therefore, follow the model of the Fair Labor Standards Act of 1938 or the Family and Medical Leave Act of 1993, which encourage states to legislate for improved protection for employees, beyond the minimum. The preemption rule led the US Supreme Court to strike down a New York that required giving benefits to pregnant employees in ERISA plans. It held a case under Texas law for damages for denying vesting of benefits was preempted, so the claimant only had ERISA remedies. It struck down a Washington law which altered who would receive life insurance designation on death. However, under §1144(b)(2)(A) this does not affect 'any law of any State which regulates insurance, banking, or securities.' So, the Supreme Court has also held valid a Massachusetts law requiring mental health to be covered by employer group health policies. But it struck down a Pennsylvania
statute which prohibited employers becoming subrogated to (potentially
more valuable) claims of employees for insurance after accidents. Yet more recently, the court has shown a greater willingness to prevent laws being preempted,
however the courts have not yet adopted the principle that state law is
not preempted or "superseded" if it is more protective to employees
than a federal minimum.
The most important rights that ERISA 1974 did not cover were who controls investments and securities that beneficiaries' retirement savings buy. The largest form of retirement fund has become the 401(k). This is often an individual account that an employer sets up, and an investment management firm, such as Vanguard, Fidelity, Morgan Stanley or BlackRock,
is then delegated the task of trading fund assets. Usually they also
vote on corporate shares, assisted by a "proxy advice" firm such as ISS or Glass Lewis. Under ERISA 1974 §1102(a),
a plan must merely have named fiduciaries who have "authority to
control and manage the operation and administration of the plan",
selected by "an employer or employee organization" or both jointly.
Usually these fiduciaries or trustees,
will delegate management to a professional firm, particularly because
under §1105(d), if they do so, they will not be liable for an investment
manager's breaches of duty. These investment managers buy a range of assets, particularly corporate stocks which have voting rights, as well as government bonds, corporate bonds, commodities, real estate or derivatives.
Rights on those assets are in practice monopolized by investment
managers, unless pension funds have organized to take voting in house,
or to instruct their investment managers. Two main types of pension fund
to do this are union organized Taft–Hartley plans, and state public pension plans. Under the amended National Labor Relations Act of 1935 §302(c)(5)(B) a union bargained plan has to be jointly managed by representatives of employers and employees. Although many local pension funds are not consolidated and have had critical funding notices from the Department of Labor,
more funds with employee representation ensure that corporate voting
rights are cast according to the preferences of their members. State public pensions are often larger, and have greater bargaining power
to use on their members' behalf. State pension schemes invariably
disclose the way trustees are selected. In 2005, on average more than a
third of trustees were elected by employees or beneficiaries. For example, the California Government Code §20090 requires that its public employee pension fund, CalPERS
has 13 members on its board, 6 elected by employees and beneficiaries.
However, only pension funds of sufficient size have acted to replace investment manager voting. Furthermore, no general legislation requires voting rights for employees in pension funds, despite several proposals. For example, the Workplace Democracy Act of 1999, sponsored by Bernie Sanders then in the US House of Representatives,
would have required all single employer pension plans to have trustees
appointed equally by employers and employee representatives. There is, furthermore, currently no legislation to stop investment managers voting with other people's money as the Dodd–Frank Act of 2010 §957 banned broker-dealers voting on significant issues without instructions. This means votes in the largest corporations
that people's retirement savings buy are overwhelmingly exercised by
investment managers, whose interests potentially conflict with the
interests of beneficiaries' on labor rights, fair pay, job security, or pension policy.
The Occupational Safety and Health Act, signed into law in 1970 by President Richard Nixon,
creates specific standards for workplace safety. The Act has spawned
years of litigation by industry groups that have challenged the
standards limiting the amount of permitted exposure to chemicals such as
benzene.
The Act also provides for protection for "whistleblowers" who complain
to governmental authorities about unsafe conditions while allowing
workers the right to refuse to work under unsafe conditions in certain
circumstances. The Act allows states to take over the administration of
OSHA in their jurisdictions, so long as they adopt state laws at least
as protective of workers' rights as under federal law. More than half of
the states have done so.
Connick v. Myers,
461 U.S. 138 (1983) 5 to 4, a public attorney employee was not
unlawfully dismissed after distributing a questionnaire to other staff
on a supervisor's management practices after she was transferred under
protest. In dissent, Brennan J held that all the matters were of public
concern and should therefore be protected by the First Amendment
Rankin v. McPherson, 483 U.S. 378 (1987) 5 to 4, a Texas deputy constable had a First Amendment right to say, after the assassination attempt on Ronald Reagan
"Shoot, if they go for him again, I hope they get him." Dismissal was
unlawful and she had to be reinstated because even extreme comments
(except potentially advocating actual murder) against a political figure
should be protected. She could not be fired for merely exercising a
right in the Constitution.
Waters v. Churchill, 511 U.S. 661 (1994) 7 to 2, a public hospital nurse stating, outside work at dinner, that the cross-training policies of the hospital were flawed, could be dismissed without any violation of the First Amendment because it could be seen as interfering with the employer's operations
Garcetti v. Ceballos,
547 U.S. 410 (2006) 5 to 4, no right against dismissal or protected
speech when the speech relates to a matter in one's profession
Employee Polygraph Protection Act (1988) outlawed the use of lie detectors by private employers except in narrowly prescribed circumstances
City of Ontario v. Quon,
130 S.Ct. 2619, (2010) the right of privacy did not extend to employer
owned electronic devices so an employee could be dismissed for sending
sexually explicit messages from an employer owned pager.
The central right in labor law, beyond minimum standards for pay, hours, pensions, safety or privacy, is to participate and vote in workplace governance. The American model developed from the Clayton Antitrust Act of 1914, which declared the "labor of a human being is not a commodity
or article of commerce" and aimed to take workplace relations out of
the reach of courts hostile to collective bargaining. Lacking success,
the National Labor Relations Act of 1935 changed the basic model, which remained through the 20th century. Reflecting the "inequality of bargaining power between employees ... and employers who are organized in the corporate or other forms of ownership association", the NLRA 1935 codified basic rights of employees to organize a union, requires employers to bargain in good faith (at least on paper) after a union has majority support, binds employers to collective agreements, and protects the right to take collective action
including a strike. Union membership, collective bargaining, and
standards of living all increased rapidly until Congress forced through
the Taft–Hartley Act
of 1947. Its amendments enabled states to pass laws restricting
agreements for all employees in a workplace to be unionized, prohibited
collective action against associated employers, and introduced a list of
unfair labor practices for unions, as well as employers. Since then,
the US Supreme Court chose to develop a doctrine that the rules in the NLRA 1935 preempted any other state rules if an activity was "arguably subject" to its rights and duties. While states were inhibited from acting as "laboratories of democracy", and particularly as unions were targeted from 1980 and membership fell, the NLRA 1935 has been criticized as a "failed statute" as US labor law "ossified".
This has led to more innovative experiments among states, progressive
corporations and unions to create direct participation rights, including
the right to vote for or codetermine directors of corporate boards, and elect work councils with binding rights on workplace issues.
Richard Trumka was the late president of the AFL–CIO, a federation of unions, with 12.5m members. The Change to Win Federation has 5.5m members in affiliated unions. The two have negotiated merging to create a united American labor movement.
While union governance is founded upon freedom of association,
the law requires basic standards of democracy and accountability to
ensure members are truly free in shaping their associations. Fundamentally, all unions are democratic organizations,
but they divide between those where members elect delegates, who in
turn choose the executive, and those where members directly elect the
executive. In 1957, after the McClellan Committee of the US Senate found evidence of two rival Teamsters Union executives, Jimmy Hoffa and Dave Beck, falsifying delegate vote counts and stealing union funds, Congress passed the Labor Management Reporting and Disclosure Act of 1959.
Under § 411, every member has the right to vote, attend meetings, speak
freely and organize, not have fees raised without a vote, not be
deprived of the right to sue, or be suspended unjustly. Under § 431, unions should file their constitutions and bylaws with the Secretary of Labor and be accessible by members:
today union constitutions are online. Under § 481 elections must occur
at least every 5 years, and local officers every 3 years, by secret
ballot. Additionally, state law may bar union officials who have prior convictions for felonies from holding office. As a response to the Hoffa and Beck scandals, there is also an express fiduciary duty
on union officers for members' money, limits on loans to executives,
requirements for bonds for handling money, and up to a $10,000 fine or
up to 5 years prison for embezzlement.
These rules, however, restated most of what was already the law, and
codified principles of governance that unions already undertook.
On the other hand, under § 501(b) to bring a lawsuit, a union member
must first make a demand on the executive to correct wrongdoing before
any claim can be made to a court, even for misapplication of funds, and
potentially wait four months' time. The Supreme Court has held that
union members can intervene in enforcement proceedings brought by the US Department of Labor. Federal courts may review decisions by the Department to proceed with any prosecutions.
The range of rights, and the level of enforcement has meant that labor
unions display significantly higher standards of accountability, with
fewer scandals, than corporations or financial institutions.
Beyond members rights within a labor union, the most controversial
issue has been how people become members in unions. This affects union
membership numbers, and whether labor rights are promoted or suppressed
in democratic politics. Historically, unions made collective agreements
with employers that all new workers would have to join the union. This
was to prevent employers trying to dilute and divide union support, and
ultimately refuse to improve wages and conditions in collective bargaining. However, after the Taft–Hartley Act of 1947, the National Labor Relations Act of 1935
§ 158(a)(3) was amended to ban employers from refusing to hire a
non-union employee. An employee can be required to join the union (if
such a collective agreement is in place) after 30 days. But § 164(b) was added to codify a right of states to pass so called "right to work laws"
that prohibit unions making collective agreements to register all
workers as union members, or collect fees for the service of collective
bargaining. Over time, as more states with Republican governments passed laws restricting union membership agreements, there has been a significant decline of union density. Unions have not, however, yet experimented with agreements to automatically enroll employees in unions with a right to opt out. In International Ass'n of Machinists v. Street, a majority of the US Supreme Court, against three dissenting justices, held that the First Amendment
precluded making an employee become a union member against their will,
but it would be lawful to collect fees to reflect the benefits from
collective bargaining: fees could not be used for spending on political
activities without the member's consent. Unions have always been entitled to publicly campaign for members of Congress or presidential candidates that support labor rights. But the urgency of political spending was raised when in 1976 Buckley v. Valeo decided, over powerful dissents of White J and Marshall J, that candidates could spend unlimited money on their own political campaign, and then in First National Bank of Boston v. Bellotti, that corporations could engage in election spending. In 2010, over four dissenting justices, Citizens United v. FEC
held there could be essentially no limits to corporate spending. By
contrast, every other democratic country caps spending (usually as well
as regulating donations) as the original Federal Election Campaign Act of 1971 had intended to do. A unanimous court held in Abood v. Detroit Board of Education that union security agreements to collect fees from non-members were also allowed in the public sector. However, in Harris v. Quinn five US Supreme Court judges reversed this ruling apparently banning public sector union security agreements, and were about to do the same for all unions in Friedrichs v. California Teachers Association until Scalia J died, halting an anti-labor majority on the Supreme Court. In 2018, Janus v. AFSCME
the Supreme Court held by 5 to 4 that collecting mandatory union fees
from public sector employees violated the First Amendment. The
dissenting judges argued that union fees merely paid for benefits of
collective bargaining that non-members otherwise received for free.
These factors led campaign finance reform to be one of the most
important issues in the 2016 US Presidential election, for the future of the labor movement, and democratic life.
Since the Industrial Revolution, collective bargaining has been the main way to get fair pay,
improved conditions, and a voice at work. The need for positive rights
to organize and bargain was gradually appreciated after the Clayton Antitrust Act of 1914. Under §6, labor rights were declared to be outside of antitrust law, but this did not stop hostile employers and courts suppressing unions. In Adair v. United States, and Coppage v. Kansas, the Supreme Court, over powerful dissents, asserted the Constitution empowered employers to require employees to sign contracts promising they would not join a union. These "yellow-dog contracts" were offered to employees on a "take it or leave it" basis, and effectively stopped unionization. They lasted until the Great Depression when the Norris–La Guardia Act of 1932 banned them. This also prevented the courts from issuing any injunctions or enforcing any agreements in the context of a labor dispute. After the landslide election of Franklin D. Roosevelt, the National Labor Relations Act of 1935 was drafted to create positive rights for collective bargaining in most of the private sector.
It aimed to create a system of federal rights so that, under §157,
employees would gain the legal "right to self-organization", "to bargain
collectively" and use "concerted activities" including strikes for
"mutual aid or other protection". The Act was meant to increase bargaining power
of employees to get better terms in than individual contracts with
employing corporations. However §152 excluded many groups of workers,
such as state and federal government employees, railway and airline staff, domestic and agriculture workers. These groups depend on special federal statutes like the Railway Labor Act or state law rules, like the California Agricultural Labor Relations Act of 1975. In 1979, five Supreme Court judges, over four forceful dissents, also introduced an exception for church operated schools, apparently because of "serious First Amendment questions".
Furthermore, "independent contractors" are excluded, even though many
are economically dependent workers. Some courts have attempted to expand
the "independent contractor" exception. In 2009, in FedEx Home Delivery v. NLRB the DC Circuit, adopting submissions of FedEx's lawyer Ted Cruz, held that post truck drivers were independent contractors because they took on "entrepreneurial opportunity". Garland J dissented, arguing the majority had departed from common law tests. The "independent contractor" category was estimated to remove protection from 8 million workers. While many states have higher rates, the US has an 11.1 per cent unionization rate and 12.3 per cent rate of coverage by collective agreement. This is the lowest in the industrialized world.
At any point employers can freely bargain with union representatives and make a collective agreement. Under NLRA 1935 §158(d) the mandatory subjects of collective bargaining include "wages, hours, and other terms and conditions of employment". A collective agreement will typically aim to get rights including a fair day's wage for a fair day's work, reasonable notice and severance pay before any necessary layoffs, just cause for any job termination, and arbitration
to resolve disputes. It could also extend to any subject by mutual
agreement. A union can encourage an employing entity through collective action to sign a deal, without using the NLRA 1935 procedure. But, if an employing entity refuses to deal with a union, and a union wishes, the National Labor Relations Board (NLRB) may oversee a legal process up to the conclusion of a legally binding collective agreement. By law, the NLRB is meant to have five members "appointed by the President by and with the advice and consent of the Senate", and play a central role in promoting collective bargaining. First, the NLRB will determine an appropriate "bargaining unit" of employees with employers (e.g., offices in a city, or state, or whole economic sector), The NLRB favors "enterprise bargaining" over "sectoral collective bargaining", which means US unions have traditionally been smaller with less bargaining power
by international standards. Second, a union with "majority" support of
employees in a bargaining unit becomes "the exclusive representatives of
all the employees".
But to ascertain majority support, the NLRB supervises the fairness of
elections among the workforce. It is typical for the NLRB to take six
weeks from a petition from workers to an election being held. During this time, managers may attempt to persuade or coerce employees using high-pressure tactics or unfair labor practices
(e.g. threatening job termination, alleging unions will bankrupt the
firm) to vote against recognizing the union. The average time for the NLRB to decide upon complaints of unfair labor practices had grown to 483 days in 2009 when its last annual report was written.
Third, if a union does win majority support in a bargaining unit
election, the employing entity will have an "obligation to bargain
collectively". This means meeting union representatives "at reasonable
times and confer in good faith
with respect to wages, hours, and other terms" to put in a "written
contract". The NLRB cannot compel an employer to agree, but it was
thought that the NLRB's power to sanction an employer for an "unfair
labor practice" if they did not bargain in good faith would be
sufficient. For example, in JI Case Co v. National Labor Relations Board the Supreme Court held an employer could not refuse to bargain on the basis that individual contracts were already in place. Crucially, in Wallace Corp. v. NLRB the Supreme Court also held that an employer only bargaining with a company union, which it dominated, was an unfair labor practice. The employer should have recognized the truly independent union affiliated to the Congress of Industrial Organizations (CIO). However, in NLRB v. Sands Manufacturing Co.
the Supreme Court held an employer did not commit an unfair trade
practice by shutting down a water heater plant, while the union was
attempting to prevent new employees being paid less. Moreover, after 2007 President George W. Bush and the Senate refused to make any appointments to the Board, and it was held by five judges, over four dissents, in New Process Steel, L.P. v. NLRB that rules made by two remaining members were ineffective.
While appointments were made in 2013, agreement was not reached on one
vacant seat. Increasingly it has been made politically unfeasible for
the NLRB to act to promote collective bargaining.
The proposed Employee Free Choice Act, sponsored repeatedly by Hillary Clinton, Bernie Sanders
and Democrat representatives, would require employers to bargain in 90
days or go to arbitration, if a simple majority of employees sign cards
supporting the union. It has been blocked by Republicans in Congress.
Once collective agreements have been signed, they are legally enforceable, often through arbitration, and ultimately in federal court.
Federal law must be applied for national uniformity, so state courts
must apply federal law when asked to deal with collective agreements or
the dispute can be removed to federal court. Usually, collective agreements include provisions for sending grievances of employees or disputes to binding arbitration, governed by the Federal Arbitration Act of 1925. For example, in United Steelworkers v. Warrior & Gulf Navigation Co a group of employees at a steel transportation works in Chickasaw, Alabama requested the corporation go to arbitration over layoffs and outsourcing of 19 staff on lower pay to do the same jobs. The United Steelworkers had a collective agreement which contained a provision for arbitration. Douglas J
held that any doubts about whether the agreement allowed the issue to
go to arbitration "should be resolved in favor of coverage." An arbitrator's award is entitled to judicial enforcement so long as its essence is from the collective agreement. Courts can decline to enforce an agreement based on public policy, but this is different from "general considerations of supposed public interests". But while federal policy had encouraged arbitration where unions and employers had made agreements, the Supreme Court drew a clear distinction for arbitration over individual statutory rights. In Alexander v. Gardner-Denver Co. an employee claimed he was unjustly terminated, and suffered unlawful race discrimination under the Civil Rights Act of 1964.
The Supreme Court held that he was entitled to pursue remedies both
through arbitration and the public courts, which could re-evaluate the
claim whatever the arbitrator had decided. But then, in 2009 in 14 Penn Plaza LLC v. PyettThomas J
announced with four other judges that apparently "[n]othing in the law
suggests a distinction between the status of arbitration agreements signed by an individual employee and those agreed to by a union representative." This meant that a group of employees were denied the right to go to a public court under the Age Discrimination in Employment Act of 1967, and instead potentially be heard only by arbitrators their employer selected. Stevens J and Souter J, joined by Ginsburg J, Breyer J dissented, pointing out that rights cannot be waived even by collective bargaining. An Arbitration Fairness Act of 2011
has been proposed to reverse this, urging that "employees have little
or no meaningful choice whether to submit their claims to arbitration". It remains unclear why NLRA 1935 §1, recognizing workers' "inequality of bargaining power"
was not considered relevant to ensure that collective bargaining can
only improve upon rights, rather than take them away. To address further
perceived defects of the NLRA 1935 and the Supreme Court's interpretations, major proposed reforms have included the Labor Reform Act of 1977, the Workplace Democracy Act of 1999, and the Employee Free Choice Act of 2009. All focus on speeding the election procedure for union recognition, speeding hearings for unfair labor practices, and improving remedies within the existing structure of labor relations.
To ensure that employees are effectively able to bargain for a collective agreement, the NLRA 1935 created a group of rights in §158 to stall "unfair labor practices" by employers. These were considerably amended by the Taft–Hartley Act of 1947, where the US Congress over the veto of President Harry S. Truman
decided to add a list of unfair labor practices for labor unions. This
has meant that union organizing in the US may involve substantial levels
of litigation
which most workers cannot afford. The fundamental principle of freedom
of association, however, is recognized worldwide to require various
rights. It extends to the state, so in Hague v. Committee for Industrial Organization held the New Jersey mayor violated the First Amendment when trying to shut down CIO meetings because he thought they were "communist". Among many rights and duties relating to unfair labor practices, five main groups of case have emerged.
First, under §158(a)(3)–(4) a person who joins a union must suffer no
discrimination or retaliation in their chances for being hired, terms
of their work, or in termination. For example, in one of the first cases, NLRB v. Jones & Laughlin Steel Corp, the US Supreme Court held that the National Labor Relations Board was entitled to order workers be rehired after they had been dismissed for organizing a union at their plant in Aliquippa, Pennsylvania. It is also unlawful for employers to monitor employees who are organizing, for instance by parking outside a union meeting, or videotaping employees giving out union fliers. This can include giving people incentives or bribes to not join a union. So in NLRB v. Erie Resistor Corp the Supreme Court held it was unlawful to give 20 years extra seniority to employees who crossed a picket line while the union had called a strike. Second, and by contrast, the Supreme Court had decided in Textile Workers Union of America v. Darlington Manufacturing Co Inc
that actually shutting down a recently unionized division of an
enterprise was lawful, unless it was proven that the employer was
motivated by hostility to the union.
Third, union members need the right to be represented, in order to
carry out basic functions of collective bargaining and settle grievances
or disciplinary hearings with management. This entails a duty of fair representation. In NLRB v. J. Weingarten, Inc.
the Supreme Court held that an employee in a unionized workplace had
the right to a union representative present in a management interview,
if it could result in disciplinary action. Although the NLRB has changed its position with different political appointees, the DC Circuit has held the same right goes that non-union workers were equally entitled to be accompanied.
Fourth, under §158(a)(5) it is an unfair labor practice to refuse to
bargain in good faith, and out of this a right has developed for a union
to receive information necessary to perform collective bargaining work.
However, in Detroit Edison Co v. NLRB
the Supreme Court divided 5 to 4 on whether a union was entitled to
receive individual testing scores from a program the employer used. Also, in Lechmere, Inc. v. National Labor Relations Board
the Supreme Court held 6 to 3 that an employer was entitled to prevent
union members, who were not employees, from entering the company parking
lot to hand out leaflets.
Fifth, there are a large group of cases concerning "unfair" practices
of labor organizations, listed in §158(b). For example, in Pattern Makers League of North America v. NLRB
an employer claimed a union had committed an unfair practice by
attempting to enforce fines against employees who had been members, but
quit during a strike when their membership agreement promised they would
not. Five judges to four dissents held that such fines could not be
enforced against people who were no longer union members.
The US Supreme Court policy of preemption, developed from 1953, means that states cannot legislate where the NLRA 1935 does operate. The NLRA 1935 contains no clause requiring preemption as is found, for example, in the Fair Labor Standards Act 1938 §218(a) where deviations from the minimum wage or maximum hours are preempted, unless they are more beneficial to the employee. The first major case, Garner v. Teamsters Local 776, decided a Pennsylvania statute was preempted from providing superior remedies or processing claims quicker than the NLRB
because "the Board was vested with power to entertain petitioners'
grievance, to issue its own complaint" and apparent "Congress evidently
considered that centralized administration of specially designed
procedures was necessary to obtain uniform application of its
substantive rules". In San Diego Building Trades Council v. Garmon, the Supreme Court held that the California Supreme Court
was not entitled to award remedies against a union for picketing,
because if "an activity is arguably subject to §7 or §8 of the Act, the
States as well as the federal courts must defer to the exclusive
competence of the National Labor Relations Board". This was true, even though the NLRB had not given any ruling on the dispute because its monetary value was too small. This reasoning was extended in Lodge 76, International Association of Machinists v Wisconsin Employment Relations Commission, where a Wisconsin Employment Relations Commission sought to hold a union liable for an unfair labor practice, by refusing to work overtime. Brennan J held that such matters were to be left to "be controlled by the free play of economic forces".
While some of these judgments appeared beneficial to unions against
hostile state courts or bodies, supportive actions also began to be held
preempted. In Golden State Transit Corp. v. City of Los Angeles a majority of the Supreme Court held that Los Angeles was not entitled to refuse to renew a taxi company's franchise license because the Teamsters Union had pressured it not to until a dispute was resolved. Most recently in Chamber of Commerce v. Brown
seven judges on the Supreme Court held that California was preempted
from passing a law prohibiting any recipient of state funds either from
using money to promote or deter union organizing efforts. Breyer J and Ginsburg J dissented because the law was simply neutral to the bargaining process. State governments may, however, use their funds to procure corporations to do work that are union or labor friendly.
All workers, like the Arizona teachers in 2019, are guaranteed the right to take collective action, including strikes, by international law, federal law and most state laws.
The right of labor to take collective action, including the right to strike, has been fundamental to common law, federal law, and international law for over a century. As New York teacher unions argued in the 1960s, "If you can't call a strike you don't have real collective bargaining, you have 'collective begging.'" During the 19th century, many courts upheld the right to strike, but others issued injunctions to frustrate strikes, and when the Sherman Antitrust Act of 1890 was passed to prohibit business combinations in restraint of trade, it was first used against labor unions. This resulted in Eugene Debs, American Railway Union leader and future Socialist Presidential candidate, being imprisoned for taking part in the Pullman Strike. The Supreme Court persisted in Loewe v. Lawlor in imposing damages for strikes under antitrust law, until Congress passed the Clayton Act of 1914. Seen as "the Magna Carta of America's workers", this proclaimed that all collective action by workers was outside antitrust law under the Commerce Clause, because "labor is not a commodity
or article of commerce". It became fundamental that no antitrust
sanctions could be imposed, if "a union acts in its self-interest and
does not combine with non-labor groups." The same principles entered the founding documents of the International Labour Organization in 1919. Finally at the end of the Lochner era the National Labor Relations Act of 1935
§157 enshrined the right "to engage in other concerted activities for
the purpose of collective bargaining or other mutual aid or protection"
and in §163, the "right to strike".
Although federal law guarantees the right to strike, American labor unions
face the most severe constraints in the developed world in taking
collective action. First, the law constrains the purposes for which
strikes are allowed. The National Labor Relations Act of 1935
only covers "employees" in the private sector, and a variety of state
laws attempt to suppress government workers' right to strike, including
for teachers, police and firefighters, without adequate alternatives to set fair wages. Workers have the right to take protected concerted activity. But NLRB v. Insurance Agents' International Union
held that although employees refusing to perform part of their jobs in a
"partial strike" was not a failure to act in good faith, they could be
potentially be discharged: perversely, this encourages workers to
conduct an all-out strike instead.
Second, since 1947 the law made it an "unfair labor practice" for
employees to take collective action that is not a "primary strike or
primary picketing" against the contractual employer. This prohibition on solidarity action
includes a ban on employees of a subsidiary corporation striking in
concert with employees of a parent corporation, employees striking with
employees of competitors, against outsourced businesses, or against
suppliers. However the same standards are not applied to employers: in NLRB v. Truck Drivers Local 449,
the Supreme Court held that a group of seven employers were entitled to
lock out workers of a union at once, in response to a strike at just
one of the employers by the union.
This said, employees may peacefully persuade customers to boycott any
employer or related employer, for instance by giving out handbills. Third, a union is bound to act in good faith
if it has negotiated a collective agreement, unless an employer commits
an unfair labor practice. The union must also give 60 days warning
before undertaking any strike while a collective agreement is in force.
An employer must also act in good faith, and an allegation of a
violation must be based on "substantial evidence": declining to reply to
the National Labor Relations Board's attempts to mediate was held to be insubstantial.
The fourth constraint, and most significant, on the right to strike
is the lack of protection from unjust discharge. Other countries protect
employees from any detriment or discharge for strike action, but the Supreme Court held in NLRB v. Mackay Radio & Telegraph Co. that employees on strike could be replaced by strikebreakers, and it was not an unfair labor practice for the employer to refuse to discharge the strikebreakers after the dispute was over. This decision is widely condemned as a violation of international law. However the Supreme Court further held in NLRB v. Fansteel Metallurgical Corp. that the Labor Board cannot order an employer to rehire striking workers, and has even held that employers could induce younger employees more senior jobs as a reward for breaking a strike. Fifth, the Supreme Court has not consistently upheld the right to free speech and peaceful picketing. In NLRB v. Electrical Workers
the Supreme Court held that an employer could discharge employees who
disparaged an employer's TV broadcasts while a labor dispute was
running, on the pretext that the employees' speech had no connection to
the dispute. On the other hand, the Supreme Court has held there was a right to picket shops that refused to hire African-American workers. The Supreme Court declared an Alabama law, which fined and imprisoned a picketer, to be unconstitutional. The Supreme Court held unions could write newspaper publications to advocate for pro-labor political candidates. It also held a union could distribute political leaflets in non-work areas of the employer's property.
In all of these rights, however, the remedies available to employees
for unfair labor practices are minimal, because employees can still be
locked out and the Board cannot order reinstatement in the course of a
good faith labor dispute. For this reason, a majority of labor law
experts support the laws on collective bargaining and collective action
being rewritten from a clean slate.
While collective bargaining was stalled by US Supreme Courtpreemption policy, a dysfunctional National Labor Relations Board, and falling union membership rate since the Taft–Hartley Act of 1947, employees have demanded direct voting rights at work: for corporate boards of directors, and in work councils that bind management. This has become an important complement to both strengthening collective bargaining, and securing the votes in labor's capital on pension boards, which buy and vote on corporate stocks, and control employers. Labor law has increasingly converged with corporate law, and in 2018 the first federal law, the Reward Work Act was proposed by three US senators to enable employees to vote for one third of the directors on boards of listed companies. In 1919, under the Republican governor Calvin Coolidge, Massachusetts
became the first state with a right for employees in manufacturing
companies to have employee representatives on the board of directors,
but only if corporate stockholders voluntarily agreed. Also in 1919 both Procter & Gamble and the General Ice Delivery Company of Detroit had employee representation on boards. Board representation for employees spread through the 1920s, many without requiring any employee stock ownership plan.
In the early 20th century, labor law theory split between those who
advocated collective bargaining backed by strike action, those who
advocated a greater role for binding arbitration, and proponents of codetermination as "industrial democracy". Today, these methods are seen as complements, not alternatives. A majority of countries in the Organisation for Economic Co-operation and Development have laws requiring direct participation rights. In 1994, the Dunlop Commission on the Future of Worker-Management Relations: Final Report examined law reform to improve collective labor relations, and suggested minor amendments to encourage worker involvement. Congressional division prevented federal reform, but labor unions and state legislatures have experimented.
... while there are many contributing causes to unrest ... one cause
... is fundamental. That is the necessary conflict—the contrast between
our political liberty and our industrial absolutism.
We are as free politically, perhaps, as free as it is possible for us
to be. ... On the other hand, in dealing with industrial problems, the
position of the ordinary worker is exactly the reverse. The individual
employee has no effective voice or vote.
And the main objection, as I see it, to the very large corporation is,
that it makes possible—and in many cases makes inevitable—the exercise
of industrial absolutism. ... The social justice
for which we are striving is an incident of our democracy, not its main
end ... the end for which we must strive is the attainment of rule by
the people, and that involves industrial democracy as well as political democracy.
Corporations are chartered under state law, the larger mostly in Delaware, but leave investors free to organize voting rights and board representation as they choose. Because of unequal bargaining power, but also because of historic caution among American labor unions about taking on management,
shareholders have come to monopolize voting rights in American
corporations. From the 1970s employees and unions sought representation
on company boards. This could happen through collective agreements, as it historically occurred in Germany or other countries, or through employees demanding further representation through employee stock ownership plans, but they aimed for voice independent from capital risks that could not be diversified. By 1980, workers had attempted to secure board representation at corporations including United Airlines, the General Tire and Rubber Company, and the Providence and Worcester Railroad. However, in 1974 the Securities and Exchange Commission, run by appointees of Richard Nixon, had rejected that employees who held shares in AT&T were entitled to make shareholder proposals to include employee representatives on the board of directors. This position was eventually reversed expressly by the Dodd–Frank Act of 2010 §971, which subject to rules by the Securities and Exchange Commission entitles shareholders to put forward nominations for the board. Instead of pursuing board seats through shareholder resolutions the United Auto Workers, for example, successfully sought board representation by collective agreement at Chrysler in 1980. The United Steel Workers secured board representation in five corporations in 1993. Some representation plans were linked to employee stock ownership plans, and were open to abuse. At the energy company, Enron, workers were encouraged by management to invest an average of 62.5 per cent of their retirement savings from 401(k) plans in Enron stock against basic principles of prudent, diversified investment, and had no board representation. When Enron collapsed in 2003, employees lost a majority of their pension savings.
For this reason, employees and unions have sought representation
because they invest their labor in the firm, and do not want
undiversifiable capital risk. Empirical research suggests by 1999 there
were at least 35 major employee representation plans with worker directors, though often linked to corporate stock.
As well as representation on a corporation's board of directors, or
top management, employees have sought binding rights (for instance, over
working time, break arrangement, and layoffs) in their organizations
through elected work councils. After the National War Labor Board was established by the Woodrow Wilson administration, firms established work councils with some rights throughout the 1920s.
Frequently, however, management refused to concede the "right to employ
and discharge, the direction of the working forces, and the management
of the business" in any way, which from the workforce perspective defeated the object. As the US presidency changed to the Republican party
during the 1920s, work "councils" were often instituted by employers
that did not have free elections or proceedings, to forestall
independent labor unions' right to collective bargaining. For this
reason, the National Labor Relations Act of 1935 §158(a)(2) ensured it was an unfair labor practice
for an employer "to dominate or interfere with the formation or
administration of any labor organization, or contribute financial or
other support to it".
This was designed to enable free work councils, genuinely independent
from management, but not dominated work councils or so called "company unions". For example, a work council law was passed by the US government in Allied-occupied Germany called Control Council Law, No 22.
This empowered German workers to organize work councils if elected by
democratic methods, with secret ballots, using participation of free
labor unions, with basic functions ranging from how to apply collective agreements,
regulating health and safety, rules for engagements, dismissals and
grievances, proposals for improving work methods, and organizing social
and welfare facilities.
These rules were subsequently updated and adopted in German law,
although American employees themselves did not yet develop a practice of
bargaining for work councils, nor did states implement work council
rules, even though neither were preempted by the National Labor Relations Act of 1935. In 1992, the National Labor Relations Board in its Electromation, Inc, and EI du Pont de Nemours,
decisions confirmed that while management dominated councils were
unlawful, genuine and independent work councils would not be. The Dunlop Report in 1994 produced an inconclusive discussion that favored experimentation with work councils. A Republican Congress did propose a Teamwork for Employees and Managers Act of 1995 to repeal §158(a)(2), but this was vetoed by President Bill Clinton as it would have enabled management dominated unions and councils. In 2014, workers at the Volkswagen Chattanooga Assembly Plant, in Chattanooga, Tennessee, sought to establish a work council. This was initially supported by management, but its stance changed in 2016, after the United Auto Workers succeeded in winning a ballot for traditional representation in an exclusive bargaining unit. As it stands, employees have no widespread right to vote in American workplaces, which has increased the gap between political democracy and traditional labor law goals of workplace and economic democracy.
Since the US Declaration of Independence in 1776 proclaimed that "all men are created equal", the Constitution was progressively amended, and legislation was written, to spread equal rights to all people. While the right to vote was needed for true political participation, the "right to work" and "free choice of employment" came to be seen as necessary for "Life, Liberty and the pursuit of Happiness". After state laws experimented, President Franklin D. Roosevelt's Executive Order 8802 in 1941 set up the Fair Employment Practice Committee
to ban discrimination by "race, creed, color or national origin" in the
defense industry. The first comprehensive statutes were the Equal Pay Act of 1963, to limit discrimination by employers between men and women, and the Civil Rights Act of 1964, to stop discrimination based on "race, color, religion, sex, or national origin." In the following years, more "protected characteristics" were added by state and federal acts. The Age Discrimination in Employment Act of 1967 protects people over age 40. The Americans with Disabilities Act of 1990 requires "reasonable accommodation" to include people with disabilities in the workforce. Twenty two state Acts protect people based on sexual orientation in public and private employment, but proposed federal laws have been blocked by Republican opposition. There can be no detriment to union members, or people who have served in the military.
In principle, states may require rights and remedies for employees that
go beyond the federal minimum. Federal law has multiple exceptions, but
generally requires no disparate treatment by employing entities, no disparate impact of formally neutral measures, and enables employers to voluntarily take affirmative action favoring under-represented people in their workforce. The law has not, however, succeeded in eliminating the disparities in income by race, health, age or socio-economic background.
The right to equality in employment in the United States comes from
at least six major statutes, and limited jurisprudence of the US Supreme Court, leaving the law inconsistent and full of exceptions. Originally, the US Constitution entrenched gender, race and wealth inequality by enabling states to maintain slavery, reserve the vote to white, property owning men, and enabling employers to refuse employment to anyone. After the Emancipation Proclamation in the American Civil War, the Thirteenth, Fourteenth and Fifteenth Amendments attempted to enshrined equal civil rights for everyone, while the Civil Rights Act of 1866, and 1875 spelled out that everyone had the right to make contracts, hold property and access accommodation, transport and entertainment without discrimination. However, in 1883 the US Supreme Court in the Civil Rights Cases put an end to development by declaring that Congress was not allowed to regulate the actions of private individuals rather than public bodies. In his dissent, Harlan J
would have held that no "corporation or individual wielding power under
state authority for the public benefit" was entitled to "discriminate
against freemen or citizens, in their civil rights".
A constitutional right to equality, based on the Equal Protection Clauses of the Fifth and Fourteenth Amendments has been disputed. 125 years after Harlan J wrote his famous dissent that all social institutions should be bound to equal rights, Barack Obama won election for President.
By 1944, the position had changed. In Steele v. Louisville & Nashville Railway Co., a Supreme Court majority held a labor union had a duty of fair representation and may not discriminate against members based on race under the Railway Labor Act of 1926 (or the National Labor Relations Act of 1935. Murphy J would have also based the duty on a right to equality in the Fifth Amendment). Subsequently, Johnson v. Railway Express Agency admitted that the old Enforcement Act of 1870 provided a remedy against private parties.
However, the Courts have not yet accepted a general right of equality,
regardless of public or private power. Legislation will usually be found
unconstitutional, under the Fifth or Fourteenth Amendment if discrimination is shown to be intentional, or if it irrationally discriminates against one group. For example, in Cleveland Board of Education v. LaFleur
the Supreme Court held by a majority of 5 to 2, that a school's
requirement for women teachers to take mandatory maternity leave was
unconstitutional, against the Due Process Clause, because it could not plausibly be shown that after child birth women could never perform a job. But while the US Supreme Court has failed, against dissent, to recognize a constitutional principle of equality,
federal and state legislation contains the stronger rules. In
principle, federal equality law always enables state law to create
better rights and remedies for employees.
Today legislation bans discrimination, that is unrelated to an employee's ability to do a job, based on sex, race, ethnicity, national origin, age and disability. The Equal Pay Act of 1963 banned gender pay discrimination, amending the Fair Labor Standards Act of 1938.
Plaintiffs must show an employing entity pays them less than someone of
the opposite sex in an "establishment" for work of "equal skill,
effort, or responsibility" under "similar working conditions". Employing
entities may raise a defense that pay differences result from a
seniority or merit system unrelated to sex. For example, in Corning Glass Works v. Brennan
the Supreme Court held that although women plaintiffs worked at
different times in the day, compared to male colleagues, the working
conditions were "sufficiently similar" and the claim was allowed. One drawback is the equal pay provisions are subject to multiple exemptions for groups of employees found in the FLSA 1938 itself. Another is that equal pay rules only operate within workers of an "enterprise", so that it has no effect upon high paying enterprises being more male dominated, nor child care
being unequally shared between men and women that affects long-term
career progression. Sex discrimination includes discrimination based on
pregnancy, and is prohibited in general by the landmark Civil Rights Act of 1964.
Beyond gender equality on the specific issue of pay, the Civil Rights Act of 1964
is the general anti-discrimination statute. Titles I to VI protects the
equal right to vote, to access public accommodations, public services,
schools, it strengthens the Civil Rights Commission, and requires equality in federally funded agencies. Title VII of the Civil Rights Act of 1964
bans discrimination in employment. Under §2000e-2, employers must not
refuse to hire, discharge or discriminate "against any individual with
respect to his compensation, terms, conditions or privileges of
employment, because of such individual's race, color, religion, sex, or national origin." Segregation in employment is equally unlawful.The same basic rules apply for people over 40 years old, and for people with disabilities.
Although states may go further, a significant limit to federal law is a
duty only falls on private employers of more than 15 staff, or 20 staff
for age discrimination. Within these limits, people can bring claims against disparate treatment. In Texas Department of Community Affairs v. Burdine the US Supreme Court held plaintiffs will establish a prima facie
case of discrimination for not being hired if they are in a protected
group, qualified for a job, but the job is given to someone of a
different group. It is then up to an employer to rebut the case, by
showing a legitimate reason for not hiring the plaintiff. However, in 1993, this position was altered in St. Mary's Honor Center v. Hicks where Scalia J
held (over the dissent of four justices) that if an employer shows no
discriminatory intent, an employee must not only show the reason is a
pretext, but show additional evidence that discrimination has taken
place. Souter J in dissent, pointed out the majority's approach was "inexplicable in forgiving employers who present false evidence in court".
Disparate treatment can be justified under CRA 1964 §2000e-2(e) if an employer shows selecting someone reflects by "religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise." Race is not included. For example, in Dothard v. Rawlinson the state of Alabama
prohibited women from working as prison guards in "contact" jobs, with
close proximity to prisoners. It also had minimum height and weight
requirements (5"2 and 120 lbs),
which it argued were necessary for proper security. Ms Rawlinson
claimed both requirements were unlawful discrimination. A majority of 6
to 3 held that the gender restrictions in contact jobs were a bona fide occupational qualification, because there was a heightened risk of sexual assault, although Stewart J
suggested the result might have differed if the prisons were better
run. A majority held the height and weight restrictions, while neutral,
had a disparate impact on women and were not justified by business necessity. By contrast, in Wilson v. Southwest Airlines Co., a Texas
District Court held an airline was not entitled to require women only
to work as cabin attendants (who were further required to be "dressed in
high boots and hot-pants") even if it could show a consumer preference.
The essence of the business was transporting passengers, rather than
its advertising metaphor of "spreading love all over Texas", so that
there was no "bona fide occupational requirement". Under the ADEA 1967, age requirements can be used, but only if reasonably necessary, or compelled by law or circumstance. For example, in Western Air Lines, Inc v. Criswell the Supreme Court held that airlines could require pilots to retire at age 60, because the Federal Aviation Administration required this. It could not, however, refuse to employ flight engineers over 60 because there was no comparable FAA rule.
We are confronted by powerful forces telling us to rely on the good
will and understanding of those who profit by exploiting us. They
deplore our discontent, they resent our will to organize, so that we may
guarantee that humanity will prevail and equality will be exacted. They are shocked that action organizations, sit-ins, civil disobedience,
and protests are becoming our everyday tools, just as strikes,
demonstrations and union organization became yours to insure that bargaining power genuinely existed on both sides of the table. ...
In addition to prohibitions on discriminatory treatment, harassment, and detriment in retaliation for asserting rights, is prohibited. In a particularly obscene case, Meritor Savings Bank v. Vinson
the Supreme Court unanimously held that a bank manager who coerced a
woman employee into having sex with him 40 to 50 times, including rape
on multiple occasions, had committed unlawful harassment within the
meaning of 42 USC §2000e. But also if employees or managers create a "hostile or offensive working environment", this counts as discrimination. In Harris v. Forklift Systems, Inc.
the Court held that a "hostile environment" did not have to "seriously
affect employees' psychological well-being" to be unlawful. If the
environment "would reasonably be perceived, and is perceived, as hostile
or abusive" this is enough. Standard principles of agency and vicariously liability apply, so an employer is responsible for the actions of its agents, But according to Faragher v. City of Boca Raton
an employing entity can avoid vicarious liability if it shows it (a)
exercised reasonable care to prevent and promptly correct any harassment
and (b) a plaintiff unreasonably failed to take advantage of
opportunities to stop it. In addition, an employing entity may not retaliate against an employee for asserting his or her rights under the Civil Rights Act of 1964, or the Age Discrimination in Employment Act of 1967. In University of Pennsylvania v. Equal Employment Opportunity Commission,
the Supreme Court held that a university was not entitled to refuse to
give up peer review assessment documents in order for the EEOC to investigate the claim. Furthermore, in Robinson v. Shell Oil Co.
the Supreme Court held that writing a negative job reference, after a
plaintiff brought a race discrimination claim, was unlawful retaliation:
employees were protected even if they had been fired.
It has also been held that simply being reassigned to a slightly
different job, operating forklifts, after making a sex discrimination
complaint could amount to unlawful retaliation. This is all seen as necessary to make equal rights effective.
In addition to disparate treatment, employing entities may not use practices having an unjustified disparate impact on protected groups. In Griggs v. Duke Power Co., a power company on the Dan River, North Carolina, required a high school diploma for staff to transfer to higher paying non-manual jobs. Because of racial segregation in states like North Carolina, fewer black employees than white employees had diplomas. The Court found a diploma was wholly unnecessary to perform the tasks in higher paying non-manual jobs. Burger CJ, for a unanimous Supreme Court, held the "Act
proscribes not only overt discrimination, but also practices that are
fair in form, but discriminatory in operation." An employer could show
that a practice with disparate impact followed "business necessity" that was "related to job performance" but otherwise such practices would be prohibited. It is not necessary to show any intention to discriminate, just a discriminatory effect. Since amendments by the Civil Rights Act of 1991, if disparate impact
is shown the law requires employers "to demonstrate that the challenged
practice is job related for the position in question and consistent
with business necessity" and that any non-discriminatory "alternative
employment practice" is not feasible. On the other hand, in Ricci v. DeStefano five Supreme Court judges held the City of New Haven had acted unlawfully by discarding test results for firefighters, which it concluded could have had an unjustified disparate impact by race. In a further concurrence, Scalia J said "resolution of this dispute merely postpones the evil day" when a disparate impact might be found unconstitutional,
against the [[Equal
Protection Clause]] because, in his view, the lack of a good faith
defense meant employers were compelled to do "racial decision making"
that "is ... discriminatory." In dissent, Ginsburg J pointed out that disparate impact
theory advances equality, and in no way requires behavior that is not
geared to identifying people with skills necessary for jobs.
Both disparate treatment and disparate impact claims may be brought by an individual, or if there is a "pattern or practice" by the Equal Employment Opportunity Commission, the Attorney General, and by class action. Under the Federal Rules of Civil Procedure,
Rule 23 a class of people who share a common claim must be numerous,
have "questions of law or fact common to the class", have
representatives typical of the claimants, who would "fairly and
adequately protect the interests of the class".
Class actions may be brought, even in favor of people who are not
already identified, for instance, if they have been discouraged from
applying for jobs, so long as there is sufficiently specific presentation of issues of law and fact to certify the action.
A significant practical problem for disparate impact claims is the "Bennett Amendment" in the Civil Rights Act of 1964
§703(h). Though introduced as a supposedly "technical" amendment by a
Utah Republican Senator, it requires that claims for equal pay between
men and women cannot be brought unless they fulfill the requirements of
the Fair Labor Standards Act of 1938 § 206(d)(1).
This says that employers have a defense to employee claims if unequal
pay (purely based on gender) flows from "(i) a seniority system; (ii) a
merit system; (iii) a system which measures earnings by quantity or
quality of production; or (iv) a differential based on any other factor
other than sex." By contrast, for claims alleging discriminatory pay on
grounds of race, age, sexual orientation or other protected
characteristics, an employer only has the more restricted defenses
available in the CRA 1964 §703(h). In County of Washington v. Gunther
the majority of the Supreme Court accepted that this was the correct
definition. In principle, this meant that a group of women prison
guards, who did less time working with prisoners than men guards, and
also did different clerical work, would be able to bring a claim—there
was no need to be doing entirely "equal work". However Rehnquist J
dissented, arguing the Amendment should have put the plaintiffs in an
even worse position: they should be required to prove they do "equal
work", as is stated in the first part of §703(h).
Nevertheless, the majority held that the gender pay provisions could be
worse because, for example, an employer could apply ""a bona fide job
rating system," so long as it does not discriminate on the basis of
sex", whereas the same would not be possible for other claims under the Civil Rights Act of 1964. Given that a significant gender pay gap remains, it is not clear why any discrepancy or less favorable treatment, should remain at all.
United Steelworkers v. Weber,
443 U.S. 193 (1979) 5 to 3 held that the Civil Rights Act did not
prohibit preference being given to under-represented groups as a
temporary measure to correct historical disadvantage. Black workers were
assured half the places in an on the job training program, pursuant to a
collective agreement. Rehnquist J dissented.
Bushey v. New York State Civil Service Commission,
733 F2d 220 (2nd 1984) the use of a separate grading curve on the New
York Civil Service Commission entrance test for minority candidates was
legitimate
Johnson v. Transportation Agency
480 US 616 (1987) 7 to 2, White J and Scalia J dissenting an employer
was entitled to give preference to women who possessed qualifications
for a job, even if not equally qualified.
Wygant v. Jackson Board of Education
476 US 267 (1986) a preference for teachers to be laid off in reverse
order of seniority unless this would reduce the percentage of minority
teachers was collectively agreed. Held, under strict scrutiny, the
preference was unlawful under the Fourteenth Amendment because it was
not based on evidence of past discrimination. Marshall J, joined by Brennan J, Blackmun J, Stevens J dissented
US v. Paradise
480 US 149 (1987) a judicially ordered preference to remedy
longstanding discrimination in the Alabama Department of Public Safety
hiring and promotion of state troopers was lawful.
City of Richmond v. J.A. Croson Co., 488 US 469 (1989) 6 to 3, government contracting according to diversity criteria unlawful. Race preference is subject to strict scrutiny, or more difficult to justify than other remedies for discrimination.
Morton v. Mancari 417 US 535 (1974) held preference of Native Americans in the Bureau of Indian Affairs
was compatible with Title VII and the Fifth Amendment, as it was
"reasonably designed to further the cause of Indian self-government and
to make the BIA more responsive to the needs of its constituent groups."
Southeastern Community College v. Davis 442 US 397 (1979) a duty of reasonable accommodation did not apparently amount to a duty of affirmative action under §§501–3
US Airways Inc v. Barnett
535 US 391 (2002) bad back, request for transfer against seniority
system. Breyer J saying that (apparently) seniority systems "encourage
employees to invest in the employing company, accepting 'less than their
value to the firm early in their careers' in return for greater
benefits in later years."
Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002) 5 to 4, an immigrant worker, who had arrived without permission, denied effective rights under the NLRA 1935 for helping in union organizing.
Job security laws in the United States are the weakest in the developed world, as there are no federal statutory rights yet.[439] Any employment contract can require job security, but employees other than corporate executives or managers rarely have the bargaining power to contract for job security.[440] Collective agreements often aim to ensure that employees can only be terminated for a "just cause",
but the vast majority of Americans have no protection other than the
rules at common law. Most states follow a rule that an employee can be
terminated "at will" by the employer: for a "good reason, a bad reason, or no reason at all", so long as no statutory rule is violated.[441]
Most states have public policy exceptions to ensure that an employee's
discharge does not frustrate the purpose of statutory rights. Although
the Lloyd–La Follette Act of 1912 required that federal civil servants cannot be dismissed except for a "just cause", no federal or state law (outside Montana[442]) protects all employees yet. There are now a growing number of proposals to do this.[443]
There are no rights to be given reasonable notice before termination,
apart from whatever is stated in a contract or collective agreement, and
no requirements for severance pay if an employer lays off employees for economic reasons. The only exception is that the Worker Adjustment and Retraining Notification Act of 1988
requires 60 days notice is given if a business with over 100 employees
lays off over 33% of its workforce or over 500 people. While a minority
of theorists defend at will employment on the ground that it protects
liberty and economic efficiency,[444] the empirical evidence suggests that job insecurity hampers innovation, reduces productivity, worsens economic recessions,[445] deprives employees of liberty and pay,[446] and creates a culture of fear.[447]
US unemployment has historically been extremely volatile, as Republican
presidents have consistently increased post-war unemployment, while
Democratic presidents have reduced it.[448][citation needed] In its conduct of monetary policy, it is the duty of the Federal Reserve to achieve "maximum employment",[449] although in reality Federal Reserve chairs prioritize the reducing of inflation. Underemployment from growing insecurity of working hours has risen. Government may also use fiscal policy
(by taxing or borrowing and spending) to achieve full employment, but
as unemployment affects the power of workers, and wages, this remains
highly political.[450]
The reasons or "causes" that an employer can give to terminate
employment affect everything from people's income, to the ability to pay
the rent, to getting health insurance. Despite this, the legal right to
have one's job terminated only for a "just cause" is confined to just
three groups of people. First, in the Lloyd–La Follette Act of 1912
Congress codified executive orders giving federal civil servants the
right to have their jobs terminated "only for such cause as will promote
the efficiency of the service."
Second, in the mid 20th century, courts in New York developed a rule
that corporate directors could only be dismissed for a "just cause",
requiring reasons related to the director's conduct, competence, or some
economic justification. Third, since 1987, Montana
has enacted a "wrongful discharge" law, giving employees the right to
damages if "discharge was not for good cause and the employee had
completed the employer's probationary period of employment", with a
standard probation set at 6 months work.
However a right to reasons before termination has never been extended
to ordinary employees outside Montana. By contrast, almost all other
developed countries have legislation requiring just cause in
termination. The standard in the International Labour OrganizationTermination of Employment Convention, requires a "valid reason" for termination of a worker contract based on
"capacity or conduct" and prohibits reasons related to union
membership, being a worker representative, or a protected characteristic
(e.g. race, gender, etc.). It also requires reasonable notice, a fair
procedure, and a severance allowance if the termination is for economic reasons. Some countries such as Germany also require that elected work councils have the power to veto or delay terminations, to neutralize the employer's potential conflicts of interest. Most countries treat job security as a fundamental right, as well as necessary to prevent irrational job losses, to reduce unemployment, and to promote innovation.
An alternative view is that making it easier to fire people encourages
employers to hire more people because they will not fear the costs of
litigation, although the empirical credibility of this argument is doubted by a majority of scholars.
The slogan "you're fired!" was popularized by Donald Trump's TV show, The Apprentice before he became president. This reflects the "at will employment" doctrine that deprives employees of job security, and lets people become unemployed for arbitrary reasons.
Because most states have not yet enacted proposals for job security rights, the default rule is known as "at-will employment". For example, in 1872, the California Civil Code
was written to say "employment having no specified term may be
terminated at the will of either party", and even employment for a
specified term could be terminated by the employer for a wilful breach,
neglect of duty or the employee's incapacity. In the late 19th century, employment at will was popularized by academic writers as an inflexible legal presumption,
and state courts began to adopt it, even though many had presumed that
contract termination usually required notice and justifications.
By the mid-20th century this was summed up to say that an employee's
job could be terminated for a "good reason, a bad reason, or no reason
at all".
However, the employer's discretion to terminate could not violate any
statutory prohibition, including termination for union membership, discriminatory termination based on a protected characteristic (e.g. race, gender, age or disability), and bringing claims for occupational health and safety, fair labor standards, retirement income, family and medical leave, and under a series of other specific Acts. Many state courts also added at least four "public policy" exceptions,
to ensure that the purpose of statutes in general would not be
frustrated by firing. First, employees will be wrongfully discharged if
are discharged after they refused to act unlawfully, for instance for
refusing to perjure themselves in court.
Second, employees cannot be terminated if they insist on performing
public duties such as serving on a jury or responding to a subpoena even
if this affects an employer's business.
Third, an employee cannot be discharged for exercising any statutory
right, such as refusing to take a lie detector test or filing
litigation. Fourth, employees will be wrongfully discharged if they legitimately blow the whistle on unlawful employer conduct, such as violating food labelling laws, or reporting unlawful standards in a nursing home.
However none of these exceptions limit the central problem of
terminations by an employer that are unrelated to an employee's conduct,
capability, or business efficiency. Some states interpret the general duty of good faith in contracts to cover discharges, so that an employee cannot, for example, be terminated just before a bonus is due to be paid. However the vast majority of Americans remain unprotected against most arbitrary, irrational or malicious conduct by employers.
Despite the default, and absence of job security rights in
statute, a contract may require reasons before dismissal as a matter of
construction. When there is a "just cause" term in a contract, courts
generally interpret this to enable termination for an employee's
inadequate job performance after fair warning, and job-related misconduct where the employer consistently enforces a rule, but not actions outside of the job.
An employee's job may be constructively and wrongfully terminated if an
employer's behavior objectively shows it no longer wishes to be bound
by the contract, for instance by unfairly depriving an employee of
responsibility.
If a written contract does not promise "just cause" protection against
termination, statements in a handbook can still be enforceable, and oral agreements can override the written contract.
Many job terminations in America are economic layoffs,
where employers believe that employees are redundant. In most
countries, economic layoffs are separately regulated because of the conflicts of interest
between workers, management and shareholders, and the risk that workers
are discharged to boost profits even if this damages the long-term
sustainability of enterprise. The ILOTermination of Employment Convention, 1982 requires a severance allowance if the termination is for economic reasons, as well as consultation with worker representatives about ways to avoid layoffs. Most developed countries regard information and consultation in the event of any economic change as a fundamental right. The United States government also helped write Control Council Law No 22
for post-war Germany which enabled unions to collectively bargain for
elected work councils, which would have the right to participate in
decisions about dismissals.
However, there are no state or federal laws requiring severance pay or
employee participation in layoff decisions. Where employment contracts
or collective agreements contain "just cause" provisions, these have
been interpreted to give employers broad discretion, and immunity from the social consequences for the laid off workforce.
American
workers do not yet have a right to vote on employer layoff decisions,
even though the US government helped draft laws for other countries to
have elected work councils.
The only statutory right for employees is for extreme cases of mass layoffs under the Worker Adjustment and Retraining Notification Act of 1988. The WARN Act
regulates any "plant closing" where there is an "employment loss" of
33% of employees if that is over 50 employees, or any case of over 500
employee layoffs, and the business employs 100 persons or more.
In these cases, employers have to give 60 days notice to employee
representatives such as a union, or to each employee if they have none,
and the State.
Employment loss is defined to include reduction of over 50% of working
time, but exclude cases where an employee is offered a suitable
alternative job within reasonable commuting distance.
Despite the absence of any duty to consult, employers can argue three
main defenses for failure to give notice of mass layoff. First, an
employer can argue that they believed in good faith that less notice was
necessary to improve chances of a capital injection. Second, an employer may argue that business circumstances were unforeseen. Third, an employer can argue it had reasonable grounds for believing its failure was not a violation of the Act.
The only remedies are pay that would have been due in the notice
period, and a $500 a day penalty to the local governments that were not
notified.
States such as Massachusetts, Connecticut and Maine have statutes with
slightly more stringent notice requirements, but none yet require real
voice for employees before facing economic hardship.
A common cause of layoffs is that businesses are merged or taken
over, either through stock market acquisitions or private equity
transactions, where new managements want to fire parts of the workforce
to augment profits for shareholders. Outside limited defenses in corporate law,
this issue is largely unregulated. However, if an employer is under a
duty to bargain in good faith with a union, and its business is
transferred, there will be a duty on the successor employer to continue
bargaining if it has retained a substantial number of the previous
workforce. This was not made out in the leading case, Howard Johnson Co. v. Detroit Local Joint Executive Board,
where the new owner of a restaurant and motor lodge business retained 9
out of 53 former employees, but hired 45 new staff of its own.
The majority held there must be "substantial continuity of identity" of
the business for the good faith bargaining duty to continue.
The right to full employment or the "right to work" in a fair paying job is a universal human right in international law, partly inspired by the experience of the New Deal in the 1930s. Unemployment
has, however, remained politically divisive because it affects the
distribution of wealth and power. When there is full employment under
2%, and everyone can easily find new jobs, worker bargaining power tends to be higher and pay tends to rise, but high unemployment tends to reduce worker power and pay,
and may increase shareholder profit. It was long acknowledged that the
law should ensure nobody is denied a job by unreasonable restrictions by
the state or private parties, and the Supreme Court said in Truax v. Raich
that "the right to work for a living in the common occupations of the
community is of the very essence of the personal freedom and
opportunity". During the New Deal with unemployment having reached 20% after the Wall Street Crash of 1929, the Emergency Relief Appropriation Act of 1935 empowered the President to create the Works Progress Administration, which aimed to directly employ people on fair wages. By 1938, the WPA employed 3.33 million people, and built streets, bridges and buildings across the country. Also created by the 1935 Act, the Rural Electrification Administration
brought electrification of farms from 11% in 1934 to 50% by 1942, and
nearly 100% by 1949. After war production brought full employment, the
WPA was wound up in 1943.
Unemployment since World War I has been lower under Democratic presidents and higher under Republican presidents. The high rate of incarceration raised real unemployment by around 1.5% since 1980.
After World War II, the Employment Act of 1946
declared a policy of Congress to "promote full employment and
production, increased real income... and reasonable price stability".
However the Act did not follow the original proposal to say "all
Americans... are entitled to an opportunity for useful, remunerative,
regular, and full-time employment". By the 1970s, there was a growing opinion that the Equal Protection Clause itself in the 14th Amendment should also mean, according to Justice Marshall in Board of Regents of State Colleges v. Roth,
that "every citizen who applies for a government job is entitled to it
unless the government can establish some reason for denying the
employment." The Humphrey–Hawkins Full Employment Act
of 1978 was passed and enabled the President to create jobs to maintain
full employment: it stated "the President shall, as may be authorized
by law, establish reservoirs of public employment and private nonprofit
employment projects".
The Act sets the goal of federal government to ensure unemployment is
below "3 per centum among individuals aged twenty and over" with
inflation also under 3 per cent.
It includes "policy priorities" of the "development of energy sources
and supplies, transportation, and environmental improvement". These powers of a job guarantee, full employment, and environmental improvement have not yet been used.
While the laws for a federal or state job guarantee have not yet been used, the Federal Reserve Act 1913 does require that the Board of Governors of the Federal Reserve System should use its powers "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."
During the Great Depression it was understood that inequality in the
distribution of wealth had contributed to the lack of employment, and
that Federal lending policy and bank regulation should pursue a range of
objectives. However, the Federal Reserve became dominated by a theory of a natural rate of unemployment,
taking the view that attempts to achieve full employment would
accelerate inflation to an uncontrollably high. Instead it was said by
theorists such as Milton Friedman that central banks should use monetary policy only to control inflation, according to the non-accelerating inflation rate of unemployment (NAIRU).
It is doubted that any natural rate of unemployment exists, because the
United States and other countries have sustained full employment with
low inflation before, and the US unemployment rate follows which political party is in the White House.
... my friends, after this war, there will be a great unemployment
problem. The munition plants will be closed and useless, and millions
of munitions workers will be thrown out upon the market... First they
ignore you. Then they ridicule you. And then they attack you and want to
burn you. And then they build monuments to you. And that is what is
going to happen to the Amalgamated Clothing Workers of America.
And I say, courage to the strikers, and courage to the delegates,
because great times are coming, stressful days are here, and I hope your
hearts will be strong, and I hope you will be one hundred per cent
union when it comes!
—Nicholas Klein, Biennial Convention of the Amalgamated Clothing Workers of America (1918)
If despite fiscal and monetary policy people are unemployed, the Social Security Act of 1935 creates unemployment insurance.
One of its goals is to stabilize employment by encouraging employers to
retain workers in downturns. Unlike other systems, this makes social
security highly dependent on employers. It is funded through a federal
payroll tax, and employers that make more layoffs pay higher rates based
on past experience. A laid off employee brings a claim to state
unemployment office, the former employer is informed and may contest
whether the employee was laid off fairly: they are given absolute
privilege to communicate information regardless of how false or
defamatory it is. Employees cannot get benefits if they are laid off for misconduct, and for participation in strikes,
even though the reality may be the employer's fault and there are no
other jobs available. Social security claimants must also accept any
suitable job.
Unemployment offices usually provide facilities for claimants to search
for work, but many also turn to private employment agencies. The
Supreme Court has held that licensing, fees and regulation of employment
agencies under state law is constitutional.
[The International Labour Organization ...] has for its object the establishment of universal peace, and such a peace can be established only if it is based upon social justice
... conditions of labor exist involving such injustice, hardship, and
privation to large numbers of people ... and an improvement of those
conditions is urgently required: as, for example, by ... a maximum working day and week, the regulation of the labor supply, the prevention of unemployment, the provision of an adequate living wage, the protection of the worker against sickness, disease and injury arising out of his employment, the protection of children,
young persons and women, provision for old age and injury, protection
of the interests of workers when employed in countries other than their
own, recognition of the principle of freedom of association, the organization of vocational and technical education ...
US Constitution, Article I, Section 8, Clause 3,
Congress has the power: "To regulate Commerce with foreign Nations, and
among the several States, and with the Indian Tribes." Article IV, Section 2, Clause 1, "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States."
(1) expansion of trade is good because it increases the scope for division of labor and expanding markets. So, all customs, taxes, and equivalent restrictions against market access should be dismantled
(2) free trade is bad because it exacerbates labor's inequality of
bargaining power against global capital. Trade should be limited and
regulated by systems of taxes and tariffs according to the state of
other countries' development
(3) trade, without barriers to movement of capital, goods and
services, improves living standards if labor standards are improved in
all countries. This (a) discourages emigration from poorer countries: as
people's lives improve they may not want to leave (b) requires
standards are improved at a rate to ensure stability in capital and
labor flows (c) in turn requires that standard should not enable workers
to be paid less than is necessary for human development and the workers' rate of productivity.
In 1959, California added the Division of Fair Employment Practices to the California Department of Industrial Relations. The Fair Employment and Housing Act of 1980 gave the division its own Department of Fair Employment and Housing, with the stated purpose of protecting citizens against harassment and employment discrimination on the basis of:
age, ancestry, color, creed, denial of family and medical care leave,
disability (including HIV/AIDS), marital status, medical condition,
national origin, race, religion, sex, transgender status and sexual
orientation. Sexual orientation was not specifically included in the original law but precedent was established based on case law.
On October 9, 2011, California Governor Edmund G. "Jerry" Brown signed
into law Assembly Bill No. 887 alters the meaning of gender for the
purposes of discrimination laws that define sex as including gender so
that California law now prohibits discrimination on the basis of gender
identity and gender expression.
In
1945, New Jersey enacted the first statewide civil rights act in the
entire nation. with the purpose of protecting citizens against harassment and employment discrimination on the basis of: race, creed, color, national origin, nationality, or ancestry.
This has since been expanded to age, sex, disability, pregnancy, sexual
orientation, perceived sexual orientation, marital status, civil union
status, domestic partnership status, affectional orientation, gender
identity or expression, genetic information, military service, or mental
or physical disability, AIDS and HIV related illnesses and atypical
hereditary cellular or blood traits.
As of 2019, twenty-six states plus Guam
prevent trade unions from signing collective agreements with employers
requiring employees pay fees to the union when they are not members
(frequently called "right-to-work" laws by their political proponents).
In 2010, the organization "Save Our Secret Ballot" pushed four states: Arizona, South Carolina, South Dakota, and Utah to pass constitutional amendments to ban card check.
In September 2015, the 
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