AccelPro Community Event
On Pay Discrimination: a live discussion with Jessica Stender, Policy Director at Equal Rights Advocates, a national civic rights organization. Please join us.
When: Wednesday, September 27, 2023, 3pm - 4pm ET
Where: Zoom link to be provided
Topics: We will discuss pay discrimination + careers in civil rights with Jessica and take questions from the AccelPro Employment Law community
Availability is limited.
Welcome to AccelPro Employment Law, where we provide expert interviews and coaching to accelerate your professional development. Today we’re going to continue talking about our country’s employment at-will regime and the power imbalance it creates between employers and employees.
Our guest is Cynthia Estlund, a leading scholar of labor and employment law and workplace governance. Currently a professor at NYU’s Law School, she has also taught at Harvard, Columbia and the University of Texas.
We dove so deep on this issue that we turned it into two episodes. This is part two, in which we explore ways to rebalance that imbalance of power and search for possible solutions, as U.S. workers lag behind the developed world in terms of power in the workplace.
Businesses could be proactive and cede power in the name of a better workplace, which could improve productivity or profits or both. Or, Congress could pass a law requiring businesses to treat employees better. “The problem is it’s a high-risk strategy because Congress could do something much worse than what we have now from the standpoint of employees,” Estlund says. “So we muddle through.”
Be sure to check out part one, in which we break down what employment at-will means for employees and employers. The supplemental materials and episode transcript are available below.
Cynthia Estlund’s NYU Law faculty page
4:33 | International Finance Corporation; World Bank. (2007). Doing Business 2008: Comparing Regulation in 178 Economies.
4:34 | Adams, Zoe and Bishop, Louise and Deakin, Simon F. and Fenwick, Colin and Martinsson Garzelli, Sara and Rusconi, Giudy. (2018). The Economic Significance of Laws Relating to Employment Protection and Different Forms of Employment: Analysis of a Panel of 117 Countries, 1990-2013. University of Cambridge Faculty of Law Research Paper No. 36/2018, European Corporate Governance Institute (ECGI) - Law Working Paper No. 406/2018.
13:27 | Wrongful Discharge Law, N.Y.C. Admin. Code §§ 20-1271 to 20-1275. (2021).
17:23 | Krawiec ,Kimberly D. (2003). Cosmetic Compliance and the Failure of Negotiated Governance. Washington University Law Review, 81(2).
I. REBALANCE THE IMBALANCE OF POWER
Matt Crossman, Host: How do we rebalance this imbalance of power between employers and employees?
Cynthia Estlund: Wow, that’s a huge question.
MC: Do you have six hours to answer that?
CE: Right. You could say that is my lifelong research agenda in a sense. Everything I’ve written with one exception really is about work. It’s about regulating work, it’s about workers’ rights, and it’s all over the place—including employment at-will and its exceptions. And the other ways that employers exercise power over employees, for example, by requiring them to sign a non-compete agreement that constrains the employee’s ability to actually go out there and find another job without moving across the country.
I’ve written about a lot of different things, and in a sense, almost all of them are about the power that employers exercise over workers. Most workers, most of the time, not all workers, all of the time. Some workers have bargaining power, absolutely. The higher up you go, the more you start looking like the talent that the employer has to chase.
That’s a good position to be in, right? But people who have, let’s call them ordinary skills, who are competing both with a lot of other people and with machines, they don’t have a ton of power. And the law weighs in on their side, both by giving them the right to join together and form a union and bargain collectively with their employer and by giving them some rights to minimum wage, right to overtime compensation, right to safe workplace, all that.
And so, yes, in a sense that does describe what I think I and most labor and employment scholars sort of see as the nature of our field. And not everyone in the field in the practice would see it that way. There are more lawyers that represent employers out there than workers and unions.
But it is true that in the legal academy, there’s a very strong pro-employee, pro-union tilt to why people go into the academy and the kind of work they do. No question about that. You have to be able to step back and be fair-minded and consider legitimate interests, which there clearly are on the other side. But in terms of why did you come into this field, it’s often having to do with the imbalance of power and how to fix that if you can.
MC: I perceive a slight light at the end of this dark tunnel. Maybe. You cite a couple of massive studies, one from the World Bank and one from Cambridge, that suggest, they don’t prove, but they suggest a sway in public opinion on this topic.
For years it was the broad consensus that too much protection for the employee was, by and large, not good for business, but maybe that’s changing. Maybe there’s some research that suggests, again, it doesn’t prove, that employee protection is a good long-term idea. What is happening there and what do employers and attorneys need to know?
CE: So the research that you’re talking about is not about public opinion, it’s about economic research on the actual impact of employment protection laws, which as I mentioned, are pervasive throughout the world. But they’re different in different countries.
So if you study a lot of countries, in their case, I think it’s something like 114 countries over 40 years, the laws change and they vary. And economists can design a study to try to pull apart the different factors, right? The biggest, most comprehensive study that we have, it’s a continuing study, indicates that on balance and over the medium to long term, the economic impact of employment protection laws protecting job security, basically, on economic growth, on employment levels, on inequality, are basically insignificant or slightly positive.
Now if they’re insignificant, if there’s no impact on any of those things, we could say, “well, you know, we could give employees some job security without it hurting us,” but it might actually be better than that. There might actually be gains. And I think, for example, one of those gains is probably that employers who know that it’s not going to be easy to shed workers, they’re going to have to come up with other strategies for dealing with change and technology, and they may decide that they should invest in training their people so that they can switch to new tasks so that they can be redeployed elsewhere in the organization rather than treating them as expendable.
There are some studies that hone in on that factor, but that’s a little bit of extrapolation. In any event, it’s not that public opinion has changed, although that might also be true, but economists have started to say, “ah, we oversimplified the picture.”
And the World Bank most famously used to rate countries in how easy it was to fire people. And the easier it was to fire people, the better. So the U.S. was at the very top, and in 2015, they finally took on board some of this economic research and said, “OK, well, we realize now that employment protection can be a problem for countries if there’s too much or if there’s too little.”
There’s probably, for any given country, kind of a sweet spot. And you can definitely have too much job security. No question about it. I ask my students, “would you like to work in a workplace where it’s impossible to fire your coworkers?”
I don’t think so. You want the employer to be able to fire people who are screwing up, doing a bad job, bothering everybody.
So we get that. There can be too much job security. But there could also be too little. So I think that’s a changing picture. That doesn’t mean that politicians who are disproportionately responsive to business interests will join in that because businesses don’t want those constraints. They’re not going to read that literature and say, “oh, well, it’s going to be good for economic equality and, overall employment levels. I guess we should get on board with that.”
No, they may be better off, and they certainly think they’d be better off, if their flexibility is unconstrained or relatively unconstrained by these laws. Now, as we talked about, it’s not that employers in the U.S. are unconstrained in firing people. They have a lot to worry about. They have litigation costs, et cetera. They have a lot less to worry about in the era of mandatory arbitration.
But the point is employers crave and jealously guard their flexibility and discretion. And those voices have been stronger in the U.S. relative to the voices on the other side historically. That’s why the U.S. is an outlier on a number of aspects of work law and the social safety net.
MC: Let’s go back to that question that will take six hours to answer and let’s just see if we can get it somewhat quickly. Is there a way to fix this?
CE: Well, I think if I were to be the king of the country and there were no states and cities to worry about, you’re designing one overall system, and if I could ensure that whatever I decide won’t be overturned …
MC: Congratulations, professor. I promote you to Benevolent Dictator. Now, please fix this.
CE: I think there’s no question that we could design a system of dealing with dismissals and discipline that would be better for both employers and employees than what we have. You’d have to have a baseline requirement that employers justify their decisions in a tribunal that does not involve jury trials, that does not involve hugely costly, lengthy discovery proceedings, a relatively neutral fair tribunal, but one that’s accessible to workers and the cost of which is not ridiculous for employers. So you have that baseline.
You must give a good job-related reason or a reason that the success of your organization requires you to fire this person. They’re not performing their job very well. They’re harassing their co-workers. There could be obviously a whole bunch of reasons.
You probably couldn't stop there. That would provide quite a lot of protection against discriminatory discharges and retaliatory discharges—all the kinds of discharges that we do make actionable. But I think we’d still want to have additional protections and additional remedies for people who are fired, not just for inadequate reasons, but for wrongful reasons, discriminatory reasons, retaliatory reasons, obnoxious reasons.
I just taught this stuff yesterday. And I asked one of my students who’s from Australia to describe their regime, and they have a baseline, good-cause regime with a relatively straightforward tribunal, and then additional remedies, additional rights of action for truly wrongful dismissals. I think that a lot of the disputes that are currently channeled through discrimination and retaliation, some of those would flow into this more accessible kind of system.
They may be convinced that it was also discriminatory or retaliatory. And that’s what they have to do if they want any kind of relief here, because just saying it’s unfair, that’s not good enough. Merely arbitrary, merely because I rubbed somebody the wrong way or somebody thought I did something that I didn’t do. That’s not a good enough reason to overturn that dismissal or to get any relief at all. So a lot of disputes over unfair, arbitrary dismissals are flowing into the system of wrongful dismissal.
Now, you’d bring those into where they belong, which is what union workers have in a just-cause grievance arbitration process. It’s what civil service employees have. We probably wouldn’t give private sector workers as much job security as some civil service workers have. There’s many levels of job security, and you could definitely have too much of that.
So I think that’s what we would do. We would still need laws prohibiting discriminatory refusal to hire people, for example. You’d still have to have other laws, but we could greatly streamline, simplify the system to the benefit of both sides. But Congress would have to do it.
MC: We don’t need Congress. We’ve got a benevolent dictator.
CE: Well, right. So then pivoting back to reality, only Congress could do that. And I don’t see that being in the cards. The problem is it’s a high-risk strategy because Congress could do something much worse than what we have now from the standpoint of employees.
So we muddle through. And if you happen to be in New York City and you’re a fast-food worker, you now have the benefit of a wrongful dismissal law that puts the burden on the employer proving a good reason for discharge. Because New York City has home-rule authority within the city, and it selected a sector of particularly vulnerable but active workers to grant a really good wrongful dismissal protection, as good as just about anything you’d find in one of those social democratic countries in Europe.
It is open to states and localities now. Localities may be constrained by the state they happen to be in, but I wouldn’t be surprised to see action on that front in New York, California, some other fairly solidly blue states to finally cross the threshold and legislate something in this area. The problem is that doesn’t do a lot to reduce the complexity of the overall system, which is what employers would want. Only Congress could actually bring it all together in one rational system.
And I wouldn’t want to put the fate of this whole system in the hands of any Congress I can foresee in my lifetime.
II. WHAT ATTORNEYS AND HR EXECS CAN DO TO HELP
MC: Let’s agree with the premise there that the idea that some federal law would solve this problem, that’s probably not realistic. What can companies and attorneys do to at least make the world a little bit better in this area?
CE: That’s a very heroic aspiration in the sense that companies and their lawyers are supposed to be acting in the interest of their clients. OK, you’re a good company. You want to be known as someone who treats their employees fairly.
One thing you’re not allowed to do, by the way, is create an organization through which workers can voice their opinions. Our system of labor law basically says the only way employees can get that collective voice is through independent union and collective bargaining. Employers are not allowed to set up some alternative to that.
So given the existing constraints of U.S. labor and employment law, it would be completely within your power to say, “we do promise you that you will only be fired if there’s a good reason, provided that the process for challenging that is strictly internal.”
You could say it’s internal, plus say an arbitrator at the top, a neutral third party. I feel pretty confident that in just about every jurisdiction, you could insulate yourself from a court lawsuit based on that promise. If you make it very clear, this is not a contract enforceable in court. This is a contract enforceable through these internal procedures. It would be tricky and, and a bit high risk, but I think companies could do that.
That would be a pretty good piece of a positive anti-union strategy. So companies want to avoid unions. They can do so through what we can very crudely call sticks and carrots. The labor laws take away some possible carrots. Like oh, here’s a system for voicing your opinion, an employee congress type thing internally. Can’t do that. But you can treat your people well. You can promise them job security, and you can walk the walk, not just talk the talk. You can demonstrate through how you adjudicate those cases that you mean it, it’s real.
You could do that. Employers try to do that on diversity and inclusion. Long ago I wrote some stuff on comparing firms’ attitudes and the sort of corporate social responsibility stuff around diversity and inclusion on the one hand versus employee voice and unionization. And my colleague and friend in Minnesota just wrote about this exact thing, like, oh, there’s no end to how they want to advertise themselves as good for diversity and inclusion.
And they have all these internal procedures, and they’re very attentive to the reputation in that regard. When it comes to employee voice, the only option there really is on offer is unionization, and if the employees are seeking unionization, they’re very hostile and they resort to, in some cases, some pretty egregious, unlawful practices to resist that.
It’s an interesting contrast. It seems like we could find a better way of making it attractive for firms to allow their employees to form a union or some other entity through which they could express their voice internally and try to make things better without always having to file a lawsuit for it or quitting.
So I think those kinds of things would happen in a firm that faces labor shortages, which some firms are. In an environment in which employees are very attentive to these issues, if employers desire to cultivate a reputation as a good employer without bringing out the big guns for anti-union purposes, if employees were able to identify firms that allowed employees to decide these things for themselves, and then when employees chose unionization, sit down and try to work out a mutually beneficial relationship, that’s possible, but almost no firms do that now. In the right environment, one could imagine a firm taking that approach.
I don’t see a lot of prospects for that right now, but it could happen.
III. ADVICE TO NAVIGATE THESE CHALLENGES
MC: We’ve talked a lot about power here. You mentioned that most attorneys working in this area work for the big corporations and not representing the person who needs more power, who has gotten fired. For that lawyer out there who wants to represent somebody who has been fired for reasons that don’t seem entirely fair, what advice do you have for them?
CE: They could go work for a union. Some unions have significant in-house legal shops. Some of them are really terrific. That’s one way. You could work for a law firm that represents unions like I did way back when. You could work for the government because there are government agencies whose job is to enforce workers’ rights, their collective labor rights through the National Labor Relations Board or the EEOC or Department of Labor.
There are good government jobs at the state level also. The New York AG has a fabulous labor department that has done terrific stuff for employees. And many states have that. They could do more along that line. You can work for plaintiff’s firms. That is, employment firms that specialize. Most of them do specialize, but there are some slightly bigger plaintiff’s firms that have a subgroup that does employment cases, and they represent either individuals or groups of workers.
Individuals with no significant savings, they are going to be very hard pressed to hire a lawyer. Yes, a lot of cases have attorney’s fees provisions. You can get your attorney’s fees. That’s not a basis for a sustainable law practice. So the plaintiff’s firms, they tend to represent a disproportionate number of high-up people, but some firms do look for ways to aggregate claims.
MC: What advice can you offer to young lawyers who want to work in this field today, and what would you do differently if you were starting out in today’s world?
CE: Oh, my goodness, I have such a fantastic job, such a fantastic life. I have an 18-month-old grandson also, so honestly, there’s almost nothing I would do differently myself.
I wish I could tell people how to follow that path and get where I am. The world is different. I think it’s a tougher world in some ways, especially tougher for those who wanted to get into the academic side of this. But that’s not really the direction your question is coming from. I think there’s plenty of opportunities for creative, energetic, right-thinking young people to do this work.
The path of least resistance is to go work for one of the big firms, and they do not represent employees. You can represent management and be a force for good within the company.
So yes, I think management lawyers can do a lot of good in helping firms avoid these disputes through proactive governance and good treatment of people. So I don’t want to say that you can’t do good, but the point is you will make a lot less money and you will have to forge your own path. The firms aren’t going to come knocking at your door. If you want to work for unions or individual employees or government, you’re going to have to go out and look for those things.
And so if you’re sure that’s what you want to do, there are lots of opportunities. I won’t say it’s easy. But that is definitely a path and at NYU we have a critical mass of students who come in every year wanting to represent workers in some capacity or another.
They get summer internships because there’s now a fabulous summer internship for worker advocacy, and they get jobs. That is a very viable path or paths because as I said, there’s a couple different ways you can do it.
This AccelPro audio transcript has been edited and organized for clarity. This interview was recorded on March 31, 2023.
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