Employee Rights

Antitrust in the Workplace

Seeking to end one of the last remaining forms of indentured servitude in the United States, the Federal Trade Commission has issued a final rule that would largely ban the ability of companies to prevent employees from taking a job with a competing firm. The change would remove shackles from an estimated 30 million workers.

This is a bold move by the FTC, which normally handles cases involving anti-competitive practices by individual companies and which has traditionally focused on consumer protection rather than worker rights. The agency argues that eliminating non-competition clauses will not only help workers but will indirectly benefit consumers by stimulating business formation and reducing market concentration.

There appears to be broad support for the FTC action. The agency said that, of the 26,000 comments it received on the proposed rule on non-competes issued last year, over 25,000 endorsed the change. Corporations, on the other hand, are outraged at the rule. The U.S. Chamber of Commerce issued a statement calling it “another attempt at aggressive regulatory proliferation.” The Chamber, which vowed to bring a legal challenge, also argued that the issue should be left up to the states, most of which currently allow non-competes.

Non-competition restrictions are fundamentally a form of wage suppression. Workers barred from taking a job with a rival company are in a weaker bargaining position when it comes to pay. As such, non-competes serve the same function for employers as two other anti-competitive practices: non-poaching agreements and wage-fixing arrangements.

The first of those are agreements among companies not to hire people from one another. Workers, whether or not they are subject to a non-competition agreement, are thus in effect blacklisted if they apply for a position at another firm. The Justice Department has brought several cases as criminal matters and has faced a series of setbacks in court.

Private plaintiffs’ lawyers, on the other hand, have won a few dozen settlements in civil class actions. The largest no-poach settlement occurred in 2015, when Apple, Google, Intel and Adobe Systems agreed to pay a total of $415 million to class action plaintiffs. Cases have also involved blue-collar occupations such as truck drivers and railcar assembly workers.

Wage-fixing, analogous to price-fixing, occurs when employers in a specific labor market agree not to pay wages above a certain level. DOJ has had limited success in its prosecutions in this area as well, but here too there have been some substantial civil settlements. The most significant of these have occurred in the poultry processing industry, where companies including Pilgrim’s Pride have paid over $40 million in settlements. Several other settlements, including a $60 million agreement with Perdue Farms, are awaiting final court approval. Groups of hospitals in Michigan and upstate New York have paid over $70 million to resolve allegations they conspired to depress the wages of nurses.

The FTC’s regulatory initiatives, along with these court cases, constitute an aggressive use of antitrust law to address employer abuses. They offer significant hope for reducing the severe imbalance of power between employers and workers in U.S. labor markets.

A Challenge to Intrusive Workplace Monitoring

One of the drawbacks of the growing presence of electronic technology in the labor process is the ability of managers to conduct continuous surveillance of workers. Those who toil at computers have their keystrokes measured and evaluated, while others are monitored via handheld scanners or other devices.

U.S. corporations think they have every right to use these techniques in the pursuit of maximum output and higher profits. As Amazon.com has just learned, that may not be so easy when it comes to their European operations. The e-commerce giant was just fined the equivalent of $35 million for employing an “excessively intrusive” system of electronic monitoring of employee performance at its warehouses in France.

The French Data Protection Authority (CNIL) said it was illegal for Amazon to measure movements of workers to such an extent that they would have to justify every moment of inactivity. CNIL condemned Amazon not only for using what it called “continuous pressure” but also for retaining the monitoring data for too long.

CNIL’s case was based on the European law known as the General Data Protection Regulation (GDPR), which includes a principle largely unknown in the United States: data minimization. Americans are used to giving up vast amounts of personal information to corporations. In Europe, companies are supposed to restrain their data appetites.

That message has not gotten through to American firms operating in the EU, especially the tech giants. Meta Platforms, the parent of Facebook, has been fined more than $5 billion for GDPR penalties—far more than any other company. Alphabet Inc., parent of Google, has racked up over $900 million in fines. Even Amazon has previously run afoul of the law. In 2021 it was fined over $800 million for misusing the personal data of customers. An appeal is pending.

What is relatively unusual about the latest fine against Amazon is that it involves GDPR violations in the relationship between employers and workers, as opposed to companies and their customers. Employment-based cases are not unheard of. In fact, Amazon itself was fined over $2 million for improperly doing criminal background checks on freelance drivers.

What makes the new case even more remarkable is that it concerns not only personal information but also the labor process. The CNIL’s challenge to Amazon’s monitoring is a challenge to its ability to control what workers do every moment they are on the job.

By restricting intrusive employee monitoring, the GDPR is being used to shield workers from the worst forms of exploitation. And because excessive monitoring pressures workers to do their job in an unsafe manner, the law also protects against occupational injuries. In other words, it is challenging management domination of the workplace.

It remains to be seen whether the CNIL and the other agencies enforcing the GDPR in Europe go after other employers engaged in intensive monitoring or if they treat Amazon as an outlier requiring a unique form of enforcement. For now, at least, the CNIL has shown the possibility of using privacy regulation to enhance the liberty and well-being of workers.

The Many Sins of the Tech Giants

The 400-page report just published by the Democratic leadership of the House Judiciary Committee is a damning review of the anti-competitive practices of the big tech companies—Amazon, Apple, Facebook and Google’s parent Alphabet.

The report finds that in various portions of the digital world these companies have amassed what amounts to monopoly control and have not hesitated to use it crush or absorb competitors. Comparing the tech giants to the oil barons and railroad tycoons of the late 19^th century, the report calls for aggressive measures such as breaking up the companies and doing more rigorous reviews of proposed mergers and acquisitions in the future.

Among the broader consequences of the rising power of the tech giants are, the report argues: a weakening of innovation and entrepreneurship, a decline in the number of trustworthy sources of news, and an erosion of safeguards for the privacy of personal information.

One aspect of the report that has not received much coverage is the brief discussion of the power of the tech giants in the labor market. This is especially relevant for Amazon, which as the report notes has become one of the largest employers in the country and is exercising monopsony power in sectors such as warehousing and “has wage-setting power through its ability to set route fees and other fixed costs for independent contractors in localities in which it dominates the delivery labor market. These entities are dependent on Amazon for a large majority—or even 100%—of their delivery business.”

Amazon has moved into the position previously held by Walmart—a shamelessly exploitative employer that depresses wages and worsens working conditions not only for its own workers but also for the entire sector in which it operates—and to some extent for the economy as a whole.

The report’s wide-ranging recommendations do not include any remedies for these labor issues, perhaps because they are outside the scope of the Judiciary Committee.

It is worth noting that there are already efforts underway to address the labor practices of the tech giants. Several unions as well as other groups are working with Amazon employees to agitate for better conditions, a process made more difficult by Amazon’s brazen anti-union practices and its widespread use of staffing services to evade its employer responsibilities.

There are also class-action lawsuits challenging unfair employment practices by Amazon and other tech giants. For example, Facebook recently agreed to pay $1.65 million to resolve litigation alleging that it misclassified workers to deprive them of overtime pay. A few years ago, Apple, Google, Intel and Adobe Systems together agreed to pay $415 million to resolve allegations that they conspired not to hire each other’s employees, thus suppressing salary levels.

Taking on the tech giants will require many lines of attack to address the harms they cause to users and employees alike.

The Continuing Battle Over Workplace Rights

The claim that everyone is entitled to his or her day in court is supposed to be one of the bedrock principles of the U.S. legal system. This notion, as it applies to workplace abuses, took a big hit in the Supreme Court last year, and now the National Labor Relations Board is making matters worse.

In its controversial Epic Systems ruling in May 2018, the high court held that employers can compel their workers to sign agreements waiving their right to sue over issues such as wage theft and discrimination and limiting their redress to arbitration actions. Because these actions are individual rather than collective and are not part of the public record, arbitration makes it much easier for corporations to avoid paying out substantial damages for their misconduct.

The pro-business majority on the NLRB just pushed through a decision that gives employers an additional opportunity to implement a mandatory arbitration system. The board ruled that companies may impose such a system after a Fair Labor Standards Act collective action lawsuit has already been filed, in order to prevent additional employees from signing on to the suit.

The board also affirmed the right of an employer to discharge a worker who refuses to sign a mandatory arbitration agreement.

This patently unfair decision is another indication of the lengths that the corporations and their advocates will go to circumscribe the rights of workers. We should expect to see more of these moves, because the Epic Systems ruling has not yet put a major dent in class action lawsuits.

There has not been a significant decline in the number of cases filed, and there continues to be a steady stream of settlement announcements, especially for cases filed in California, which gives workers additional legal tools to deal with wage theft in particular.

Here are some recent examples of these settlements:

Wells Fargo agreed to pay $35 million to a group of 38,000 bank employees who alleged they were improperly denied overtime pay.

Kraft Heinz agreed to pay $3 million to settle a suit brought on behalf of 4,000 workers alleging that the company violated California labor law by failing to pay overtime.

The operator of hundreds of Panera Bread restaurants agreed to pay $4.6 million to settle allegations that it improperly classified assistant managers as executives to deny them overtime pay.

A group of drivers and their assistants who delivered Best Buy merchandise signed a $3.25 million deal to settle a lawsuit alleging they were misclassified as independent contractors and consequently shortchanged on pay.

A Massachusetts court gave preliminary approval to a $3.9 million settlement of a class action brought by former commission-only salespeople at the mattress retailer Sleepy’s who argued they should receive overtime pay.

If corporate interests get their way, these settlements will disappear, and workers who are cheated on the job will have to settle for the crumbs they may get through individual arbitration filings.

Targeting Migrants in the Workplace

Perhaps to avoid giving the impression that the Trump Administration was getting soft on immigrants by having the president go to El Paso to console the victims of a mass shooting aimed at Latinos, Immigrations and Customs Enforcement chose the same day to carry out the largest workplace raid in more than a decade.

The more than 600 people taken into custody at several sites in Mississippi were not apprehended while engaged in criminal activity, but rather in the course of supporting their families by performing some of the most unpleasant and dangerous work in the U.S. economy: poultry processing.

There were no arrests of managers at the companies involved – which included Koch Foods and Peco Foods, whose spokespeople insisted they carefully screened new hires using the E-Verify system. This came as no surprise, as employers are rarely prosecuted for immigration offenses, whether or not they use E-Verify, or if they are lax in applying the system.

Among the more than 300,000 entries in Violation Tracker there are fewer than 50 cases of immigration-related employer penalties, and only 18 with fines of $1 million or more. Countless other companies have gotten away with employing undocumented workers, among them the Trump Organization.

They also often get away with other workplace violations, though sometimes they are caught in the job safety or wage & hour enforcement net. Koch Foods (not part of Koch Industries), for instance, has been penalized more than $4 million for its Mississippi operation, including three OSHA violations, one wage & hour violation, two environmental violations and a $3.75 million settlement with the EEOC concerning sexual harassment and national origin and race discrimination.

Peco Foods has had five violations at its Mississippi plants, including two from OSHA and three from the EPA.

Mike Elk, writing in Payday Report, notes that some advocates have speculated that workers are targeted for raids after their facilities get cited for workplace violations. He cites several examples in which that happened.

Since companies face little risk of being prosecuted for immigration offenses, it is possible that they may be the ones tipping off ICE, seeing the raids as a way of discouraging whistleblowing by workers about abusive conditions. While the raids cause temporary disruption to their production, these employers hope to discourage replacement workers from being outspoken on the job.

Trump and other immigration hardliners often claim that their aim is to help native-born workers by eliminating the supposed job competition created by migrants. If that were the case, then they would crack down on employers who hire the undocumented.

Instead, they enable those employers to maintain a business model based on worker intimidation.

Corporate Accountability from Within

It appears that no one working for the public relations giant Edelman balked in 2006 when the firm went all-out to help then-besieged Wal-Mart by setting up a war room to plan attacks against the retailer’s critics and creating bogus front groups to create the illusion that the company had widespread public support. Nor apparently did Edelman staffers have any problem over the years when the firm took on clients such as tobacco companies, military contractors, the petroleum industry and the American Legislative Exchange Council.

Times are changing in the corporate p.r. business. The New York Times just reported that a staff revolt forced Edelman to abandon a plan to work for the private prison company GEO Group and improve its image in the face of criticism of its role in operating immigrant detention centers for the Trump Administration.

The Edelman situation is not unique. The Times noted that the marketing and p.r. firm Ogilvy has been facing staff unrest over its work for Customs and Border Protection, and employees at Deloitte and McKinsey tried to get their firms to end contracts with Immigration and Customs Enforcement. Pressure on management over work for these agencies has also been reported at tech companies such as Microsoft and Amazon as well as the online furniture retailer Wayfair.

Employees at large corporations are making their feelings known about other issues as well. Staffers at Amazon have pressed the company to do more to address the climate crisis. Perhaps the most dramatic move came last November when thousands of Google employees around the world walked off the job to protest the company’s handling of sexual harassment complaints.

These actions have come at a time when the conventional wisdom is that collective action by workers is a largely thing of the past. It is true that unions continue to struggle, as shown, for example, by the recent defeat of another organizing drive at Volkswagen’s operations in Tennessee in the face of intense opposition from management as well as public officials.

Yet what the actions at Edelman and the tech companies show is that workers – including some who may be very well paid – are finding different ways to express their dissatisfaction.

What’s particularly powerful is when employees launch campaigns that combine self-interest with altruistic goals. That’s what happened at Google, where the aim was both to change practices within the company and to support the wider MeToo Movement.

It’s also what gave such potency to the wave of teachers’ strikes that began in early 2018. Those walkouts were prompted both by the urgent need to raise salaries and the need to improve school funding to address overcrowding and other problems affecting students.

The willingness of employees to take on issues such as migrant abuse can also serve to expose the shallowness of much of what goes under the banner of corporate social responsibility. Edelman, for instance, claims that it is committed to being a “force for good.”

That somehow got forgotten when its managers initially agreed to work for GEO Group. It took a bold stance by the staff to overcome the hypocrisy.

De-Enforcement

For the past two years, the Trump Administration has sought to give the impression it is dismantling large parts of the federal regulatory system. The effort is not only wrong-headed – it has largely been unsuccessful. Many of the moves to eliminate rules have been thwarted by court challenges.

Yet the administration has found another way to advance its goal of allowing rogue corporations to operate with much lower levels of oversight: it is reducing the ranks of federal employees whose job it is to enforce the regulations that remain on the books.

A recent overview by the Wall Street Journal found that staffing at the Environmental Protection Agency is down by about half since its height during President Obama’s second term. The Occupational Safety and Health Administration was said to have the fewest workplace inspectors in decades.

Fewer inspectors means fewer inspections and lower levels of penalties imposed for infractions. Last year, Public Citizen and the Corporate Research Project, using data from Violation Tracker, published a report showing how penalty levels were sinking at virtually all the key agencies. The evidence suggests that the trend is continuing.

Some of the staffing decline is due to attrition. Many regulatory agency employees have retired or resigned because they can no longer bear to work to see their mission undermined by the political appointees Trump has installed. More than 700 left the EPA in first 12 months after the administration took office.

Trumpworld is no longer depending entirely on attrition to hollow out the EPA. Now the administration is engaged in a direct attack on the remaining employees at the agency. EPA management has just informed the American Federation of Government Employees, the largest union at the EPA, that it will unilaterally impose changes in working conditions on 9,000 staffers.

The changes, which AFGE is challenging with an unfair labor practice filing, would, among other things, bar employees from telecommuting and would severely limit the amount of time rank-and-file union representatives can spend on grievances and other workplace matters. AFGE reps would also be evicted from the office space at the agency currently being used for union activity. Grievance and arbitration rights themselves would also be put in jeopardy.

The moves by EPA management appear to be an indirect way of implementing harsh policies that Trump tried to implement through executive order last year, but which were blocked by a federal judge. “In the Trump world, there is no bargaining, only ultimatums,” stated Tim Whitehouse, executive director of Public Employees for Environmental Responsibility and a former EPA enforcement attorney. “Under these rules, important safeguards against political purges within the civil service would be removed.”

Trump has received a great deal of deserved criticism for his attacks on federal prosecutors and Congressional oversight, given the corrosive effect on the rule of law. The administration’s actions against staffers at agencies such as the EPA are just as dangerous for our system of regulatory enforcement.

Suing Employers for Retirement Plan Abuses

In late March the Swiss company ABB agreed to pay $55 million to resolve a lawsuit brought by its U.S. employees alleging that the company charged excessive fees to administer their 401(k) plan. This was just the latest in a long series of class actions brought under the Employee Retirement Income Security Act of 1974, or ERISA, which protects the rights of retirement plan participants.

As part of the latest expansion of Violation Tracker, the Corporate Research Project has identified 201 such cases in which the defendant was a corporation included in the Fortune 1000, the Fortune Global 500 or the Forbes list of America’s Largest Private Companies.

Our compilation finds that in these cases, which date back to the beginning of 2000, corporations had paid out a total of $6.2 billion in settlements and verdicts. The largest settlement, $480 million, was reached in 2014 in a retiree health benefits suit brought against Daimler AG on behalf of workers at the German company’s U.S. truck manufacturing plants.

The 201 lawsuits (details here) alleged various types of misconduct by employers, including:

Charging excessive fees or offering overly risky investment options in 401(k) plans;
Improper investment of pension plan assets in company stock, especially during times of instability;
Inadequate or misleading disclosure of financial information to plan participants; and
Mishandling conversions of pensions to cash-balance plans.

Some suits were brought against investment managers or plan trustees rather than the employer. For example, in 2015 Bank of New York Mellon agreed to a $335 million settlement to resolve allegations by multiple pension funds that it deceptively overcharged them on currency exchange rates relating to the purchase of foreign securities.

Apart from Daimler and Bank of New York Mellon, 13 other large corporations have had total ERISA payouts of $100 million or more. Among them are IBM, Foot Locker, Xerox, Bank of America, AK Steel, AT&T and JPMorgan Chase. The industry with the most ERISA payouts is banking, with a total of more than $1.3 billion.

In addition to large for-profit corporations, some major nonprofits, especially healthcare systems, have had to pay out large sums. Most involve lawsuits alleging that religious institutions improperly claimed that their plans were exempt from ERISA. The biggest settlements have involved Providence St. Joseph Health ($351 million) and Bon Secours Mercy Health ($161 million from two suits).

In many cases the settlement costs are covered in part or wholly by an insurance policy, but Violation Tracker attributes the amount to the corporation or non-profit named in the lawsuit.

With the addition of the ERISA cases and the updating of other categories, Violation Tracker now contains more than 368,000 civil and criminal entries with total penalties of $464 billion. The new ERISA entries—like our earlier compilations of wage theft and employment discrimination lawsuits—include details on each case and links to key court documents.

The fastest way to get a list of the ERISA cases from Violation Tracker is to choose the Option 2 offense type “pension ERISA violation.” You’ll get the 201 large-company cases discussed above plus 51 more brought against non-profits and companies not on the Fortune and Forbes lists.

Corporate Harassment

People who are subjected to sexual harassment on the job are too often left to confront their abusers on their own. Those with means can hire high-powered legal help, as Gretchen Carlson did in her lawsuit against 21^st Century Fox that resulted in a $20 million settlement. Other survivors of abuse may not get justice.

A new initiative by Fight for $15 is making the fight against workplace harassment a collective rather than an individual struggle. In a bold new initiative for the labor movement, the campaign recently organized work stoppages at McDonald’s fast-food outlets in ten cities to protest harassment and to highlight complaints filed earlier this year with the U.S. Equal Employment Opportunity Commission.

This will not be the first time the EEOC has heard reports about such practices at McDonald’s. In 2010, for example, the company had to pay $50,000 to settle allegations of harassment by an assistant store manager in New Jersey who was reported to have touched and spanked a teenage worker.

For years, the company failed to take adequate action to deal with repeated instances in which female workers were falsely accused of stealing customer property and strip-searched by managers in response to phone calls from individuals pretending to be law enforcement officers. In 2007 McDonald’s had to pay $6.1 million to settle a lawsuit filed by a young worker in Kentucky who was also molested.

The decision of a state appeals court upholding the damage award noted that similar incidents had occurred more than 30 times at McDonald’s outlets. The ruling went on to say: “McDonald’s corporate legal department was fully aware of these hoaxes and had documented them. The evidence supports the reasonable conclusion that McDonald’s corporate management made a conscious decision not to train or warn store managers or employees about the calls.”

Corporate decisions not to take steps to protect workers were also behind many of the more than 275 cases documented in Violation Tracker in which corporations paid to settle sexual harassment allegations brought with the involvement of the EEOC. These cases together have yielded $132 million in penalties.

The tally goes back to 2000, but cases continue to the present. Among the most recent ones are the $3.75 million harassment settlement signed by Koch Foods involving poultry workers in Mississippi who also alleged racial and national origin discrimination as well as the $3.5 million settlement by outsourcing company Alorica in connection with allegations that a group of customer service representatives in California were subjected to a sexually hostile work environment.

To supplement the EEOC actions I’m in the process of collecting data for Violation Tracker on class action and individual lawsuits brought by workers separate from the agency. These will cover harassment claims as well as cases involving discrimination by employers based on gender, race, national origin, religion, sexual orientation, disability and age discrimination. I’ve already tallied more than $1 billion in settlements and verdicts involving the largest corporations.

It’s great that the MeToo and the Fight for $15 movements are highlighting the continuing problems of harassment on the job. I look forward to the day when there will not be so many such cases to document.

Note: The latest update to Violation Tracker has just been posted.

Employers and Sexual Harassment

The Harvey Weinstein scandal is bringing necessary attention to the problem of sexual harassment. But that problem is not limited to abusive behavior on the part of big-time movie producers and a few other powerful men. Women are confronted with sexual predators in a wide variety of workplaces.

Evidence of this can be found in the cases resolved by the Equal Employment Opportunity Commission. In addition to enforcing anti-discrimination rules regarding hiring, pay levels, etc., the EEOC brings lawsuits (or joins existing ones) dealing with harassment.

In Violation Tracker I have collected data on a total of 1,393 resolved EEOC cases since the beginning of 2000 that together have resulted in about $1 billion in penalty payments by employers. Of these, about 300 involved sexual harassment (often in conjunction with other allegations). They have resulted in about $135 million in employer penalties. Here are some of the more significant cases:

In August, Ford Motor agreed to pay $10.1 million to resolve allegations that mangers at two plants retaliated against workers who complained that they were being subjected to sexual (and racial) harassment on the job.

In 2011, a telemarketing company called International Profit Associates agreed to pay $8 million to resolve allegations that some 82 female employees had been subjected to sexual harassment. It took nine years from the time the EEOC first filed the case to get to that resolution, with the agency attributing the delay to the filing of frivolous legal motions by the firm, whose top officials were alleged to have personally participated in the abusive behavior.

In 2010 ABM Industries, a major provider of janitorial services, agreed to pay $5.8 million to resolve allegations that more than 20 female workers were subjected to repeated sexual harassment by co-workers and supervisors. An EEOC press release stated: “Some of the harassers allegedly often exposed themselves, groped female employees’ private parts from behind, and even raped at least one of the victims.”

Predatory behavior can also occur at non-profit workplaces. In 2003 Lutheran Medical Center in Brooklyn, New York agreed to pay $5.4 million to resolve allegations that female workers were subjected to inappropriate touching during employment-related medical examinations conducted by a hospital physician who also asked intrusive questions about their sexual practices.

In 2005 Carrols Corporation, a major Burger King franchisee, agreed to pay $2.5 million to resolve EEOC allegations that 89 female workers, many of them teenagers, were subjected to egregious sexual harassment at many of the company’s locations. The EEOC alleged that the abuse “ranged from obscene comments, jokes, and propositions to unwanted touching, exposure of genitalia, strip searches, stalking, and even rape” and that it was “perpetrated by managers in the majority of cases.”

In a case involving retailer Fry’s Electronics, a supervisor was said to have been fired for supporting a subordinate who complained about sexual harassment The supervisor had told the company’s legal department that the worker reported receiving repeated sexually charged text messages from an assistant store manager. Fry’s paid $2.3 million to resolve the EEOC’s allegations.

Whether in the Weinstein case or these other situations, what starts out as the depraved behavior of individuals is compounded by the efforts of employers to conceal the abuse and punish those victims who dare to report it. Whether the targets are famous actresses or janitors and fast food workers, corporate America needs to do more to stop the sexual predators on its payrolls.