Occupational Hazards
Why "sued if you do, sued if you don't" is the new rule in employment law.
It was a case of "a basic lack of human decency," a "sickness in the organization." Exxon knew its captain had a history of alcoholism, yet it chose to let him command a tanker, accepting his story that his problems were behind him. And the result? The Exxon Valdez had run aground in Alaska's Prince William Sound, causing one of history's worst oil spills. And it happened because the giant company had taken a "callous, cold-hearted business risk."
Thus, in his closing arguments, spake the plaintiff's attorney suing Exxon in the main damage case resulting from the spill. To reflect the uncomplicated nature of the moral issues at stake, he even quoted from the best-selling book of homilies Everything I Know I Learned in Kindergarten. Reason enough, he said, for a punitive damage award of $20 billion for his clients. (Contingency fees for plaintiff's lawyers commonly run at around a third of the total award.) The jury, doubtless thinking itself moderate, responded by awarding $5 billion.
In other courtrooms, meanwhile, other lawyers were suing Exxon on other grounds. In particular, they were suing on behalf of workers with drinking pasts whom the company had taken off safety-sensitive positions. By the mid-1990s at least 100 challenges to the company's substance abuse policies had been filed, and dozens of cases were pending around the country. Lawyers citing language in the company's employee handbook, which they argued should be treated as a binding contract, had already won one big verdict for an officer in Portland, Maine, whom Exxon had transferred with no cut in pay. "Public perception of the Valdez incident as having been caused by a recovering alcoholic," declared a Department of Labor administrative law judge in 1992, "does not justify discrimination against all recovering alcoholics."
It became a standing joke: After the lawyers were done suing you up one side of the street, they'd sue you down the other. They'd sue when you gave a bad reference, then sue for failure to warn--failure to give a bad reference--when your old employee committed some atrocity in his new job. They'd sue when you turned away a job applicant with a violent or criminal past, or sue if you did take him and he hurt someone: A landmark California case allowed a negligent-hiring suit against a laundromat owner who'd taken on an unstable halfway-house graduate, though the man had no criminal record.
Rules on dating and nepotism are another sued-if-you-do, sued-if-you-don't favorite. Letting office mates get romantically involved invites suits by other workers charging favoritism or sexualized environment, or more commonly suits by the junior-ranking participant in the affair charging hostile environment or retaliation after it ends. Even third parties may have claims: A Texas court ruled in 1994 that the spouse of an employee carrying on an adulterous affair could sue the company for letting it happen. But clamping down runs into claims of privacy invasion, interference with off-hours conduct, defamation, and so forth. Companies have been sued both for carrying on nepotism (unfair to minorities who aren't in the family) and for enforcing rules against it (unfair to married couples).
Litigators have targeted employers over "English-only" rules that prevent workers from talking among themselves in the language with which they're most at home. Yet New York's Bellevue Hospital lost when an English-speaking nurse sued, charging that co-workers' casual use of the Filipino language Tagalog kept her from doing her job by depriving her of critical information about patients. Federal law and fear of accident liability push companies to carry on employee drug testing even where they might not wish to do so, but guessing wrong about which employees may be put through such tests has led to six-figure verdicts. Then there's the perennial puzzle of how to find out about employees' protected-group status, so as to file all the proper reports and the like, without seeming to take an interest in the topic. "We're not supposed to ask, but we are supposed to know," as more than one business person has put it.
"Disparate impact" doctrine leads to compliance jams too. Courts have generally held it unlawful for companies voluntarily to accord hiring preference to U.S. war veterans, since such policies have adverse impact on women. But some laws on the books require many private employers to observe such a preference. To resolve the issue, it was ruled that veterans' preferences would be forbidden everywhere they weren't mandatory and mandatory everywhere they weren't forbidden--the truly unthinkable alternative, of course, being to allow employers to follow their own wishes on the subject.
The discipline of misbehaving workers is a constant source of double binds. The sheriff of Suffolk County, New York, tried to fire two white officers he considered responsible for fairly egregious taunting of minority workers in the county prison system, but civil service appeals gave them their jobs back; the county proceeded to lose a huge harassment case filed by the outraged minority workers. Civil service and union protections often lead to reinstatement of sex harassers as well.
Over the past 35 years, legislators, regulators, and courts have invented and imposed on the American workplace a vast and ambitious new body of law ranging from harassment and handicap-accommodation law to age discrimination law to family leave to new common-law doctrines making employers liable for "wrongful termination," "workplace defamation," infliction of emotional distress by harsh supervision, and much more. Practicing lawyers refer to this new field as employment law, and distinguish it from the earlier labor law associated with the New Deal. It is mostly advanced not by unions--nor in fact by collective worker sentiment or action of any sort--but by lawyers' threats to sue for large damages on behalf of some (often just one) worker. It aspires to regulate not just hiring, firing, and wage-setting, but the whole range of working conditions, very much including stress, verbal criticism that workers find hurtful, and similar psychological intangibles of the sort summed up in a famous phrase from harassment law, "hostile work environment."
To hear many descriptions of the new employment law, you'd think its main challenge for employers was simply to summon the force of character to behave properly. "It is as simple as requiring everyone on the job to treat everyone with decency and respect," The Washington Post editorialized after a harassment ruling. "The law simply codifies courtesy," said an advocate quoted in a New York Times account which announced that employers "need not fret" about compliance with the new Americans with Disabilities Act. Another agreed: "This isn't rocket science." Several academics writing in the Law and Society Review reproach employers for wasting effort on defensive management efforts when it would be so much easier for them just to treat workers "more fairly" and "avoid discharging employees without good cause."
Employers found liable in court verdicts, or sometimes even just those taken to court in the first place, are often assumed to have acted in defiance of clear legal dictates. "Managers who follow generally accepted principles of management, and keep in mind the general dictates of the law, do not get sued," contends the author of the self-help guidebook Your Rights at Work. Any litigation that may arise under the ADA, declared a Wall Street Journal letter writer, "will occur solely because…civil rights…have been ignored."
No more absurd view could be imagined. Employers cannot knowingly and fully comply with the new employment law the way a wage earner can be sure he has filed his income taxes by April 15. The new law is voluminous; much of it is vague, so that employers cannot tell exactly what is asked of them but must find out after the fact when courts or regulators rule; it changes constantly and often retroactively; it assigns liability to common workplace interactions that are bound to come up every day; and its dictates are often what lawyers diplomatically call "in tension" with each other. No degree of good faith can keep employers from being taken to court and sometimes losing. Nor can they be sure of victory by sinking any fortune into compliance efforts--which does not keep them from trying.
Employers react to this impossible situation in various ways, all unsatisfactory to one degree or another. Some paddle ever more frantically in hopes of reaching the fabled shores of compliance. Some document personnel decisions obsessively, while others put as little on paper as they can get away with. Many hire squadrons of personnel and compliance specialists and in-house lawyers, often yanking authority from front-line managers and professionals in the process. Some adopt clever subterfuge, others resolve to live dangerously and hope they don't get sued, and yet others cultivate ultra-progressive reputations for overcompliance which they hope will count in their favor if they are ever put in the dock. The result is a varied culture of compliance whose one consistent feature is its propensity to usher in personnel practices no one would have thought of adopting for any other reason.
One of the most obvious problems with the new law is its sheer voluminousness. One survey found federal personnel managers were bound by 850 pages of directly pertinent law and 1,300 pages of regulations, aside from roomsful of commentary and case law. Private managers are not far behind. Race and sex and age, disability, harassment, family leave, common-law wrongful termination, employee privacy, and defamation each generate volumes of laws, regulations, and court interpretations analyzed in commercially available manuals and case reporters. Former IRS official Alvin Lurie has observed that, though employers have spent scores of billions trying to comply with the federal pension law he once oversaw, "even experts cannot understand" it, with the result that there "continues to be massive noncompliance"--the law operating on two levels, an incomprehensible "official" law and a "vulgate." Companies that do as much as $10,000 of business with the government come under thousands of pages of distinct additional rules for contractors.
The ADA, Civil Rights Restoration Act of 1991, and Family and Medical Leave Act all hit within a few years in the early 1990s. And those laws, at least, were the outcome of a conventional legislative process: published in official records and widely publicized before becoming effective at a future date. Much of employment law was never preannounced or published as such at all, instead taking the form of judicial innovations fastened on unsuspecting employers who hadn't a clue that the law's interpretation was going to change. (In fact, flying in the face of very old ideas about the rule of law, advocates have more than once endorsed the idea that newly passed statutes should be applied retroactively; they lost a round when the Supreme Court declined to read retroactivity into the 1991 civil rights act's silence on the subject, but have won on some other occasions.) Regulators, too, periodically redefine as prohibited vast swaths of formerly accepted behavior.
Even more corrosive is the vagueness. How is an employer supposed to tell which of its employees count as legally disabled and thus covered by the ADA, how much accommodation for which of them is reasonable, when the costs of compliance finally amount to undue hardship, when a boisterous or tense working environment reaches the point of being hostile, when a suspension or failure to promote will count as having been for good cause? The answer is that it frequently does not and cannot know. Complying with laws of this sort is not like stopping for red lights or staying within a speed limit; one would wait forever for the light to turn green, and being an employer is unsafe at any speed. Instead you must act first and then learn later whether you've acted lawfully, when a lawyer hauls you before a jury to demand a fortune.
Constant jeopardy is inevitable as well because the law takes so many commonplace work situations and turns them into potential suits. Not only is every firing open to challenge; so is every failure to hire or promote, as well as an endless array of problematic working conditions, pay disparities, and criticisms or other remarks that might have given pain. (As Camille Paglia puts it, every workplace is hostile.) Pretty much all employee selection and evaluation methods, very much including the subjective and word-of-mouth methods most in use, show disparate impact or are legally suspect for some other reason. "Absent discrimination," the Equal Employment Opportunity Commission has proclaimed in one of its baldest defiances of reality, "one would expect a nearly random distribution of women and minorities in all jobs." Absurd though that standard may be, it guarantees the commission a full docket till doomsday.
Shrewd enforcers know they do not want regulated parties to achieve definite compliance; that would badly undercut the basis of their power. When the EEOC issued its landmark rules on the use of employment tests, a Justice Department official observed that "the thrust of the proposed Guidelines is to place almost all test users in a posture of noncompliance" while giving "great discretion to enforcement personnel to determine who should be prosecuted." That discretion suited enforcers just fine, since it meant their inspectors met a very obliging if not obsequious reception. Alfred Blumrosen, a professor at Rutgers law school who directed the EEOC's enforcement operations for many years, has described the agency's periodic inspection visits to large employers during his years as a "nibbling" approach--"the government will take an arm this year and come back next year for an ear or a leg." At each visit inspectors could add new demands "where the violations appear clearest or where the resistance to change might be less." (Uniroyal got an unpleasant surprise this way in one early case: An inspector had observed and let go its practice of maintaining separate seniority lists by department, a then-common practice; later officials decided it ought to be against the law, costing the tire company an estimated $15 million to $20 million in resulting contract-debarment proceedings.) An important point, in Blumrosen's view, is that "the government does not give the regulated institution a clean bill of health" at any point in the process.
Almost by necessity, staying abreast of legal obligations now tends to become a specialized function within employers. Line managers simply cannot assimilate the whole mass of new law; even if they each took a sabbatical year to study their legal obligations, the flow of new laws, regulations, and court rulings would soon render their knowledge dangerously obsolete. Increasingly, therefore, all large employers and many of the small maintain ongoing and formal efforts devoted to compliance. Even if they can't bring full compliance within reach, these departments can make a valuable contribution by improving the employer's odds.
A serious compliance effort can be expensive even for an employer with no unusual work force problems. Some internal inspection process will be recommended to check on whether far-flung offices have followed company policy. The government has provided a steady diet of new responsibilities for personnel specialists: harassment and sensitivity training and complaint hotlines, disability and language accommodation issues, "family-friendly" policies with their growing legal component, and on and on. Since staying current on the ever-changing law is of the essence in all these areas, one soon tends to become a customer of the sprawling industry of seminars and conferences, looseleaf services, newsletters, and hotlines on new developments.
Compliance incentives often cut in the direction of standardizing company policy on various personnel issues and practices, centralizing as well as formalizing policy. One reason is that over a wide range of situations, provable inconsistency is more legally dangerous to an employer than foolish consistency. Suppose the job specs for a certain type of position have always called for an MBA, but a dream candidate shows up who isn't one: Bending the rules to take him comes at the risk of giving both past and future disgruntled applicants ammunition to portray the requirement as a mere sham. The problem often comes up in employee discipline cases: It's actually legally dangerous for managers to be lenient in overlooking employees' infractions of company rules. "Uniform application" of a rule against résumé inaccuracies is "critical," warns Detroit attorney George Mesritz, lest the employer lose the right to press the matter in more urgent cases. An Investor's Business Daily account likewise advises the employer to resist the temptation to let absenteeism rules go unenforced in the case of an employee with an otherwise fine record, because it could find itself having lost the right to enforce the rules. "Compassionate leave" policies governing such matters as time off when a family member dies get enmeshed in equally dismal complications: Lawyers for other workers may seize on the granting of one variance as a precedent denied their own clients in their less sympathetic situations.
The results are as perverse as anyone could have wished. Fear of the leniency-for-one, leniency-for-all rule leads some companies to discipline or even fire workers they'd rather have retained. Compassionate leave is doled out with an eyedropper on advice of counsel. At the extreme, the totally rule-bound company begins timing people's bathroom breaks.
Many courts and regulators construe inconsistent or informal policies as evidence of a cavalier attitude toward compliance or even as violations in themselves: If a company hasn't kept written records of requests for permission to vary from vacation policy it may not notice a pattern in which women have fared worse than men at getting such permission, which suggests it doesn't care whether that happens. The Automobile Club of Michigan lost a case after a court cited its lack of "consistent and public standards" in personnel decisions, including its failure to maintain a "systematic job description and evaluation system." In harassment law and increasingly in other legal areas, failure to maintain a formal policy on a topic can lead to payouts even if the policy would not have prevented or resolved the worker's grievance.
The pressure for formal consistency and against managerial discretion has helped encourage one of the policies most irritating to ordinary employees, the across-the-board drug test. When companies institute such tests the most frequent question from employees is why they aren't just testing workers who have shown some performance problem suggesting impairment. But singling out an employee that way invites suit for defamation, infliction of emotional distress, and other atrocities. Across-the-board testing intrudes on a far larger class of employees, but is paradoxically safer for most legal purposes because it is freer from the taint of individualized manager discretion.
The threat of company-wide punitive damages is another legal pressure strongly encouraging centralization. Prevailing doctrines allow juries that discover a violation at any of a huge company's far-flung subsidiaries to levy punitive damages based on the parent enterprise's wealth, just as if that parent enterprise were a single brooding intelligence rather than (say) a bunch of fairly autonomous enterprises responding to the center mostly on matters of finance and capitalization. But once higher-ups realize that the off-the-wall personnel decisions of the tiniest operating unit in the smallest town can anger some jury into lopping off a third part of the parent company's assets, many will resolve to make sure nothing of the sort happens by hiring headquarters staff to start issuing central personnel policies, thus becoming (self-fulfillingly) something measurably closer to the lawyer-portrayed octopus of unitary brain and intention.
Another inevitable result of the compliance culture is the growing number and clout of attorneys within organizations of all sorts. Lawyers, both in-house and outside, are needed to vet employee communications; hover in the background in dismissals, individual reprimands, or warnings; monitor the keeping and timely destruction of personnel records; plan layoffs and buyouts; and on and on.
Many of the compliance issues surrounding the ADA offer case studies in how sweeping employment laws tend to abet centralization and bureaucratization in the workplace.
In one of its least-noted but most disturbing effects, the ADA gives employers powerful new reason to devise and adhere to formal job descriptions. The law holds that a disabled worker turned down for a job because he can perform only some of its functions can sue on the grounds that the other duties are not truly essential. Aware that this "essential functions" doctrine opens up formidable scope for messy factual disputes, the law provides that courts should grant some deference to the employer's own ideas on which functions are essential, but on the condition that it put a job description in writing before being faced with the disabled person and his particular shortcoming. The rationale for requiring prior written descriptions is that otherwise employers might tailor job requirements to exclude a particular unwanted applicant who has begun raising a fuss.
The drawing up of legally robust job descriptions for this purpose is no light undertaking. To begin with, a job's most fundamental aspects will be among the easiest to overlook: Omit to stipulate that applicants be able to read handwriting, or show up on time, or remain quiet when unattended, and there may be no chance for second thoughts later. It will be highly dangerous to rely on the language of job descriptions prepared earlier without legal implications in mind, which are in any case notoriously inaccurate and incomplete at many companies. An Employee Relations Law Journal article advises that descriptions be worded by persons seasoned in ADA issues. It adds that descriptions should draw on "behavioral profiles of successful incumbents" prepared with input from expert psychologists, which at the same time must not demand traits found in uneven proportions among different demographic groups. It's a tall order, for which all but the largest businesses will think of hiring an outside consultant. The expense mounts up: Thus the city of Baytown, Texas, found it would cost $81,000 to have a consultant prepare ADA job descriptions for its 270 job titles, though it managed to reduce the outlay by collaborating with a consortium of similar-sized towns.
For many organizations, the real cost of ADA job descriptions will go far beyond a consultant's fee. To begin with, many will (rightly) sense that the description on paper is to an extent legally binding on them, even when it begins to seem unrealistic. There will also be a reluctance, common in bureaucracies, to create new job classifications freely or reassign duties among incumbents. For reasons like these, many employers would not want fixed and obligatory job descriptions even if they came drafted with great skill for free. Newer, fast-growing companies in fluid industries are especially prone to disparage the "job-description mentality" in favor of shifting talent around ("forget what you were doing, come over here and help with this"). It is not that the free-form entrepreneurial model is somehow "better" than the highly structured model; different forms appear best for different tasks. But a distinctive strength of the American economy has been its compatibility with both. Economies like Germany's and Canada's, which generate some successful bureaucratically organized companies, have had far more trouble nurturing the entrepreneurial kind. Laws like the ADA tilt our playing field, too, toward the organizationalists.
Companies maintain centralized personnel departments for many reasons other than compliance. Still, it's notable that, per business historians, such departments have seen big jumps in their authority and prestige during three distinct periods in this century, and that each expansion wave has coincided with a period of increased pressure on companies by government, unions, or both. World War I, which brought huge experiments in government control of private business, likewise sparked a huge advance in personnel centralization. There followed a decentralizing reaction in the '20s after the removal of most government controls. The New Deal and World War II then brought another massive expansion: According to historian Sanford Jacoby, the share of mid-sized to large firms with formal personnel departments rose from 34 percent in 1929 to 81 percent by the end of the 1950s. And a third big wave has come with the new employment law.
An entire corps of "diversity professionals" has by now sprung up in larger organizations. Federal regulations, it may be noted, do not leave this process to chance. Contract compliance regulations covering virtually all the nation's largest companies require them to name equal employment opportunity/affirmative action (EEO/AA) officers and vest in them a long list of functions, including many they might otherwise not have chosen to unite in a single officer. Among them: investigating employee complaints; designing "systems that will…indicate need for remedial action"; developing goals, timetables, and "policy statements" on group hiring; providing "interpersonal relations awareness and EEO compliance training and other staff development"; and providing "[c]areer counseling for all employees." They must also be given access to line management, the regulations specify.
These rules go far beyond any plausible concern with ensuring compliance. They appear more like an effort to install a beachhead of EEO culture within each company and guarantee it substantial turf by annexing such functions as career counseling. Surveys indicate that EEO staffs are apt to differ to some extent from the executives around them--for example, they appear to view numerical hiring goals more favorably. On the other hand, they are still hired by and answerable to their employers, which means they're more likely to feel torn by conflicting expectations than they are to live up to the hopes of outside grievance organizers.
Still, widely held views of the EEO function encourage these officers to depart in some rather dramatic ways from prevailing norms of organizational loyalty. Seattle attorney Patricia Rose has written that an EEO officer commonly may, along with investigating an employee complaint impartially, offer the complainant "emotional support and counseling….If her mediation and informal resolution efforts fail, the EEO officer routinely helps the aggrieved employee file a complaint with a government enforcement agency." The EEOC has even taken the view in court that giving "aid and comfort" to the employer's legal adversaries is part and parcel of an EEO officer's job, for which the company must not retaliate.
Whether from sincere belief or to improve what lawyers call the atmospherics on future suits, many employers make a big show of enthusiastic support for the new law's spirit as well as letter. A "history of progressive attitudes regarding the advancement of women" makes it easier to prevail as a defendant, observes an Ohio State Law Journal writer. Most large companies have ventured into not only compliance and anti-harassment training but more elaborate diversity sessions designed to instill correct attitudes in workers and underline for all to see that the company is really smitten with the new law in the full beauty of its spirit and not just dragging itself into compliance with the crabbed letter. These training sessions commonly feature the trappings of a law-driven effort, such as mandatory attendance and checkoffs so the company can later document that everyone was there.
Other managers--or sometimes managers at the same firms--at some point simply give up trying to comply, reasoning that they can't keep from being sued anyway and may as well run a rational business. Not many bosses refrain from word-of-mouth hiring until they get a validation study, or pay the slightest heed to the rules against criminal-record discrimination, or make sure to advertise in the minority press if they are in the want ads of the big city daily. The "dirty little secret" of job interviewers, a Wall Street Journal reporter breathlessly announced, is that lots of them knowingly violate the law on forbidden inquiries and the like. Headhunter searches specifying female candidates are on the rise, though blatantly unlawful. Age bias law, though it keeps producing big verdicts for complainants in court, is among the most routinely ignored parts of the law, especially in hiring. Ad agencies, entertainment companies, and other trend-chasers make few bones about preferring young staffs. A 1995 New York Times account credits NBC's dominance in network programming to its success in reaching 18-to-34-year-olds, the "viewers most sought after by advertisers," and depicts NBC's strategy as one of hiring programming executives in that age bracket, including a 31-year-old and two 29-year-olds. "They're the right age." No one is quoted saying that this is the employment-law equivalent of boasting in a Customs inspection line what a good living one makes as a smuggler.
Short of deliberate violation, there's subterfuge. Thus managers learn how to elicit information without asking, or raise their eyebrows just so when asked about an employee. Where restrained from firing they also learn the knack, familiar in civil service settings, of making subordinates' lives unpleasant enough that they think of leaving voluntarily.
Most business managers yearn for legal safe harbors. They wish to know, as Washington, D.C., lawyer James DeLong has put it, "that their organizations are in compliance, not that they are out of compliance but that the agency probably will not treat the matter seriously." Our legal system denies them that chance, and its denial is effectively deliberate. As programmers might put it: It's not a bug, it's a feature. The ACLU, campaigning to overturn the employment-at-will principle, has called for the content of good cause in dismissal not to be specified in legislation, but to be left up to shifting judicial discretion. Sexual-harassment-law advocates have consistently preferred keeping the law "fluid," keeping employers guessing as to what is permitted, to codifying by statute what is required. ADA advocates successfully fought off any set definition, however high, on how much "reasonable accommodation" would be enough.
If we gave employers any definite safe harbor, after all, some of them might reach it. And then, for advocates and lawyers and enforcement agencies, a train of unwelcome consequences would follow. They might feel their moral high ground beginning to slip away, along with the practical leverage--in the form of threats to call down the law--that goes with it. It would not be so easy to depict the enemy as a bunch of scofflaws or to list the unmet promises, stretching out unending to the horizon, on which the existing law has still not delivered. The rest of us might cease feeling guilty and turn our attention to other deserving issues, causes, and groups, and even the most burningly felt need of identity politics might recede to the status of just one more private dispute among many, rather than a legal right being denied.
Many a hands-on manager has been tempted to cry out to the heavens in frustration: Do they really expect us to comply with all these laws? To which the appropriate answer is a question in turn: Whatever made you think they did?
