Free Minds & Free Markets

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.

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