Header graphic for print

Employment Law Worldview

Termination of US Employees for Posting “Sandwich Contamination” Posters was Illegal According to NLRB

Posted in NLRB

On August 21, 2014, the National Labor Relations Board (NLRB) issued a decision that broadens the line to which potentially disloyal actions by employees will be treated as protected activity.  In MikLin Enterprises, Inc. dba Jimmy John’s and Industrial Workers of the World [pdf], the NLRB ruled that posters and press releases alleging that Jimmy John’s was providing contaminated sandwiches to the public as a result of their failure to provide paid sick leave was protected activity.  Consequently, the termination of six Jimmy John’s employees, as well as written warnings provided to three others, was found to be in violation of the National Labor Relations Act (NLRA).

Employees of ten Jimmy John’s shops in the Minneapolis-St. Paul, Minnesota area formed a union in 2011, partially as a result of several work practices that the employees believed needed to change.  One of the primary concerns was the lack of paid sick leave, which the employees alleged resulted in sick employees returning to work and, subsequently, handling food served to the public.  When management refused to meet with them, the union began putting posters on bulletin boards in the restaurants as well as in public places that included a picture of two sandwiches and said “Can’t Tell the Difference?  That’s too bad because Jimmy John’s workers don’t get paid sick days.  Shoot, we can’t even call in sick.  We hope your immune system is ready because you are about to take the sandwich test . . . Help Jimmy John’s workers win sick days.”

The employees also alleged that they were not allowed to simply call in sick, which meant that they had to ensure that someone could work for them.  Employees who were unable to find replacements and missed work were penalized.  This was based on a Jimmy John’s rule that stated “We do not allow people to simply call in sick!  NO EXCEPTIONS!”  Jimmy John’s eventually fired six employees and issued written warnings to three other employees for their participation in the poster campaign.

In reaching its decision, the NLRB determined that the employees’ actions that led to the discharges and warnings qualified as protected activity.  The employees argued they had engaged in protected activity under the “mutual aid or protection clause” in Section 7 of the NLRA and that they sought to “improve their lot as employees through channels outside the immediate employee-employer relationship.”  Jimmy John’s contended that the actions of the employees were disloyal and therefore unprotected.  The NLRB determined that neither the posters nor the press release were shown to be disloyal, reckless or maliciously untrue to the point where the employees would lose protection under the NLRA.  The posters were clearly connected to issues involved in the labor dispute, namely the provision of paid sick leave, and the primary message of the posters was to seek support for the employees’ position in the dispute.

The NLRB held that concerted activity that is otherwise proper does not lose its protected status because it is prejudicial to the employer.  Further, communications that raise highly sensitive issues such as public safety have been found to be protected when it is sufficiently linked to a legitimate labor dispute and not maliciously motivated to harm the employer.  There was no indication that the intent of the employees was to inflict harm on Jimmy John’s, even though they have anticipated that the posters may cause some patrons to stop visiting the restaurants.  The employees’ purpose was a sincere desire to improve their terms and conditions of employment by obtaining a more flexible attendance policy that included paid sick leave.  The posters did not allege that people were getting sick or that the sandwiches were actually contaminated but suggested the realistic potential for illness resulting from employees who came to work and handled food while they were sick.

This decision shows that the NLRB is continuing to cast a wide net as to the type of actions that will be found to be protected activity.  Employers should be cautious when disciplining employees for activities that could be viewed as related to a labor dispute.  Actions that may seem disloyal or malicious to the employer may not be viewed the same way by the NLRB.

EEOC Issues New Guidance Expanding Pregnancy Discrimination Protections for US Employees

Posted in Employment Policies

As the number of pregnancy discrimination lawsuits has increased, the Equal Employment Opportunity Commission (“EEOC”), for the first time in over thirty years, issued a comprehensive guidance update on pregnancy discrimination last month.  The EEOC’s guidance serves to clarify its position on a wide range of topics related to pregnancy discrimination as enforced under the Pregnancy Discrimination Act (“PDA”) and Americans with Disabilities Act (“ADA”).

The scope of the EEOC casts a wide net across the spectrum of potential pregnancy discrimination topics.  However, one of the notable changes in the guidance relates to which individuals are covered by the PDA.  In addition to covering an employee’s current pregnancy, the protections of the PDA now also apply to an employee’s past pregnancies and their “potential or intention to become pregnant” in the future.  Employees who may qualify as having “potential or intention” to become pregnant fall into a number of categories:

  • Including penalizing a female employee for missing work to undergo fertility treatments;
  • Excluding a female employee from a position because it may harm her fertility while not excluding fertile males and
  • Ensuring that an employer’s health insurance plan provides coverage for contraception on the same basis as prescription drugs, devices and services that are used to prevent the occurrence of medical conditions other than pregnancy.

An employee could also qualify if they are discriminated against due to their use of contraceptives.  As a result, there are a wide range of potential employees who may now find themselves protected under the PDA.

Medical Conditions

The new guidance expands the types of medical conditions that are related to pregnancy and childbirth.  Specifically, the EEOC now states that lactation and breastfeeding are pregnancy‑related conditions protected under the PDA.  Therefore, employees with lactation related needs must be given the same freedom and opportunity to address those needs as other employees with similarly‑limiting medical conditions.  Thus, if an employer allows employees to change their schedule or use sick leave for routine doctor’s appointments related to a non-incapacitating medical condition, then female employees must be allowed the same opportunities in order to attend to lactation‑related needs.

Similarly, the EEOC guidance reaffirmed its continued protection for medical impairments related to a person’s pregnancy.  The guidance specifically states that pregnancy‑related impairments that may qualify a pregnant individual as disabled under the ADA include carpal tunnel syndrome, sciatica, mandatory bed rest, depression, nausea, painful swelling and conditions that limit walking.   These protections naturally extend to reasonable accommodations as well, which can include modifying workplace policies (i.e., more frequent water breaks), altering non-essential job functions (i.e., lifting restrictions), purchasing or modifying workplace equipment (i.e., a stool so that a pregnant woman can sit at her workstation) and granting additional leave or work flexibility.  The EEOC also reiterated that employers cannot require an employee to take leave because she is or has been pregnant, as long as the employee is capable of fully performing the job.  Likewise, pregnant employees who may be limited in their ability to perform their job must have the same leave options available to them as non-pregnant employees who are similarly limited.  This means that an employer cannot require that a pregnant employee exhaust her sick leave before using other forms of leave or impose a shorter maximum period for leave unless those provisions are applied to all employees with similarly‑limiting disabilities.

Light Duty

The guidance puts a specific emphasis on light duty requirements for employers.  If an employer provides light duty assignments to employees who are temporarily unable to perform their full duties, then the same accommodations must be equally provided to pregnant employees who are temporarily unable to perform their full duties.  That said, employers are not required to provide special treatment to pregnant employees.  Therefore, if there are certain restrictions on light duty positions, such as the number or duration of such positions, the employer is permitted to apply those restrictions to pregnant employees, as long as they are equally applied to non-pregnant employees as well.

Fathers Are Included

Finally, the EEOC also extends additional protections to new fathers.  Fathers must receive equal treatment as it relates to parental leave, i.e. leave for the purposes of bonding with or providing care for a newborn child.   Thus, if an employer provides leave to new mothers in addition to recuperation from childbirth or provides paid maternity leave, then fathers of newborns must be provided with the same leave options and benefits.  However, employers can distinguish and provide leave related to physical limitations imposed by pregnancy or childbirth that is other than the leave provided for bonding and/or caring for the baby.

The EEOC’s Guidance is not law or regulation.  The courts will ultimately decide what is required by the PDA.  In fact, the Supreme Court will be reviewing accommodations that must be provided to pregnant employees during its 2014-2015 term in Young v. United Parcel Services, Inc.  However, employers may still want to review and update their policies to ensure that they sufficiently address all of the new positions identified by the EEOC.

Clicking Facebook’s “Like” Button May Require An Employer To Rehire A Fired Employee

Posted in NLRB, Social Media

On August 22, 2014, the National Labor Relations Board (NLRB) affirmed an administrative law judge’s January 2012 ruling that Triple Play Sports Bar and Grille (Triple Play) unlawfully fired bartender-waitress Jillian Sanzone and cook Vincent Spinella requiring they be rehired and provided back pay and benefits with interest.

In Triple Play v. Sazone and Triple Play v. Spinella, Case Nos. Cases 34–CA–012915 and 34–CA–012926, Sazone and Spinella alleged that Triple Play violated Section 8(a)(1) of the Act by discharging them in retaliation for their protected concerted activities when they took part in a comment exchange after former Triple Play worker Jamie LaFrance posted the following comment on her Facebook page:

Maybe someone should do the owners of Triple Play a
favor and buy it from them. They can’t even do the tax
paperwork correctly!!! Now I OWE money…Wtf!!!!

Spinella clicked the “Like” button under the comment and various other employees and customers commented on the post. In response to one of the comments, LaFrance commented that one of the owners is “such a shady little man. He prolly pocketed it all from all our paychecks. I’ve never owed a penny in my life till I worked for him. Thank goodness I got outta there.” To which Sanzone commented, “I owe too. Such an asshole.”

The administrative law judge determined and the Board agreed that Sanzone and Spinella were engaged in protected concerted activity because this was a discussion with other workers about the calculation of their tax withholdings and that “Spinella’s selecting the ‘Like’ option on LaFrance’s Facebook account constituted participation in the discussion that was sufficiently meaningful as to rise to the level of concerted activity”.

While Triple Play originally argued that the conduct was not protected concerted activity, it focused its arguments here on whether Sanzone and Spinella’s conduct was an adoption of LaFrance’s defamatory and disparaging comments such that they both lost protection of the National Labor Relations Act.

The Board recognized that employers have legitimate interests in preventing the disparagement of their products, services and reputation from defamation, however, these interests must be balanced against the interests of the employees. Because Spinella’s “Like” and Sanzone’s comment did not accuse Triple Play “of pocketing employees’ money” or otherwise “endorse[] any comment by LaFrance to that effect”, the “comments were not ‘so disloyal… as to lose the Act’s protection.”

The outcome of this decision should be another reminder for employers that the current NLRB continues to give latitude for employees to engage in disloyal and damaging conduct under the guise of protected activity.

Employment Mediations – an Insider’s Guide, Part 10

Posted in Mediation

This is the concluding piece in our series by Caroline-Sheridan.

Not all mediations settle.  The Employment Tribunal mediation system boasts a success rate of 70%, while CEDR’s experience is that of about 85% of its employment mediations result in an agreement.   Those who do not settle can go off to fight another day, and best of luck to them with that, but for those who do reach an agreement, what are the rules about wrapping up the process?

That depends very much on what the mediation is about.  If it is a matter which is or could be the subject of Employment Tribunal proceedings, then the employer is still safest requiring the completion of a statutory settlement agreement.  The fact that the agreement is reached via a mediation does not vary the usual rule that an ordinary letter of agreement is not effective to waive statutory claims.

However, many mediations are about resolving tensions between colleagues which will otherwise explode, the shrapnel causing who knows what damage to those individuals, the colleagues around them and the employer’s business.  The terms of settlement in those cases (also called “facilitations”) can often be little more than an increased mutual understanding of the other’s position or sensitivities, or perhaps an apology (more likely when reframed as an “acknowledgement”) or some express commitment to deal differently next time with any issues arising.  CEDR recommends that all settlements should be in writing, but I have found in cases like this that the process of reducing this mutual understanding to paper can do more harm than good.  This is because the parties then inevitably focus on the precise words used and not on the behavioural changes which they have agreed.  If the protagonists are genuinely content to resolve the matter on a handshake, then it is not for the mediator to require otherwise.

Even where there is to be a written agreement, the mediator cannot advise on its detailed terms for fear of being perceived to have lost his/her neutrality.  The most I can do is to remind the parties of the different components of the settlement at the close of the bargaining stage, but it is up to them to determine what goes into the final agreement.  For this reason at least, it can make sense for the parties to have their advisors available in person or on the phone towards the back end of the mediation day.

Going home after a failed mediation is a deeply depressing business, and that is just for me, let alone the actual parties.  Sometimes they are just miles apart from the start and failure is always on the cards, but equally mediations occasionally founder on a last-minute moment of fatigue, temper or intransigence (the parties, not me!) when they had seemed just about to do a deal.  In those circumstances, a good mediator will let the parties reflect overnight on the wasted cost and lost opportunity to put it all behind them, and will contact both again the next day to see if something can be snatched from the jaws of defeat.   A meaningful proportion of mediations which do not succeed on the day are resolved soon afterwards in this way.  All part of the mediation service!

This is the last in my series of Insider’s Guides to Employment Mediations.  Thank you for reading them.  I hope you have found them useful and that you will take from them some of my own conviction that for all parties (except those few for whom principle is everything), mediation is truly the way forwards for employment disputes.  If you have any queries about this series or the services which CEDR provides, please contact me on csheridan@cedrsolve.com.

“Ban the Box” Movement: Another US State Joins the Ban

Posted in Employment Policies

On August 11, 2014, New Jersey Governor Chris Christie signed the “Opportunity to Compete Act” (“Act”) [pdf] into law.  The Act will limit the ability of New Jersey employers to inquire about the potential criminal record of a job applicant.  Under the new law, New Jersey employers will not be permitted to make such inquiries until at least after the first interview.  The new law will go into effect on March 1, 2015, so employers will have several months to modify their job applications and prepare for the new changes.

Laws similar to the one signed in New Jersey are commonly referred to as “Ban the Box” bills, which references the fact that many employers include a check box on job applications asking whether the applicant has ever been convicted (or even sometimes arrested) for a crime.  Often, applicants who check “yes” see their applications thrown in the trash and disqualified from consideration for the job as a result of their convictions.

The New Jersey law will apply to all employers, both private and public, that employ 15 or more employees over 20 calendar weeks.  Covered employers will not be permitted to inquire about an applicant’s criminal record until the employer:  (1) has conducted an interview; (2) made a determination that the applicant is qualified for the position and (3) selected the applicant as its first choice to fill the position.  However, employers will be permitted to make an inquiry prior making a formal offer to the applicant.  Similar to requirements under the federal Fair Credit Reporting Act, employers who make a conditional offer to an applicant but subsequently decide to not hire the applicant based on the results of a background check must provide the applicant with a copy of the background report and the specific reasoning for the revocation of the offer.  The applicant must also be given ten days to dispute the background check or provide additional information for consideration, although the employer is still permitted to hire another applicant during this period.

Further, employers will not be permitted to inquire about certain criminal background information at any point in the application process, including expunged criminal records, disorderly conduct convictions in which the sentencing date or release from jail occurred five or more years earlier and convictions of fourth degree crimes in which the sentencing date or release from jail occurred 10 or more years earlier.  Employers should not include statements in job advertisements stating that they will not consider applicants who have been arrested or convicted of a crime.

With the passage of this new law, New Jersey becomes the thirteenth state to pass a bill applicable to public employers and the sixth state to pass one applying to both public and private employers joining Hawaii [pdf], Illinois [pdf], Massachusetts, Minnesota [pdf] and Rhode Island [pdf].

New Jersey employers covered by the new law should review their job applications and hiring procedures to ensure that they are compliant with this law.  Additionally, employers should consider training  hiring managers to ensure that questions about the applicant’s criminal history are not solicited during interviews in violation of the law.

Employment Mediations – an Insider’s Guide, Part 9

Posted in Mediation

This is the penultimate instalment in our look into employment mediations by Caroline-Sheridan.

As a mediator I am often asked, sometimes in the mediation itself, what negotiating stance a party should adopt in order to get the best deal out of the process.

This is dangerous territory for a mediator.  It goes without saying that I cannot disclose anything of the other side’s negotiating position, e.g. that although they have said they will do a deal at £x, they would really go for £y.  Similarly, I cannot advise either party as to the offer they should make themselves, with the possible exception of some gentle shot across the bows of any offers which I fear will fall into the Insult Zone (see Part 7 of this series) and so jeopardise the whole process.

The reality is that there are as many negotiating styles as there are disputes, and their effectiveness or otherwise is entirely a function of their opponent.  Some parties will crumble quickly if an employer makes a low offer and steadfastly refuses to increase it.  On the other hand, others will regard that (as, secretly, would I) as a sign that it is not taking the mediation seriously and they consequently abandon ship early on.   It is consequently totally impossible to provide a definitive guide to negotiation tactics which will work every time.  However, here are some thoughts which might be helpful for employers:-

(i)         do not be tempted to say your offer is “final” unless it is, meaning that you will reject even the tiniest increment over that position.  While this sometimes works, if it does not then to move your offer materially after playing the “final offer” card will cost you dearly in credibility terms for the rest of the mediation;

(ii)        your negotiation movements should ideally decrease in size (or percentage) each time.  To change your position in same-size steps does not give the other party any reason to sense the narrowing of the opportunity to settle.  CEDR adopts the rule of thumb that you should aim to be somewhere close to settlement in no more than three offers and counter-offers each;

(iii)       focus initially on things you can agree on – a reference if the person is leaving, a low-cost but cosmetically important accommodation of some sort if he is not.  Sometimes leaving the money until later allows the parties to recognise that there is less between them than they thought;

(iv)       adopting too hard a line too soon will risk alienating the other party.  Later in the day this will probably be much more effective;

(v)        keep positive – the mediation day can be long and hard and the great majority of breakthroughs come only at its end when the parties are otherwise facing the prospect of a day’s time and costs wasted.  A positive and reasonable approach conveyed to the other side also denies him to some extent the ability to blame you if the mediation fails.  Instead he must face the unattractive possibility that the failure was down to him.  This is a powerful spur to make that extra small concession which will put the thing back on track;

(vi)       try to de-personalise the issue – CEDR describes this as “working hard on the problem and soft on the people”.  Emotions can block negotiation progress but instead of dismissing them (easy for the employer but wildly provocative to the employee), try to recognise them up front and to make it clear that you do understand the other’s position.  This overt awareness of what the other party is feeling will also help you understand how any given offer is likely to be received.  An early attempt to put yourself in the employee’s shoes may well assist movement towards settlement;

(vii)      remember that your objective is not to come out with a deal you are happy with, but one you can live with.  The mark of a good settlement, I have heard it said, is that it makes both parties equally unhappy.  Be prepared to abandon points you would have preferred to maintain, in the knowledge that your opponent is doing the same.  If you are too wedded to your position then you should just get on and litigate it instead.  On the other hand, if you want the dispute resolved now without that cost, delay and uncertainty, then you will have to be willing (in some form or other) to pay for the privilege.

Next and last, reaching a binding settlement.

Employment Mediations – an Insider’s Guide, Part 8

Posted in Mediation

In this post Caroline-Sheridan looks at some of the techniques mediators use to close the gap between the parties.

In the previous piece in this series I discussed the transition from exploration to bargaining in an employment mediation, the move from the preliminary skirmishing to the full-blown negotiation process.  But surely the parties could do the horse-trading between themselves?  True, and they sometimes do, but the growth in mediation as a dispute resolution tool in the employment arena is evidence that sometimes it just takes three to tango.  This week I will look at some of the techniques which the mediator uses to push the parties towards each other:-

1          Reality Testing

This is a catch-all description of the process of encouraging a party to take a hard look at its own position to see if its assumptions about facts or risks or costs are correct.  This is a delicate process – too much playing Devil’s Advocate risks the perception of loss of neutrality, that I am advancing my own thoughts on the merits, or surreptitiously pushing the other party’s confidential position.

Posing some external challenges are a necessary part of the mediator’s role, however, and a party may be willing to have that debate with the mediator where the same points raised by the other side would be dismissed just because they are raised by the other side.

2          BATNA and WATNA

These may sound like Japanese manga cartoon characters, but in fact they stand for Best (and Worst) Alternative to a Negotiated Agreement.  Put shortly, these concepts are compared with any given settlement proposal to assess whether that proposal can realistically be beaten by other means.  Taking an ordinary unfair dismissal claim as an example, the employee’s BATNA is obviously winning the claim.  But though that might bring him some money, the quantum may be up for debate, he will probably incur irrecoverable legal costs and he will definitely face considerable stress, delay and potentially adverse PR also – and that is if he wins.  So even the best alternative is not necessarily all that great.  Turned on the employer, the WATNA will be to spend all those costs, put up with months of internal flak from managers who do not want to take the witness stand and will not necessarily be a safe pair of hands when they get there, and then to lose a possibly significant sum in compensation in the glare of a public forum.  Even its BATNA (to win) carries all the same downsides except the compensation award.  Against that, is a reasonable cash offer (even if the employer feels it to be totally unmerited or the employee thinks it short of his aspirations) necessarily such a hard step?

3          Reframing

Is the putting of a different spin on something said by a party with the intention of altering the message in it.  A 75% chance of success can equally be described by the mediator as a one-in-four chance of losing.  If a letter of apology is too much for the employer to swallow, perhaps an “acknowledgement of regret” would be more palatable, even though in practical terms it means the same thing.

4          Walking to the Balcony

Also to the abyss, precipice, etc., this is a similar technique to the WATNA but a little more “visual”.  It involves encouraging the party to look out as if over a sheer drop and to contemplate the future, starting the very next day, if settlement is not reached.  Are they really ready to take that leap?  How different would that future look if today were the last time they had to live with this dispute?

In the end, these are all just tools in the good mediator’s armoury, each one aimed at helping the parties distinguish between what they would like to achieve out of the mediation on the one hand from what they might just be willing to live with on the other.

Next, effective negotiating styles in an employment mediation.

Navy affair rocks the boat – but is the response sexist?

Posted in Discrimination, Employment Policies, Equal treatment, Equality & Diversity

It was reported recently that the Royal Navy’s first female warship commander has been relieved of her post following allegations of an affair with an officer under her command (a comment on their working hierarchy rather than any judgment on their alleged romantic relationship, I should make clear).  

Sarah West is undoubtedly an important figure – a role model for other female officers in the Navy. The debate on equality within the Armed Forces is rather boring now – for there even to be any debate about whether women should be able to enter the Armed Forces is quite ridiculous as we sit here in 2014. However, you immediately realise there remains a major issue when you read comments by Lord West (no relation to Sarah), who said, “If she had a relationship with someone under her command then she’s rather let down other women in the Royal Navy, because there are people who will jump on this and say this is why women shouldn’t be on ship”.  No mention here of male officers having relationships with female ratings or of such liaisons between male crewmembers.  

Quite apart from the fact the turn of phrase ‘women shouldn’t be on ship’ really should have been left in the 18th Century, why should the ability of any other woman to perform a senior role in the Navy be questioned due to the (alleged) actions of one individual?  I don’t recall anyone saying ‘men shouldn’t be allowed on ship’ when the Costa Concordia cruise ship tragically ran onto rocks when the Captain was (allegedly) trying to impress his mistress by sailing close to shore.  

Questions of sexism apart, however, there is another question to be answered here: is it sensible to have a policy on relationships at work to try to prevent this sort of thing happening?  

In the case of the Royal Navy, there is a ‘Code of Social Conduct’ which prohibits any personal relationships which compromise ‘operational effectiveness’. Numerous companies have similar policies in slightly less military terms but to the same basic effect, and we have seen a rise over the last few years in organisations wishing to introduce them.  

Such policies can be sensible. It is prudent to ensure that you guard against any appearance of nepotism, bias or differing standards when it comes to reporting lines, duties, appraisals or criticism of colleagues. These considerations are part of ensuring that any organisation maintains ‘operational effectiveness’, and in that way, the intention is no different from the policy of the Royal Navy.   By the way, there has been nothing in the Press to suggest that operational effectiveness has actually been prejudiced in this case, whatever did or did not happen, or that the fact of any sexual relationship has even been established.  

The problems within these policies, however, can be (i) sometimes they are difficult to enforce (especially without having someone in the office who knows the gossip, and reports it), (ii) ensuring enforcement takes the same form across the board (so senior managers who have an affair and junior members of Accounts are all treated in the same way), (iii) in cases where the policy seeks to prohibit personal relationships in the workplace there is the very real issue of what you do about relationships that formed prior to the introduction of the policy, and (iv) put bluntly, the document that can prevent fit and healthy human beings kept in close quarters having sex with each other has not yet been invented.  

So, how should you approach governing relationships at work?  

As long as the focus of your policy is on dealing with situations in which managers may be perceived to be giving more favourable treatment to those subordinates with whom they are in a relationship, or those situations in which a security risk is created or where certain behaviours can make it uncomfortable for colleagues, a policy on relationships at work should be justifiable.   However you phrase it, the protection of operational effectiveness is a legitimate aim of any employer.  

Finally, it is worth remembering that if you have employees who went to the Navy Admiral Lord West School of Modern Manners, it might be time to re-run your equality and diversity training!

Employment Mediations – an Insider’s Guide, Part 7

Posted in Mediation

A glimpse into the Insult Zone, courtesy of CEDR mediator Caroline Sheridan.

At some point the parties will have got as far as they are going by exploration of common emotional ground and objectives and will want, in fact need, to begin to move into the harder bargaining phase.

Even in the protective cocoon of a mediation there is often a reluctance to be the one to make the first move.  Employers fear that it may look weak or that the proposal put forward is so ambitious as to provoke an immediate waltzing-out by the other party.  This is not a necessary concern and I always encourage employers in particular not to take that stance.  Not being willing to make a first move at all is far more likely to persuade the employee that you are not taking the process seriously than making one which is unacceptable but at least has some rationale attached to it.

You should remember also that the mediator may already have gained from the exploration phase an outline idea of what the other party wants or its likely negotiation style.  Sometimes this may lead him or her to park a particularly thorny issue (usually the money) then to approach the settlement question initially via some softer avenues.  These might include references, outplacement or some acknowledgement/apology letter designed to reduce the emotional head of steam carried by the employee.  Signs that the employer is willing to make such concessions are valuable to the progress of the mediation even if the reality is that these are points of much greater worth and significance to the employee than they are to the employer.

Nonetheless, the positioning of the opening offer can set the tone, good or bad, for the rest of the mediation.  For that reason I would generally seek to “reality test” the opening proposal before taking it to the other side.  That means effectively holding up a mirror to a party’s suggestion, perhaps in the light of the other’s previous position in negotiations or in its opening statement, and asking how genuinely realistic it is.  Often it is effective to ask one party how, if they were the other, they would receive that offer.  Would they see it as a constructive approach, even if well short of acceptable, or as so far adrift of what they know the other wants that it represents no more than an insult?

Tough negotiation is one thing, but once the parties stray into the Insult Zone, the mediation is already on its last legs.  After all, if all a party wanted to do was insult the other side, it could have done it in correspondence before we all got there.  Once at the mediation, however, I make a point of reiterating what we are there for – to try to reach a deal, and not to maintain the same entrenched postures which had failed to lead to settlement before we started.  This is particularly important where the lawyers are doing most of the talking.  They may have advised on the action or dismissal or claim giving rise to the mediation, and they may fear that their client will round on them if, having been paid for that advice, they now advocate too “weak” a settlement.  A good lawyer will however be able to separate the legal merits of the position from the best interests of the client – you can have a cast-iron case at law but that does not mean that you want the cost, distraction, risk or PR associated with fighting it.

Next, carrying on with the bargaining phase and telling your BATNA from your WATNA.

$324.5 million is Not Enough

Posted in Class Action, Settlement

United States District Judge Lucy Koh, sitting in San Jose, refused to approve a $324.5 million settlement in a case pitting a class of engineers against high tech giants Adobe Systems, Apple, Google and Intel. The engineers’ claims in the case captioned, In re: High-Tech Employee Antitrust Litigation, stem from a 2010 U.S. Department of Justice investigation into allegations that the tech companies had agreements not to compete for each other’s software engineers. Last year, Lucasfilm, and Pixar paid a combined $9 million to settle, and Intuit settled for $11 million. This week, Judge Koh rejected the proposed settlement for the remaining defendants on the basis that the proportional payments to class members would be smaller than in last year’s settlement despite the fact that the case had only gotten stronger for the plaintiffs. The Court had granted class certification, denied motions for summary judgment and rejected motions to disqualify a key expert who opined that the engineers have suffered billions of dollars in damages from depressed wages. With trebling, Judge Koh noted, the defendants face $9 billion in liability to the class. In her decision, Judge Koh notes that to settle on the same basis as the earlier defendants, this group would need to settle for $380 million.

This decision is significant because it underscores the active role judges increasingly take to test the fairness of class action settlements. In this case, for example, plaintiffs’ counsel had also requested $81 million to cover their fees and an additional $1.2 million for costs. This case should also remind all employers to be cautious when entering into agreements that restrain the free movement of employees within the labor market, especially in states such as California which disfavor restrictive covenants.