Firing the Bankrupt Employee

Imagine two people file for bankruptcy.  One is fired by his employer because he filed.  The other applies for a job at the same employer, and is told that the company doesn't hire bankrupts.  Has the company violated the law under either scenario?

The answer is yes and no.  Under Section 525 of the Bankruptcy Code, an employee cannot be fired because he or she filed for bankruptcy.  However, as the Third Circuit ruled recently in Rea v. Federated, that same employer can refuse to hire an employee because he filed.

Dean Rea went bankrupt in 2002, and discharged his debts in 2003.  Six years later, in 2009, he applied for a job at Federated.  Federated initially indicated it was going to hire him, but then later sent him a letter saying it was not going to hire him because of the bankruptcy.  Rea sued under Section 525 of the Bankruptcy Code.

Subsection (a) of the Code says that government entitites cannot discriminate against people who file for bankruptcy, including a refusal to hire.  Subection (b), however, says that no private employer can "discriminate" against an employee who files.  Reading these sections together, the court in Rea concluded that the omission of language banning discrimination in hiring in Subsection (b) meant that Congress intended to ban private employers from discriminating against current employees only.

The court's decision seems correct, as a matter of statutory interpretation.  However, the law does not seem to make any sense.  Why should an employer be barred from firing someone for filing for bankruptcy, but not be barred from refusing to hire?  One reason might be that an employer should not be forced to hire a bankrupt, who in some circles is regarded as less than trustworthy, yet should also not be permitted to fire an employee who is otherwise a good employee.

It is expected that some 1.5 million people will file for bankruptcy this year, up from 1.4 million last year and less than a million in 2008.  In these economic times, that is not surprising.  What is surprising is that an employer would revoke an offer of employment to someone who had filed more than six years prior to the job offer.

Obama: Master Negotiator Against Himself

One of the first rules in labor negotiations is never to negotiate against yourself.  So if your goal is to get a dollar an hour raise, you don't start at a dollar, then negotiate down from there.  Likewise, if you are buying a car, you don't offer the dealer the asking price on the car.  You offer less.  Anyone who has bought a car understands this principle.  For some reason, however, President Obama does not get this concept.  From health care to the current tax bill, Obama starts in the middle, and then slowly works his way towards the Republicans. 

This is what is perhaps so infuriating to liberals who Obama (as well as Fox News) have been slamming for criticising the tax deal.  On health care, Obama quickly dropped the public option, and instead crafted a deal that, in the end, every single Republican opposed anyway.  Health care then became a campaign issue for Republicans who called it socialism.  If your enemies are going to oppose you at all costs, and if you are going to get tarred a socialist, shouldn't you at least craft legislation that is a little more "socialist?"

Likewise the tax cuts.  What did Obama get in return for caving in to the Republican demand that the wealthiest in this country suffer  no tax increases?  Not a lot.  He got a thirteen week extension of unemployment benefits -- keep in mind that there has never been opposition to federal unemployment benefit extentions when the unemployment rate was this high.  He got a cut in payroll taxes, but only on the employee side of the ledger -- and as one columnist pointed out, cutting payroll taxes and starving Social Security has long been a right-wing dream.  The payroll tax cut is also a benefit not enjoyed by state and federal workers, who don't pay into Social Security.  He also got some tax breaks for investments.  As Paul Krugman points out, how did Democrats get to the point that they have to plead with Republicans for tax cuts?

I'm not an economist, so I'm not sure whether the tax package is good or bad policy.  I do know that Obama needs to stop negotiating against himself if he has wants to have any hope of controlling the next Republican Congress.

The Glengarry Glen Ross Boss

In the brilliant movie Glengarry Glen Ross, Alec Baldwin "motivates" his sales team with a contest:  first prize is a Cadillac, second prize is a set of steak knives, and third prize is -- you're fired!  A sales manager is Utah seems to have been inspired by the movie.

In Huydens v. Prosper, a lawsuit claims that a supervisor would punish employees who did not meet performance expectations by drawing mustaches on their face with indelible marker.  He'd also walk around the office with a wooden paddle, and slam it on tables and desks.  The supervisor went too far for one employee, however, when the supervisor waterboarded him in the office.

According to the complaint, the supervisor asked for "volunteers" for a motivational exercise. The plaintiff alleges that he volunteered.  The employee and others were brought to a hill near the office, where he was ordered to lie down with his face pointed downill.  Other employees held his arms and legs, and the supervisor then poured water out of a gallon jug into his mouth and nose so he could not breathe.

The employee struggled, but was being held down by other employees and could not escape.  At the conclusion of this team building exercise, the supervisor told employees they should "work as hard at making sales as Huydens had tried to breathe."  The employee suffered nightmares and psychological difficulties, and ended up suing for a variety of claims.

The case ended up in the Utah Supreme Court after it was dismissed by a lower court judge.  Incredibly, one reason the court below dismissed the assault charge was that the exercise was done not with the intent to harm the plaintiff, but as a motivational exercise.  The Utah Supremes did not resolve the merits of the dispute, but instead send it back to the court for reconsideration. 

Waterboarding in the office.  What will they think of next.
 

Careful What You Tweet

As everyone knows by now, employees can be fired for things they do off duty, like post an inappropriate remarks about the boss on Facebook.  Of course, the employee might be saved if the post implicates the National Labor Relations Act's restrictions on discharging someone for protected activity.  The employee might also be saved if he or she has a union that will take their case to arbitration.

Take the matter of King Man Ho and Radio Free Asia.  Last January, Hillary Clinton was in Hong Kong and gave a speech (ironically, it turns out) on internet freedom.  Ho covered the story and quoted the reactions of two Chinese bloggers to the speech. 

The bloggers accused Ho of misquoting them and being unethical on their Twitter accounts.  Ho, trying to find out why they were making the accusations, used his own Twitter account to try and find out what was going on.  Ho became somewhat agitated in his Tweets, eventually prompting his editor to tell him to stop Tweeting.  Ho Tweeted one more time, which resulted in his termination for insubordination and violating RFA rules about appropriate behavior.

Had Ho been employed by a non-union employer, that would have been the end of the story.  However, because Ho's union contract had a provision in it stating that employees could not be discharged except with "just cause," he was able to present his case to an arbitrator.

The arbitrator ruled that Ho was discharged without just cause, and reinstated him to employment with full back pay and benefits.  The arbitrator acknowledged that the employer could have a policy regarding Tweeting, but held that it was unclear whether the policy had been violated given the circumstances of the case.  Additionally, the arbitrator found that Ho was not guilty of insubordination because the directives he had been given by his supervisor were not very clear.  The decision can be read here.

As technology evolves, so does the employer's ability to reach outside the workplace and fire employees for violating work rules on their own time.  But with cases like the NLRA Facebook case and this one, sometimes old standards applied to new technology save the day.