When merely considering your rights can get you fired!

When merely considering your rights can get you fired!

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By Afshin Mozaffari

Employers may be reluctant to admit that their policies are designed to shut workers out of our civil justice system.  But there is no denying their intent.

Consider this example.  Elizabeth is a widow with five children who came into my office this spring.  Since the death of her husband a few years ago, she immersed herself in her work to provide for her family. Elizabeth didn’t earn much at her job, but her work as a waitress was enough to support her children.  She had been working for a California-based restaurant chain for nine years.

During a Friday shift last year, Elizabeth was informed about a new kind of company policy – an arbitration agreement that she was told she had to sign and return by Monday.  Elizabeth tried to find an attorney over the weekend to explain the document to her, and when she couldn’t, she asked her employer for more time to review the agreement.  She was fired a few days later for missing the 72-hour deadline.  The company also fired several other employees for either declining to sign the arbitration agreement or not doing so by the company-imposed deadline.

Elizabeth’s case is not uncommon, but it underscores just how much “free choice” goes into these “agreements.” Remarkably, courts have held that terminating employees for not signing employer-mandated arbitration agreements is not illegal.  These and other decisions are beginning to reach their absurd conclusions, where courts enforce arbitration agreements without regard to the rights of the affected individuals, enforcement of our laws, or the administration of justice. As Judge Jack Zouhary (a George W. Bush appointee) recently wrote in an order compelling arbitration of an antitrust claim, “This Court is bound by case law’s pro arbitration bent … common sense plays no role.”

Compulsory private arbitration has been the favored corporate practice for years.  It is easy to understand why.  Highly-paid private arbitrators, whose livelihood often depends on the repeat business from the same large corporations, render “justice” to an aggrieved employee who almost certainly will never appear before them again.  The inherent disadvantage for low wage workers facing off against multi-million dollar corporate employers in any setting is obvious, but the disadvantage is compounded in an arbitral forum.  Despite this, our courts have generally enforced these “agreements.”

I often see aggrieved employees who have signed arbitration agreements without understanding the content or the significance of the document. They sign the documents that their employers put in front of them, in order to continue working and to feed their families.  In fact, most workers don’t learn what the term “arbitration” means until they consult with an attorney and learn that they have already signed away their right to seek justice in a court.

But the compulsory nature of these arbitration agreements is undeniable when we look at the employees that don’t blindly “agree” to an employer’s mandatory arbitration policy, or those like Elizabeth who merely ask for time to conduct a careful review and to consider their rights before agreeing to sign them away.  If there was any question whether such “agreements” are a condition of employment, Elizabeth’s experience offers the answer.

Are we beginning to see the end to these extreme practices? On July 31, President Obama signed an executive order prohibiting certain federal contractors from forcing their employees out of court and into arbitration in workplace discrimination cases.

Although this executive action is a step in the right direction, it does not go far enough. Congress continues to ignore this systematic denial of justice to our workers by failing to move forward on the Arbitration Fairness Act, which has been pending since last year.  The Act would ban forced arbitrations in employment and consumer settings. Until workers have a real choice in deciding where to claim their rights, the scales of justice will remain unbalanced.

Avoiding the impending catastrophe for 1.3 million long-term jobless Americans

Avoiding the impending catastrophe for 1.3 million long-term jobless Americans

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By Afshin Mozaffari

As we celebrate this holiday season, let’s remember our fellow citizens who are struggling with the unprecedented chronic unemployment caused by the Great Recession of 2008. While the most recent reports indicate the rate of unemployment is down to 7 percent, the lowest unemployment rate since November 2008—the number of long-term unemployed (those without a job for 27 weeks or more) continues to be stubbornly high. Indeed, while the unemployment rate declined overall by .3 in November, the actual number of long-term unemployed people remained essentially the same at 4.1 million. Compare this to 2007, when only around 1.2 million people were long-term unemployed.

In the face of this reality, Congress excluded extension of unemployment benefits from the bipartisan budget compromise it reached last week. Without congressional action, this means some 1.3 million workers will lose their extended unemployment benefits on December 28th of this year. And the number of chronically unemployed people losing benefits will grow every month thereafter. Needless to say, long-term unemployment and cessation of unemployment benefits is a tragedy for the unemployed workers and their families. However, persistent long-term unemployment also presents troubling long-term repercussions for the economy as a whole, including declining labor force participation, less consumption and a smaller tax base.

Long-term unemployment “is not exclusive to any one industry [or] occupation.” The demographic composition of the long-term unemployed is also diverse, but it is evident that workers ages 55 and older suffer a higher percentage of long-term unemployment of all age groups. Men are also more likely than women to be long-term unemployed.

The economic affect of long-term unemployment hinges, in part, on the issue of whether the workers who are unemployed for a long period of time would at some point become unemployable.  This was the subject of a 2012 study by William Dickens and Rand Ghayad of Northeastern University who studied the relationship between job openings and unemployment. Generally, the more job openings there are, the fewer workers there are out of work.  But when it comes to the long-term unemployed, a rising number of job openings does not seem to substantially reduce the number of long-term unemployed workers.  According to the Nobel Prize winning economist, Paul Krugman, this dangerous trend is creating “a permanent class of jobless Americans.”  He predicts that this reality and the loss of unemployment benefits, will in turn, depress the economy as a whole.

The extension is essential to the long-term unemployed, like Sheri Minkoff of Pittsburg, Pennsylvania, who is about to lose her only source of income. Sheri lost her job for the second time in the past 5 years.  The first time, she lost her job as a director of a nonprofit that lost its invested funds to the massive Ponzi scheme by Bernie Madoff that defrauded Sheri’s employer and thousands of other investors of billions of dollars.  Sheri was able to find employment two years later as a coordinator at a domestic violence shelter, only to lose that position due to the lack of funding.  During this period, Sheri has lost all of her retirement benefits and savings.  At the age of 50, she spends six days per week trying to find employment.  Sheri, and more than a million long-term unemployed Americans will continue to struggle to find employment even with the extension of unemployment benefits. The benefits will not only help cover their basic necessities like food and housing, but will enable them to continue their active search for work.

The White House and Democrats in Congress have called for extending the unemployment benefits, and vowed to try to retroactively extend unemployment benefits in early 2014.  There are also a number of outside groups that are organizing a campaign to pressure Congress to extend the Emergency Unemployment Compensation Program. The National Employment Law Project (“NELP”), a non-partisan organization that conducts research and advocates on issues affecting low-wage and unemployed workers, is collecting and distributing true stories of the long-term unemployed and urging everyone to contact their congressional representatives.  Without congressional action, more than a million Americans and their families will be left in desperate financial straits and the economy will suffer as a result.

Subsidizing our food supply on the backs of the working class

By Afshin Mozaffari

The fast-food workers’ protests for higher wages last month triggered a national debate about workers’ compensation, price of food, and the role of the statutory minimum wage.  Thousands of fast-food workers have been holding one-day strikes from New York to several Midwestern cities, demanding $15 an hour – more than twice the federal minimum wage.

The federal minimum wage rate has been in effect since 1938 and is part of the Fair Labor Standard Act (“FLSA”), which, among other things, also set the 40-hour workweek and overtime pay.  Beginning at a rate of $0.25 in 1938, the minimum wage standard has been raised more than 20 times  to reflect cost of living increases.  The last time Congress visited this issue was as part of the Fair Minimum Wage Act of 2007, which amended FLSA to gradually raise the minimum wage from $5.15 per hour to its current rate of $7.25.  Prior to that, the minimum wage rate had not been adjusted since 1997.

These numbers do not reflect the full story. Those making minimum wage have less buying power than their peers did in the mid-1950s.  Although the federal minimum wage generally kept pace with increases in the cost of living, it began to fall behind during the 1980s. In fact, according to a recent report, the “effective minimum wage,” which is the local minimum wage rate adjusted for the cost of living, is actually $6.07 in Los Angeles and $6.27 in San Francisco. Based on the Department of Housing and Urban Development estimates of fair market rents for housing, even ignoring taxes, a minimum wage worker in Los Angeles must work 34.5 hours per week just to pay rent.  Minimum wage workers in San Francisco need to work 33.75 hours to pay rent.

Based on the federal minimum wage standards, a full time worker earns approximately $13,920 per year.  The poverty income threshold in the United States is just over $23,000 for a family of four.  In other words, a minimum wage worker holding a full time job is guaranteed to live well below the poverty line, which itself has been kept artificially low.

Some argue that minimum wage positions are filled with teenagers, who need not concern themselves with such “real life” affairs as paying rent or providing for children.  However, this position simply ignores the reality of minimum wage worker demographics today.  The median age of fast-food workers is over 28, with many trying to support their families.

Many, if not most, minimum wage workers are compelled to work multiple jobs to make ends meet.  Indeed, McDonald’s financial planning guidelines for its low-pay workforce anticipates a second, nearly full-time job as part of its “sample monthly budget” for its low wage employees.  Meanwhile, the food prices, especially in the fast-food industry, remain fairly low and fast-food companies continue to post healthy profits.  The McDonald’s Corporation, for instance, reported approximately $5.5 billion in profits in 2012. It paid its CEO $27.7 million in compensation during the same year.  With the public benefiting from a relatively cheap food supply and the corporations enjoying profits equal to small countries’ gross domestic product, it is time to ask ourselves how long are we willing to allow minimum wage workers to subsidize our food supply by working more than 70 hours per week while struggling with poverty so that our food prices remain where they are and corporate profits continue to rise.

For more information on joining the fight to help raise the minimum wage, click here.

 

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