Category: Employment Law

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Sports, Player Protection, and of course, Money

The attention to the way football head injuries affect players at all levels of the game is good. Whether the game as it is loved today can persist, I leave to others. But as the NFL has asserted that it wants to protect its players, the question of injury and health beyond head injuries struck me as a good one. I love football. I grew up with hard-nosed, crazy players (Raiders fan even during the abysmal last twenty plus years of dubious management). But with the evidence that these Sunday circuses put players at so much risk, I hope that the league and fans can find ways to mitigate the long-term harms of the sport. As Arian Foster recently pointed out, Thursday night games are not geared to protect players. Quite the opposite. They generate large revenue and are not going away. Yet it seems that a solution is at hand.

Use the bye-week teams to play on Thursday nights. With some juggling, the teams could be set up so that if a team is on a bye week, they play on Thursday, and then they again would have nine days rest. That should make for fewer injuries overall and a better post-season. Others may have written about this option (and a good friend had made this argument in the past but not to me). There may be fewer Thursday night games. But smart folks at the NFL should be able to figure out how to maximize the games, while still making money for the league and the players. Some may ask whether all long-term injuries can be mitigated. I doubt that. Still, if lawsuits persist, football, soccer (more contact and head injuries than one might think), and many contact sports may have to shift their rules or find that they can’t attract the best athletes. Hmm a world of basketball, extreme sports, and curling. Maybe I could get into that.

Digital Labor & Rethinking Economics

LaborDayIt’s easy to document the degradation of work conditions in the wake of capital’s ascendance. I’ve done so for years, fully expecting that globalization would push the downward convergence of non-college-educated American workers’ living standards to that of the 73% of the global work force now living in the developing world. But I think we are in the midst of a sea change of resistance. Just listen to Belabored, an extraordinary series of podcasts on labor struggles (with plenty of print/web sources accompanying each broadcast). Or, if you’re in, or can visit, New York City, try to attend the following two conferences:

Rethinking Economics: A student-led movement, this group has an all-star line-up for a conference on Sept. 12-14. I’m particularly happy to see Philip Mirowski in the mix, as his Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown was one of my most enjoyable (and illuminating) reads this summer.

Digital Labor: This November conference will “will bring together designers, labor organizers, theorists, social entrepreneurs, historians, legal scholars, independent researchers, cultural producers and perspectives from workers themselves to discuss emerging forms of mutual aid and solidarity.” I attended the first iteration in 2009, and am on the Advisory Board for this one. It should be a fascinating event, particularly as forms of exploitation common in the “gig economy” influence large corporations.

Photo Credit: Karen Horton.

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The [Law School] Adjunct Problem

Adjunct-ActionAmerican higher education, under pressure on all fronts, has squeezed adjuncts. Adjuncts, in turn, have protested in a variety of public fora, and now seek government regulation to ameliorate the conditions of their employment. In general terms, the problem is this: universities have high fixed labor costs (TT faculty), weak manager oversight – and consequently spiraling costs, and increasing student demand for expensive facilities. Their ability to raise prices is constrained (at least more than it used to be.)  The result is that adjuncts, who typically aren’t organized and who have little job security, can be treated like workers in the rest of the economy – i.e., terribly so long as market conditions permit.  At a variety of schools – including mine – unionization movements are afoot.

One wrinkle concerns the “fate” of law school adjuncts. Law schools typically employ adjuncts to teach cutting edge areas in practice, and those adjuncts are almost always otherwise employed as full-time lawyers and judges. Those lawyers and judges provide students with opportunities to understand developments in practice that no full-time instructor could deliver (whether or not that instructor ever writes a law review article). They also can be sources for leads on jobs, and can model professionalism.  The networking and professional development street runs in both directions.  For many law school adjuncts, association with the school brings significant professional benefits, which are more likely to motivate taking the gig than the relative pittance adjuncts are paid. Lawyers routinely highlight their law school teaching expertise in advertising – “Teaches criminal advocacy at X…”, “Professor teaching ERISA at Y….”  (I can’t prove that clients care about this kind of puffing, but the prevalence of claims in the market suggests they might.) Adjuncts also can use the experience to deepen their knowledge of a field, thus improving their skills.  Or, as Eric Goldman once commented, “There are lots of good reasons to be an adjunct, but the pay is definitely not one of them.”

Now, like university adjuncts more generally, law school adjuncts can feel like second-class citizens. They are rarely if ever even mildly integrated into the faculty.  They usually teach in the evening (when their practices permit them to).  They don’t have offices on campus.  And teaching takes more time than many of them have to give. With that all said, mandating that law school adjuncts be treated like teachers in the rest of the university – and given higher benefits and salary –  is profoundly foolish and unwise.  I realize that that is very easy for me to say.  But  I have heard that at many schools, university-wide adjunct policies designed to make adjuncts’ lives better – some, of course, prompted by unionization – have had perverse effects when applied to law school adjunct faculty.   Law schools are already stretched thin, and there already is a secular trend against adjunct teaching given the reduced numbers of students.  When lumped in with & bumped up with the rest of the university’s adjuncts, law schools respond by employing many fewer adjuncts.

And even in a better law school market, law school adjuncts really are differently situated than their undergraduate counterparts.  Treating them like oppressed graduate students will harm law students, law schools, and lawyers alike.

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A Slower Boat From China: Pilotless Ships and Changes to Labor and the Environment

A slower but powerful change is coming to a less familiar part of transportation: shipping. The Economist Tech Quarterly headline on Ghost Ships caught my attention because I know the term from piracy and a script I wrote about the subject. Ghost ships in modern terms refer to ships where a pirate crew has gotten rid of the crew, painted a new name on the ship, and/or set it adrift. The new ghost ships will also lack a crew but for a different reason. The autonomous cargo vessels the article describes are an extension of insights from autonomous cars. The returns to this shift could be as important. Shipping has operator errors: “Most accidents at sea are the result of human error, just as they are in cars and planes.” And costs will come down. Not only would a ship not need a pilot; it may not need a crew.

With pilotless ships, a company could almost eliminate the crew. Costs drop not only for labor but for fuel, because ships could move slower for certain goods. “By some accounts, a 30% reduction in speed by a bulk carrier can save around 50% in fuel.” That saving is lost when paying for people and a ship that has to house and feed people. Plus less fuel burnt should result in environmental benefits. And as the article notes, there is a piracy connection. The human cost of piracy would go down quite a bit. I suppose pirates could still try and take over a ship. But holding the crew hostage would not be an issue and so retaking a ship is simpler. Plus I can imagine that a ship going off course and controlled from afar may be more difficult to commandeer. A pirate might not be able to restart engines or take the ship to destinations unknown. The shore control could have a kill switch so that the ship is useless.

As with my thoughts on driverless cars, the new labor will be those who can operate the ship by remote. A shipping center could house experts to monitor the ships and take over as needed. Instead of months at sea, sailors would be, hmm, landlubbers. Not sure I like the sound off that, but then like has nothing to do with what the future is.

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Health as a Bottleneck

In his thoughtful and path-breaking book, Bottlenecks: A New Theory of Equal Opportunity, Joey Fishkin challenges the common conception of equal opportunity as providing a level playing field.  He explains that merely equalizing opportunity at critical points in a person’s life, such when she applies for a desirable job or college program, is often not enough. By then, social inequities and previous limited opportunities may have already taken their toll on the affected individuals, perhaps leaving them underprepared and ill-equipped to meaningfully compete—let alone succeed—even when given the chance.  Fishkin explains that this line of reasoning puts us in a vicious cycle: To achieve true equal opportunity, interventions must happen earlier.  But when is earlier?  The disadvantaged job applicant could have benefited from a better college education.  Yet the disadvantaged college student could also have benefited from a better high school education.  And the disadvantaged high school student could have benefited from a better primary school education. And the disadvantaged primary school student could have benefited from having parents with higher incomes and more time to devote to parenting, which just takes us back to the disadvantaged job applicant.  Hence, Fishkin identifies a key flaw in the traditional construction of equal opportunity: We are all the products of our opportunities, and those opportunities can never be truly “equal.”  To that end, he endorses “opportunity pluralism,” which he defines as making more opportunities available to more people.  Thus, in a society that limits educational or job opportunities based on a particular standardized test, we can move away from asking whether the test is a fair metric and instead ask why the opportunity structure depends upon its results.

Fishkin christens these opportunity-limiting factors “bottlenecks” and pushes us to understand traditional antidiscrimination protections through that lens.  Thus, well-known protected statuses, such as race and sex, can be understood as bottlenecks because certain opportunities have been construed to require whiteness or maleness.  But legally recognized antidiscrimination categories, such as race and sex, are not the only bottlenecks we have to contend with.  Employers also restrict opportunities based on other factors, such as college education, credit history, criminal convictions, or unemployment.  My own scholarship has dealt extensively with yet another employer bottleneck: health.

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College Football Unions?

I was intrigued by this story about the petition by the Northwestern University football team to form a union. In prior posts I’ve criticized the NCAA and argued that players in football and basketball should get paid.

I do not know enough about labor law to know if the NRLB might grant this petition, but it is a great way of drawing attention to the problem. It is also worth noting that arbitration is what led to the creation of free agency in baseball. Sometimes an unjust system gets challenged from an unexpected quarter.

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The Dualities of Freedom and Innovation

What a rollercoaster week of incredibly thoughtful reviews of Talent Wants to Be Free! I am deeply grateful to all the participants of the symposium.  In The Age of Mass Mobility: Freedom and Insecurity, Anupam Chander, continuing Frank Pasquale’s and Matt Bodie’s questions about worker freedom and market power, asks whether Talent Wants to Be Free overly celebrates individualism, perhaps at the expense of a shared commitment to collective production, innovation, and equality. Deven Desai in What Sort of Innovation? asks about the kinds of investments and knowledge that are likely to be encouraged through private markets versus. And in Free Labor, Free Organizations,Competition and a Sports Analogy Shubha Ghosh reminds us that to create true freedom in markets we need to look closely at competition policy and antitrust law. These question about freedom/controls; individualism/collectivity; private/public are coming from left and right. And rightly so. These are fundamental tensions in the greater project of human progress and Talent Wants to Be Free strives to shows how certain dualities are pervasive and unresolvable. As Brett suggested, that’s where we need to be in the real world. From an innovation perspective, I describe in the book how “each of us holds competing ideas about the essence of innovation and conflicting views about the drive behind artistic and inventive work. The classic (no doubt romantic) image of invention is that of exogenous shocks, radical breakthroughs, and sweeping discoveries that revolutionize all that was before. The lone inventor is understood to be driven by a thirst for knowledge and a unique capacity to find what no one has seen before. But the solitude in the romantic image of the lone inventor or artist also leads to an image of the insignificance of place, environment, and ties…”.  Chapter 6 ends with the following visual:

 

Dualities of Innovation:

Individual / Collaborative

Radical/Incremental

Accidental /Deliberate

Global /Local

Passion / Profit

Art/Science

Exclusive/Shared

Inscribed/Tacit

 

And yet, the book takes on the contrarian title Talent Wants to Be Free! We are at a moment in history in which the pendulum has shifted too far. We have too much, not too little, controls over information, mobility and knowledge. We uncover this imbalance through the combination of a broad range of methodologies: historical, empirical, experimental, comparitive, theoretical, and normative. These are exciting times for innovation research and as I hope to convince the readers of Talent, insights from all disciplines are contributing to these debates.

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Free Labor, Free Organizations,Competition and a Sports Analogy

I have enjoyed the discussion on Orly’s book and thought of an interesting analogy to sports that is worth sharing. The inspiration was  Haddock, Jacobi, & Sag, “League Structure & Stadium Rent Seeking–The Role of Antitrust Revisited,” 65 Florida Law Review 1 (2013), an offprint of which appeared in my box the other day.  I recommend the article for those interested in regional economic development, sports franchising, antitrust and composing a title for an academic article without using a colon.  The ideas below are inspired by the article but represent my own views, not those of the authors.

Free agency in sports is desirable along the lines of Orly’s argument. Talented players are not locked into a particular team and can auction their skills off to the highest bidder.  I think the case is strong for free agency as benefitting individuals and society. One can complain about rent seeking and about the dynamics that lead to improper behavior like doping. As far as rent seeking, it is a loaded term like piracy or pornography, acting more as a conclusive label rather than an analytical concept. Orly’s argument supports rent seeking when it benefits talent and helps to unlock it.  As far as the dark side of competition (doping or cheating), those can be handled through other means than limiting free agency.

Does the free agency argument translate over into the firm or organizational level?  As Haddock, Jacobi, & Sag point out, there is lots of wasteful behavior as sports teams threaten to move in order to get better franchise deals from cities.  I understand their argument to be that the industrial structure of sports franchises in the United States leads to such opportunistic behavior as strapped and often desperate cities cannot effectively respond to the threat of exit by a team. They contrast the US sports team structure with that in the UK, where teams rely more on fan support rather than public subsidies.  Consequently, municipalities often have several sports teams that compete among themselves.

I found this example fascinating for the purposes of this symposium.  First of all, the free agency point maps readily onto Orly’s point. Competition among players is perhaps more effective and arguably more fair than competition among teams where players are locked into the firm and its mechanisms (if any) for internal competition.  At the same time, arguments for free competition do not readily transfer over to the franchising level given the industrial organization of teams and their relationship with cities. The answer to the problems Haddock et al. identify for sports franchising in the US lies in altering the political and market structure within which bargaining and competition for franchises occur. The example illustrates the relationship between individual mobility, competition internal to an organization, and the background structure of competition that defines how interactions among and within organizations play out.

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Talent Timing Paradox

There is a hidden paradox in Talent Wants to be Free: There is time to lock down, and a time to set free (maybe to sow, reap, and more too). Lobel notes that some work indicates that early stage industries may benefit from lock down. But she also makes the observation that a company locking down talent may be in decline. What can we make of this possible paradox?

I think that it shows how difficult it is for any company or industry to truly innovate. As Lobel notes, when things plateau, talent should be loosened up. Why? I suggest that the old hack of the Innovator’s Dilemma is in play. As a company is used to a certain business there are many reasons it won’t move on to the next thing. And it may not be able to see or be willing to work on the next thing. The folks who are into crazy late night work, start-up adrenaline, and the chance to press the edge of whatever field they are in find that the company has become stale. That may also be an industry. I believe that the convergence of businesses is part of why Silicon Valley companies looked to limit talent movement. They both did not want their core people help competitors build rival services and found that folks may be tempted to move to a seemingly new place. For example, a social network person may have jumped to Google to build Google + if their old firm was stable or a search technologist to Amazon or FaceBook, and so on. The respective verticals may be stale and converging. So the leaders start to find ways to keep labor in place (and probably sneak folks to their outfits as much as they can nonetheless). Is there another option? Sure.

Start a Bell Labs, Skunk Works, or Google X. In the short term at least, some of the best folks may stay and set up the next stage of your company. But as the scenario planning and related literature show, sooner or later the company will fail to turn that work into something. When that happens, some of the talent may be frustrated and leave. Again, the need for the payoff, the we planned for X and delivered X vortex takes hold and down the drain we spin. The upside is that other companies will lurk at the edge of the collapse and pick out the best of the wreckage. The key as Lobel argues is that the human capital be able to picked up. If not, the stalling, collapsing company keeps hold of good folks who might do great work elsewhere.

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Individuals & Teams, Carrots & Sticks

I promised Victor Fleisher to return to his reflections on team production. Vic raised the issue of team production and the challenge of monitoring individual performance. In Talent Wants to Be Free I discuss some of these challenges in the connection to my argument that much of what firms try to achieve through restrictive covenants could be achieved through positive incentives:

“Stock options, bonuses, and profit-sharing programs induce loyalty and identification with the company without the negative effects of over-surveillance or over-restriction. Performance-based rewards increase employees’ stake in the company and increase their commitment to the success of the firm. These rewards (and the employee’s personal investment in the firm that is generated by them) can also motivate workers to monitor their co-workers. We now have evidence that companies that use such bonus structures and pay employees stock options outperform comparable companies .”

 But I also warn:

 “[W]hile stock options and bonuses reward hard work, these pay structures also present challenges. Measuring employee performance in innovative settings is a difficult task. One of the risks is that compensation schemes may inadvertently emphasize observable over unobservable outputs. Another risk is that when collaborative efforts are crucial, differential pay based on individual contribution will be counterproductive and impede teamwork, as workers will want to shine individually. Individual compensation incentives might lead employees to hoard information, divert their efforts from the team, and reduce team output. In other words, performance-based pay in some settings risks creating perverse incentives, driving individuals to spend too much time on solo inventions and not enough time collaborating. Even more worrisome is the fear that employees competing for bonus awards will have incentives to actively sabotage one another’s efforts.

A related potential pitfall of providing bonuses for performance and innovative activities is the creation of jealousy and a perception of unfairness among employees. Employees, as all of us do in most aspects of our lives, tend to overestimate their own abilities and efforts. When a select few employees are rewarded unevenly in a large workplace setting, employers risk demoralizing others. Such unintended consequences will vary in corporate and industry cultures across time and place, but they may explain why many companies decide to operate under wage compression structures with relatively narrow variance between their employees’ paychecks. For all of these concerns, the highly innovative software company Atlassian recently replaced individual performance bonuses with higher salaries, an organizational bonus, and stock options, believing that too much of a focus on immediate individual rewards depleted team effort.

Still, despite these risks, for many businesses the carrots of performance-based pay and profit sharing schemes have effectively replaced the sticks of controls. But there is a catch! Cleverly, sticks can be disguised as carrots. The infamous “golden handcuffs”- stock options and deferred compensation with punitive early exit trigger – can operate as de facto restrictive contracts….”

 All this is in line with what Vic is saying about the advantages of organizational forms that encourage longer term attachment. But the fundamental point is that stickiness (or what Vic refers to as soft control) is already quite strong through the firm form itself, along with status quo biases, risk aversion, and search lags. The stickiness has benefits but it also has heavy costs when it is compounded and infused with legal threats.