Chapter 1
FIRST THE FOREST, THEN THE TREES: AN OVERVIEW OF EMPLOYMENT AND LABOR
LAW
INTRODUCTION
Chapter one introduces the student to foundations of labor and employment laws and how political,
social, and economic conditions have contributed to the rise and fall of 1) government intervention in the
employer/employee relationship, and 2) the influence of organized labor. Historical examples date back to
the New Testament of the Bible and should enlighten the student to the fact that the employer/employee
struggle for power speaks directly to the nature of human psychology and the quest for power and
resources.
After reading this chapter, students should realize that the balance of power in the employer/employee
relationship is decidedly on the employer’s side, absent any government invention or organized
opposition, as long as there is a ready and willing labor pool. Indeed, up until the Industrial Revolution,
I. INTRODUCTION
One may consider the craftsman guilds as the earliest forms of unions. As early as the Middle
Ages, employment in many trades was restricted to those in the proper class or family.
However, as these guilds grew, so also did corruption within the system. This ultimately led
to working class revolts, spawning harsh reprisals from those in authority. The balance of
power swung briefly to the worker’s side during the mid-14th century when deaths due to the
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
1-1 THE NEW DEAL AND THE RISE OF THE MODERN AMERICAN UNION
A. New Deal Legislation passed at the urging of President Franklin D. Roosevelt
i. The Social Security Act (1935) provides modest pensions to retired workers.
ii. The National Labor Relations Act (1935) sets the ground rules for the give and
take between labor unions and corporate managers.
B. Despite the impressive list, changes did not come easy. The Supreme Court had
repeatedly refused to allow any employee protection laws, declaring them
unconstitutional. Then two things happened:
i. President Roosevelt threatened to increase the number of Justices on the Supreme
Court (this was within his power), if the Court did not change it’s view of
employment protection legislation, and
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
1-2 THE POST-WAR DECLINE OF ORGANIZED LABOR
Several significant issues and trends combined to cause the gradual decline of organized
labor:
A. Union abuse of power: John L. Lewis, president of the United Mine Worker’s Union
called for a strike, at the height of WWII, making miners look unpatriotic and selfish,
C. Globalization: The U.S. manufacturing industry has been pressured by Japan’s post WWI
D. Statutes protecting individual employee rights: Since the 1960s, there has been an
onslaught of legislation providing protections once only available through union
negotiation.
Individual employee rights are rights enjoyed by workers as individuals, as against
collective rights secured by unionization; sources are statutes and court decisions.
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
E. Occasionally, statutory protections and terms of collective bargaining agreements
conflict.
F. Case: Alexander v. Gardner-Denver Company, 415 U.S. 36 (1974)
i. The employer wanted to limit the aggrieved employee’s remedy to the
1-3 THE RESURRECTION OF THE ARBITRATION REMEDY
Whereas previously, these cases were frequently resolved through CBA arbitration clauses,
after the Alexander ruling, cases rooted in individual employment rights swamped the courts.
In 1991, the Supreme Court once again ruled on the subject.
Whistleblower is an employee who reports or attempts to report employer wrongdoing or
actions threatening public health or safety to government authorities.
CASE 1.1 GILMER V. INTERSTATE/JOHNSON LANE CORPORATION
500 U.S. 20 (1991)
Facts: At age 62, Gilmer alleged that he had been discharged in violation of the Age Discrimination in
Employment Act of 1967 (ADEA). The company moved to compel arbitration according to the
application Gilmer signed, as a registered securities representative, agreeing to arbitrate such claims under
Racketeer Influenced and Corrupt Organizations Act (RICO) is a federal law designed to
criminally penalize those that engage in illegal activities as part of an ongoing criminal
organization (e.g., the Mafia).
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
THE WORKING LAW
In its 2014 press release, Restaurant Franchiser Unlawfully Barred New Hires from Filing
Discrimination Charges, Federal Agency Charges, the EEOC sent a sharp signal that the outer limits of
CASE 1.2 IN RE D. R. HORTON, INC.
357 NLRB No. 184 (2012)
Facts: D. R. Horton, Inc. is a homebuilder with operations in more than 20 states. In January 2006, the
company, on a corporate-wide basis, began to require each new and current employee to execute a
Charging Party Michael Cuda was employed by the firm as a superintendent from July 2005 to April
2006. Cuda’s continued employment was conditioned on his signing the MAA, which he did. Cuda filed
an unfair labor practice charge, and the General Counsel issued a complaint alleging that the Respondent
Issue: In light of Gilmer and 14 Penn Plaza, can an arbitration clause cut off employees’ collective access
to the rights and remedies of the National Labor Relations Act?
Decision: The Board panel found that a class action constitutes protected concerted activity. Therefore,
1-4 EMPLOYEE HEALTH, SAFETY, AND WELFARE
A. Covered thoroughly in their own sections of this text are the major aspects of employee
health, safety, and welfare, as they are embodied in our federal and state laws. These
include:
i. The federal Occupational Safety and Health Act (OSHA) and its many state-law
counterparts.
ii. Workers’ compensation and unemployment insurance statutes, which are a part
of virtually every state’s statutory safety net for injured and out-of-work workers.
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
vii. The Patient Protection and Affordable Care Act, commonly called Obamacare
after the president during whose term it was enacted, which dramatically revised
the American healthcare system, notably by mandating that all Americans buy
health insurance or pay a tax penalty by 2014, but which was challenged before
the U.S. Supreme Court in March 2012.
Note: No national statute requires private employers to provide their employees with either health
insurance or a pension plan.
THE WORKING LAW
In 2011 and 2012 public-employee labor unions and collective bargaining were targeted by conservative
governors.
1. The Wisconsin Case. On March 11, 2011, Wisconsin’s Governor Scott Walker signed the 2011
Wisconsin Act 10, a controversial bill that limits the collective bargaining power for the state’s public
2. The Ohio Case. On March 3, 2011, the Ohio legislature passed a massive revision of the state’s public
3. The Supreme Court case. In June 2014, the U.S. Supreme Court held in a 5–4 split between
conservative and liberal justices that public employees who do not choose to join the union that
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
ETHICAL DILEMMA
Is President Obama’s “Go It Alone” Strategy Constitutional?
In 2010 the Republican Party won control of the House of Representatives in the midterm national
elections, and took control of the Senate in 2014. This prevented President Obama from being able to win
ANSWERS TO END OF CHAPTER PROBLEMS
QUESTIONS
1. Employment at will was devised by American judges in the 19th century, a time when the young
nation was pushing West and expanding its industrial base. The public policy inherent in
employment at will is the same policy manifested in the enormous land grants given to railroad
2. The Industrial Revolution created a demand for labor. Workers banded together into labor unions
in order to gain some power. This shifted some power back to the workers. Courts initially
resisted these unions, considering them to be similar to criminal conspiracies, based on Old
3. FDR had threatened to seek authorization from the Democratic Congress to appoint additional
Justices to the Supreme Court, thereby altering the majority in favor of New Deal legislation.
4. The instructor might present the following pros and cons for students’ consideration and debate:
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
5. In 1974, the Alexander Court determined that the right to be protected against illegal
discrimination is a protected statutory right, as is the right to have the government agency (the
EEOC) investigate the claim. Therefore, the union cannot waive an employee’s right to invoke
6. The reelection of President Obama for a second term in 2012, and the Democrats’ retention of a
majority in the Senate mean that major cuts in so–called “entitlement” programs, notably Social
Security and Medicare/Medicaid are unlikely. On the other hand, the size of the U.S. deficit and
7. One might argue that eliminating collective bargaining rights is a case of “throwing out the baby
with the bath water.” By this we mean that the real problem for most states is that unionized
public employees have defined-benefit pension plans, as well as guaranteed health care at
retirement, following 20 to 30-year careers. These are Cadillac plans, which in many instances
8. American courts create common (judge made) law. The doctrine of employment at will was a
creation of the common law during the 19th century, when America was expanding west and
developing into a major industrial power. Later, American courts began fashioning exceptions to
the pure doctrine of at-will employment, most notably the public-policy exception. The courts
Cihon/Castagnera, Employment and Labor Law, 9e Instructor’s Manual Chapter 1
9. The instructor will need to lead this debate, should the instructor choose to use this problem.
The instructor may direct student to conduct research, including these web addresses:
Some questions the instructor might throw out for consideration and debate include:
▪ Republicans have compared President Obama’s ample use of executive orders to that of a
minority workers?
10. The TV pundit Bill Maher occasionally ruminates about why Americans, whose high-paying
industrial jobs have migrated overseas, and who are left working low-wage service jobs with few
benefits, are not flocking to labor unions. His concern, first of all, is overstated. In fact the
Service Employees International Union and some other labor organizations are enjoying