Also, on April 13th, my article and editorial Thoughts on Private and Public Sector Union Relations was published on Slate.com’s BizBox, a small business blog.  Thanks to Steve Viuker who manages the blog.  The full text is below.

In the Private Sector

I recently completed my third union negotiation and dispute resolution of the past six months. One case involved a successful union decertification, and the other two involved settlements before the National Labor Relations Board (NLRB). Due to confidentiality clauses in settlements and not wanting to upset people and disturb my clients’ business operations, I won’t get too specific about my clients or these unions.

What I’ve learned from these negotiations and dispute resolution processes, and the current labor struggles, is that in most private sector industries unions aren’t needed. Sure, in any vocation involving mining, long distance transportation or any other heavy industrial or physically and mentally dangerous activities, unions sometimes serve a valuable safety purpose (i.e., monitoring, inspection and enforcement), but short of safety, unions don’t do much for private sector businesses and employees.

With one client, which is a small business that had a handful of union employees, we were forced to layoff most of the union employees in order to prevent bankruptcy. We did this knowing that these layoffs would be litigated. It took almost a year to get this case to trial before the NLRB. Finally, on the day that trial was supposed to start, and all of the threats and innuendo had been set aside to discuss reality, we settled the case. My client won very, and I emphasize the word very, favorable terms. Thus, this decades old business will remain open and bankruptcy is no longer being discussed.

Many of the businesses I deal with, including the above-mentioned client, have no history of union grievances or unfair labor practice charges, and some rarely communicate with their union at all. Furthermore, due to continuing influences of racism, sexism and religious bias, unions these days still serve as a barrier for minority and female hiring. Although, out of desperation and reality unions have improved in their egalitarianism, many of the reasons for which they were founded (e.g., wage inequality, hours and conditions of employment) no longer exist to the extent that unions can remedy or assist with these concerns. For example, unions have been largely silent when it comes to the “glass ceiling” that still confronts many women, immigration issues, and they’re too slow reacting to job classification changes and changes in the economy.

Essentially, both private and public sector unions today are largely pension fund managers. They exist to fulfill their pension obligations. They need new and existing members in order to keep their pensions funded so they can stay current on payouts. Most of the unions that I’ve dealt with have pensions which are significantly declining in value since economic shakeup 2008. One particular fund that I examined lost billions in less than a year. A few are doing well considering the circumstances. Nevertheless, like Social Security and Medicare, most union pensions have dismal long-term prospects.

Moreover, many of these funds are plagued by corruption regarding fund management choices. These funds invested in risky securities (and in my opinion, did this with the hope of a kickback or insider information like free investment advice). Some funds have a lack of oversight to the extent that their officers and directors often take expensive trips to resorts and similar destinations for meetings amongst themselves, investment advisors and potential investors (part of the kickback they receive). Some of this information is obtainable through these funds’ federal filings (not the insider information/kickbacks of course; for that you need access to personal financial records).

Unfortunately, many private and public sector employees will only get pennies on the dollar due to government pension takeovers (i.e., the PBGC-Pension Benefit Guranty Corporation), bankruptcy and other refinancing schemes. And, many pensioners will probably never receive their pensions if they don’t plan on staying in America because they’ll have to arrange to receive their pensions in other countries, and they won’t know how to retrieve it. Some will get worn down by the retrieval process or will even forget that they’re owed a pension, or realizing that the pension is a ripoff, they’ll take an early withdrawal for a fraction of what they’ll be owed if they waited until they’re fully vested.

In short, many of today’s private and public sector workers who are covered by these pensions don’t understand their rights and obligations. Some employees I speak with even believe that somewhere out there is a retirement account with their name on it. With pensions, that’s not true. It’s a fund that has tens to thousands of enrollees, and all that money is commingled.

When you add all of this to the multi-employer pension withdrawal liability that’s mandated by ERISA–Employee Retirement Income Security Act, any reasonable person should see that these many of these funds don’t have the wherewithal to survive.

In the Public Sector

Many of these same issues are now affecting the public sector. If you examine some of the reporting and editorializing going on, there’s much discussion about public sector unionized employees (and public sector employees in general) earning more than their private sector counterparts. This compensation variance isn’t always reflected in salaries but may be more apparent when factoring the overall costs of benefits (insurance, retirement funds, etc.). Generally this leads to a larger government, and a larger government historically leads to economic stagnation, inflation, corruption and lack of innovation.

For an interesting analysis of this dynamic see www.npr.org/2011/02/25/134065799/Truth-Squading-Public-Private-Pay-And-Benefits.

Furthermore, when government employees (elected and non-elected) start to earn more than their private sector counterparts, a greater and sustained sense of entitlement to higher compensation becomes ingrained (how common are tax rollbacks and cuts?). Once we start paying government employees more, and the size of government increases, it’s very difficult to revert to a smaller, cheaper and more efficient form of government.

What may be even more troublesome, if you believe in the free market, the private sector and entrepreneurialism, is that for the first time in U.S. history, the number of unionized employees in the public sector, 7.6 million, exceeds the number in the private sector, 7.1 million (see http://stats.bls.gov/news.release/pdf/union2.pdf and http://stats.bls.gov/news.release/union2.nr0.htm). It appears that we’re becoming less of a producing economy and more of a civil service and regulatory oriented economy.

What’s happening now in government and in states like Illinois, Indiana, California and Wisconsin is a reflection of the frustration and fear that the economic collapse of 2008 brought on. There’s a growing divide among many sectors of our society as to how to alleviate this frustration and fear.

For example, it’s not just citizens vs. government and Republicans vs. Democrats, but big business vs. small business (some big businesses seemingly faired well during the downturn due to government/taxpayer aid and little of this aid has “trickled down” to smaller and medium-sized businesses). In short, people are angry that highly paid public sector employees are the people who made the decisions to help big business weather the storm, whereas many smaller businesses had to rely purely on market forces for survival.

What all this means for private sector labor unions is that as smaller businesses cut back operations, change locations or close because there’s not enough profit (as my clients are contemplating and doing), and their percentage of profit lost compared to taxes paid increases, there will be decreased private sector unionizing, less compensation for union employees, and much greater frustration and discomfort over what their public sector union “brothers” are earning compared to their “brothers” in the private sector. Less “brotherhood” will result too.

Meanwhile, all unions lobby for increased union rights, salaries and benefits, but where will the money to fund this come from? Who funds a bigger government and weaker dollar?

My next presentation is on Wednesday, April 6, 2011, from 7:45 AM – 9 AM.  It’s at the Arlington Heights IDES office at 723 W Algonquin Road, Arlington Heights, 60005. The topic will be “Hiring & Screening Practices – Does your company use social media to recruit?”

To register you can go to this web page or contact:
Deb Lawrence
Business Employer Services and Community Relations Illinois workNet Centers of Northern Cook County
224.538.1039
dlawrence@worknetncc.com

Also, here’s my handout for the presentation (PDF format).

First, I think that it’s a novel concept to equate employees as being the same as “property,” especially in the context of criminally convicting someone for “wire fraud.”   However, in the criminal law context, I don’t think that rusing is the same as wire fraud, unless a company can make a really strong case that an employee is company property and can be barred from going from one employer to another because a recruiter tricked them into leaving, and that the criminal justice system needs to imprison the recruiters perpetrating that fraud in order to prevent them or others from doing the same thing.

Let’s get real about this.  A recruiter who ruses to get past a gatekeeper in order to reach a real decision maker or information holder isn’t committing a federal crime.

But, in answer to the writer who asked if there’s a point where rusing could become illegal the answer is yes.  This will occur when rusing has been clearly indicated as being either criminally or civilly liable conduct.  This can occur via legislation or court decision.  But it hasn’t happened yet.  In the civil law context, liability (money damages or equitable relief) may occur if an enforceable contract or agreement has been violated.

The Recruiting Animal interviewed me on a number of labor & employment law related topics germane to recruiters.  One topic seems to have created a MINOR controversy in the blogosphere.

The issue of ruse calling or “rusing” came up.  In the context of recruiting, this is when an HR person or recruiter (usually an external or 3^rd party person) reaches a company “gatekeeper” (i.e., someone who protects or guards what information is distributed) & pretends to be someone else in order to get past the gatekeeper.  By doing this, the recruiter hopes to get to the person in charge of hiring, or who has the most information about the position, so that they can bypass bureaucracy & get an advantage over other recruiters.  The gatekeeper is usually an administrative assistant or someone else designated to screen phone calls.  Specifically, I was asked whether rusing is legal.

Generally, under federal law it’s not civilly or criminally illegal.  I’ve seen blog posts from professionals, & even another management side labor & employment attorney, saying that rusing violates federal law such as Federal Trade Commission rules.  Others argue that it violates the Uniform Trade Secret Act, but this isn’t federal law.  It’s a doctrine which can be adopted by the states; i.e., unless codified as law, it’s persuasive but not mandatory as an authority.

As best as I can tell rusing only violates FTC law when the recruiter is lying for the purpose of obtaining something of concrete value such as money, trade secrets or inside information in order to gain a direct pecuniary advantage.  There’s potential criminal and civil liability with these types of thefts.  Still, most trade secret & intellectual property law & doctrine doesn’t address the type of conduct I’m talking about here.

My contention is that rusing for the purpose of getting past a gatekeeper to get the real person in charge, & then disclosing that the purpose of your call is for information regarding an open position isn’t the same as what’s prohibited by the FTC or other laws.  Again, it’s worth repeating that there are no other U.S. laws in existence, or even proposed, which addresses rusing in the aforementioned recruiting context.

Now if you change the context to obtaining information regarding the separation of a C-level executive or director that has a substantial impact on that business’ operations, then this MIGHT be illegal under civil law, maybe criminal law too (though that’s a weaker argument and probably only a misdemeanor at best).  Intent to damage the company or someone else’s reputation, & the nature of what’s communicated, could factor into whether or not someone is criminally charged, & any actual resulting damage could factor into civil liability.

Also to be considered is whether the information sought is considered very valuable by the company it’s sought from.  More specifically, if a company has gone to great lengths to protect the information solicited, either through technology, policy, practice or binding agreements, then that might make a stronger case for recognizing it as being legally protected property.

If you change the context to an in-house recruiter for a company trying to steal employees from a competitor, this MIGHT be illegal under state civil law dealing with trade secrets (unlikely illegal per criminal law) or some sort of tortious interference with business, which is more likely a common law argument (i.e., violates case law not statute).  The nature of our legal system dictates that actual damage & intent factor into whether it’s illegal per civil law.  It probably won’t be illegal per criminal law, and if it is, it will probably be a misdemeanor at best.

Ultimately, all the public can do is debate this issue.  It will take at least one court case to start defining in a more definite manner whether or not ruse calling or rusing is illegal in either criminal or civil courts.

If I’m wrong, please correct me.  But so far, all of the research I’ve done, and all of the comments from those who contend that it violates federal law have been unable to point out the specific law that’s violated.  Additionally, relative to state law, I can’t find anything on that either.

What’s Appropriate to Ask Job Candidates?

By: Charles A. Krugel (www.charlesakrugel.com)

Although there are only a few explicitly illegal questions that an employer should never ask a job applicant, there are many more questions which lead to the inference that the employer intended to illegally exclude (discriminate against) a member of a protected class. One way to help avoid or minimize liability for discrimination is to ask all applicants all of the same questions.

Additionally, it’s crucial that you focus on questions related to the essential job functions. Or, put another way, are the questions you’re asking intended to solicit information connected to the applicant’s ability and willingness to perform the essential job functions, or are they more indicative of illegal bias? In almost all cases, it’s not an essential job function to be of a certain race, age, sex, sexual orientation, etc. Exceptions are extremely limited.

One popular selection technique is to ask candidates behavior oriented questions such as how the applicant handled prior workplace disruptions or disputes, or how they would handle job related issues or matters that are related to the position. These types of questions can be asked in a written form or verbally during an interview.

Below is a handy bullet-point summary of do’s and don’ts for avoiding legal problems during the selection process.

Job Candidate Application & Selection Summary

Focus on the essential functions of the job. Essential job functions usually defined via a valid job description.

For all candidates:

• Ask the same questions,
• Use the same background checking processes, use the same tests; and
• Score/assess the same way; i.e., don’t adjust scoring/assessment system unless for a valid and/or legal purpose.

Don’t discriminate in the hiring process on the basis of any protected class (see below); unless:

• mandated pursuant to a legally binding order or agreement, or
• you are doing so based on a “bona fide occupational qualification.”

Can ask if candidate can perform the essential job functions with or without an accommodation (or a reasonable accommodation).

• Type of accommodation is generally contingent upon why needed, cost and feasibility.

Don’t ask questions intended to elicit, or which unintentionally elicit, information regarding:

• race
• gender
• religious beliefs
• age
• sexual orientation
• disability
• military status
• socioeconomic status – where are you from, own home, rent home, how will pay for home, education, etc.
• national origin.

Currently, it’s popular to ask behavioral questions of candidates. These questions might be useful as they’re generally nondiscriminatory, and they elicit performance and conduct related information. Examples of such questions include:

• Describe a situation in which you and another coworker conflicted. What happened? How did you deal with the situation? How was the situation resolved?
• Describe a situation where your employer asked you to do something which you believe may have been unethical or unprofitable for the business? How did you handle this? What was the outcome?

Background Checking – Compliance with federal laws like the Fair Credit Reporting Act, Consumer Credit Protection Act and state law like the Illinois Uniform Conviction Information Act is contingent upon:

• disclosure of the background check;
• disclosure of the reason for background check;
• procurement of candidate or employee’s written release(s)–could be more than 1 release depending on the checks conducted.

Also:

• subsequent to the selection process, if a candidate or employee is rejected as a result of the check, then provide employee with the relevant part of the report and summary of rights/ recourse options.

Employment Testing:

• Make sure that the test is valid, reliable and used for purpose(s) intended.

Charles Krugel – a Chicago based private practice attorney who specializes in management side labor and employment law–is a vendor partner of Horton’s Law Practice Division. He can be reached at 312-804-3851, or by email at cak1@charlesakrugel.com

Paul V. Shaheen, RHU REBC
Vice President – The Horton Group, Law Practice Division
221North LaSalle, Suite 910
Chicago, Illinois 60601
v: 312-917-8623/f: 312-324-9223/ c: 708-715-6623
paul.shaheen@thehortongroup.com
www.thehortongroup.com