The ground beneath the historical relationship between capital and labor is shifting. Long-held notions about the balance between these two interests have been seriously upended. For organizations unaware of how the environment has changed may find themselves in uncharted waters or even in legal jeopardy if they fail to revise their assumptions. Let’s examine two seismic shifts that have occurred in the worker/employer power dynamic as a result of the pandemic and the risks to employers should they fail to adapt to the new normal.
More Aggressive Enforcement of Wage Laws
There have always been labor laws enacted to protect workers from bad acting employers. Laws on the books prohibit all manner of wage theft. Others protect against overtime abuses and other benefits-related infractions. However, since the 1990s, the balance of power had tilted decidedly towards Capital, and workers were not empowered to push back against abuses for fear of being let go or other reprisals.
Today however, in the wake of the pandemic and the Great Resignation which analysts agree reflects a wholesale shift in the priorities of the average worker, existing and new wage laws are being far more stringently enforced. As an example, consider the Massachusetts Supreme Justice Court (SJC) ruling days ago on April 4. In the ruling, the court delivered a stern reminder to employers that failure to comply with the applicable labor laws would be heavily penalized and employers in MA would be liable not just for the interest on late/withheld wages, but also treble damages on the entire amount due PLUS attorney fees.
Business attorneys, Sheehan Bass & Green wrote about the recent MA court ruling in the case of Dobin v. CIOView which involved the withholding of an employee’s accrued PTO after the employee was terminated for cause. The attorneys wrote explained the employee,
“did not receive her vacation pay until three weeks later. A year after that, the employer paid her $185 as compensation for the interest accrued during the three week delay, multiplied by three. The employee argued that she was entitled to triple damages on the entire amount of the late payment plus attorneys’ fees, for a total of more than $23,000. After trial, a Superior Court judge decided that the employee was only entitled to the $185 interest payment because she had already received the vacation pay, and the only issue was how much she was owed for attorneys’ fees. The SJC has now rejected the Superior Court’s ruling and agreed with the employee that she is entitled to treble damages on the entire amount.”
In it’s decision, the court signaled that employers must prioritize compliance with Massachusetts’ Wage Act to “avoid drastic consequences”
The Possible Resurgence of Labor Union Organizing
Reading the media organs of Capital, like the Wall Street Journal or Forbes one will find no shortage of opinions suggesting that the rising interest among workers in unionizing is simply a blip and that in reality, American workers remain uninterested in union organizing. This may be some “whistling past the graveyard” on the part of employers. And while it may still be too early to gather concrete, data-driven evidence of whether unionization is surging or not, there are harbingers that employers would be foolish to dismiss.
Take for example the newly minted Amazon Labor Union, which was organized against steep odds and one of the world’s largest, most powerful companies by Chris Smalls, an Amazon warehouse worker from Staten Island, NY. The new union has 8,300 members working at the same warehouse where Chris works. NPR reports Smalls is being inundated with interest from other Amazon workers across the country. Smalls is reported to have said, “We’ve been getting emails like that, you know, of course they’re congratulating us, but most of them are saying: You guys motivated me. I want to unionize. How do I get involved? How do I start a new chapter?”
And its not an anomaly. Another industry giant, Starbucks, is currently seeing labor organizing among its ranks. Lawrence Katz, a labor economist at Harvard University agrees the recent flurry of US workers unionizing could grow into a blizzard of union resurgence in the US.
Organizations used to be able to aggressively quash labor organizing within their operations without much fear for legal consequences, despite that it has always been against the law to punish or retaliate against workers for organizing. Today though, not just the eyes of the law, but also the eyes of the public are all fixed on improving the lot of the worker. So companies run both a legal AND reputational risk by failing to evolve.