Sunday, February 5, 2017

Never Become an Employer!

Employing people today is not a very profitable enterprise.  In fact, it may bankrupt you.   And with each passing year, employing people becomes less and less profitable and more and more of a headache.  And we wonder why there is unemployment.

Back when I was stupid enough to think I should hire and manage people (the latter of which is a staggeringly difficult job and forces you to be someone you really don't want to be) I was having a discussion with one of my employees, who was rather conservative.   There was something on the radio about passing equal rights legislation that would make it illegal to discriminate on the basis of sexual orientation.
"I'll bet you're looking forward to that passing, right?" he said.

"Actually, no," I replied.

He was flabbergasted.  "Why not?" he said.

"Well," I replied, "If they pass such legislation, someone could sue me for discriminating against them for being straight."
And that is the problem with being an employer right there in a nutshell.   With each passing year, we pass more and more legislation that protects the "rights" of employees and placing more responsibilities on the shoulders of employers.   Employees, on the other hand, had very little in the way of responsibilities - even to show up on time and actually work.

You may think I am kidding, but in the bad old days of General Motors - in the 1970's - I was assigned to be shop foreman at the tender young age of 18, for the "hard parts kitty" - a collection of heat-treated bearing rings that took up half a bay - this in the days before "just in time" inventory.

The place was a mess.  Parts were in large bins everywhere, identified by IBM punch cards.   Out of sheer boredom, the workers would tear up the cards or switch bins, which would create a lot of problems, as trying to identify a bin of rings from our catalog of over 5,000 parts was a staggeringly time-consuming procedure.   In many cases, if the IBM card was lost, we'd just make a new bin of parts and try to hide the old bin somewhere and figure it out later.

Sadly, the State of Connecticut charged us property tax on "inventory" which we had to take twice a year, so these unused rings piling up were actually costing the company money.  The factory is closed now, 8,000 people out of work, 22 acres under one roof - now a warehouse for Chinese-made goods.   Do you care to wonder why?

But it gets worse.   Many of the workers came and went as they pleased.  Some worked, some didn't.   Some spent all day in the john, sleeping, before they went off to a second job.   Others dealt drugs, ran the numbers, drank all day long - whatever.   And there was nothing anyone could do, in a UAW plant in 1978 to stop this.

I asked another foreman how he got anything done.   "You have to cajole them into working," he said.   Foreman were like the Sergeants in the factory at the time.  Not hourly, not quite salary.  Not enlisted men, not officers - but the front-line interface between the two.   They often made less than the men they supervised.   And they took the heat from the hourly workers and from management.  You have to hand it to these unsung heroes.

But even heroes have a breaking point.  One hourly worker, in a fit of rage (making twice the prevailing wage, with benefits, tends to make one angry) punched the foreman in the face.   He was fired, of course, but at the next contract re-negotiation, the union insisted he be re-hired with back pay.   The foreman quit the same day.   Can you blame him?

Stories like these explain why GM made such crappy cars in the 1970's and early 1980's.   And it explains why the company went bankrupt, too.   Today, with onerous union rules eliminated, the company is again making money - for the time being.   But greedy, weak, and inept management is once again caving into union demands - scared to death to stop the money train for even a brief instant.   When you are paid in stock options, you often do things that are not in the best long-term interests of the company.

But I digress again, somewhat.

Since those bad old days, a lot of factories in the Northeast and Midwest have closed.  And new, non-union factories have sprung up in the South - in "Right to Work" states where unions are weakened.  Even the hourly employees are starting to realize that "having it your way all the time" in the long run means you have no job.   Plus, many were disgusted as I was that the union would protect slackers and idiots and people who would punch a foreman.   They got tired of carrying the dead weight.

But over the years, we have enacted more and more laws, some at the State level, some at the Federal level that, although they have the best of intentions tend to make it harder and harder to be an employer.

Yes, it would be great if people weren't jerks and if they didn't discriminate on the basis of gender, religion, race, color, or even sexual orientation.   But with each new class of "protected persons" you add to the list, you create a new cause of action under which employees may sue.

What is a cause of action?

Under the law, in order to bring a lawsuit, you have to have some legal grounds to do so.   This is the cause of action.   And so long as there is a colorable claim, then someone can bring a suit, even if you and I would think it is specious.  The facts may weigh against the employee, but so long as they allege facts that fit a particular cause of action they can bring suit, and you have to spend tens of thousands of dollars defending it.

You see, under Federal Rule 11(b), an attorney is not supposed to bring frivolous claims to court.  Well, here, read it for yourself:

(b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.
This seems pretty straightforward.  Yet the courts have watered-down Rule 11 to the point where it is largely unenforceable.   So long as you cite some law under which you could sue, and claim to have a reasonable belief that evidence exists to support your claim, you need not worry about sanctions under Rule 11.

So, you can file a bullshit lawsuit claiming discrimination or violation of a number of employee rights, and it isn't going to get thrown out right away - nor are you at any risk of sanctions for doing so.

And since it costs tens of thousands of dollars to defend such a suit (and creates bad publicity for an employer) there is a huge incentive to settle such lawsuits, rather than take them to trial, spend a lot of money and have some weepy jury decide that your "big evil old corporation" was abusing an employee by not providing transgender bathrooms.

(Actually, the bathroom thing may be solving itself.   In the past, there was a men's room and a ladies' room, and the line for the ladies' room was always twice as long.   Many companies and retail outlets are finding it easier to have single-person restrooms that are ambidextrous.   It solves a lot of problems, but is difficult to retrofit to existing buildings!).

So, each new law we pass creates a new "cause of action" and provides another opportunity for legal abuse.

For example, you would think the Americans with Disabilities Act was a good thing, right?   Well, it helped put handicapped people (or the disabled or crippled or whatever - there I said it) back into mainstream society.   When I was a youth, if you were confined to a wheelchair, you basically stayed at home, unless you had a lot of money and could afford your own handi-van and could afford to put ramps in wherever you wanted to go.  The law helped a lot of people.

It also helped a lot of lawyers.   In Florida, one handicapped man and one attorney file most of the lawsuits under the ADA.   Under Florida law, an individual may sue to enforce the law.   So this attorney files "drive by" lawsuits against small convenience stores, claiming their ramps are not in conformance with the law.    Sometimes this is justified, most times, not.  The net result is, the store owner ends up settling with this one fellow, as it is too expensive to go to trial.   Some people get rich, at everyone else's expense, as this adds to the cost of doing business.

And of course, let's not get started on all the people who get bogus handicapped stickers and park in handicapped spaces.   Or people who insist they are disabled because they are too fat.   Or the people who bring their dogs everywhere, claiming they are "service animals" and because of HIPPA, you can't even ask for proof that you need such an animal.

I want to bring my cat to work.   You have to accommodate me and provide a litter box for kitty.  And no, you can't ask for a note from my doctor!  That is the crazy direction we are heading.

Because of this crazy lawsuit world we live in, you can't offer a recommendation to a departing employee - or warn someone else of an employee who stole from you.   If you write a letter of recommendation for one employee it automatically implies that the employees you don't write a letter for are somehow inferior or damaged goods.  So you are better off saying nothing at all.

In today's crazy world, the only thing you can say is that so-and-so worked for you from X date to Y date, end of story.   Similarly, if you are sued by an employee, they can say horrific things about you in the press, but you have to keep your mouth shut, as employment details are confidential.   You can only answer these claims in court, and odds are, you will never get your day in court.

When Mark ran the gourmet store, they caught an employee on camera loading three shopping carts full of expensive foods into the trunk of his car.   When confronted with the video, he claimed it wasn't him - even though his face was clearly visible.   He was let go, of course.  They did not charge him with theft, or have him arrested, as it was too much hassle and they didn't want him to sue them for wrongful termination.   And when people called for references, they could only say that he worked there from X to Y.

There are, of course, other ways you can tell a lot about a prospective employee.  Not necessarily reliable ways - and ways that often are unfair.   For example, lapses in employment, or a series of short-term jobs tend to tell you than your applicant is a slacker or perhaps a thief.   Credit reports are increasingly being used to screen applicants, but I believe these are really unfair, as whether someone has good credit or not may be entirely independent of how reliable they are as an employee.  In fact, the employee who is in debt is often the most reliable - he has to show up!

Criminal records, of course, can be used to screen employees.  And in some instances, this may seem unfair, as nearly everyone tosses any resume that has a criminal record on it, or if the box "have you ever been arrested?" is checked.   Since we can't be honest with each other about our failings, we have to resort to absolutism. 

Speaking of absolutism, enter drug-testing.   One of the few things an employer is allowed to do anymore is utterly humiliate their employees by making them pee in a cup.  Not only is this one of the few ways left to screen employees, the employer is at risk of a lawsuit if they fail to drug-screen their prospective employees.   If some employee fucks up, and someone is hurt, well, if they test positive for drugs, guess whose fault it is?  Yea, yours.

So if your employer does drug tests, don't castigate them as "mean" because they might not have a choice in the matter.  Their insurance company may be forcing them to do so.   Welcome to our crazy new world - run by lawyers.

Sadly, even these few remaining screening criteria are falling by the wayside.  Some municipalities, counties, and States are passing laws prohibiting employers from checking criminal records or at least asking about criminal backgrounds in the initial interview/application.  Others are talking about abolishing drug testing or credit reports as a means of screening for employment.

Pretty soon, there will be no criteria left to screen applicant's for a job, other than to give the job to the first person who applies.

Now, some folks ask me, "Well, Bob, don't you want to have laws to protect you as an employee?"  And the answer I would have to give is, "Well, not really."

You see, I have been continuously employed for over 40 years now - since about age 12.   I have never lacked for a job, only because I work hard and have some skill sets.   If I was lazy and had no skills, I guess I wouldn't be able to get a job - but then again, laziness and lack of skills are things you can change yourself.

As for discrimination based on non-work criteria, yes, that is wrong.  But then again, I would not want to work for any person or company who didn't want me to work for them.   Sure, you could pass a law "forcing" them to hire me, but you could bet that working there would be a miserable experience.   You would end up quitting or being fired, and end up a "victim" in some kind of discrimination lawsuit.   Those people never end up happy, either.

And is there discrimination?  You bet.   While it is against the law to inquire about martial status and religion during a job interview, in almost every interview I have been on in my life, these are among the first questions asked.   For the most part, the employer is trying to figure out if I am a stable "family man" who is in debt up to his eyeballs and needs a job and thus will be reliable.   

Still, somehow, I managed to get jobs, even without a wife and kids to prop up my resume.

And sure, there are some folks who "coast" more at work, because they fit the mold the bosses are looking for, or they are of the same religion or whatever.   And maybe you have to work a little harder to overcome that sort of thing.  In the long run, companies like that tend to fail, over time.

A company that discriminates against an employee based on non-work indicia does so to their disadvantage.   Good employees are very, very hard to find and if you are going to not hire someone because of their race or gender, then you're an idiot.   Granted, some folks still do this, perhaps subconsciously, but a lot has changed in the workplace since 1968, and perhaps we need to realize this and adjust our laws accordingly - instead of granting protections to more and more classes.

Today, I am an outside contractor - one of the most popular forms of employment today.   We have made employment so toxic - providing so many "rights" and causes of action to employees - that many employers are looking for ways to hire people as "contractors" or "part time" and avoid legal liability, payroll paperwork, as well as worker's comp insurance, retirement plans, medical plans, and a whole host of responsibilities that are piled onto employers (employers are tax collectors, retirement planners, health care providers, just to name a few things.  Somewhere in there, they run a business and try to make money.  Most fail). 

The thing with being a "contractor" of course - which sounds sweet in the abstract - is that you have to provide your own health insurance, your own retirement plan, and of course pay that 18% self-employment tax.   And unlike an employee, you can be fired at a moment's notice, without cause or warning - with no legal recourse.   You are perpetually "interviewing" for a job, and perpetually one step away from unemployment.  In a way, it is sort of like what work was like circa 1930.

And this illustrates how market forces work.   When we make employment unprofitable or too risky, people find other ways.  They move factories to friendlier States - or overseas - where not only are wages lower, you can fire people who steal or who fail to work, or who work poorly.  They hire people as contractors, instead of employees.  They use automation and hire fewer people.   When your labor rates are topping $100 a hour, a robot makes financial sense.   It is not a matter of robots "taking people's jobs" but people pricing themselves out of the labor market - with crappy, overpriced labor.

But of course, that all falls on deaf ears today.   Some young folks postulate that "a job is a right!" but fail to understand that no one is obligated to hire anyone.   Something can't be a "right" unless there is an unlimited supply of it.  And increasingly, employers are avoiding hiring people because it is such a sticky nightmare.

Maybe the new administration will ease up on employment rules and laws.   When you have more discretion in hiring and firing - and setting wages - and when regulations are fewer, hiring doesn't seem like such a frightening proposition.

But until that changes, well, you couldn't pay me enough to hire anyone.