The Ethics of Layoffs

Thursday, May 28, 2009 | 0

By Julius Young

Unless you've been living as a hermit on a remote mountaintop, chances are you've run into friends and family who've been laid off this year.

Even friends who were living high on the hog in recent years.

Workers' comp claim frequency has been plunging in California. While layoff notices may provide incentive for some to pursue claims they wouldn't have pursued otherwise, many workers are loathe to pursue comp claims when their jobs are in jeopardy.

Many of the workers I've seen over the past year are very concerned about the future of their jobs. They see companies retrenching and downsizing.

Undoubtedly some of those companies are fighting for their lives. Some are bleeding red ink.

Many are fighting to cope with changes in their business model that have been dictated by recent events. Others are just evolving and innovating, with some workers being in the wrong place with the wrong skills at the wrong time.

Some are outsourcing. In our little "comp community," I've known a number of comp law firms that outsourced their dictation/word processing to India.

A big argument in past debates over workers' comp has been the notion that California could lose jobs to other states with less worker-friendly benefits. It's a concern, though never very well documented.

Labor advocates believe such arguments are a ruse for suppressing humane and adequate benefits for all California workers. In Los Angeles there has been a successful effort to organize car wash operations, which all too often have been uninsured for workers' comp and systemic violators of wage and hour standards.

In any event, for many folks the current economic situation is bad.

Today, I saw a worker who had recently received a layoff notice under the WARN act. At his age, it's not clear whether he will ever be competitive for a job which pays even half of what he has made.

Last week, at the deposition at a large Northern California bulk building materials firm, I asked the manager whether the federal stimulus money was tricking down to get regional infrastructure projects rolling. The answer? No. The company recently laid off more than a dozen workers who supply concrete, rock, and other base building materials.

Federal deficits may be rising fast, but if "stimulus money" is coming, it's slow.

So it's not surprising that companies are turning to layoffs.

Do companies (big and small) have some ethical duties toward their workforce? That's the argument made by Randy Cohen, who writes a New York Times Magazine article on ethics. Here's the link to Cohen's piece:
http://ethicist.blogs.nytimes.com/2009/

Some readers may find such considerations quaint. After all, we live in a world where capital and information technology are very mobile. Free trade ideology and the emergence of multiple world financial centers have accelerated trends toward transnational capitalism.

And innovation may be painful.

Critics of high executive pay have gotten considerable attention in the press. But ethics - and corporate ethics in particular - get very little focus.

Corporations clearly have obligations to their shareholders, but Cohen raises issues about the obligation corporations have to their workers and their communities.

I'm a CNBC fan, but it's not an issue you'll see being raised often by the talking heads on Fast Money or Mad Money. The business press does (and will) focus on return on investment.

But we're getting to the point as a country where we're setting up a circular firing squad, as layoffs breed more and more economic contagion, and bigger and bigger deficits.

Here's a thought-provoking piece from columnist Bob Herbert on our crumbling foundation:
http://www.nytimes.com/2009/05/26/opini ... rbert.html

Herbert thinks we need to keep our work force busy rebuilding our country before it's too late. Unfortunately I don't see the "stimulus' as meeting Herbert's vision. What do you, dear reader, think?

Just some thoughts for my readers as we interact with workers and employers.......

Meanwhile, those of us "stakeholders" toiling in the vineyards of workers' comp press onward.



=======
Julius Young is an applicants' attorney with Boxer & Gerson LLP in Oakland. This column was reprinted with his permission from his blog, http://www.workerscompzone.com
=======