In the past year, the U.S. Department of Labor (DOL) has approved more than $1 billion in new settlements with railway employees. This has raised concerns about whether these new settlements will be sufficient to end the industrial dispute at hand. Some may be, but others may not be sufficient to resolve the situation. The DOL’s decision to approve such large settlements was based on the assumption that workers would return to work at a fair wage and terms of reference that protected their rights and well-being. However, as detailed below, there are actually a number of issues which make this settlement process inherently flawed and unworkable.
The DOL’s settlement process is inherently flawed
Like all labor disputes, the construction and maintenance of the U.S. infrastructure is subject to intense unionization and regulation. This includes all aspects of the construction industry, such as Anticipated Construction Cost (ACE), Environmental Review (ER), and Construction Work Period (CWP) requirements. The DOL has established a process for certifying the amount of damage caused by construction workers, which is known as the “damaged-for-consequence” process. However, the DOL’s process for determining the “sufficient compensation” for workers is flawed. As detailed below, a settlement agreement signed following the destruction of a building does not automatically entitle workers to damages for the destruction of other property. The DOL’s job is to determine whether damage was caused by the work or by another party, including the workers themselves. However, because the DOL has little authority to make a determination on the basis of “no evidence,” reliance on the “damaged-for-consequence” standard to establish compensation is arbitrary and capricious.
The DOL does not have enough authority to approve large settlements
One of the issues with the DOL’s process is that it does not have the necessary authority to approve large-scale, multi-year contracts. Among other things, the DOL does not have authority to approve multi-year, blanket contracts. The agency has the authority to approve temporary, one-off contracts, however, and has shown little intention of doing so.
There are serious concerns about the fairness of existing contracts
One of the issues with the DOL’s process is the arbitrary nature of the decision regarding the amount of damages. It is unclear how the DOL bases its decision on the “no evidence,” but it does so nonetheless. The same goes for its conclusion that the workers’ union pension fund was still “enough” to cover the workers’ retirement benefits at the end of their current contract. While the union’s alleged assets are listed as over $2 million, their liabilities are typically far less. While both the state and federal governments have also established a variety of rules and regulations to make workers’ retirement benefits more efficient, the DOL has taken a particularly active role in implementing those rules.
Some workers may be permanently harmed by the settlement process
Another issue with the DOL’s process is that workers are not fully aware of the terms and conditions of their contracts. In fact, there is no process for workers to review the terms and conditions of existing contracts, something which can be extremely harmful. If workers haven’t been informed of the terms and conditions of a contract for a long period of time, then their actions can have a large impact on the rest of the organization.
An enforceable contract is not something which can be cancelled
Another issue with the DOL’s process is that it does not have the power to cancel a contract. There is no way for a contractor to cancel a contract and seek protection under the law. The contractor must first sign the contract, and then the contractor must deliver the contract to the contractor-specific security. However, the DOL has done virtually nothing to address the fact that contractors have been unable to keep their contracts in force for years.
The construction and maintenance of the U.S. infrastructure is a critical component of the U.S. economy. Although the contract work is done under a variety of circumstances, one of the most important aspects of any contract is the enforceability. This is because if a contract is not enforceable, then the entire transaction is worthless. Moreover, there are numerous potential conflicts of interest that could arise from a contractor’s participation in an enforceable contract. These issues, along with the fact that the current contract is ten years old, indicate that the DOL’s settlement process is inherently flawed and unworkable.