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Q&A With Lane Powell's Paul Ostroff
Law360, New York (April 11, 2013, 2:44 PM ET) -- Paul M. Ostroff is a shareholder in Lane Powell PC's
Portland, Ore., office.
Paul Ostroff provides advice and counsel to employers in all phases of labor and employment law,
including collective bargaining, labor arbitration, union organizing campaigns, employment
discrimination, discipline and discharge, wage and hour, employee benefits, workers’ compensation,
drafting of policies and handbooks, Americans with Disabilities Act, Family and Medical Leave Act,
employment contracts, covenants not to compete and occupational safety.
Q: What is the most challenging case you have worked on and what made it challenging?
A: I defended a public agency in a Fair Labor Standards Act collective action that presented just about
every challenge imaginable and then some. The case had everything: sizable potential damage exposure
that could have had a significant effect on the defendant’s operations; a major change in case law that
occurred during the case; difficult problems of proof and sometimes elusive witnesses; intransigent
plaintiffs; an aggressive, but highly effective, plaintiffs’ counsel (who, at one deposition, caused a human
resource manager to burst into tears); and local politics.
In addition, the plaintiffs’ labor union was involved in the litigation, thereby spawning a potential host of
labor relations issues. None of this was made any better by the fact that I came into the case midway
when the attorney at the firm that I then practiced with went on an unexpected medical leave.
This case was challenging for two reasons. First, the defendant had (not unreasonably) relied for its
defense on an obscure exemption from the overtime provisions of the FLSA. Halfway through the case,
the Ninth Circuit issued a decision that may have dramatically narrowed, if not nullified, the defense as
it applied to the defendant’s operations. Consequently, prior evaluations of liability, litigation strategy
and the defendant’s financial planning for the potential loss were upended, and the plaintiffs were
further emboldened and became even more intransigent.
Second, the substantial damage exposure, coupled with other uncertainties in the case, created a
“perfect storm.” Payment for the potential damages would ultimately fall on the residents in the local
community. Consequently, there was public controversy that made efforts at informal resolution
difficult.
Moreover, the union was, in one sense, placed between a rock and a hard place — the plaintiffs (its
members) sought the highest damage award, but the natural consequence of a large award would have
resulted in less being available at the bargaining table for other employees in the bargaining unit. The
defendant’s earlier evaluation of the case, before the change in decisional law, also created inertia.
The case was ultimately settled on the eve of trial — a settlement described as a “minor miracle” by the
assigned judge — and was achieved through the services of a highly skilled and reputable mediator who
gave all the interested parties the “cover” they needed in order to resolve the case.
Q: What aspects of your practice area are in need of reform and why?
A: Wage and hour laws. Employers and employees are saddled with federal and state wage and hour
laws that are a disservice to the very employees they were designed to “protect.” These laws discourage
the hiring of younger, inexperienced employees; create inconvenience and inefficiencies for employees
and employers with little or no commensurate benefit; and create deadweight loss in the country’s
economy that is entirely avoidable.
The FLSA overtime provisions were enacted nearly 80 years ago, during the height of the great
depression. It was enacted based in part on the faulty economic premise that jobs and employees were
a “lump of labor” and that by requiring employers to pay overtime premiums, employers would “create”
more jobs.
Instead, the opposite has happened — by sometimes artificially increasing labor costs, employers simply
seek other economic solutions, such as mechanization, and also structure their compensation systems
to favor benefits over cash wages. Reforming overtime laws may enable employees and employers to
develop better and more flexible arrangements and solutions.
Minimum wage laws bear a significant measure of responsibility for the high levels of unemployment
among younger workers, particularly young minority workers. No business can remain viable if it
employs workers for whom their benefit to the organization is less than the employer’s wage costs.
When individuals cannot become employed because they lack the skills, habits or experience necessary
to confer the requisite value (i.e., a value that is at least more than the minimum wage), then their
minimum wage is effectively zero. Yet, it is precisely those low-wage, entry-level positions that are the
gateway for younger workers to gain and improve the skills that are necessary to achieve future
employment gains.
Last, our current “system” of “white collar” exemptions is a relic of a previous era when the lines
between management and “rank and file” workers was far more distinct than today. Current exemption
laws create enormous uncertainties and potential liability for even the most sophisticated employers.
Some limited regulatory reforms at the federal level have not been matched at the state level.
Q: What is an important issue or case relevant to your practice area and why?
A: Status of recess appointments to the National Labor Relations Board.
As a regular practitioner on behalf of employers before the NLRB, the D.C. Circuit’s recent case in Noel
Canning v. NLRB raises important questions about the status of NLRB case law and recently enacted
regulations. In Noel Canning, the D.C. Circuit concluded that President Obama’s “recess” appointments
in 2012 of the current NLRB members violated the constitution.
As a result, the board has, at least since January 2012, lacked the quorum necessary to take official
action, thereby throwing into doubt the validity of hundreds of decisions issued by the board. Many of
the decisions that may be abrogated shifted the balance in favor of unions and employees.
The reasoning of the Noel Canning decision may also apply to the recess appointment in 2010 of board
member Craig Becker. Consequently, decisions of the board as far back as August 2011 may be
invalidated, including D.R. Horton, in which the board invalidated class action waivers in employee
arbitration agreements.
Additionally, regulations enacted by the board in December 2011 that changed the rules concerning
representation elections may also be invalidated. The validity of Becker’s appointment is currently under
consideration before the Fifth Circuit.
Until this issue is resolved by the U.S. Supreme Court, some of the rules for employer conduct under the
NLRB may be rife with uncertainty.
Q: Outside your own firm, name an attorney in your field who has impressed you and explain why.
A: Peter Anderson, now retired and previously a partner with K&L Gates in Seattle. Peter’s knowledge of
traditional labor law is prodigious. He has the ability to marshal the evidence and explain the employer’s
position in such a way that it always sounds eminently reasonable. Perhaps most importantly, he has the
ability to understand the “big picture” and to convey that understanding to clients.
Q: What is a mistake you made early in your career and what did you learn from it?
A: As a new lawyer, I violated what I now know to be one of the important canons of being an effective
advocate and counselor: Believe only half of what your client tells you, and be skeptical about the other
half. Don’t be hesitant to diplomatically question your client’s version of the facts, and dig deeply into
the factual issues. Labor and employment law can be highly fact-sensitive, and subtle (or not-so-subtle)
shifts in the facts may have significant consequences when making personnel-related decisions or in the
evaluation of potential liability.
When, as a new lawyer, I gave advice and direction to a client without engaging in the due diligence to
verify, as well as understand the nuances of a situation, decisions were sometimes made that were less
than optimal.
The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its
clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general
information purposes and is not intended to be and should not be taken as legal advice.
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