Workplace Information‐Forcing: Constitutionality and Effectiveness

• Date: 01 September 2016
• Author: Charlotte S. Alexander
• DOI: http://doi.org/10.1111/ablj.12083
• Published date: 01 September 2016

Workplace Information-Forcing:

Constitutionality and Effectiveness

Charlotte S. Alexander*

INTRODUCTION

Information is central to the project of workplace law enforcement.

1

Workers who do not know that they are subject to illegal working condi-

tions—exposed to pesticides, for example, or paid less than coworkers

of the opposite sex—do not have the information they need to enforce

their rights.

2

Information about those rights is equally important, as

even workers who have full knowledge about their true conditions of

work cannot take enforcement action if they are ignorant about the

rights and remedies available under the law.

Because of the key role that information plays in workplace rights

enforcement, many employment statutes require employers to post

“know-your-rights” notices that inform workers about their legal

*Assistant Professor of Legal Studies, Department of Risk Management and Insurance, J.

Mack Robinson College of Business, Georgia State University; secondary appointment,

Georgia State University College of Law. Thanks to the participants in the Labor and

Employment Law Colloquium at the University of Colorado Law School at Boulder, espe-

cially Helen Norton, and the American Business Law Journal Invited Scholars Colloquium.

Thanks also to the editors and anonymous reviewers of the American Business Law Journal,

especially Julie Manning Magid and Robert Sprague.

1

Cf. Christine Jolls, Debiasing Through Law and the First Amendment,67STAN.L.REV. 1411,

1412 (2015) (“Both within and beyond markets, law is pervasively concerned with the

availability and structure of information.”).

2

Charlotte S. Alexander, Transparency and Transmission: Theorizing Information’s Role in Regu-

latory and Market Responses to Workplace Problems,48C

ONN.L.REV. 177, 212–13 (2015)

(describing scenarios in which workers are unaware of their pesticide exposure and in

which women workers do not know about pay discrimination by sex).

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C2016 The Author

American Business Law Journal V

C2016 Academy of Legal Studies in Business

487

American Business Law Journal

Volume 53, Issue 3, 487–536, Fall 2016

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protections on the job.

3

Borrowing a term from economics, this article

classifies such notice-posting mandates as “information-forcing” rules, or

requirements that an actor provide information that he or she otherwise

might not reveal.

4

In economic theory, mandating the transmission of

information can correct market problems caused by information asym-

metries or mismatches between parties’ knowledge.

5

A used car pur-

chaser, for example, might fail to make a good deal because the

purchaser lacks information about the true quality of the spec ific car he

or she is purchasing.

6

This bad deal is an inefficient result for the

3

Office of Small and Disadvantaged Bus. Utilization, Poster Page: Workplace Poster Require-

ments for Small Businesses and Other Employers, U.S. DEP’TOFLABOR, http://www.dol.gov/

oasam/boc/osdbu/sbrefa/poster/matrix.htm (last visited Apr. 9, 2016). The U.S. Department

of Labor lists at least twelve posters that different groups of employers must display. Id.

These posters describe rights ranging from minimum wage and overtime guarantees,

polygraph and antidiscrimination protections, and migrant and seasonal farm labor stand-

ards. Id. Other federal and state agencies may require more or different disclosures. Id.;

see also Peter D. DeChiara, The Right to Know: An Argument for Informing Employees of Their

Rights Under the National Labor Relations Act,32H

ARV.J.LEGIS. 431, 433 (1995) (discussing

federal and state agency poster requirements); Joseph H. McFarlane, Poster Wars: The

NLRB and the Controversy over an 11-by-17-Inch Piece of Paper,38J.C

ORP. L. 421, 429–31

(2013) (discussing same).

4

J.H. Verkerke, Legal Ignorance and Information-Forcing Rules,56WM.&MARY L. REV. 899,

904 (2015) (“[T]he information-forcing framework uses an unfavorable default to redress

problems of asymmetric information between the parties to a contract.”). See infra Part

I.A, which explains the information-forcing literature in more detail. That discussion also

acknowledges the ways in which the notice-posting requirements that are the subject of

this article do not fit squarely into the information-forcing model from economics. These

instances of mis-fit may contribute to some judges’ skepticism about notice-posting rules;

this point is discussed further infra Part III.D.

5

David J. Doorey, A Model of Responsive Workplace Law,50OSGOODE HALL L.J. 47, 67 (2012)

(“Disclosure regulation is usually justified as market-correcting: it corrects information

asymmetries that impede the efficient clearing of markets.”).

6

George A. Akerlof, The Market for “Lemons”: Quality Uncertainty and the Market Mechanism,

84 Q. J. ECON. 488, 489 (1970) (“An asymmetry in available information has developed:

for the sellers now have more knowledge about the quality of a car than the buyers. But

good cars and bad cars must still sell at the same price—since it is impossible for a buyer

to tell the difference between a good car and a bad car.”). Other examples of information

asymmetry outside the sales contract setting include toxicity information held exclusively

by toxic polluters and private information held by only one party to litigation. Bradley C.

Karkkainen, Information-Forcing Environmental Regulation,33F

LA.ST.U.L.REV. 861, 874

(2006) (describing state regulation that “gives toxic polluters in California an unusual

incentive to cooperate with state regulators in setting, justifying, and defending numerical

regulatory standards and to produce and disclose as much credible toxicity and exposure

488 Vol. 53 / American Business Law Journal

purchaser and can also spill over to create inefficiencies in the used car

market as a whole.

7

Forcing the seller to reveal information regarding

the car’s quality solves this problem.

In the context of the workplace, numerous studies have shown that

workers lack accurate information about their rights on the job.

8

Work-

ers here are like used car buyers, and their legal ignorance about their

workplace rights can cause them to strike bad employment deals where

they accept sublegal wages or tolerate unlawful working conditions.

Workers’ lack of legal knowledge can also have spillover consequences

across the labor market, as employers race to the bottom by depressing

wages and violating employment and labor laws, while going unchal-

lenged by worker enforcement action.

9

information necessary to enable regulators to implement these regulatory standards”); Ste-

ven Shavell, Sharing of Information Prior to Settlement or Litigation, 20 RAND J. ECON. 183,

183 (1989) (developing a model of information asymmetry in which “one party [to litiga-

tion] possesses ‘private’ information ... [that] pertains to ... the likelihood of prevailing at

trial or to the size of the judgment he would receive in that event”).

7

Bruce Mann & Thomas J. Holdych, When Lemons Are Better than Lemonade: The Case

Against Mandatory Used Car Warranties,15Y

ALE L. & POL’YREV. 1, 2 (1996) (“Informational

asymmetry arises when one party to a bargain, usually the seller, has more and better

information about the condition of a product than does the buyer. In the presence of

informational asymmetry, inefficient transactions may be consummated or the market may

completely fail.”). Specifically, the buyer may pay more for the car than it is worth. More-

over, buyers’ lack of information creates uncertainty, causing them to make only low offers

on used cars due to the risk that the car may actually be of low quality. Low prices then

drive the sellers of high-quality used cars out of the market, leaving the market occupied

exclusively by low-priced, low-quality used cars. The information asymmetry between

buyer and seller, and buyers’ resulting uncertainty about car quality, blocks mutually bene-

ficial transactions that otherwise could have occurred between willing buyers and sellers.

See generally id. at 2, 18–19. This effect is known as “adverse selection.” Id. at 26; Giuseppe

Dari-Mattiacci et al., Inverse Adverse Selection: The Market for Gems 2–7 (Amsterdam Ctr. for

Law & Econ. Working Paper No. 2010-04, 2011), http://ssrn.com/abstract=1661090

(explaining adverse selection in the used car market).

8

See David Weil, “Broken Windows,” Vulnerable Workers, and the Future of Worker Representation,

10 FORUM 1 [Article 9], 5 n.6 (2012) (summarizing the “literature on the lack of knowledge

of statutory rights under a variety of laws”); Amanda L. Ireland, Note, Notification of

Employee Rights Under the National Labor Relations Act: A Turning Point for the National Labor

Relations Board,13N

EV. L.J. 937, 947–49 (2013) (discussing deficits in “employee rights

awareness”).

9

This vision of the labor market assumes that most workplace law enforcement is done by

workers themselves. This is correct as an empirical matter, as even the bulk of enforce-

ment activity taken by government agencies relies on tips by workers, which themselves

2016 / Workplace Information-Forcing 489