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Healthcare vs. Wealthcare: Uncovering UCLA’s VIP Medical Program

How do you get the best quality health care in the University of California’s renowned public medical system? At UCLA’s Ronald Reagan Medical Center it’s a gold-colored wallet card with a personalized number to call. When flashed from a gurney in the ER (or at a club to impress friends), the card means one thing: The patient in question is a VIP.

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Rex Weiner




Illustration by Lalo Alcaraz

Part One of a Two-Part Series About UCLA’s Concierge Medicine Program

How do you get the best quality health care in the University of California’s renowned public medical system? Approaches vary, according to the campus, but at UCLA’s Ronald Reagan Medical Center it’s a gold-colored wallet card with a personalized number to call. When flashed from a gurney in the ER (or at a club to impress friends), the card means one thing: The patient in question is a VIP.

Welcome to the world of concierge medicine, UCLA-style. At a time when millions of uninsured Californians can’t afford Affordable Care Act coverage, even with subsidies, and the ACA’s added enrollments compound the pressures on our patchwork health-care system, California’s academic health centers are devoting a portion of their resources to wealthy benefactors and anyone willing and able to pay a premium for medical services.

Perks go beyond hotel-type amenities to include special access to clinical care. “VIPs and major donors had preferred access to specialists with long waiting lists and to diagnostic procedures, such as MRIs,” says Dr. Robert Pedowitz, who served from 2009 to 2010 as chairman of the UCLA Department of Orthopedic Surgery. One of a number of doctors with experience in the UC medical system who were interviewed for this article, Pedowitz told Capital & Main he would often oblige special requests from the dean’s office on behalf of VIPs.

Bound by HIPAA (Health Insurance Portability and Accountability Act) privacy rules from disclosing patients’ identities, doctors and UC hospital workers say it’s understood that if you’re either a major donor or board member, sports or entertainment celebrity, political honcho, or someone who has simply shelled out big bucks for better service, you’ll be well-cared for.

“If they wanted to see the chairman of the department—not that it would necessarily be better treatment—I would say ‘Absolutely,’ and have my assistant make room in my schedule,” said Dr. Pedowitz.

Photo by Pandora Young

Photo by Pandora Young

In 2013 the union that represents the UC system’s health-care workers issued a scathing report about UC’s administrative practices, including UCLA’s. Among other things, A Question of Priorities documented members’ complaints about how the demands of VIP policies allegedly diminish employees’ ability to serve all patients effectively. Local 3299 of the Association of Federal, State, County and Municipal Employees called into question “administrative decisions that prioritize UC’s profit margins over patients’ health.” Describing UCLA’s VIP program, union president Kathryn Lybarger called it “Simply an outrage.” When asked to elaborate, she added:

“That UC would ask any front-line care provider to prioritize so-called VIP patients over other patients is a sad reminder of the misguided priorities that have become all too commonplace at UC.”

University of California administrators disagree. A spokesperson for UC President Janet Napolitano told Capital & Main in an email, “T he charge that we treat some patients better than others is outrageously false.” Spokespeople representing UC Irvine, UC Davis, UC San Francisco, UC San Diego and the four hospitals within the UC Los Angeles Health System—teaching hospitals chartered by the California state constitution “as a public trust,” and among the highest-rated in the country—all maintain that the institutional mission is to treat all patients equally.

Even so, upgrades are available.

UCLA’s Executive Plus Package offers “a world-class program for annual executive health care, with a level of individualized service and attention second to none.” Cost for the one-time physical examination, battery of tests and follow-up consultation: $5,500, which includes town car pickup and drop-off.

A more elite – and unadvertised – program is UCLA’s Medical Hospitality Program (MHP, as it’s known internally). “It’s usually a word of mouth thing,” says a coordinator at the UCLA Executive Health office in the center of the university’s Westwood campus, where most VIP services are arranged. Enrollment in the MHP requires a minimum $12,000 “donation,” of which $7,200 is tax deductible.

Concierge programs are part of a nationwide trend, according to Concierge Medicine Today, a trade publication which estimates that between 6,000 and 12,000 private practitioners across the country and an increasing number of hospitals now offer what some also call “boutique medicine,” “retainer service” or “platinum practice.” Much like a passenger who pays more to an airline for extra legroom, the patient pays a fee or annual retainer, above insurance coverage, for a health-care upgrade. Doctors can be reached on their cell phones 24/7, there’s no waiting for appointments and a valet will park your car. Hospitals offer deluxe suites, meals chosen from a gourmet menu, special attention from the nursing staff, and access to hard-to-reach specialists, wait-listed testing and surgeries on a preferential basis.

But concierge medicine is also seen as a sign of privilege in a country riven by mounting evidence of economic inequality.

Arthur Caplan

Arthur Caplan

“Concierge medicine is fundamentally unjust,” said Arthur Caplan, Ph.D., founding head of the Division of Bioethics at New York University, calling it “more a symptom of a broken system than it is a solution.”

Pablo Eisenberg, a senior fellow at Georgetown University’s McCourt School of Public Policy, told Capital & Main, “More and more we have business models replacing medical models, business ethics and business culture instead of health-care ethics and health-care culture.”

The debate over concierge medicine and the queasiness with which some institutions approach incorporating such programs into their business model, moves one health-care industry marketing company to assure potential clients: “You’ll have to get comfortable about making a change (or not) to the concierge model. But there are ethical and effective ways to successfully market concierge or platinum practices.”

In a white paper published by Grenzebach Glier and Associates, a consultant to major hospitals across the country on philanthropy management, GG&A executive Dan Lowman advises clients who are considering adopting concierge services: “It is critical that these programs maintain a separation between upscale patient services and clinical/medical services. In other words, it must be abundantly clear and widely known that there is only one standard of medical care for all.”

Ethical concerns have spurred the American Medical Association to admonish its members that “if retainer practices become so widespread as to threaten access to care” they must heed its Code of Medical Ethics: “Physicians have a professional obligation to provide care to those in need, regardless of ability to pay, particularly to those in need of urgent care.”

Beyond ethics, critics of concierge medicine raise legal concerns, including: federal prohibitions against charging more than the established fees for services already covered by Medicare; federal and state laws mandating equal and timely access to emergency treatment; and strict rules against jumping the nationally-regulated waiting list for organ transplants.

Warning of a two-tier health-care system for the haves and have-nots, medical industry analysts point to signs that top quality medical resources are entering a period of scarcity. As more primary care physicians abandon high-volume, low-paying caseloads for a concierge practice with lighter, more lucrative workdays treating upscale patients, the National Center for Health Statistics reports in a 2012 survey that more than 25 percent of general physicians do not accept new patients with public coverage (e.g., Medicare, Medicaid), “and the proportion of specialists accepting new patients with Medicare or Medicaid is declining.”

The role of public hospitals as a last resort for the uninsured is changing as they refashion themselves, offering a menu of curated services for the bespoke crowd. Even Massachusetts General in Boston, founded 200 years ago to treat the poor, is joining the trend; launching a concierge service this summer, the hospital is charging an annual $6,000 fee for “an exceptionally high level of service from their primary care physician, including preventive care, health screening, wellness, nutrition and fitness,” according to its website. “It won’t be the right model for everybody,” a Mass Gen spokesperson told the New York Times, “but it will help us generate different sources of revenue in a way to fund the core mission.”

Revenue is also what drives the two-tiered system increasingly on display at UCLA, whose Medical Hospitality Program is available mainly to major donors, including members of UCLA Medical Center’s five advisory boards. These philanthropic boards are chaired by business leaders and UCLA doctors spearheading fundraising efforts for each of the teaching hospitals. The Resnick Neuropsychiatric Hospital Board of Advisors includes Friends actress Lisa Kudrow among its 14 members. Former Caesar’s World casino mogul Henry Gluck chairs the advisory UCLA Health Board, an umbrella group that counts Hollywood personality Candy Spelling as a member. A designated director within the UCLA Health Sciences Development department—the medical center’s fund-raising arm, which employs nearly 100 executives and staffers, reporting to associate vice chancellor Kathryn Carrico—facilitates the board members’ access to health care for themselves, family or friends.

UCLA spokesperson Tami Dennis told Capital & Main in an email that the MHP—“a physician-directed program” currently headed by Dr. Benjamin Ansell—was created in 2010 “in response to donors interested in both services that meet their needs and opportunities for additional philanthropy.” The annual $4,800 fee covers “program coordination, convenience and amenities such as beverages and parking,” and is attached to a mandatory “minimum annual donation of $7,200 that goes toward a breadth of academic and research programs,” including programs for veterans and the disadvantaged.

With approximately 260 to 270 members, the MHP “is not actively promoted,” said Dennis, “to prevent creation of demand beyond capacity.” In response to a request for financial information, Dennis said, “a detailed accounting is not readily available” of how much money the MHP brings in or specifically where it goes. “Charitable donations made to the Regents are used in accordance with state and federal law and in a manner consistent with donor preference, when appropriate,” she said, adding that the program is “not viewed as a significant revenue source.”

But it is a perk offered to the hospital’s benefactors, whether they use it or not, including advisory board members such as Henry Gluck and his wife, who recently donated $10 million. They and other donors whose gifts may far exceed the MHP’s $12,000 minimum are entitled to receive that golden wallet card granting them, their families and even their friends the medical center’s red carpet treatment. In effect, the MHP renders UCLA Medical Center a private hospital for some, and a teaching hospital for everyone else.

The medical center’s program invites criticism from medical ethicists such as Stephen Post, director of the Center for Medical Humanities, Compassionate Care and Bioethics at New York’s Stony Brook University, who calls concierge medicine “a mark of gross class-ism.” When informed of specifics of the MHP, he told Capital & Main, “The idea of a two-tier health-care system in an institution based on donors and non-donors is, for me, too great a compromise of fundamental human equality.”

Dr. Eric Campbell

Dr. Eric Campbell

Dr. Eric Campbell, a professor of medicine at Harvard Medical School who specializes in bioethics and medical conflicts of interest, questions the MHP’s combined $12,000 fee/donation. “Frankly, I have a problem with them calling this a gift and getting a tax deduction for it,” Campbell told Capital & Main. “It’s a transaction and should be treated like any other transaction in medical care.”

Internal Revenue Service guidelines state that deducting the cost of goods or services received in connection with a charitable donation—called a quid pro quo donation—(such as the price of a dinner or raffle gift at a fundraising gala) should conform with legal accounting practice. But the deal still troubles at least one concierge medicine practitioner and former UCLA primary care physician, Dr. Dennis Evangelatos. Ranked as one of “Hollywood’s Top Doctors” by the Hollywood Reporter, Dr. Evangelatos now operates his own practice, affiliated with MD2 , one of the largest nationwide concierge medicine franchises. Over the phone from his Beverly Hills office, Evangelatos said the MHP was something new since he left UCLA. “It seems funny to me that part of the fee is tax deductible,” he said. “How you value the fee and what part is deductible—that’s a tricky one.”

The MHP institutionalizes, and provides an IRS-friendly accounting for, a VIP policy that has long existed informally at UCLA, and has always had a Hollywood angle. Well before the term “concierge care” was coined, the ninth and 10th floors of the old medical center’s Wilson Pavilion were reserved for patients willing to pay a premium for fancy suites and deluxe menus. Suite 948, furnished with extra beds and a kitchenette, was where John Wayne checked in for last-ditch cancer treatments not long before his death in 1979, according to Wayne’s biographer, Randy Roberts. UCLA’s practice of special care for VIPs was well-established even back then, Roberts reported: “People who were rich, but not famous, however, had their charts coded so that nurses and physicians would be able to recognize immediately just how important they were.”

It took an earthquake, however, and one man driven by the best of intentions, to bend the medical center’s legacy VIP programs to a larger purpose, pointing UCLA and its administrative culture in the direction of the $1.9 billion business it has become today.

Part Two: How UCLA Embraced Hollywood and VIP Care

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Labor & Economy

Why a Pioneering Green Energy Investor is Optimistic About the Future of the Planet

Daniel Weiss, managing partner of Angeleno Group, describes on the latest episode of “The Bottom Line” podcast how clean energy has moved from the realm of politics and policy to that of the markets and economics.

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When Daniel Weiss co-founded Angeleno Group in 2001 to fund green energy companies, few would have regarded him as a master of timing.

Oil was trading at a lowly $23 per barrel. The California electricity crisis had recently triggered large-scale blackouts across the state. Enron had just gone belly-up.

“To launch an investment firm and raise capital to invest in this space . . . maybe we ought to have had our heads examined, ” Weiss, one of Angeleno Group’s two managing partners, told me on the latest episode of my podcast, The Bottom Line.

Seventeen years and $2.5 billion worth of investments later, Weiss and his colleagues have proven that they were lot more savvy than silly.

Along the way, they’ve kept their eyes on four fundamental drivers: an urgent need to replace an aging and inadequate power infrastructure in the United States and elsewhere; the steadily increasing demand for fuel and electricity as ever more of the world’s population enters the middle class and becomes urbanized; a push by different nations to secure their own energy independence; and the rise of global warming and other environmental issues as a major social concern.

“You add those four things up,” Weiss notes, “and we thought, ‘These are not 10-, 20-, 30-month trends. These are 20-, 30-, 40-year trends. And they’re going to create massive investment opportunities.’”

Plus, Weiss adds, the field was pretty wide open back then. “Not a lot of folks were focused on the next generation of energy,” he says.

At least not in the private sector. Two decades ago, most of those paying close attention to our biggest energy and environmental problems — and how we might overcome them—were public officials, nonprofit leaders, and scholars.

Not any longer, however. “We really are shifting,” Weiss says, “from a world in which adoption of some of these technologies is driven by politics and policy to a world . . . being driven by markets and economics.”

Actually, among Angeleno Group’s greatest strengths is its ability to draw on the assistance of those who have deep experience in both arenas—corporate and government. The firm’s advisory board includes John Browne, the former chief executive of British oil giant BP; Ernest Moniz, who served as Energy Secretary under President Obama; Bennett Johnson, the long-time senator from Louisiana who chaired the Energy and Natural Resources Committee; and nine others with similarly golden credentials.

Motivating these heavy-hitters — who take a very active role in helping Angeleno Group and its portfolio companies — is the belief “that this $6 trillion vertical of the global economy is an important one,” Weiss says, and that “technology, science, and entrepreneurship in this sector can make a really positive difference.”

Despite the ongoing threat of climate change and a number of backward steps on the environment made by President Trump and his administration, Weiss thinks so too. He points out that the companies Angeleno Group has invested in — a range of enterprises offering products and services in wind and solar, clean transportation, energy efficiency, and more — have had the effect in terms of reduced carbon of taking the equivalent of 50 million cars off the road per year.

But there’s another metric that hits even closer to home. In 1977, when Weiss was growing up in Los Angeles, there were more than 120 Stage 1 smog alerts. “You couldn’t go out and play on the blacktop” because the air was so nasty, he recalls. But now, “in my kids’ experience in elementary school . . . in Los Angeles there were zero Stage 1 smog alerts” — even though there’s far more traffic on the road.

What made things better, says Weiss, was a steady progression in which politics and policy helped to drive the adoption of new technology (in that case, the catalytic converter) until, eventually, market forces took over and spurred truly widespread change.

“I’m optimistic,” he says, “because of that track record and history that we have of innovating our way against some of these challenges.”

You can listen to my entire interview with Weiss here, along with Marty Goldensohn reporting on Coca-Cola’s “World Without Waste” sustainable packaging campaign, and Rachel Schneider pondering whether the United States can ever have lasting full employment.

The Bottom Line is a production of Capital & Main

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Battery Blood

Battery Blood: California Has Worse Lead Standards Than Arkansas and Texas. Why?

Battery recycling is considered one of the most potentially hazardous industries. Yet Vernon’s Exide workers were routinely being poisoned with nearly nonexistent intervention by Cal/OSHA.

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Joe Rubin




Cleanup of Exide's Vernon plant. (Photo: California Department of Toxic Substances Control)

How could California, the model state when it comes to tough environmental regulations, have failed to assess lead-contamination dangers at a battery-recycling facility?

In the summer of 2008, California’s Department of Occupational Safety and Health (Cal/OSHA) inspected Exide Technologies’ vehicle-battery recycling plant in Vernon, California, an industrial suburb of Los Angeles. The ensuing laboratory analysis of air from the plant’s smelter room, where batteries are melted down to reclaim their lead, revealed that levels of the neurotoxin exceeded federal standards by a factor of 13. Despite the toxic air, Cal/OSHA found no serious violations at Exide, issuing only a token fine of $150 for what it deemed a low-level violation.

Asked today about that inspection, Cal/OSHA spokesperson Erika Monterroza told Capital & Main that it was “handled appropriately,” adding that the high level of lead that smelter-room workers were exposed to would only have been excused if other safety measures, such as “protective clothing, onsite showers, clean change rooms, proper housekeeping, clean lunchrooms, medical surveillance, effective training and implementation of engineering and administration controls” were deemed effective in reducing “exposures to as low as feasible.” However, there is little to no evidence that Cal/OSHA’s 2008 inspection included the measures Monterroza cited.

Also Read:
How California Health Agencies Failed Exide Workers

How could California, perceived by many as the model state when it comes to tough environmental regulations, have fallen so short when it came to assessing lead-contamination dangers at the Vernon battery-recycling facility?

Part of the answer stems from how the Occupational Safety and Health Administration (OSHA) works in the Golden State. In 29 states, workers at private companies such as Exide are are protected by federal OSHA, which is administered by the U.S. Department of Labor. In the remaining 21 states, including California, state-run OSHA programs protect workers employed by private industry. Even so, according to Monterroza, “Cal/OSHA’s program is required to be, and is, at least as effective as federal OSHA.”

In California, communication about workers with high levels of lead in their blood was nearly nonexistent between Cal/OSHA and the Department of Public Health.

But our investigation found that when it comes to protecting workers from lead, California operates in a different universe from states with federal OSHA oversight. While workers were routinely being poisoned in Vernon, with nearly nonexistent intervention by Cal/OSHA, battery-recycling plants in federal OSHA states were facing inspections so robust they amounted to an existential threat to the plants. The message to these lead polluters seemed simple: Either clean up your act or be fined out of business. A case in point: The same summer as Cal/OSHA’s 2008 Vernon inspection, another Exide battery-recycling plant, in Fort Smith, Arkansas, was hit with $71,000 in fines for having high levels of lead in its smelting department, and for other serious violations, including poorly fitted respirators. All told, inspectors found 22 “serious violations” at the Arkansas plant. A serious violation, an OSHA press release about the Fort Smith citations noted, is “one in which the hazard could cause death or serious physical harm to employees, and the employer knew or should have known about it.”

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And after a 2012 inspection of a Johnson Controls battery plant in Ohio, federal OSHA issued 20 citations for “serious”and “willful” health violations, and issued $188,600 in fines. At yet another Exide facility, in Frisco, Texas, OSHA fined the plant $77,000 in 2011. That same year, Exide reached an agreement with Texas officials to pay $20 million for improvements to its engineering systems at the Frisco plant to cut down on lead emissions.

In Vernon, Cal/OSHA required no engineering changes that would impact levels of lead in the plant.

“OSHA is supposed to have workers’ backs,” said Rania Sabty-Daily, an expert in industrial hygiene and an assistant professor at California State University, Northridge. Sabty-Daily said Cal/OSHA completely failed to take into account a fundamental fact in its 2008 Exide inspection.

Photo: Laurie Avocado

“The records you dug up showed that lots of workers were being exposed to lead at levels high enough that their health was being compromised,” she said. “That should have led inspectors to seek out the safety problems causing the health problems. Any occupational hygienist knows that a real-world factory is imperfect — we can’t just rely on respirators, which are often not fitted properly. And there are other avenues for exposure. What happens when the worker takes off their boots? Are the shower facilities adequate?”

Making workplaces safer became a central OSHA focus in 2001, when the agency launched the National Emphasis Program on lead. This ambitious initiative sought to eliminate the conditions that had caused lead-related health issues in workers. The lead-reduction program was reinforced with even more stringent standards in 2008.

The directive legally mandates that when workers are found to have blood-lead levels above those considered by the U.S. Centers for Disease Control and Prevention (CDC) to represent a serious health risk (25 micrograms per deciliter or above), those cases “shall be considered high-gravity, serious and must be handled by inspection.” And it wasn’t just the 29 federal OSHA states that adopted the tough inspection standards. Nine states that have their own OSHA programs, including Indiana, Oregon and North Carolina, chose to adopt the same federal standards. For unexplained reasons, California did not adopt lead standards required by 38 other states.

Elsewhere, others saw a profound improvement. “Without question it’s an absolutely essential program that I saw make a difference when it came to protecting workers from being exposed to lead,” Clyde Payne, who retired in 2014 as the area director of U.S. OSHA’s Jackson, Mississippi office, told Capital & Main

“People were getting lead-poisoned in just a few months on the job. That tells you a lot about what conditions were like inside [Exide].”

While OSHA’s national directive remains largely intact today, President Donald Trump has made good on his promise to scale back all government regulations; OSHA’s current leadership has chipped away at the get-tough approach of the lead directive, changing its language to make some elements of the rules optional rather than mandatory.

Coordination with State Public Health Departments

Battery recycling is considered one of the most potentially hazardous industries for workers. Consequently, plants are almost always required to test workers’ blood for lead at least a couple of times per year. Most states’ departments of health — including California’s — are legally required to maintain those blood-lead results in what are called “blood-lead registries.”

A key component of the 2001 National Emphasis Program on lead is coordination with the custodians of blood-lead registries, the states’ individual public health departments. Scott Allen, a spokesperson for federal OSHA’s regional office in Illinois, underscored the importance of communication with state health departments. “Related to blood-lead levels, these medical referrals often come from health departments, medical providers or hospitals,” Allen stated in an email.

Workers Became Lead-Poisoned at Exide in a Matter of Months

Our investigation found that in California, communication about workers with high levels of lead in their blood was nearly nonexistent between Cal/OSHA and CDPH, the two agencies responsible for keeping workers safe from lead hazards.  Between 1994 and 2014, CDPH tracked over 2,300 cases of workers with blood-lead levels at or above 25 micrograms per deciliter at Exide’s Vernon plant; yet CDPH referred the Vernon plant for an inspection to Cal/OSHA just once, in 1996.

Along the way, there were health experts who saw warning signs.

Infographic:  Kelly Bergkamp

The Oakland-based Center for Environmental Health (CEH), which was concerned about airborne lead spreading from smokestacks at the Vernon plant to surrounding L.A. neighborhoods like Boyle Heights, filed a 2008 lawsuit to force the state to warn residents about lead that was known to be escaping the plant. “We also wanted to know what was going on inside the plant,” Caroline Cox, a CEH staff scientist, told Capital & Main. To figure that out, the nonprofit asked CDPH in 2009 for a year’s worth of blood-lead tests of Exide’s Vernon employees.

CDPH provided Cox with this data for more than 152 workers. Most employees had several tests per year.  “What I was most struck by were results from workers who clearly were brand-new employees,” Cox said. “These people started out like an average person — whose blood-lead level is around two micrograms per deciliter. After a few months on the job, [I saw that] in some cases these readings shot up to alarming levels. Essentially, people were getting lead-poisoned in just a few months on the job. That tells you a lot about what conditions were like inside, and you just worried that the workers perhaps had no idea what they were getting into.”

An Obscure Department Failed To Sound the Alarm

The Occupational Lead Poisoning Prevention Program (OLPPP) is a department within CDPH that tracks blood-lead levels and offers advice and expertise to companies to reduce lead-based health risks.

“You have an organization receiving data about spikes in blood-lead levels. That should spur some sort of action. If that didn’t happen, why?”

Our investigation found that between 1994 and 1996, OLPPP managers were very concerned about the Vernon plant’s lead problem. For example, in 1995, OLPPP determined that, at what was then called GNB Technologies, “compliance plan and medical surveillance plan are seriously deficient; written respiratory protection program is confusing and inconsistent; GNB has no protocol for systematically reviewing BLL [blood-lead levels].” In 1996, OLPPP referred the case to Cal/OSHA for inspection.

That 1996 referral inspection appears to be the last time the two agencies teamed up to limit worker exposure to lead at the Vernon site. CDPH remained aware of lead-exposed workers, yet appears not to have communicated concern or crucial data with the one agency that could levy fines or shut down the plant if it were deemed to be too hazardous.

Mariano Kramer, a former Cal/OSHA district manager who was in charge of the 1996 inspection, said he was troubled to learn that CDPH did not continue to refer information about lead-poisoned workers to Cal/OSHA. “What concerns me is that you have an organization [CDPH] receiving data about spikes in blood-lead levels. That should spur some sort of action or reporting. If that didn’t happen, I’m wondering, Why? What’s the point of medical surveillance if you don’t use it?”

CDPH declined repeated requests for interviews and declined to answer specific questions by email for this story.

After being provided with documents obtained by Capital & Main and the University of Southern California’s Annenberg Health Reporting program, Assemblyman Ash Kalra (D-San Jose) wants to change the system that California has been operating under, to make it correspond to the federal lead directive. Last month, based on our research, Kalra introduced Assembly Bill 2963, which would require the “State Department of Public Health to report to the Division of Occupational Safety and Health any instance where a worker’s blood-lead level is at or above a certain amount.”

Joe Rubin  wrote this story while participating in the California Data Fellowship, a program of the USC Annenberg  Center for Health Journalism.

Copyright Capital & Main

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Battery Blood

Battery Blood: How California Health Agencies Failed Exide Workers

California’s Department of Public Health and Cal/OSHA didn’t protect workers from lead contamination at a battery recycling plant. A state Assembly member will hold hearings for a worker-protection bill based on our investigation.

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Joe Rubin




Photo: Joanne Kim

Even as health agencies in other states issued six-figure fines and ordered multimillion-dollar safety improvements of battery recycling plants, California’s enforcement was strangely anemic.


For nearly a century a hulking industrial plant near downtown Los Angeles melted down car batteries to reclaim their lead. The facility, most recently owned by Exide Technologies, was shut down in 2015 in a deal the company made with the U.S. Justice Department to avoid criminal prosecution for polluting nearby residential communities. Neighborhood activists have criticized California’s Department of Toxic Substances, which allowed Exide to continue operating for years with a temporary permit, despite evidence it was a major polluter. But a year-long investigation by Capital & Main and the University of Southern California’s Annenberg Health Reporting Center has found that two other agencies, the California Department of Public Health (CDPH) and the Division of Occupational Safety and Health (Cal/OSHA), failed to take action during a simmering public health crisis involving hundreds of lead-poisoned workers at the plant.

Between 1987 and 2014, according to records we obtained from CDPH, California health officials were aware of more than 2,300 blood tests from the plant’s workers revealing blood-lead levels above 25 micrograms per deciliter — high enough to cause miscarriages, tremors, mood disorders and heart disease. While CDPH lacks the power to levy fines or mandate changes, it may refer cases to Cal/OSHA, which has that authority. But except for one fleeting moment in 1996, the agencies have operated in virtual silos, failing to coordinate actions or share incontrovertible evidence that the facility was a potential death trap.

Infographic:  Kelly Bergkamp

“It’s distressing to know that Exide workers were exposed at that level and chronically,” said Dr. Bruce Lanphear, a physician and leading lead researcher with Simon Fraser University in Vancouver, Canada. “We’ve known for decades that lead at those levels can lead to hypertension and chronic renal failure [kidney disease]. California regulators were aware of this information and should have better protected these workers.”

In contrast to the anemic enforcement by California officials, regulators in much of the rest of the nation have, thanks to a strict federal lead directive issued in 2001, cracked down on perilous battery recycling plants — issuing six-figure fines and requiring multimillion-dollar safety improvements. Although the federal lead directive is legally binding in states where workers are directly protected by federal OSHA and eight other state-run programs that adopted these standards, California, the nation’s most populous state, never embraced them.

Exide appealed a $280 Cal/OSHA fine. It was ultimately reduced to $150 — less than the cost of a speeding ticket.

Despite California’s seemingly lower standards, Cal/OSHA told Capital & Main that “Cal/OSHA’s program is required to be, and is, at least as effective as federal OSHA.” However, despite hundreds of workers who developed lead poisoning at the plant, the only fine specifically related to lead that we found issued by Cal/OSHA at the site, which recycled about 25,000 lead-acid car batteries a day, was a 2008 citation for $150 — less than the cost of a speeding ticket.

The lead problem at the Vernon plant, which was acquired by Exide in 2000, goes back a long time. In the 1970s Jim Dahlgren, today a retired physician, treated 120 severely lead-poisoned workers from the plant, then owned by National Lead, and helped qualify them for disability insurance. Dahlgren, who worked for the University of California, Los Angeles, at the time, claimed that nearly all of those men died prematurely from complications due to lead exposure and that several patients fell into lead-induced comas. Dahlgren said his patients’ blood levels routinely measured above 100 micrograms per deciliter (μg/dL), a potentially lethal level. “Every single organ system of the body is impacted adversely by lead,” Dahlgren said. “These men had symptoms that ran the spectrum — severe abdominal pain, vomiting, diarrhea, palpitations, chest pains, trouble thinking, headaches.”

Read Documents Related to This Story

Dahlgren’s account was echoed in a 1973 Los Angeles Times article headlined “Plant Fumes Poisoning Plant Workers, Union Chiefs Say,” and an obscure 1976 documentary, Lead Smelter, which interviewed Dahlgren, along with gaunt, bedridden workers and their families.

Luis Rodriguez, a poet and writer who achieved fame with his memoir about escaping gang life, “Always Running, La Vida Loca, Gang Days in L.A.,” spent six months in 1978 working in the Vernon plant as a smelter. The plant’s huge furnaces melted down car batteries and separated out the lead into what is called slag.

“After you use the furnace, all the lead would fall to the bottom and there was a hole in the back called a slag hole,” Rodriguez said. “I had to use a jackhammer to hammer it open, and pull the slag out and put it into carts. A good friend of mine said, ‘You know you got to get out of there. Lead will kill you and your family.’ That woke me up, might have saved my life.”

California Department of Public Health warnings about the Vernon plant, which Exide Technologies purchased in 2000, took on the look of an annual form letter.

The CDPH declined interview requests or to answer specific questions by email, and instead issued a statement that read in part, “CDPH takes seriously any incidents that may affect the public health of the people in California,” adding that “there are always lessons to be learned, especially in the case of long-running complex community public health issues.”

Exide’s lead-poisoning problem, however, was well known to state officials. Because battery recycling involves potentially lethal exposure to lead, the company was required to test workers’ blood several times per year and to report the results to the CDPH. (Exide did not respond to emails and phone messages requesting comment.)

Despite the fact that CDPH was aware of more than 2,300 concerning blood lead tests among workers at the Vernon site, our investigation found that CDPH referred the company to Cal/OSHA only a few times in the 1990s, and that between 1990 and 2013, inspections of the plant related to lead by Cal/OSHA occurred only in 1995, 1996 and 2008. Records we obtained show the 1995 inspection was triggered by a complaint to Cal/OSHA from a private physician who had treated a plant worker with symptoms of lead poisoning and alarming blood-lead levels. Cal/OSHA determined “no serious injuries or illnesses detected” and issued no fines. The company, according to the inspection report, also told Cal/OSHA that “engineering controls were not feasible at the plant.”

By then the plant had changed hands and was owned by GNB Technologies. Despite the new ownership, lead poisoning among workers was still a huge problem. Blood-lead testing tracked by CDPH showed that in 1995, 135 workers at the site that year had seriously elevated levels of lead in their blood, and 33 workers had blood-lead levels above 40 μg/dL.

The same year Cal/OSHA’s inspection report dismissed concerns about fundamental safety at the plant, CDPH was expressing extreme concern. In 1995 CDPH’s Occupational Lead Poisoning Prevention Program chief, Barbara Materna, wrote a letter to GNB’s regional director, David Wesley, noting that the Vernon workers had blood-lead levels high enough to cause “increased blood pressure, damaged sperm, and impaired learning ability in children exposed to lead during pregnancy.” CDPH also expressed grave concerns that airborne levels of lead found in parts of the plant were more than 50 times above federal safety standards.

By 1996 CDPH had had enough. “Our policy is to work cooperatively with those who are improving health and safety conditions in their workplace,” Materna wrote GNB. “However, if serious conditions are not addressed in a timely manner we are obligated to make referrals to Cal/OSHA for enforcement actions.”

Capital & Main spoke to Mariano Kramer, then a Los Angeles-area Cal/OSHA district manager, who CDPH sent the referral letter to. In 1996, after receiving a referral from CDPH, he supervised the only inspection we could find that appears to have had any teeth behind it.

Former Cal/OSHA Manager: “The agency is a battleground between those who see the prime directive as protecting workers and others who are fearful of hurting the bottom line of industry.”

Cal/OSHA told us it was unable to locate records related to the 1996 inspection. Kramer recalls the case vividly, however: “It was a very messy situation at the plant and a lengthy process. We required them to make substantial safety improvements.” The fines and required safety upgrades, which Kramer said were levied, seemed to make a difference at the plant. Lead poisoning cases dropped 25 percent the following year.

Photo: Joanne Kim

However, the monitoring of the Vernon plant, which Exide Technologies purchased in 2000, became less frequent and appears to have amounted to an annual form letter. In 2005 CDPH told Exide, “We recently received one or more reports of elevated blood-lead levels at or above 40 μg/dL for employees of Exide Technologies.” The letter continued, “Elevated BLLs indicate serious problems with your lead safety program that should be corrected. They may also indicate violations of the Cal/OSHA Lead Standard.”

By then, according to records provided to Capital & Main by CDPH, about 40 workers per year continued to show alarming levels of lead in their blood. It wasn’t until 2008 that Cal/OSHA performed a new lead-safety inspection at the site. The inspection stemmed from an anonymous complaint from an Exide worker, and the inspectors don’t appear to have been armed with any of the information collected by CDPH. When inspectors arrived at the sprawling Vernon plant, records show, they took just one swipe of a surface in search of evidence of lead dust. The sample was taken on a shelf next to a telephone — in an office that was designated a lead-free zone, where workers were supposed to be able to take breaks without wearing any protective equipment. While the shelf had lead levels far in excess of federal standards, Cal/OSHA fined Exide just $280 for the safety violation it labeled “low” in severity. Exide appealed the fine and the violation was ultimately reduced to $150.

Cal/OSHA appeared even less concerned with the toxic air to which workers were exposed in the plant’s smelting room. Alvin Richardson, a 20-year plant veteran, said he remembers Cal/OSHA coming to inspect the site in 2008 and affixing an air monitor to his clothing to measure the amount of lead that he and other workers were being exposed to. Richardson says he wasn’t told the results, even though he had become a canary in the coal mine.

Experts we spoke to, including Kramer, say the results from Richardson’s air monitor, which measured airborne lead more than 13 times above levels federal limits, could have required the evacuation of workers and at a minimum should have resulted in stiff penalties.

But when the results came back, Cal/OSHA may have employed some creative math. (See equation below.) Because Richardson was wearing a respirator mask, Cal/OSHA’s report reasoned its inspectors could divide the level of exposure by a factor of 50. (See formula below.) After the airborne lead levels were divided by 50, the inspection gave the smelting operation a clean bill of health, no fines were issued for the airborne lead, and the company was allowed to keep up its operation without making any engineering changes.

Cal/OSHA declined repeated requests for in-person interviews about its lead-related protocols or to comment on former workers who claim to be suffering today. In response to queries about the seemingly inadequate 2008 inspection, Cal/OSHA spokeswoman Erika Monterroza responded via email, “The division can only issue citations when it finds sufficient evidence of violations. The inspection was handled appropriately.”

But Clyde Payne, who for 23 years was the area director of U.S. OSHA’s Jackson, Mississippi, office, said that applying the equation employed by Cal/OSHA violated a fundamental OSHA principle. “The principle,” Payne said, “is you are not allowed to use the respirator to excuse toxic air. You have to implement other controls like ventilation and proper hygiene.”

Payne explained that the equation which Cal/OSHA employed is intended to be used to determine if employers are using proper respirators, or if they need to provide a better respirator. “Because we assume that workers are going to get exposed in other ways, you don’t utilize that type of division to excuse violations of the air standards.”  Payne added, “There is no question it’s challenging for companies to get those levels of airborne lead down, but if you do not have somebody riding your rear end, you won’t try.”

Mariano Kramer retired in 2011 and today works as an instructor at the Dominguez Hills OSHA Training Center. After reviewing the report of the 2008 inspection of the plant, he said the levels of airborne lead that Alvin Richardson and other workers were exposed to were completely unacceptable. “One of the basic tenets of safety and health is the hierarchy of controls,” Kramer said. “You start with administrative and engineering, and the last thing that you do is personal protective equipment. Because with ventilators, you are doing nothing to correct the hazard. All you’re doing is putting a barrier to the hazard.”

First Amendment Project Lawyer:  The Public Health Department “ends up being a shield for companies which expose the public and workers to toxins.”

A review of federal OSHA inspections carried out around the same time as Cal/OSHA’s 2008 inspection of Exide in Vernon does show that dramatically different standards were employed. For example, during their 2012 inspection of a Johnson Controls battery recycling plant in Ohio, OSHA inspectors affixed air monitors to workers just as they did with Richardson in California. The level of lead detected was one-third what Richardson and other Exide workers were exposed to. But because the OSHA inspectors did not employ the division formula utilized in California, they deemed the exposure levels as a “serious” violation of OSHA regulations. All told, OSHA issued to Johnson Controls Battery Group Inc. fines of $188,000, more than 1,200 times the $150 fine issued to Exide during Cal/OSHA’s 2008 inspection for violating lead standards.

Alvin Richardson told us that when he left the company in 2011 he suffered from what he believed to be lead-related symptoms, including exhaustion and tremors. After he departed his daily routine at Exide, Richardson hoped his symptoms would improve, but they worsened. Today the 53-year-old suffers from chronic weakness and kidney problems. “He can’t stand for very long,” Alvin’s wife LaShawn Richardson told us, adding that her husband had just received state disability status after a seven-year struggle.

Photo: Joanne Kim

Kramer believes that two long-running problems at Cal/OSHA likely contributed to an inadequate inspection in 2008. “The agency is kind of a political football, a battleground between those who see the prime directive as protecting workers and others who are fearful of hurting the bottom line of industry. Some staff also have a poor understanding of health-related safety issues like lead. The agency is better at recognizing a crane that might fall. When it comes to nearly invisible toxins like lead dust, that can be a problem.”

Rania Sabty-Daily, an expert in industrial hygiene and an assistant professor at California State University, Northridge, told Capital & Main that one of the stumbling blocks preventing better protection of California workers is long-delayed changes to the state’s lead standards. The standards formulated in the 1970s allow employees to continue working even with blood lead levels up to 50 μg/dL. Health experts consider those standards out of date because the U.S. Centers for Disease Control and other authorities say permanent damage can occur at levels as low as 10 μg/dL. In 2009 CDPH issued new recommendations and asked Cal/OSHA to call for removing workers with lead levels above 20 μg/dL and not returning them until they fall to below 15 μg/dL. In addition CDPH proposed that a more protective standard be applied to airborne lead.

Because CDPH can only make recommendations, CDPH petitioned Cal/OSHA in 2010 to adopt the new standards. In a statement, Cal/OSHA told us it agreed with the necessity to make some changes. “The existing lead standard is based on pre-1978 data and subsequent research has shown significant adverse effects at lower levels. The advisory committee met six times from 2011-2015 to draft a proposed industrial regulation that will lower the blood-lead removal level (BLL) and Permissible Exposure Limit (PEL). That process is ongoing.”

But the process to change California regulations appears to have bogged down. Cal/OSHA invited companies like Exide and other stakeholders to participate in advisory meetings over the new standards. During one advisory meeting in 2011, industry representatives, particularly from battery recycling companies, hammered the proposal. According to minutes from the sessions, Terry Campbell, an executive from U.S. Battery, said that one-fourth of the company’s Corona workers would have to be pulled from their jobs because of high blood-lead levels. Ultimately, the company said, it could be forced to close up shop and move to Mexico. Representatives from Exide echoed similar sentiments.

“It’s a totally dysfunctional system,” said Sabty-Daily. “We debate the toughest standards in the country — meanwhile, Cal/OSHA enforces what are among the weakest standards in the nation.”

There appears to be an even larger problem to fix. Our investigation found that workers protected by Cal/OSHA under the outdated standards continue to be harmed by unsafe lead conditions with little or no consequences.

In October we made a public records request asking CDPH for lists of workers who had lead levels at or above 20 μg/dL for the last 30 years. According to the data we received, the agency was aware of more than 26,000 blood tests from workers from more than 260 companies across the state.  Workers were counted once per year at their highest level according to CDPH. We also learned that between 2010 and 2017, even as California’s regulatory agencies continued to debate toughening lead standards,  CDPH was aware of an additional 2,256 blood tests at or above 20 μg/dL. Despite those alarming numbers, finding the locations of the workplaces that have had large numbers of lead poisoned workers is for the moment impossible.

Although CDPH previously provided year-by-year anonymous data for lead-poisoned workers at Exide, the agency turned down our request for information about where those other cases in the state were occurring. Citing a “constitutional right to privacy,” CDPH says it is concerned that providing anonymous details about the extent of the problem at specific companies could somehow lead to identifying the individual workers. When there is “a high risk of re-identification, statistical masking must be applied,” the agency said in a March 14 statement.

Dr. Bruce Lanphear, the lead-poisoning expert, also was troubled by the withholding of specific numbers for where the lead poisoning incidents were occurring. “That’s just hogwash. One of the basic functions of public health is to make clear the extent of the problem and where it’s occurring. You can’t protect the public if you’re not armed with the information.”

James Wheaton, senior counsel for the First Amendment Project and a media-law professor at the University of California, Berkeley, called the agency’s rationale for keeping the information secret “bogus” and said he believed the agency had violated California law with its refusal to disclose the information.

“CDPH unfortunately has a tendency to jealously guard information which is vital to the public,” Wheaton said. “The net result is the agency ends up being a shield for companies which expose the public and workers to toxins.”

While Exide closed in 2015, several battery recycling plants continue to operate in the greater Los Angeles area, and they appear to represent an ongoing problem when it comes to workers exposed to lead. While CDPH would not provide Capital & Main with information about where the most serious cases are occurring, in response to a public records request the agency did provide similar data to the Los Angeles Times in 2016 for worker exposures in Los Angeles County from 2008 to 2014.

The data, provided to Times reporter Tony Barboza, show that Quemetco, another Los Angeles-area recycling plant which, unlike Exide, is still up and running, had 254 workers with elevated blood-lead levels (at or above 10 g/dL) between 2008 and 2014. By comparison, Exide had 175 workers during that same time period with similarly elevated levels. Quemetco also appears to have another Exide-like problem. Soil samples taken from homes within a quarter-mile of the plant, according to data we obtained from the Department of Toxic Substances Control, also show that surface soil is on average four times above acceptable levels, suggesting a multimillion-dollar cleanup could be necessary.

Prior to publication of this article we shared data we had gathered with several lawmakers and Bill Allayaud, the California director of the Environmental Working Group, a science-based watchdog organization. Allayaud’s group has spearheaded several proposed lead laws in California. “We all know how the neighborhoods around Exide were polluted with toxic lead over the long term, and now we are finding out how workers on the frontlines were neglected by the agencies that are supposed to monitor and demand that hazardous conditions be eliminated,” Allayaud said. “This needs to be fixed so this never happens again.”

Allayaud collaborated with San Jose Assemblyman Ash Kalra, who introduced legislation sponsored by the Environmental Working Group that would require CDPH and Cal/OSHA to follow federal standards recognized in other states. Kalra’s measure, Assembly Bill 2963, would legally require the “State Department of Public Health to report to the Division of Occupational Safety and Health any instance where a worker’s blood-lead level is at or above a certain amount.”

In a statement to Capital & Main, Kalra said, “Lead poisoning is a serious matter and we need to consider the gravity of this hazard by ensuring that our state agencies are properly scrutinizing cases involving workers’ exposure to high levels of lead — this means that adequate inspections need to be carried out whenever there is evidence of serious lead-related exposure.”

Kalra plans to hold hearings in April for his worker-protection bill based on our investigations. He told Capital & Main that he would like to have Alvin Richardson and other workers testify to educate the public about what it’s like to experience lead poisoning.

“Alvin’s a proud man,” said Richardson’s wife, LaShawn. “Going through this has been a long, incredibly difficult struggle for our entire family.” She said she was speaking to us in the hope that future workers wouldn’t have to endure what her husband has.

Joe Rubin  wrote this story while participating in the California Data Fellowship, a program of the USC Annenberg  Center for Health Journalism.

Tomorrow —
California Has Worse Lead Standards Than Arkansas and Texas. Why?

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Labor & Economy

Why 24 Hour Fitness Is Going to the Mat Against Its Own Employees

Co-published by Fast Company
24 Hour Fitness’ policies have brought the fitness chain in the crosshairs of the National Labor Relations Board, which has said the company’s employee arbitration agreements violate federal labor law.

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24 Hour Fitness headquarters in San Ramon, California. (Photo: Coolcaesar)

Relentless pressure to sign up new members made one man question the chain’s commitment to changing people’s lives.

Co-published by Fast Company

On its website, 24 Hour Fitness says it has thousands of job openings. That’s great news for fitness buffs hunting for work. Or is it?

Disgruntled former employees of the San Ramon, California-based company have filed hundreds of cases over almost two decades, some resulting in settlements in the millions of dollars.

And the large payouts appear to have made 24 Hour Fitness one of the nation’s more aggressive advocates for curtailing workers’ ability to defend their rights in court, labor lawyers say. That advocacy has also put the almost four-million-member-strong fitness chain in the crosshairs of the National Labor Relations Board, which has said the firm’s employee arbitration agreements violate federal labor law.

The company’s dispute with the NLRB may make it to the U.S. Supreme Court, which could hear oral arguments next term as to whether the contracts the firm asks workers to sign when they are hired violate historic worker protections put in place as part of New Deal legislation adopted in the 1930s. Those contracts ask employees to waive their right to come together to file class action lawsuits.

Attorney:  “24 Hour Fitness has been pretty aggressive in stripping workers of their rights.”

Some workers say the company’s single-minded focus on selling memberships caused it to run afoul of wage and hour law.

“We worked basically 8 to 8 every day no matter what, and if you got a lunch break it was usually at the club, or you went out and came right back,” said Gabe Beauperthuy, a former general manager, who worked in fitness centers in Colorado before leaving the company in 2006.

At first, Beauperthuy said, he loved the work and embraced the company’s philosophy of personal transformation. But the long days and relentless pressure to sign up new members made him question the company’s commitment to changing people’s lives, and even his own priorities. He developed a single-minded focus on bringing in the “almighty dollar” for the company because, he explained, “you’re a product of your environment.”

“I’m thankful that I realized that, and I’m thankful that I’m no longer there,” said Beauperthuy, now a competitive amateur wrestler and coach.

24 Hour Fitness declined to comment for this story.

Beauperthuy was one of more than 900 managers, sales counselors and trainers to bring a collective action lawsuit under the Fair Labor Standards Act, alleging the company had misclassified them and denied them overtime pay. After the class was decertified and following seven years of litigation, the group settled for $17.5 million in 2013, according to published reports. The company settled another lawsuit involving thousands of California employees for $38 million, the nation’s sixth largest wage and hour class action settlement of 2006.

Those cases may have made 24 Hour Fitness more steadfast in defending their employee arbitration agreement that asks employees to waive their right to bring class action lawsuits in NLRB v. 24 Hour Fitness, which the U.S. Supreme Court may review next year, depending on the outcome of a related case. The fact that 24 Hour Fitness has an employee arbitration agreement with a “class action waiver” does not make it unusual. But the company has been especially aggressive in defending its arbitration agreement in the courts, labor advocates say.

“Historically, there have been a few companies who went out of their way to fight and defend arbitration,” says Cliff Palefsky, a San Francisco attorney who filed the unfair labor practice case resulting in the NLRB’s finding that 24 Hour Fitness had violated the law. “They’ve been pretty aggressive in stripping workers of their rights.”

About 60 million people—more than half of the non-union private sector workforce—are covered by mandatory arbitration agreements, according to an Economic Policy Institute study. These agreements require employees to resolve disputes through private arbitrators chosen by employers, rather than go through the courts.

An estimated 25 million of these arbitration agreements also include class action waivers, like those used by 24 Hour Fitness, in which employees give up their rights to band together to bring class action suits to address workplace disputes in the courts.

The contract language has received attention in recent months as the “Me Too” campaign has gained steam, and advocates pointed to the difficulty of raising workplace concerns individually in confidential arbitration proceedings that are crafted by the employer. Last year, U.S. Rep. Cheri Bustos (D-IL) introduced a bi-partisan bill that would prevent companies from keeping sexual harassment and sex discrimination claims from going to court, where the proceedings are typically in the public record.

A landmark case expected to be decided by the U.S. Supreme Court this term, National Labor Relations Board v. Murphy Oil USA, will determine whether class action waivers will be a continuing feature of employment contracts. It will also decide the fate of NLRB’s dispute with 24 Hour Fitness.

“If the NLRB loses Murphy Oil, then our case would suffer the same fate, essentially,” says Palefsky. In its Supreme Court brief, 24 Hour Fitness distinguishes its employment agreements from those at issue in the Murphy Oil case because the fitness employees are given 30 days to opt out of the class action ban.

But Palefsky counters that the rarely-used “opt out” provision is irrelevant because a worker’s right to act collectively is one that cannot be signed away.

The argument about class action waivers might seem an academic one to job seekers if 24 Hour Fitness is now complying with the law.

There have been 621 employment cases filed in the federal courts against 24 Hour Fitness since 2000. On a per-establishment basis, that’s more than eight times as many as have been filed against its competitor, Gold’s Gym, during the same time period, according to a Capital & Main review of federal court records.

The disproportionately large number of cases is likely linked to the battle that took place between 24 Hour Fitness and Beauperthuy’s attorney, Richard Donahoo, who continued to fight for his 900 or so clients even after a federal judge in San Francisco granted a 24 Hour Fitness motion in 2011 to decertify the class. (The judge’s ruling that the plaintiffs’ claims were not sufficiently similar prevented the case from moving forward as a collective action—not the class action decertification language–but the effect was similar.)

“Many times that means it’s the death of the case because people don’t want to proceed individually,” said Donahoo, who is based in Orange County. “Attorneys can’t do it economically.”

Nevertheless, Donahoo and his colleagues decided to “swallow hard” and fight for each plaintiff individually. They filed hundreds of individual petitions in federal court to compel the company to arbitrate claims in Northern California, where 24 Hour Fitness is headquartered, and successfully fended off 24 Hour Fitness’s efforts in 21 federal courts across the country to force the arbitration proceedings to take place near the clubs where each of the former employees had worked.

“Our case became a ‘careful what you wish for’ scenario for the company,” Donahoo said. The company ultimately agreed to a settlement that resolved the individual claims at once.

Since then, 24 Hour Fitness has changed ownership. AEA Investors LP, a New York-based private equity firm, Fitness Capital Partners of Palm Beach, Florida, and the Toronto-based Ontario Teachers’ Pension Plan purchased the firm in 2014 in a leveraged buyout. But reasons remain to be concerned about the practice of the fitness company, which employs about 20,000 workers and operates in a highly competitive industry.

In November, the company agreed to pay restitution and settled a lawsuit for $1.3 million filed by Orange County prosecutors, stemming from allegations the company increased annual renewal rates on prepaid memberships beginning in 2015 in violation of its contracts with customers. Customers were sold prepaid memberships and charged upfront fees with the guarantee of a low life-time renewal rate in 2006 but saw their rates rise as much as 300 percent nine years later, according to the Orange County Register. The company admitted no wrongdoing in the settlement agreement.

Last May, the ratings agency Moody’s changed 24 Hour Fitness’ investment outlook from “stable” to “negative.” In justifying the downgrade, the report pointed to the growing number of fitness centers and the fact that the company is highly leveraged. The purchase of the company in 2014 was financed with $1.35 billion in debt, about 75 percent of the total cost, according to the Moody’s report.

Moody’s also singled out rising labor costs due to increases in the minimum wage in many of the regions where 24 Hour Fitness operates, suggesting the company employs a large number of low wage workers. Most of the clubs are concentrated in three states — California, Texas and Colorado.

“The company should be able to offset some of the pressure from minimum wage increases by using labor optimization, and reallocating the labor force within clubs based upon their age and member profile,” according to Moody’s report.

The economic pressures 24 Hour Fitness faces may explain the experience of one Ms. Randle, a former Kids’ Club attendant, who asked that her first name not be used. She worked at a 24 Hour Fitness in Orange County from 2014 to 2016.

She said managers told her not to leave her post to take a break or use the rest room during her four-hour shift because the other staff on duty lacked the necessary clearance to work with children. She complained to managers and eventually to the human resources department, but had to file a complaint with the California Labor Commissioner’s Office to resolve the issue and secure back pay for missed rest breaks, she said.

Ms. Randle thought that one of her co-workers endured repeated urinary tract infections that could have been caused by not being able to take bathroom breaks. Randle felt the managers lacked proper training. “They were always focused on selling memberships,” she said. “They didn’t care too much about their employees.”

Roxane Auer provided additional research for this story.

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Freeway Robbery: Confronting Hollywood’s Wage-Theft Culture

Lawbreakers who happen to be bosses are, in cases of misclassifying employees as “contractors,” treated with an enviable amount of understanding by the IRS.

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Charles Davis




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The head of a company can pay a lawyer or an accountant to tell them to break the law and then get away with doing just that.

I got a letter from the Internal Revenue Service the other day and, as far as those go, it was one of the good ones: It said I was right, and that I’d been wronged, and that soon the world would know.

“We’re going to make the enclosed copy of your Form 14430, SS-8 Determination Analysis, available for public inspection,” it said. I had filed a request for that analysis about five years earlier after having worked as a segment producer on a late-night talk show.

In 2012, I thought that job was cool: “A segment producer, in Hollywood,” is how I could describe myself. In time, however, I came to realize, as many workers do, that I was being taken advantage of, by people making a lot more than me, in ways I hadn’t considered.

Casting Producer: “You don’t want to be seen as a whistleblower. If you go down that route you’re nailing your own coffin shut. You’re fucked. You’re never going to work again.”

It began with my title: “Producer” sounds better than “writer,” but the latter is actually protected by a collective bargaining agreement, ensuring basic rates of pay and benefits; the former is not. I was not an employee at all, apparently — the questions I proposed that the host ask, sometimes written down, were ostensibly the product of my own firm, and definitely not “writing.” I was, for tax purposes, an independent contractor, denied overtime, health care and, to top it off, charged twice as much in payroll taxes — my employer (who wasn’t) did not contribute a dime to Medicare, Social Security or the unemployment insurance I would later collect.

“As is the case in almost all worker classification cases, some facts point to an employment relationship while other facts indicate independent contractor status,” the IRS said in the letter. If, however, an employer tells you what to do and when to do it, providing services that are “a necessary and integral part of your business,” that employee is in fact an employee “and not an independent contractor.” I was, according to the federal government, “a common law employee.”

And the consequences? None so far. One has to file another form for those, which at best will mean that sketchy boss of mine will pay some back taxes. But that’s not guaranteed. Lawbreakers who happen to be bosses are, in cases like these, treated with an enviable amount of understanding. According to a pamphlet from the IRS, section 530 of the tax code allows employers to skirt ramifications for their actions if, for example, “You [the employer] treated workers as independent contractors because you knew, and can substantiate, that was how a significant segment of your industry treated similar workers.”

Just because everyone else is doing something does not mean it’s safe or legal, but in the case of employers misclassifying employees, the federal government does consider it an extenuating circumstance. A boss, after being caught, can also say he or she relied on “some other reasonable basis,” like “the advice of a business lawyer or accountant who knew the facts about your business,” and be absolved of their sins under the law.

In essence, the head of a company can pay someone to tell them to break the law — to advise them that breaking it would not in fact be illegal — and then get away with doing just that.

In the entertainment industry, everyone ignores the labor code,” said Christiane Cargill Kinney, an attorney at the firm LeClairRyan who focuses on employment issues within Hollywood. “There’s obvious reasons for that,” she said in an interview, “and it’s not exclusive to entertainment as far as the misclassification goes. But it is rampant.”

For one, there is the way that things have always been done. A manager may treat workers on a production as independent contractors because that’s what the person before them did — and those employee “contractors” may be accustomed to it as well. And complacency begets a culture. But the main reason, “obviously, is employers and production companies have a great incentive to misclassify: They can save thousands of dollars,” Kinney noted.

And if a worker doesn’t like it? In Hollywood, there are plenty more willing to make yet another sacrifice to make their dreams come true.

Workers like Lisa know this. She currently works as a casting manager on a cable television show, the sort of thing she’s done for the last 12 years. She’d always been treated as a traditional employee — until 2018, when she accepted a position, doing what she’s always done, but as an “independent contractor.”

“I took it because I desperately need the money,” she said, asking that her last name not be used. She works on a show aired by a well-known cable news network. As with most productions, the show is actually made by a separate production company, not the network itself, which allows for some plausible deniability. For example, when the makers of a Showtime documentary on basketball star Kobe Bryant were caught using unpaid researchers, Showtime proclaimed innocence and blamed the production company.

Françoise Carré is the research director for the Center for Social Policy, based at the University of Massachusetts, Boston. She’s seen this before. “When lead firms set up either chains or networks,” she said, “and then the lead firm essentially determines the level of resources in the system, the more segments in the chain or the more intermediaries, the more working conditions for workers on the periphery will be undermined.”

That is: A big company can hire a smaller company, give it a tiny budget, and look the other way with respect to how that budget is met. And if someone down the line gets caught, so what? In a 2015 report for the Economic Policy Institute, Carré noted that, “As a rule, companies found to be misclassifying workers and violating tax laws by the Internal Revenue Service usually do not get penalized by federal authorities due to legal constraints on the IRS.”

In her case, Lisa doesn’t even work for the production company hired by the network, but by a separate casting company that the former hired. She complains of a bait and switch, having accepted the rate offered, thinking it meant 40 hours a week, but in practice it meant “about 80 hours,” for roughly half the paycheck an employee entitled to overtime would collect.

“My boss has texted me every day, even on weekends, saying, ‘We need this. We need that,’” she said. “And because I want a job again, I gotta do it.”

She will, at least, have gained an appreciation for the difference between a W-2 and a 1099: lots of money, the latter requiring her to pay another 7.7 percent in taxes on her wages to make up for those her employer should be paying but does not. (Independent contractors do get some benefit from the 2017 federal tax law, which lets them deduct the first 20 percent of their earnings.) A 1099 also means no paid sick days or employer health insurance.

Lisa does plan on filing unemployment after this gig is over. And she will get it, despite her employer having classified her a contractor and not paying any money in to the state insurance program.

When assessing an alleged contractor’s unemployment claim, California’s Economic Development Department applies much the same test as the federal government. Does the employer “control the manner and means by which the work is performed”? If yes (if one’s hours, for example, are set by one’s boss) the employee is an employee and entitled to an unemployment check.

The other things an employee is entitled to, however, require more work to attain, and most won’t bother appealing to the IRS — not for a formal determination, much less the back taxes owed by past, delinquent employers that require yet more paperwork. That hurts the employee, but it also deprives the state of revenue and puts at a disadvantage other businesses that do follow the rules.

It is not like bosses don’t know what the rules are, even if that’s what some claim when the IRS comes around. Entertainment Partners, one of the largest payroll firms in Hollywood, is unequivocal: as far as it is concerned, in film and television production there is no such thing as an independent contractor.

“The federal government considers any person under your direction or control an employee,” the company states on its website. “As such, withholding, as well as employer taxes (e.g., FICA, [state unemployment insurance] and [federal unemployment insurance]), are due on wages and taxable allowances,” it says, noting that a failure to comply means “potential liabilities exist for all unpaid federal/state/municipal taxes…. Therefore, EP does not pay independent contractors.”

But culture often trumps the letter of the law, and the same culture that for so many years condoned unpaid internships — before the class-action lawsuits came — tolerates this particular form of wage theft as just another cost of doing business. That culture is, of course, the product of power dynamics: What’s a worker going to do: say no? Turning down a job or burning a bridge by defending one’s rights can cost a career.

“You don’t want to be seen as a whistleblower,” said Christina, a casting producer on a popular network dating show. She has been working in the entertainment industry since 2009, almost always as an independent contractor. She complains to her friends, but not to the state. “If you go down that route you’re nailing your own coffin shut,” she said. “You’re fucked. You’re never going to work again.” (She did not want her last name used for this story.)

So much depends on individual initiative, in terms of catching employers who misclassify. And there’s also the question for understaffed state agencies: Where to start?

“It’s a whack-a-mole dilemma,” said Kinney. “There’s so many people that have been misclassified. We’re talking [such] vast, vast numbers, that our bodies of government that are designated with regulating these things cannot manage. So people are going to get away with it.”

Misclassification, then, remains a systemic issue treated as an individual’s problem, with misbehaving employers given the benefit of the doubt — a benefit that no worker who has run afoul of the law is likely to receive.

There have been efforts to change that, however.

In 2013, Ohio Democrat Sherrod Brown introduced legislation in the U.S. Senate that would have eliminated the get-out-of-an-audit provision in the current tax law for employers who misclassify their employees. Among its 10 cosponsors were some big names — Vermont Senator Bernie Sanders, Massachusetts Senator Elizabeth Warren and Illinois Senator Dick Durbin, the second-highest ranking Democrat in the chamber — none of whom were Republicans.

The bill went nowhere.

States could pick up the slack, but the 2017 tax law that reduces some of the financial burden on contractors also makes it harder to raise revenue for state-level enforcement of labor and tax laws. That won’t change under the current president. What potentially could, however, is the culture: A status-conscious industry like ostensibly liberal Hollywood can arguably be shamed into living up to its alleged values. In fact, a crusade against misclassification can be seen as consistent with, if indeed not part of, the Me Too campaign: under federal law, independent contractors have a much harder time fighting sexual harassment in the workplace.

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Five Takeaways From the Disneyland “Homeless” Report

New research reveals that 11 percent of 5,000 Disneyland workers surveyed—custodians, food workers, musicians, cashiers, concierges—have been homeless at least once in the past year.

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It’s the report being read ’round the world. “Working for the Mouse: A Survey of Disneyland Resort Workers,” co-authored by the Economic Roundtable and the Urban and Environmental Policy Institute at Occidental College, has conclusively revealed Orange County’s dirtiest secret: The Happiest Place on Earth is little more than the embodiment of scarcity economics for many of its workers (known in Disneyspeak as “cast members”).

Media outlets from the New York Times to NPR (and even Breitbart) reported on the study’s most explosive findings: that 11 percent of the 5,000 workers surveyed—custodians, food workers, musicians, cashiers, concierges and more—have been homeless at least once in the past year, that three-quarters of them “do not earn enough money for basic expenses every month” and that 85 percent make less than $15 an hour, despite years of record-breaking profits by Disney. But a deeper reading of the 126-page report uncovers even more damning information. Here are five underreported angles:

  • Seniority Doesn’t Matter  Among cast members who’ve worked more than 15 years, 52 percent don’t make above $15 an hour, and 67 percent “can’t afford to pay their monthly bills.” It makes sense, then, that while 75 percent of cast members feel “they are treated with respect on the job,” only 35 percent of senior employees do. And emphasis on the senior: The number of cast members over 55 has jumped from nine percent of the total Disney work force in 2002 to 18 percent in 2017.
  • Those Omnipresent Cast-Member Smiles Cost Them  Forty-one percent of full-time employees forsook needed dental work in the past year because they couldn’t afford the premiums on Disney’s insurance or had no insurance at all.
  • Disney Loves Kids — Unless They’re Employees’ Kids  Fifty-seven percent of workers with children missed at least one shift in the past year because they couldn’t find a babysitter. Seventy-nine percent of employees who pay for child care say they’re food-insecure. Meanwhile, the Disneyland Resort has no onsite, subsidized child care facility; 79 percent of workers surveyed said they would use this service if Disney offered it. “I would love that for my 2 year old and 3 year old to know that they would be on property close to me,” one part-time ticket seller told researchers, “and would not have to worry about rushing home in two hours of traffic to go get them.”
  • Disney Workers Live Far Worse than the Average California Worker  While 44 percent of Californians rent, nearly two-thirds of cast members do so. Fourteen percent of California renters live in households with more than one person per room; 52 percent of cast members do. Meanwhile, four percent of workers in Los Angeles and Orange counties commute more than one hour to their jobs, compared with 31 percent of Mouse workers. That daily drive for them “is so onerous,” according to the report, that 21 percent of all Disney employees “sometimes stay with friends, rent a hotel room, or sleep in their cars rather than return home and then come back to work for their next shift.”
  • Few Disneylanders Live in South Orange County  “Working for the Mouse” mapped out where the majority of Disney workers live, a blob roughly bounded by the 55, 91, 15, 10 and 710, freeways. Relatively few Disney workers live in South Orange County, OC’s richer, whiter, more recently developed area—further proof that a Disney job marks the worker as a member of the working poor.

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How Elon Musk’s Traffic Tunnel Could Harm Los Angeles

Co-published by Fast Company
The Tesla CEO’s proposal to bore a high-speed commute tunnel under the Westside of Los Angeles may amplify many of the county’s most deeply entrenched disparities.

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Julianne Tveten




Boring Company's digging machine. (Photo: The Boring Co.)

Like the idea behind freeways, the Boring Company’s proposal misses a fundamental principle in reducing traffic: limiting the number of cars on the road.

Co-published by Fast Company

On January 22, employees of Elon Musk’s the Boring Company took the floor in front of Culver City’s city council. Over the course of 45 minutes, operations coordinator Jehn Balajadia sought to justify the company’s flagship project: To dig a 20-mile tunnel stretching from the South Bay California city of Hawthorne, to West Los Angeles and the Sepulveda Pass beyond in order to transport vehicles at high speeds.

Characterizing Culver City as “forward-thinking,” Mayor Jeffrey Cooper opined that “it would be foolhardy of us to just say no.” Councilmember Meghan Sahli-Wells, however, wasn’t impressed. “I asked a lot of questions. I didn’t get any answers,” she told Capital & Main. “They sent us the PR people. They didn’t send us the planners. I, so far, have not seen a plan.”

Map shows Boring Company’s proposed Phase 1 in red. (Image: The Boring Co.)

Sahli-Wells’ frustrations are revealing. Conceived by Musk in 2016 as a way to bypass the region’s freeway gridlock, Boring Company’s putative purpose is to construct networks of subterranean tunnels in California, Chicago, and the East Coast, through which personal cars and multi-passenger “pods” would travel on electric skates at speeds hovering around 125 to 150 miles per hour, with no stops between origin and destination. Beneath the veneer of its otherworldly grandeur, however, the company has had little to show for itself, investing far more in publicity gambits—namely, its buzzing campaign to sell branded flamethrowers—than in its own blueprint.

A privatized subterranean transport scheme might appeal to city governments for a number of reasons. “There’s a cool factor and there’s a fantasy factor,” Sahli-Wells said, particularly in the wake of Musk’s recent launch of a Tesla Roadster into space. More tangible motives exist as well—namely, the pressure to relieve congestion in Los Angeles, which has topped at least one list of the world’s most heavily trafficked cities for six consecutive years. In addition, the Boring Company has stated that it would singlehandedly fund its underground expressway, asking no government subsidies; combined with fees from tunneling and other permits, the prospect would ostensibly require little to no public investment.

Transportation Expert: “If I could drive from Brentwood to Hawthorne in 45 minutes, and I can take this tunnel in five minutes — but it takes me 30 minutes in line to get into it, then really, what’s the point?”

These factors, apparently, have charmed officials in Hawthorne, where Musk’s SpaceX’s headquarters is located. Last August, its city council approved Boring’s request to drill a two-mile underground test track extending west from the SpaceX offices. Such a project will augment what the company had already constructed as of last summer: a shaft and tunnel entrance in an old SpaceX parking lot, across the street from its headquarters.

Yet the evidence that the Boring Company will deliver on its central promise of mitigating traffic appears to be sparse. Theoretically, one or more additional layers of roads would reduce the number of cars on surface streets, thereby decongesting them. The company, however, has neglected to address the mechanics of the surface-level points of entry and exit above the tunnel—on-ramps, of sorts, that could far too easily cause jams.

“If there is a way to [travel] very fast—essentially a teleportation from one side of L.A. to the other—there’s going to be a big line for that, just like right now there’s a line during peak hours to go from a surface street to a freeway in Los Angeles,” Juan Matute, associate director of the University of California, Los Angeles’ Lewis Center and the Institute of Transportation Studies, told Capital & Main. “If I could drive from Brentwood to Hawthorne in 45 minutes, and I can take this tunnel in five minutes, but it takes me 30 minutes in line to get into it, then really, what’s the point?”

According to Streetsblog LA editor Joe Linton, the tunnel project’s combination of seduction and naiveté evokes a traffic-reducing proposition of yore: freeways. Originally advertised as a means by which to alleviate surface-street crowding, freeways soon generated much of the traffic they were designed to manage and prevent, exemplifying a concept known as induced demand. “In the ’50s, highway builders, car infrastructure folks [said], ‘If we can build more capacity, if we can widen another freeway, build another freeway, congestion is going to get better.’ What we’ve seen is the opposite,” he said. “The more capacity you have, the more congestion you get.”

Like the idea behind freeways, the Boring Company’s proposal misses a fundamental principle in reducing traffic: limiting the number of cars on the road. Critics claim that, in merely seeking to accommodate those cars, it perpetuates, rather than challenges, the system of car dependence responsible for Los Angeles’ congested roads—an apparent manifestation of Musk’s own self-interest. Last year, Musk garnered much opprobrium for his animus toward public transit, which he’s called “a pain in the ass.” But his greatest incentive, most likely, isn’t so much ideological as financial: For the owner of electric-car company Tesla, an atomized, driver-centric future of transit is simply good for business. (The Boring Company did not respond to requests for comment.)

The tunnel network might also be construed as a symptom of what writer Jarrett Walker terms “elite projection,” or “the belief among relatively fortunate and influential people that what those people find convenient or attractive is good for the society as a whole.” After all, as has been noted, the Westside tunnel parallels  Musk’s own commute: The SpaceX founder owns five houses in Bel Air and works in Hawthorne.

The proposed tunnel is primarily “within the wealthy Westside of Los Angeles,” Sahli-Wells pointed out. “Show me the plan that serves communities that are not wealthy. Communities that need more access to schools, jobs, medical facilities — you name it.”

The Boring Company claims its fares would be comparable to those of current public transportation—$1.75 one way in the city of Los Angeles, $1 in Culver City—but the reasons to be skeptical are legion. Privatized transit, at least in theory, wouldn’t receive the government subsidies of public transit. What’s more, Matute predicts that the company may take a number of approaches to pricing that would restrict accessibility, including a subscription or tiered model in which users pay regular fees to use the tunnels or a pay-per-trip schema. Considering the precedents of Big Tech’s attempts to “disrupt” transportation—namely, Uber and Lyft—a “flex-pricing” model wherein fares rise with demand is equally conceivable.

The Boring Company would likely not only neglect to transport low-income communities, but also threaten to displace them. As of 2016, the city of Hawthorne’s per-capita income was $21,182, with 19.2 percent of residents living in poverty—an existence whose precarity would only heighten amid an influx of young tech professionals.

“There’s a lot of demand to get from Hawthorne to Brentwood because there are a lot of jobs on the Westside,” Matute said. “This would greatly increase demand to live in the Hawthorne area, the South Bay, for people who work in the types of jobs that are in Santa Monica, Westwood — maybe even Century City. Just like putting a new Google Bus route into a different neighborhood in San Francisco can bring up prices along where those stops are, this would have, I think, a similar effect because it changes the accessibility of those neighborhoods on the other end.”

Can cities afford to take this risk, especially when issues of equity and accessibility already plague would-be public-transit riders? A recent UCLA study found that public transit ridership is declining, while car ownership is increasing. One cause is poor service quality: Within Southern California’s Imperial, Los Angeles, Orange, Riverside, San Bernardino and Ventura counties, bus speeds have slackened, due in large part to mounting congestion. This development marks a vicious cycle: As buses slow, riders become discouraged and, if they’re able to do so, begin to drive, aggravating the traffic that caused the buses’ inefficiency in the first place.

“We spent billions and billions of dollars on a system that you need to own a car for,” said Linton.  Such a requisite “presents a huge fiscal burden on low-income families that buy cars,” he added.

To allay the burdens of traffic and car dependency, Sahli-Wells advocates for an extensive network of mass public transit in which cars become the least, rather than the most, convenient mode of transportation. In addition to the recently approved transit extension measure, which includes a considerable broadening of the rail system for Los Angeles County, she, along with Linton and Matute, recommends more dedicated bus lanes, which would effectively exempt buses from traffic; Linton posits such adjustments as all-door boarding, boosting bus frequency, and thinning the number of stops for non-express lines.

The fate of such a public-works project remains to be seen, as does that of the Boring Company. Still, what’s clear is that, if allowed to proceed, the company’s initiative may amplify many of Los Angeles County’s most deeply entrenched disparities. In the meantime, until Musk can shed more light on his project, Sahli-Wells will continue to look elsewhere for transit solutions.“Even if Mayor Cooper says we would be foolish to say no,” she cautioned, “I think we’d be foolish to say yes.”

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Port Truckers’ Lawsuit Tells Company the Gig’s Up

Truck drivers spend unpaid hours awaiting assignments from dispatchers, as well as burning up time at vehicle inspections or completing shipping paperwork—time that would be compensated if they were classified as hourly or salaried employees, instead of as contractors.

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Bobbi Murray




Angel Omar Alvarez, driver and lawsuit plaintiff.

Lawyer: Drivers can receive what amount to negative paychecks, even after a 60-hour work week, due to unlawful company deductions.


The term on-demand economy probably brings to mind Uber and Lyft drivers. But truckers, not so much

Short-haul truck drivers who move cargo from portside to railroad yards and warehouses are part of the “gig economy” that requires service-providers (i.e., the workers) to front their own operational costs.

On Monday lawyers filed a class-action lawsuit in Los Angeles Superior Court against XPO Logistics Cartage on behalf of approximately 160 truck drivers at the ports of Los Angeles and Long Beach, arguing that truckers should be classified as employees, not contractors. The litigation seeks restitution of lost wages but also calls for an injunction to halt what it calls XPO’s unlawful practices.

XPO is one of the world’s 10 largest providers of transportation and logistics services, and worth $15 billion in annual revenues. It moves freight for such marquee brands as Amazon, Toyota, Procter & Gamble and Sony.

According to attorney Julie Gutman Dickinson, truck drivers spend unpaid hours awaiting assignments from dispatchers, as well as burn up time at vehicle inspections or while completing shipping paperwork—time that would be compensated if they were classified as hourly or salaried employees instead of as contractors. Dickinson is a partner at Bush Gottlieb, the firm which, along with the law offices of C. Joe Sayas Jr., filed the lawsuit. She said deductions for expenses include insurance, computer tablet fees and administrative costs.

Drivers can receive what amount to negative paychecks, even after a 60-hour work week, Dickinson added. “They actually owe money to the trucking company due to unlawful deductions because they are illegally misclassified as contractors instead of employees.”

An XPO spokesman denied that the company engages in these practices.

This is not the first proceeding against XPO Logistics Cartage and subsidiaries alleging misclassification. The California Division of Labor Standards Enforcement has ruled that its drivers are misclassified as contractors. Appeals are pending. A 2013 class-action suit against the company, then called Pacer Cartage, resulted in a 2016 settlement for $2,687,500—but did not re-classify the truckers as employees.

In an emailed statement XPO asserted that the vast majority of port drivers want to maintain their independence as contractors. “This business model lets drivers decide who they work for and when. It also means we can offer contractors competitive pay while keeping service levels high for customers. We’ll continue to defend this way of doing business.”

Angel Omar Alvarez, one of the lawsuit’s plaintiffs, has worked for XPO for eight years. He described being responsible for the costs of diesel and repairs, as well as the level of control the employer can exercise.

If a driver rejects a dispatcher’s assigned haul because it’s too time-consuming to be worthwhile, he said, there is retaliation. Sometimes drivers don’t get assignments, other times “they give you the worst load that takes six to seven hours to pick up. They make your life miserable if you reject the load.

“That’s what happens, that’s the reality that we suffer with this company. It happens every day.”

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Historian: Why Economic Libertarianism Is an Overwhelmingly White Cause

While the eyes of most journalists and citizens have been fixed on Washington and Donald Trump, a Duke University professor warns, Charles Koch-funded groups and politicians are quietly lining up the state authorizations needed for a new constitutional convention.

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Photo: Duke University

Nancy MacLean is a historian in a hurry. Leaning forward, hands pressed on the table in front of her, she is telling a room full of activists that an assault on democratic institutions has created an “all-hands-on-deck emergency” on a scale that “we have not seen in our lifetime.” MacLean has a dramatic flair in her writing and in her personal presentations. She speaks with the urgency of someone who recognizes a pivotal historical moment when she see one.

Seated in the windowless basement of a union hall that is shared with a local economic justice non-profit, she is dressed in a white blouse and blazer.

Those assembled take turns expressing dismay over a divided country, over the daily attack on immigrants, and over the legendary discipline of an extreme right-wing political movement that has advanced all the way to the White House.

“Economic libertarianism produces a kind of social Darwinism — the idea that anyone who is not thriving in the economy must have something wrong with them.”

The Duke University professor says she discovered the intellectual underpinnings of the country’s rightward tilt while digging through the archive of a Southern economist named James McGill Buchanan. She laid out her argument in her impassioned and highly readable 2017 book, “Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America. That history holds important lessons for those resisting the right’s ascendance, she tells the group.

The “days of silos are over,” says MacLean. Whereas the left has been focused on discrete campaigns and issues, the extreme right, she warns, has undertaken “an audacious bid that has been six decades in the making to fundamentally change the relationship between the government and the people — and to do so permanently.”

Buchanan, who was 93 when he died in 2013, provided a key set of anti-democratic ideas that propelled the libertarian right’s effort to dismantle the liberal state, while giving plutocrats free rein, according to MacLean. Part of his agenda, MacLean says, included shielding the “makers” from the “takers” by eroding the public’s faith in government as a means to protect the rights of the property-owning class.

Buchanan, a Nobel Prize winner, favored requiring supermajority votes to approve tax increases, making it more difficult for public officials to meet the needs of ordinary citizens. In a long and varied career, he advocated dismantling Social Security, counseled the government of Chilean dictator Augusto Pinochet and nurtured generations of scholars at Southern universities, including at a center he founded at George Mason University with the help of $10 million from the right-wing billionaire Charles Koch.

One of her book’s insights is how conservative legal scholars and economists have understood the degree to which the devil lay in the mind-numbing detail of policy.

“The wicked genius of Buchanan’s approach to binding popular self-government was that he did it with detailed rules that made most people’s eyes glaze over. In the boring fine print, he understood transformations can be achieved by increments that few will notice, because most people have no patience for minutiae,” she writes.

That passage refers to the advice he gave Pinochet’s government, which she argues has hampered Chile’s current president, Michelle Bachelet, from enacting social programs in spite of a strong popular mandate.

Now MacLean is warning progressive activists that the Republican tax bill and its projected $1.5 trillion deficit could help fuel a growing right-wing clamor for a state-led constitutional convention, whose first order of business would be a balanced budget amendment to curtail future government spending.

“While the eyes of most journalists and citizens have been fixed on Washington” and Trump, she warns, “scores of organizations and elected officials funded by Charles Koch and his donor network” have been “quietly lining up the state authorizations” needed for a constitutional convention that will curtail legislators’ ability to serve the needs of the governed. “They now have 28 of the 34 states needed to call such a constitutional convention under Article 5 [of the U.S. Constitution].”

Such a move, she adds, would put the country further down the path toward the “glorious period of liberty” favored by Koch and Buchanan — a place in which workers have “no legal right to organize for collective voice and power” and where corporations are “all but free of democratic accountability” — and where privatization had eliminated Social Security, Medicaid, and Medicare.

Nobody is immune from the right-wing attack on government, says MacLean. “Every civil rights activist, every feminist, every environmentalist, every queer and every retirees’ group who goes to government to move a public agenda is a target for this and will suffer if it goes through,” she says.

Yet this creates a “perverse source of strength,” she says. “Our common need for government can potentially unite all these constituencies across groups to protect and expand democracy.”

MacLean’s fifth book has received a slew of positive reviews from major publications and a National Book Award nomination. Not surprisingly, Democracy in Chains has also drawn an avalanche of attacks from the very right-wing think tank networks that she critiques, as well as complaints from some left academics.

MacLean’s claim of Buchanan’s centrality to the rise of libertarianism, wrote political scientists Henry Farrell and Steven Teles, could be misleading to a progressive movement “liable to overestimate the extent to which the right is operating by a single plan. The most serious danger is that the left might look to this mistaken understanding of the right’s success as a model for how it should organize itself.”

Speaking to Capital & Main, MacLean actually gives some credit to Buchanan, who in spite of his deeply reactionary politics, was “probably the most original thinker about democracy in the last 50 years,” she said.

But Buchanan’s “very, very reductionist analysis” was deployed to erode popular trust in government, she argues.

“He sought to build a case that government could not do what it promised because politicians were not really seeking to advance the public interests as they claimed. They were just trying to get themselves elected using other people’s money. The same was true of all public actors, according to Buchanan,” as she told the union-hall gathering.

MacLean’s book anchors Buchanan’s thinking in the South’s troubled history of segregation and slavery. He advocated for state-funded voucher systems for private schools in the late 1950s, after local officials had closed public schools as part of massive resistance against court-ordered desegregation.

MacLean is careful to say her research found no evidence that Buchanan operated on the basis of racial animus — although he must have understood the context of his proposal for school privatization. MacLean joins conservative scholars in connecting Buchanan’s ideas to those of antebellum South Carolina Senator and plantation owner John C. Calhoun, who thought democracy needed to be curbed because it failed to preserve the liberty of the slave-owning elite.

And what about today’s libertarians? She believes there is a reason libertarianism has remained an overwhelmingly white cause.

“Economic libertarianism,” she told this website, “produces a kind of social Darwinism — the idea that anyone who is not thriving in the economy must have something wrong with them. There’s always this slippage between [economic libertarianism] and the really ugly white-supremacist right,” she says.

MacLean’s fundamental message is that Buchanan – and the extreme right – have an Achilles heel. Their ideas are extremely unpopular and so they have had to proceed by stealth – whether through voter suppression laws, gerrymandering or other means.

“We’ve had the most radical gerrymandering in American history,” MacLean told Capital & Main. “And they’re trying to destroy labor unions without actually saying that they don’t want working people to have a collective voice.”

“However much they may offer bromides to freedom or liberty in the abstract,” she added about the far right, “what they’re really talking about is freeing corporations, and the wealthiest taxpayers, who don’t support what the majority of their fellow citizens do.”

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Legal Scholar: Sliver of Hope for Labor After Janus Hearing

The Janus v. AFSCME case that landed before the U.S. Supreme Court Monday may not only affect the destiny of public-sector unions, but also how much equal access to the democratic process Americans will have in the future.

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Bill Raden




Illustration: Define Urban

The U.S. Supreme Court heard oral arguments Monday in Janus v. American Federation of State, County and Municipal Employees, the much-anticipated case in which plaintiffs are seeking to overturn the court’s 1977 Abood v. Detroit Board of Education decision.

That landmark ruling established the legality of public-employee unions to charge fair-share fees from members who have opted out of paying dues, and formed the basis for thousands of collective bargaining agreements for the nation’s 21 million government workers. The public-employee labor movement Abood ushered in is widely seen as a bulwark of Democratic Party power in the U.S. A decision is expected by the end of the court’s current term, in late June or early July.

Capital & Main spoke by phone with Seattle University School associate professor of law Charlotte Garden, who was in the court today, about her takeaways for Janus’ prospects.


Capital & Main: What is this case about?

Charlotte Garden: Janus is about whether it violates the First Amendment for a state and a union to agree that represented public-sector union members can be required to contribute to their share of the costs of union representation.

Most observers believe that the decision to outlaw public-sector union fair-share fees is a foregone conclusion. That’s because a similar case argued in 2016, Friedrichs v. California Teachers Association, deadlocked only due to the death of Justice Antonin Scalia, who was replaced by conservative Justice Neil Gorsuch. Did today’s arguments suggest any chance for a reprieve for labor?

Garden: I think they did. I wouldn’t go so far as to say I’m optimistic. I went into Friedrichs hopeful and left feeling completely hopeless; and I went into argument today feeling hopeless and left with maybe a sliver of hope. That is in part because Justice Gorsuch and Chief Justice Roberts really didn’t tip their hats. So it’s not entirely clear what they think. Now the way to bet is that they are going to strike down fair share fees. That’s what Justice Roberts voted for in Friedrichs and, with this issue becoming an increasingly partisan one, and given Justice Gorsuch’s votes in other cases so far, I think the way to bet is that he’ll also vote to strike down fair share fees.

The briefs, especially the union’s brief, were really drafted in a way that was designed to get at what are likely to be Justice Gorsuch’s concerns. So the union’s brief, for example, talked about originalism quite a bit and the history of First Amendment protection for public employees in a way that targeted Justice Gorsuch.

Was that the most striking difference for you from the Friedrichs arguments?

Garden: That was one difference. I think the other things were that the union and the State [of Illinois] just sharpened their arguments about why Abood, this 40-year-old precedent that the court is considering striking down in Janus, really is consistent with the way the court has treated public-sector employee speech in lots of other contexts.

There have been something like 79 amici curiae briefs filed on behalf of both sides of Janus. They argue everything from the disproportionate harm that overturning Abood will represent for women and persons of color, who greatly benefit from public-sector union membership, to the legal can of worms the court will be inviting in establishing a First Amendment precedent to challenge on far more trivial matters of government employment concerns. How much weight do those briefs traditionally carry with the court?

Garden: There’s a little bit of research about how influential amicus briefs are, and I think amicus briefs have become more prevalent, especially in high-profile cases over the last couple of decades. There is probably sort of a tipping point, and I’m not sure whether this case would have gone past this, where there’s a trade-off between the number of amicus briefs that are filed and the justices are sort of [being] deluged — and the ability of the briefs to round the case out and really put it in context.

But in this case there were a couple of amicus briefs that I think stand out as being [potentially] influential: One of them is the brief by Charles Freed and Robert Post. That was mentioned by name in oral arguments as a potential kind of compromise position. The other one is a brief by Eugene Volokh and William Baude, two prominent libertarian constitutional scholars, who weighed in on the side of the state and the union, saying that there isn’t really a substantial line of First Amendment case law establishing that there’s some kind of right to avoid compelled subsidization of speech.

Because there’s actually a conservative interest in preserving Abood, right?

Garden: Exactly. Think about all the ways that public-sector employment benefits are bound up with private companies, or are administered by private companies. If you’re a public sector employee and you’ve got some kind of pension, for example, it’s probably administered by a private corporation and a share of your pay every week goes towards that corporation’s fees to administer this fund for you. That corporation probably engages in all sorts of political spending that you might agree or disagree with, and yet nobody has ever really thought before that that might pose some sort of First Amendment problem. Whereas if the court overruled Abood, then I would expect to see more challenges to that sort of arrangement.

How radical an act of judicial activism would it represent to overturn Abood?

Garden: I think it would be remarkable for the court to turn away from not just this 40-year-old precedent, but also this long line of cases, including both older cases and more recent cases about the rights of public employers to manage their workforces as they see fit. So it’s one thing to overturn a stand-alone case, but that’s not what would happen here. It would really require some hard work, and maybe some kind of fancy footwork for the court to come up with a reason that agency fees are somehow different than all the of the ways that states currently restrict public employee speech.

Is that now it for Janus, or could a mass march on Washington influence the court?

Garden: I think there are probably some historical examples where public opinion has played a role in swaying the court. I’m not sure how likely this case is to be one of them. In part, that’s a reflection of the fact that its heart is a kind of complicated legal issue that only part of the public is interested in. It’s not like a Brown v. Board of Education or a gay marriage case, where lots of people are really focused on the issue. So I’m not so sure about that.

If you’re in a public-sector union or you’re represented by a public-sector union, now is the time to be talking with your coworkers — talk to them about why union membership is important. I’d add that if you care about the political gerrymandering cases [or] about equal access to the democratic process, then you should also care about this case.

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