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The Case for Libertarian Lawsuit Reform

Policies intended to help workers by empowering trial lawyers have become their worst enemy.

Contrary to popular belief, the best way to ensure that workers enjoy good wages and working conditions is a policy of maximum free markets.

Government laws and regulations “protecting” workers raise the price of labor, causing many employers to refrain from expanding their workforces. The result is that workers have fewer alternatives and thus less bargaining power. If one wants to be truly pro-worker, one should be against the Department of Labor’s continuing abuse of its power (and the court system) to harass employees.

For example, in 2012, President Obama’s Department of Labor rolled out regulations that applied child labor laws to family farms. This proposal was the subject of an outcry from those same farms, many of which had family members and local teenagers helping out with the traditional farm work.

As my boss and then-congressman Ron Paul said at the time, “applying child labor laws to family farms is an outrageous assault on America’s farmers. My parents were dairy farmers who required me and my brothers to help out on the farm. I certainly benefited from this experience, and, as a representative of a congressional district containing a large number of farmers, I have had the opportunity to meet many farmers who learned about their profession by doing chores on their parents’ farms. Working on a family farm also provides a tremendous opportunity to form a strong work ethic that these children will carry through the rest of their lives.” This was merely one of many bad regulatory ideas that came out of the Obama administration, but it was so objectionable that even Obama backed away from it.

Another bad policy was the Obama administration’s assault on the franchise model of business. As Quin Hillyer noted in the Washington Examiner, “the Obama rule expanded the definition of ‘employer’ so that even if a business owner exercised ‘control’ over an employee that is only ‘indirect,’ the owner could be considered a ‘joint employer’ for purposes of labor law — with all the complicated rules and requirements pertaining to employer-employee relations.” The Obama rule would have put national franchises, which include some of the most successful businesses in America, on the hook for employment disputes at local stores. This rule was particularly harmful to young people who rely on farms for their first jobs. The Trump administration rolled that regulation back, but it took three years to undo.

Trump also repealed another harmful Obama-era regulation that would have “required companies with 100 or more workers to report detailed salary information to government bureaucrats by sex, race, job category, and other factors,” according to a 2017 report by the Heritage Foundation. The rule was intended to allow trial lawyers access to this data so they could use them to sue companies with deep pockets.

A similar Obama-era policy that has not been changed by the Trump administration uses data on hiring and promotion collected from government contractors to claim discrimination. One lawsuit, filed against Oracle, is based entirely on statistics with no witnesses or documentation to support its allegations. The Wall Street Journal opined, “Labor based its complaint solely on statistical analyses of Oracle’s workforce. For instance, 82% of the employees Oracle hired for a technical position were Asian compared to 75% of job applicants. The department didn’t review worker applications or performance reviews to see if pay and hiring discrepancies could be explained by merit. Labor also assumed employees with the same job title do the same work though that’s often not true.” This is actual discrimination against a tech company on the part of the federal government.

Policies encouraging baseless lawsuits against some of our nation’s most successful businesses harm the very workers they claim to benefit. Those who want to be truly pro-labor should join libertarians in working to end the regulatory state that gives bureaucrats and judges the power to violate constitutional rights of contract and property.

Norm Singleton is the chairman of Campaign for Liberty. He previously served as an aide to Texas Congressman Ron Paul, and is a founding member of the Republican Liberty Caucus.

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