Business
Column: Workers are keeling over from extreme heat while Big Business battles safety regulations
In the summer of 2022, UPS driver Esteban Chavez Jr. died from what his family maintains was heat stroke suffered while delivering packages in Pasadena. In June, Postal Service letter carrier Eugene Gates Jr. collapsed during his route, and later died at a hospital.
Farmworker Efraín López García died last month after working the fields in South Florida. Also last month, a utility lineman collapsed and died in Marshall, Texas, after working in a heat and humidity environment equivalent to 100 degrees.
Those are dispatches from the battle against the punishing heat that has enveloped much of the United States this summer. It’s a battle in which men and women with no choice but to work outdoors are on the front lines. In many occupations and many parts of the country, they’re likely to be taking serious casualties.
Employers have a legal and moral responsibility not to assign work in high heat conditions without protections in place for workers where they could be literally worked to death.
— U.S. Dept. of Labor
Figures for this summer and last haven’t yet been published by the Bureau of Labor Statistics, but its reckoning for 2011 and the prior 10 years is horrifying enough: 436 workplace deaths over that 11-year period, including 36 in 2021.
The figures are almost certainly underestimated, because heat-related workplace deaths are often attributed to some other cause — cardiac conditions or accidents, for example. The toll is almost certain to be higher this year because of the unprecedented severity of the summer heat wave.
The crisis didn’t come as a surprise. In February, the attorneys general of California, New York, Illinois, Maryland, Massachusetts, New Jersey and Pennsylvania asked the federal Occupational Safety and Health Administration to issue an emergency standard for heat exposure by May 1.
They projected (accurately) that heat this summer would outmatch the last two summers, and pointed out that tens of millions of workers, half of whom were people of color, worked in conditions that “put them at grave danger of injury, illness, or death from heat exposure.”
They said OSHA mandates should encompass access to water, shade and rest periods whenever the temperature exceeded 80 degrees. OSHA turned them down, responding that emergency standards would entangle the agency in litigation from industry lobbies, distracting from its efforts to craft a permanent regulation and probably resulting in “no tangible results for workers.”
Still, President Biden recognized the urgency of action by announcing several steps on July 27 to protect workers. Among them, he directed acting Labor Secretary Julie Su to issue a heat hazard alert aimed at reemphasizing to employers the existing right of workers to be protected from heat sickness. “Employers have a legal and moral responsibility,” the alert says, “not to assign work in high heat conditions without protections in place for workers where they could be literally worked to death.”
They include requirements that employers provide adequate cool water, rest breaks and shade or a cool rest area for employees; give new or returning employees the chance to acclimatize — that is, to become used to working in hot temperatures — and to recognize the symptoms of heat sickness. Su’s agency is also vowing to step up enforcement of safety rules on construction sites and farms, the most heatstroke-prone locations.
Biden’s directive aimed to fill a vacuum: No federal law specifically imposes heat safety standards for workplaces. Five states do — California, Oregon, Washington, Colorado and Minnesota.
California was the first state in the nation to implement heat standards for workers, in 2006. They require access to fresh water at all times and mandate shade when the temperature climbs past 80 degrees. Agricultural workers must be granted one cool-down rest period of at least 10 minutes every two hours when the temperature exceeds 95 degrees.
The missing element in California’s rules is coverage for indoor workers, such as those employed in vast inland warehouses that often have no cooling equipment other than fans, which merely move the stifling heat around. The state Occupational Safety and Health Administration has been working on rules for indoor workplaces since 2017; the latest draft, which requires that they be cooled to less than 87 degrees, will be subject to public comment through Aug. 22.
The California rules are enforced by the chronically underfunded and understaffed Cal/OSHA, which has a lot on its plate. Its jurisdiction includes not only industrial workplaces but amusement rides, elevators, mines, tunnels and asbestos and carcinogen monitoring.
That hasn’t stopped employers from grousing about the state regulations. The Construction Industry Safety Coalition has called the state’s rules “confusing and ineffective,” though its complaints sound a bit overwrought.
The builders were especially irked by a state rule that sources of drinking water be “located as close as practicable to the areas where employees are working.” That’s a “subjective standard,” the construction lobbyists complained, yet Cal/OSHA “regularly cites employers” for failing to meet it.
In his July 27 announcement, Biden referred to a heat-safety rulemaking procedure launched in 2021 by the federal OSHA. But there lies the rub, because Big Business lobbies have done everything in their power to challenge the OSHA process and ensure that whatever standard finally emerges will be shot through with loopholes and diluted into insignificance.
The power of those lobbies was made unmistakably clear in Texas on June 16, when Republican Gov. Greg Abbott signed a bill nullifying city and county ordinances mandating water and shade breaks for outdoor workers.
Among them were ordinances enacted in Dallas and Austin requiring 10-minute breaks every four hours for construction workers. The new state law, which goes into effect Sept. 1, also prohibits municipalities from enacting any such ordinances in the future.The utility worker in Marshall died six days after Abbott signed the law.
You’ve heard all the arguments that Big Business has mustered against the OSHA rule-making before. They’re no different from the arguments raised against any new regulation: One-size-fits-all rules never work, they’re too expensive, they’re “onerous,” they duplicate rules we already have, they require years of further study, etc., etc., etc.
Then there’s this all-purpose defense employers cite against any and all workplace regulations: We care deeply about our workers, so what’s the problem? Or as the American Farm Bureau Federation puts it, “Farmers and ranchers value the agricultural workforce.”
Never mind that government figures show that farming, and its associated occupations in fishing and forestry, had the second-highest toll in heat deaths in 2017-2020, exceeded only by the construction trades. (Says the Construction Industry Safety Coalition: “Workplace safety and health is a priority for all members of the Coalition, and each is committed to helping create safer construction jobsites for workers.”)
The business argument, as embodied in statements by the U.S. Chamber of Commerce and other industry lobbies, is that heat regulations are fine, as long as employers don’t have to pay the costs, the regulations don’t interfere with their ability to drive employees as hard as they can and the government is forced to waste years on extensive studies to support any new rules.
Think I’m kidding? Look at the eight-page comment about the proposed federal heat rule submitted to OSHA in January 2022 by Marc Freedman of the U.S. Chamber of Commerce.
Freedman started by asserting that the factors contributing to heat injuries and heat sickness are “so varied, so often unpredictable and so often unknown to employers” that determining when a rule should apply is almost impossible.
He asks, when is “hot” really “hot”? He writes, “There is no data of which we are aware that indicates at what point … the risk of such illness becomes significant.” He quotes from a 2020 OSHA hearing in which a U.S. Postal Service lawyer got an expert to acknowledge that it was impossible to say exactly how many workers out of 1,000 would be sickened by laboring in 100-degree heat.
“From the data I’ve seen,” the expert said, “it’s more likely that employees will become sick on a 100-degree day compared to an 80-degree day. But I can’t give you an exact number.”
To the Chamber, this pretty much showed that there’s no point in writing a heat-safety rule because one can’t be crafted to meet an “objective” standard — at least not unless OSHA is required to “commission or request additional studies” — which obviously would delay a rule for years.
Then there’s the cost argument. “For many of our members,” Freedman wrote, “measures such as acclimatization and work-rest cycles threaten to directly and substantially impair their employees’ productivity and therefore their employers’ economic viability.” It’s a harsh choice, isn’t it: Work till you drop, or go on the unemployment line.
Is there any relief for the working man or woman from the heat? The record shows that government is a thin reed to lean on — but also that one remedy for heat-related injury and illness is unionization. A study published earlier this year by researchers at the universities of Connecticut and North Carolina found that in 2017 through 2020, more than 80% of exertion-related worker fatalities (a category that includes heat-related deaths) were among nonunionized workers.
Indeed, it was the Teamsters union that forced United Parcel Service to agree to install air conditioning in its sweltering delivery trucks, as part of the contract reached last month. Even in that case, the agreement took years of negotiations and an imminent strike threat to achieve — leaving the question of how many more workers will have to succumb to the heat before the rest of Big Business wakes up to its responsibilities.
Business
Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case
In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.
The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.
The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.
Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.
Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”
Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.
Ms. Flynn said context mattered.
“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”
Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.
The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.
He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.
When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.
After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.
He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.
Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.
Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.
Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.
“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”
Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.
“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”
Business
SEC probes B. Riley loan to founder, deals with franchise group
B. Riley Financial Inc. received more demands for information from federal regulators about its dealings with now-bankrupt Franchise Group as well as a personal loan for Chairman and co-founder Bryant Riley.
The Los Angeles-based investment firm and Riley each received additional subpoenas in November from the U.S. Securities and Exchange Commission seeking documents and information about Franchise Group, or FRG, the retail company that was once one of its biggest investments before its collapse last year, according to a long-delayed quarterly filing. The agency also wants to know more about Riley’s pledge of B. Riley shares as collateral for a personal loan, the filing shows.
B. Riley previously received SEC subpoenas in July for information about its dealings with ex-FRG chief executive Brian Kahn, part of a long-running probe that has rocked B. Riley and helped push its shares to their lowest in more than a decade. Bryant Riley, who founded the company in 1997 and built it into one of the biggest U.S. investment firms beyond Wall Street, has been forced to sell assets and raise cash to ease creditors’ concerns.
The firm and Riley “are responding to the subpoenas and are fully cooperating with the SEC,” according to the filing. The company said the subpoenas don’t mean the SEC has determined any violations of law have occurred.
Shares in B. Riley jumped more than 25% in New York trading after the company’s overdue quarterly filing gave investors their first formal look at the firm’s performance in more than half a year. The data included a net loss of more than $435 million for the three months ended June 30. The shares through Monday had plunged more than 80% in the past 12 months, trading for less than $4 each.
B. Riley and Kahn — a longstanding client and friend of Riley’s — teamed up in 2023 to take FRG private in a $2.8-billion deal. The transaction soon came under pressure when Kahn was tagged as an unindicted co-conspirator by authorities in the collapse of an unrelated hedge fund called Prophecy Asset Management, which led to a fraud conviction for one of the fund’s executives.
Kahn has said he didn’t do anything wrong, that he wasn’t aware of any fraud at Prophecy and that he was among those who lost money in the collapse. But federal investigations into his role have spilled over into his dealings with B. Riley and its chairman, who have said internal probes found they “had no involvement with, or knowledge of, any alleged misconduct concerning Mr. Kahn or any of his affiliates.”
FRG filed for Chapter 11 bankruptcy in November, a move that led to hundreds of millions of dollars of losses for B. Riley. The collapse made Riley “personally sick,” he said at the time.
One of the biggest financial problems to arise from the FRG deal was a loan that B. Riley made to Kahn for about $200 million, which was secured against FRG shares. With that company’s collapse into bankruptcy in November wiping out equity holders, the value of the remaining collateral for this debt has now dwindled to only about $2 million, the filing shows.
Griffin writes for Bloomberg.
Business
Starbucks Reverses Its Open-Door Policy for Bathroom Use and Lounging
Starbucks will require people visiting its coffee shops to buy something in order to stay or to use its bathrooms, the company announced in a letter sent to store managers on Monday.
The new policy, outlined in a Code of Conduct, will be enacted later this month and applies to the company’s cafes, patios and bathrooms.
“Implementing a Coffeehouse Code of Conduct is something most retailers already have and is a practical step that helps us prioritize our paying customers who want to sit and enjoy our cafes or need to use the restroom during their visit,” Jaci Anderson, a Starbucks spokeswoman, said in an emailed statement.
Ms. Anderson said that by outlining expectations for customers the company “can create a better environment for everyone.”
The Code of Conduct will be displayed in every store and prohibit behaviors including discrimination, harassment, smoking and panhandling.
People who violate the rules will be asked to leave the store, and employees may call law enforcement, the policy says.
Before implementation of the new policy begins on Jan. 27, store managers will be given 40 hours to prepare stores and workers, according to the company. There will also be training sessions for staff.
This training time will be used to prepare for other new practices, too, including asking customers if they want their drink to stay or to go and offering unlimited free refills of hot or iced coffee to customers who order a drink to stay.
The changes are part of an attempt by the company to prioritize customers and make the stores more inviting, Sara Trilling, the president of Starbucks North America, said in a letter to store managers.
“We know from customers that access to comfortable seating and a clean, safe environment is critical to the Starbucks experience they love,” she wrote. “We’ve also heard from you, our partners, that there is a need to reset expectations for how our spaces should be used, and who uses them.”
The changes come as the company responds to declining sales, falling stock prices and grumbling from activist investors. In August, the company appointed a new chief executive, Brian Niccol.
Mr. Niccol outlined changes the company needed to make in a video in October. “We will simplify our overly complex menu, fix our pricing architecture and ensure that every customer feels Starbucks is worth it every single time they visit,” he said.
The new purchase requirement reverses a policy Starbucks instituted in 2018 that said people could use its cafes and bathrooms even if they had not bought something.
The earlier policy was introduced a month after two Black men were arrested in a Philadelphia Starbucks while waiting to meet another man for a business meeting.
Officials said that the men had asked to use the bathroom, but that an employee had refused the request because they had not purchased anything. An employee then called the police, and part of the ensuing encounter was recorded on video and viewed by millions of people online, prompting boycotts and protests.
In 2022, Howard Schultz, the Starbucks chief executive at the time, said that the company was reconsidering the open-bathroom policy.
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