Oregon Musicians No Longer Presumed Employees for Unemployment Purposes
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Sine die! The Oregon Legislature's biennial session has come to a close, providing a perfect opportunity for the Stoel Rives World of Employment to take a look at what passed, what failed, and what flew under the radar.
One helpful new statute fixes a problem for employers who operate music venues. In late 2007, Mississippi Studios, a hip North Portland nightspot and recording studio, got nailed in an Oregon Employment Department audit for not paying unemployment taxes on musicians who played at the venue. Mississippi assumed that the musicians were not employees, but were independent contractors according to the Department's test. Not so fast. Mississippi was unaware of ORS 657.506, an obscure provision in Oregon statute that presumed musicians are employees unless otherwise stated in an employment agreement.
The new statute, which went into effect immediately on passage, repeals the old rule and treats Oregon musicians just like everybody else. The bill is simply drafted and repairs some bad lawmaking. Way to go, legislature! This time you were up there with the best.
9th Circuit Orders Damages, but Not Reinstatement for Unauthorized Alien Workers
What's an employer to do when it is ordered to reinstate former employees, but those employees are not legally authorized to work in the United States? Pay liquidated damages instead, according to the Ninth Circuit's recent decision in NLRB v. C&C Roofing Supply Inc.
In C&C, the National Labor Relations Board (NLRB) alleged that the employer unlawfully fired 20 workers for engaging in union activity. The parties reached a formal settlement that called for reinstatement of the illegally fired workers and payment of specific amounts of liquidated damages to each. However, the employer then refused to reinstate the employees because many of them were unauthorized aliens and rehiring them would violate the Immigration Reform and Control Act (IRCA) and the Legal Arizona Workers Act, which both prohibit hiring unauthorized aliens.
The Ninth Circuit solved the dilemma by ordering the employer to pay the agreed-upon liquidated damages, but did not require the employer to reinstate the unauthorized employees. But how does this case square with Hoffman Plastic Compounds Inc. v. NLRB? There, the U.S. Supreme Court held 5-4 that the board may not order back pay for unauthorized aliens, despite their firing in violation of federal labor law, because doing so would violate immigration policy expressed in IRCA. In C&C, the Ninth Circuit dodged that issue by ruling that agreed-upon liquidated damages as part of a settlement do not raise the same issues as back pay ordered by the court, as the employees need not be "available to work" in order to receive liquidated damages. Don't be surprised if this one gets appealed up to the Supreme Court for a determination if it really does square with Hoffman.
Ricci v. DeStefano -- Supreme Court Holds City Violated Title VII By Rejecting Racially Disparate Test Results
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To end its term, the Supreme Court today issued its long awaited opinion in Ricci v. DeStefano--a case that has received extra media attention because Supreme Court nominee Sonia Sotomayor was on the Second Circuit Court of Appeals panel that decided the case below. The conservative justices on the Court reversed the Second Circuit (and by extension, Judge Sotomayor) in a 5-4 decision, ruling that the city of New Haven violated Title VII by discarding the results of a firefighter promotion test where white applicants fared disproportionately better than other applicants. As one might expect, Justice Kennedy provided the swing vote and authored the majority opinion.
New Haven used the test in question to identify firefighters best qualified for promotion. Despite being objectively administered, the test's racially disproportionate results led the city to question whether it should validate the results. The city, of course, found itself in a "damned if you do, damned if you don't" position: certify the test results, and face Title VII disparate impact litigation from minority applicants; fail to certify them, and face Title VII reverse discrimination litigation from the white officers who passed but were denied a promotion. The city opted for the latter course, and, as expected, the white firefighters filed a reverse discrimination lawsuit. The city prevailed on summary judgment at the district court level, and the Second Circuit affirmed.
The Supreme Court found that discarding the tests violated Title VII , while certifying the test would not have been a violation of law because there was no "strong basis in evidence" for believing that the black firefighters would prevail on a disparate impact claim. The court noted that despite what otherwise would have constituted a "prima facie" showing of disparate impact race discrimination, several defenses were available to the city--namely that the exam at issue was job related, consistent with business necessity, and there existed no equally valid, less discriminatory alternative that suited the city's needs but was not adopted. The four dissenting justices disagreed, arguing that the majority's analysis was flawed because "New Haven had ample cause to believe its selection process was flawed and not justified by business necessity."
Ultimately, the Ricci decision will have little to no impact on most employers, but represents a small victory for employers (despite the positioning here that held against the city/employer). Employers can now take a somewhat more confident stand in backing test results that may demonstrate some disparate impact, so long as the test was objective and no other less discriminatory alternative exists. The Ricci decision may not last for long, however. Political condemnation by Democrats has been swift, with Senator Patrick Leahy (D-VT) saying that "it is less likely now that employers will conscientiously try to fulfill their obligations under this time-honored civil rights law. This is a cramped decision that threatens to erode these protections and to harm the efforts of state and local governments that want to build the most qualified workforces." Don't be surprised if Congress passes legislation down the road aimed at upending the Ricci decision.
FOREWARN Act Introduced - Changes to WARN Act in 2009?
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Last week, the Federal Oversight, Reform, and Enforcement of the WARN (FOREWARN) Act was introduced in the House by Rep. George Miller (D-CA) and in the Senate by Sen. Sherrod Brown (D-OH). FOREWARN aims to amend the Worker Adjustment and Retraining Notification (WARN) Act by requiring more and smaller employers to notify workers of plant closings or mass layoffs. FOREWARN also would increase penalties for employers who violate the act. For more information, click here to read Senator Brown's press release on FOREWARN.
This isn't the first time in Congress for FOREWARN; it was introduced in 2007, but failed to gain traction, perhaps because of a likely veto from the then Bush White House had it passed. The reintroduction of FOREWARN does not come as a big surprise: the Stoel Rives World of Employment warned (ouch! bad pun!) that changes were coming to the WARN Act back in March. Better yet, we predicted FOREWARN would be on then President-Elect Obama's agenda back in November 2008.
While FOREWARN is still making its way through Congress, employers must comply with the existing WARN Act, and we have some WARN Act resources to help:
- For a basic overview of the law, here's a basic WARN Act Fact Sheet.
- For more detailed information, download the Employer's Guide to the WARN Act (a great resource and our personal favorite).
- Next, if your layoff is caused by an "act of God," you might want to download the WARN Act Natural Disaster Fact Sheet.
- And finally, you can read what the DOL is telling your employees: the Workers' Guide to the WARN Act, and for Spanish-speaking employees, the Guía para el Trabajadores.
Employment Non-Discrimination Act: Is This the Year?
Just in time for Pride Month, Representative Barney Frank (D-MA) introduced the Employment Non-Discrimination Act of 2009 (ENDA) earlier this week. If passed, ENDA would prohibit employment discrimination on the basis of sexual orientation or gender identity. It would also prohibit employers retaliation against employees who oppose such discrimination who participate in any investigation or proceeding under ENDA. To read more about ENDA, check out this article from the Human Rights Campaign.
ENDA would be the first federal law prohibiting sexual orientation and gender identity discrimination. Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of, among other things, sex; it does not explicitly prohibit sexual orientation or gender identity discrimination). Several states already have similar protections in place, but ENDA would apply nationwide. ENDA would exempt from its coverage small businesses (those with less than 15 employees), religious organizations, and the armed forces.
This isn't ENDA's first trip through Congress; versions of the bill have been introduced in almost every Congress since 1994. However, with a strong Democratic majority in both houses of Congress, a Democratic President who is feeling the heat from the GLBTQ community, and the gay rights movement riding a wave of successes in state legislatures, 2009 may well be the year ENDA becomes law.
Employers whose policies and handbooks don't already address discrimination on the basis of sexual orientation or gender identity should consider a revision. For an example of how one company has addressed such discrimination, click here to read IBM's anti-discrimination policy. Click here for a state-by-state analysis of existing sexual orientation discrimination laws;
Oregon Legislature Bans Mandatory Meetings
A new Oregon bill will prohibit employers from requiring employees to attend mandatory or "captive audience" meetings on, among other topics, labor unions. Governor Ted Kulongoski is expected to sign the bill, which would them become law effective January 1, 2010. Click here to read SB 519.
SB 519 prohibits an employer from taking action against an employee who refuses to participate in communications concerning the employer’s opinions on religious or political matters. Religious or political matters is defined broadly and includes communications to employees about unionization. An employee who suffers economic loss (through termination or suspension) as a result of the bill can sue his or her employer and recover treble damages. The bill also allows employees to obtain an injunction prohibiting additional "captive audience" meetings.
This law might not be long-lived: the U.S. Supreme Court found a similar California law to be preempted by federal labor law. Click here to read that opinion in Chamber of Commerce v. Brown. Even if a court finds Oregon's statute to be similarly preempted (and we believe a court will), the law could still apply to employers that are not covered by federal labor law - namely, Oregon public and agricultural employers. Also, the word from Salem is that the legislature will still revise the law to provide additional protections for religious employers (such as churches and some hospitals) who hold religious meetings, so keep an eye out for those changes in the next week or so.
City of Bozeman Reverses Course, Stops Asking for Social Media Passwords
In a new development on yesterday's story, the City of Bozeman, Montana must have been listening to the cacophony of criticism from privacy and employment lawyers alike relating to its new policy asking job applicants for their username and passwords for social networking sites such as Facebook and MySpace.
The Billings Gazette reports that the Bozeman City Commission has voted to abandon the policy, which one commissioner called an "egregious violation of privacy." Interestingly, the policy has been in place for well over a year, but nobody bothered to look closely at the privacy or employment law implications until the media picked up on the story.
Given that most HR professionals wouldn't dream of asking applicants about the kinds of information easily found on social networking sites (even without needing a password), this reversal of course falls in the "better late than never" category of HR decisions.
Labor Unions Targeting Green Energy Development
Labor unions are seeing a rare growth opportunity in green power. Despite the recession, there has been a building boom in green energy, in particular solar and wind projects. As reported recently in the New York Times, labor unions see something in green energy for them as well, and they're using intense political pressure to get it.
When a new solar or wind project is being built, a union will approach the builder and demand that it use only union labor on the project. If the builder agrees, the union then urges local regulators to quickly approve the project; if the builder refuses, however, the union then raises myriad environmental concerns with regulators in an attempt to stall or even completely derail the project. Apparently, a union-built solar installation won't have the same impact on the habitat of the short-nosed kangaroo rat or the ferruginous hawk as a non-union one. Right.
These tactics aren't new; labor unions have made aggressive use of the environmental laws for years to put pressure on traditional energy producers to use union labor. But, with union membership in an overall decline, unions are desperate to maintain relevance in the growing green economy.
Interested in wind, solar and other forms renewable energy? Check out our sister blog, Renewable + Law, from Stoel Rives' Renewable Energy Initiative.
Employer Asks Applicants for Facebook, MySpace Passwords
Besides asking about applicants' educational history and employment background, the City of Bozeman, Montana is also asking job applicants for their usernames and passwords for social networking websites such as Facebook and MySpace. Click here to read the full story from ABCnews.com.
It has become increasingly common over the last few years for employers to research job applicants through social networking sites. In fact, the Delaware Employment Law Blog has some very interesting results from a study on employers' use of social networking sites to screen job applicants. Employers are rejecting job candidates based on postings on drug and alcohol use, inappropriate pictures, and even inappropriate screen names.
But is researching applicants through Facebook, MySpace and Twitter always such a good idea? The conventional interviewing wisdom is to avoid personal questions that could make the hiring process appear biased. Interview questions like "are you married?" or "do you have children?" are generally avoided, as they might make the interview appear to be making decisions based on marital status or family composition. Social networking sites often contain the same information that a good HR person wouldn't dream of asking in a million years. To be safer, employers might want to make reviewing Facebook part of a post-offer background check.
Speaking of social networking, the Stoel Rives World of Employment is there. Click here to follow us on Facebook; click here to follow us on Twitter. Please just ignore those pictures of us from last year's office New Year's party.
Supreme Court Tightens Standards for Age Discrimination Plaintiffs
Yesterday the United States Supreme Court ruled 5-4 that trial courts may not use a "mixed motive" framework in federal age discrimination cases. Rather, plaintiffs in age discrimination cases must prove that "but for" their age, they would not have been discriminated against. Click here to read the Court's decision in Gross v. FBL Financial Services.
Under a 1991 amendment to Title VII of the Civil Rights Act of 1964, plaintiffs may prove race, sex, religion or national origin discrimination by proving either they would not have been discriminated against "but for" their employer's unlawful motive, or if their employer had a "mixed motive," meaning that the employer had some lawful motives to take an adverse action against the employee, but also some unlawful motives. In "mixed motive" cases, employers can avoid some (but not all) liability by proving that it would have taken the same action against the employee even absent the unlawful motive. Prior to Gross, several circuit courts (including the Ninth Circuit Court of Appeals) had applied the "mixed motive" framework in cases under the Age Discrimination in Employment Act or the Americans with Disabilities Act, even though those statutes do not incorporate a"mixed motive" framework.
Gross is ultimately a technical case mostly of interest to employment litigators. Gross will make it incrementally more difficult for plaintiffs to prevail in age discrimination and some other federal discrimination cases. Employers do not need to change their current policies and practices in light of Gross - rather, employers should continue not to discriminate on the basis of age, sex or any other characteristic protected by federal, state or local law. (Well, duh!)
Extension of Federal Benefits to Same-Sex Partners Falls Short of Goals
The memorandum issued by President Obama yesterday extends some benefits to the same-sex partners of federal employees, including access to a government insurance program that pays for long-term conditions such as Alzheimer's disease, and to sick leave to care for a sick same-sex partner or a non-biological child. However, the extension did not provide eligibility for health care to same-sex partners, drawing protest from gay activists.
Why did President Obama stop short? The Defense of Marriage Act (DOMA), the 1996 federal law that, among other things, defines marriage as a legal union exclusively between one man and one woman. According to President Obama's press statement, the White House determined that DOMA prevented an extension of all benefits to same-sex partners, including health care. In the statement, President Obama called on Congress to repeal DOMA and signaled an intend to extend all benefits to same-sex partners if and when that happens.
President Obama's actions will clearly impact Federal agencies and their employees, but what effect does it have on private employers? For now, none - the memorandum only applies to the federal government. However, it does signal a growing trend in mandating the extension of employee benefits to same-sex partners. States that recognize same-sex marriage generally require private employers to extend benefits to same-sex spouses; other states that do not recognize same-sex marriages but do recognize same-sex partnerships (such as Oregon, Washington and California) may require private employers to extend benefits to same-sex partners under certain circumstances. Private employers should consult legal counsel about their possible obligation to provide such benefits.
Obama To Extend Job Benefits to Same-Sex Partners
The New York Times is reporting that President Obama will sign an order later today extending some -- but not all -- job benefits to the same-sex partners of federal employees. According to reports, the order will come short of providing full health care coverage to same-sex partners. Check back in with the Stoel Rives World of Employment for details as they emerge.
Proposed Legislation Would Allow Employers to Fire Union Salts
The Truth in Employment Act of 2009 (TEA) would allow employers to lawfully fire employees who are suspected of “salting,” or attempting to organize the contractor's workforce from within on behalf of a labor union. The bill was introduced in the Senate by Sen. Jim DeMint (R-S.C.) and in the House by Rep. Steve King (R-Iowa).
TEA would amend the National Labor Relations Act to protect the employer from being required to hire any person who is seeking a job in order to promote interests unrelated to those of the employer. “Small businesses should never be forced to hire undercover union organizers who seek to bully workers and harm companies,” said Senator DeMint. “We must pass the Truth in Employment Act or successful small businesses will remain vulnerable to union salting tactics that threaten jobs." Click here to read Senator DeMint's press release on TEA.
Does TEA have a realistic chance of becoming law? Not really. The Republicans unsuccessfully tried to pass TEA in 2005 and 2007, and that was when they had a fellow Rebpublican in the White House and much better numbers in both houses. Expect this one to die on the vine.
Employers can take some solace, however; last year, the National Labor Relations Board held in Toering Electric Company that an employer is not required to hire an employee who is not "genuinely interested in seeking to establish an employment relationship with the employer," thus significantly restricting the amount of salt in unions' diets. If you have concerns about union salting in your workplace, you might want to read the NLRB's Guideline Memorandum Concerning Toering Electric Company.
Reality Show Contestants Win Overtime Case; SAG Signs Contract
A French court recently awarded 11,000 euros (about $15,000) in damages to three contestants in a reality television show, finding that the contestants were entitled to overtime and other benefits. The three plaintiffs appeared in L'Ile de la Tentation (Temptation Island), a show that follows couples separated on a tropical island, where single people attempted to seduce them. (Click here for the full story from the BBC.)
Why the overtime? The French court ruled that the contestants were actually working 24 hours a day while being seduced: "Temptation Island constitutes a job and therefore justifies an employment contract," the court said. "Tempting a person of the opposite sex requires concentration and attention." Concentration, indeed. Don't be surprised if American reality show contestants try the same thing (especially those that get voted off in the first few rounds).
Back stateside, the Screen Actors Guild voted overwhelmingly to approve a new two-year contract with the Hollywood Studios by a vote of 78 percent to 22 percent. Not only does the vote end a year-long impasse, it should also ease our collective fears of an actors' strike, which, like last year's writer's strike, would have resulted in another wave of dreadful reality shows like Temptation Island. Thank you actors!
Proposed Law Would Guarantee Working Mothers Right to Breast-Feed in Workplace
Oregon Democratic Senator Jeff Merkley has announced he will today introduce the Breastfeeding Promotion Act (BPA) in the U.S. Senate. The BPA would guarantee working mothers the right to breast-feed their children at their workplaces. Click here to read about Merkley's proposal on Oregonlive.com.
The bill is identical to one introduced yesterday in the House by Rep. Carolyn Maloney, D-N.Y. and Rep. Lois Capps, D-CA. The law would amend Title VII of the Civil Rights Act of 1964, by to protect breast-feeding in the workplace; provide tax incentives for employers that establish private lactation methods in the workplace; establish minimum safety standards for breast pumps; make breast feeding equipment tax deductible; and create time and privacy for working mothers to express milk.
Oregon implemented a breastfeeding law in 2007, which gives women the right to privately express breast milk in the workplace. Employers with questions about that law may consult this helpful breastfeeding rest period fact sheet from the Oregon Bureau of Labor and Industries. Meanwhile, the Stoel Rives World of Employment will continue to follow the progress of the BPA as it makes its way (or not) through the 111th Congress.
Proposed Law Would Allow Employers to Pay Extra to Union Workers
The proposed Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act, introduced in Congress last week, would change federal labor law to allow employers to pay higher wages to selected union employees. Sounds like a no brainer, right? Guess again.
The Act was introduced in the Senate by Sen. David Vitter (R-La.) and in the House by Rep. Tom McClintock (R-Calif.) Under the RAISE Act, collective-bargaining agreements would establish a "floor" for wages, a minimum standard that employees could then exceed for "those workers who go the extra mile." Under current law, an employer must first bargain with the union and obtain the union's agreement before rewarding individual achievement. Click here for an explanation of the RAISE Act from conservative think tank the Heritage Foundation.
Who would oppose such a law? Unions. Unions are adamantly opposed to allowing employers the discretion to reward individual efforts (one could accurately state that unions oppose allowing employers any discretion whatsoever, but that's a topic for a different post). Expect the unions to quietly put pressure on the Democratic majority to kill this bill. In our humble opinion, the RAISE Act is primarily an attempt by Congressional Republicans to bait unions into embarrassing themselves by opposing a bill that aims to give their own members higher pay. Undoubtedly, this will also play into the Republicans' strategy of opposing the Employee Free Choice Act. But, given the current Democratic majority in Congress, don't expect RAISE to fly.
Former Employee Wins $4.1 Billion, Dr. Evil Award
An arbitrator recently awarded $4.1 billion in favor of the former chief marketing officer of iFreedom Communications Inc., finding that iFreedom breached his employment contract by firing him without cause. You read that right: $4.1 billion, with a "b." U.S. Dollars, not Zimbabwean. Don't believe us? You can read the opinion yourself: Chester v. iFreedom Communications Inc.
$4.1 billion dollars. That's a ton of money. Boatloads of money. In fact, that's so much money, we are awarding Mr. Chester our First Annual Dr. Evil Award! Congratulations!
So, how did Chester rack up $4.1 billion in damages? The employment agreement guaranteed him a salary of $12,000 a month plus commissions of 5 percent of gross sales; if he was fired without cause, he would continue to receive commissions. iFreedom also was supposed to provide Chester with 1.1 million shares of common stock upon hiring and another 600,000 shares if he met certain sales targets . Apparently, iFreedom did really, really well. Sales, stock and interest added up, and in a big way.
How can employers avoid owing an ex-employee billions? First, be careful drafting employment agreements! A carefully drafted agreement could have avoided this massive liability. Second, if the agreement requires "cause" for termination, make sure such cause actually exists before pulling the trigger on someone. Finally, if you get sued and the other side is seeking billions of dollars, hire a decent lawyer and don't try to represent yourself. It turns out the founder of iFreedom (a non-lawyer) represented the company by himself. Oops.
Another Day, Another E-Verify Delay
It seems like just a couple days ago that we reported that implementation of the E-Verify System was delayed until June 30. Actually, it was a couple days ago. Well, you can forget that; the The Department of Homeland Security’s Citizenship and Immigration Service (USCIS) has announced that it will delay mandatory use of E-Verify, this time until September 8, 2009. Click here to read the USCIS's press release on the delay.
Why the delay? For once, it's okay to blame the lawyers: the parties in a lawsuit over the legality of E-Verify, Chamber of Commerce of the United States of America, et al. v. Napolitano, agreed to delay implementation of the rule from June 30 until September 8 to give the Obama administration more time to review the case and determine its position. Initially, federal contractors were supposed to start using E-Verify on January 15, but the rule has been postponed, and postponed, and postponed again. Keep watching the Stoel Rives World of Employment's continuing e-verify coverage to see if the new September 8 date will stick, or whether there will be more delays.
Starbucks Obtains Reversal of $105 Million "Tip Sharing" Case
Just over a year ago, we reported about a $105 million California verdict in favor of Starbucks baristas who were required to pool their tips with supervisors. As you might expect, Starbucks appealed that decision. Yesterday, a California Court reversed the decision. Click here to read the decision in Chau v. Starbucks.
The 4th District Court of Appeal in San Diego ruled Tuesday that supervisors "essentially perform the same job as baristas," so they should get their fair share of the collective tips. (We wonder what that says about the supervisors' exempt status?) Attorneys for the baristas have indicated they will appeal to the California Supreme Court, and the Stoel Rives World of Employment will be watching, its $3.50 latte in hand.
Proposed Law Would Suspend Federal Contractors that Employ Unauthorized Aliens
Federal contractors take note: a new bill recently introduced in the House of Representatives aims to suspend or debar contractors found to employ unauthorized aliens. The bill, the Border Control and Accountability Act (H.R. 1668), was introduced by Rep. Ginny Brown-Waite (R-Florida) earlier this year. The bill also would prohibit the Department of Homeland Security from contracting with companies that do not use E-Verify. The Stoel Rives World of Employment will continue to follow this and other legislation that may impact your workplace.
E-Verify Delayed Yet Again!
Still another delay for implementation of the mandatory E-Verify system for federal contractors. The Department of Homeland Security’s Citizenship and Immigration Service (USCIS) announced for a third time that it will delay mandatory use of E-Verify, this time until June 30, 2009. Click here to read the USCIS's press release on the delay. Click here for the Stoel Rives World of Employment's continuing e-verify coverage.
New Legislation Aims to End Taxation of Domestic Partner Health Benefits
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Under the current tax code, employer-provided health care benefits for employees, their spouses and dependent children are exempt from federal income and payroll taxes; however, health care benefits provided to unmarried domestic partners are subject to both payroll tax (for the employee) and to income tax (for the domestic partner beneficiary). But if passed, the proposed Tax Equity for Health Plan Beneficiaries Act introduced last month in Congress would end the taxation of health care benefits of both same- and opposite-sex domestic partners.
The Act was introduced in the House of Representatives by Rep. Jim McDermott (D-Wash.) and in the Senate by Sen. Charles Schumer (D-N.Y.) A similar bill was introduced last year, but failed to gain enough traction to make it out of committee. The bill might have more potential this time around, with a friendlier climate in both Congress and the White House.
To learn more about the tax laws the Act may impact, check out this article on the taxation of domestic partner benefits from the Human Rights Campaign. The Stoel Rives World of Employment will pay attention to this and other important Labor and Employment legislation, so check back for updates!
