College Football Players Are Employees? Who's Next?

The NLRB’s Regional Director in Chicago issued a decision on March 26 in 13-RC-121359 finding the football players at Northwestern University are employees under the NLRA, over the objections of the University. The Regional Director rejected the University’s arguments that the players, who receive “grant-in-aid scholarships” from the University, are more akin to graduate students, held by the Board not to be employees in Brown University, 342 NLRB 483 (2004). The Director also rejected the University’s argument that the players were “temporary employees” who were not eligible for collective bargaining. 

Northwestern’s varsity football team consists of 112 players, 85 of whom receive scholarships that pay for their tuition, fees, room, board, and books in the amount of $61,000 per year ($76,000 per year if they take summer classes). The players receive a “tender” letter at the beginning of their football career that describes the terms and conditions of the offer; are subject to certain rules of conduct; and spend 20-25 hours a week in mandatory activities in the off-season, 40-50 hours per week during the season, and 50-60 hours per week during training camp. The Director found that the players performed “services” for the University that generated revenues of approximately $235 million during the nine-year period of 2003-2012 through the team’s participation in the NCAA Division I and Big Ten Conference through ticket sales, television contracts, merchandise sales, and licensing agreements.

The Director distinguished the graduate assistants who were deemed “not employees” in Brown by the amount of time the Brown students spent on educational studies as compared to work duties. Unlike graduate assistants who were deemed primarily students, the Board reasoned that the players spent more time on athletics “than many undisputed full-time employees work at their jobs” and those hours were more than the players spent on their academic studies. Also, unlike the football players, who did not receive any academic credit for playing football, the graduate assistants received academic credit for performing their duties, and for the substantial majority, those duties were a requirement for them to obtain their graduate degree. In other words, the graduate assistants’ relationship with the university was an academic one, whereas the players’ relationship was an economic one based on large scholarships. Third, Northwestern’s academic faculty members did not oversee the players’ athletic duties, which lessened any concern that allowing them to engage in collective bargaining would have a negative impact on educational decisions.   Critically, the Board also distinguished between general financial aid, which graduate assistants and fellows receive, and the players’ scholarships, which commentators have dubbed “pay-for-play.”

Although this decision affects only the Northwestern varsity football team, it is certain to have ramifications throughout private college athletics. Commenters have referred to this as a “blockbuster” decision that could change the face of college athletics. 

This decision adds to the existing uncertainty of students’ status as employees, given the Board’s decisions. The NLRB has vacillated on the question of whether graduate students, student research assistants, and graduate student teaching assistants who are paid a stipend and required to perform some teaching or research service to their university should be treated as employees. In 2010, the NLRB voted to reconsider its Brown decision, but the parties in the case reached a voluntary agreement in November 2013, and the union withdrew its petition, so Brown is still controlling law. There also has been much litigation regarding whether university faculty are not covered by the NLRA as “management.” And the state of Board law in the medical field concerning medical residents and interns is uncertain since these students also provide compensated services for hospitals. 

The parties have until April 9, 2014 to file a Request for Review of the decision with the Board in Washington, D.C. Northwestern said it would appeal the Regional Director’s ruling to the full NLRB in Washington.

OSHA Issues Interim Final Rules on Whistleblower Protection Provisions Under ACA

The Occupational Safety and Health Administration (OSHA) issued an interim final rule and request for comments regarding procedures for handling employee whistleblower complaints under the Affordable Care Act (ACA), Section 1558. This part of the ACA added a new Section 18c to the Fair Labor Standards Act (FLSA), which protects employees from retaliation for exercising certain rights under the ACA, including (1) receiving a federal tax credit or subsidy to purchase insurance through the employer or a future health insurance exchange, (2) reporting a violation of consumer protection rules under the ACA (which, for instance, prohibit denial of health coverage based on preexisting conditions and lifetime limits on coverage), and (3) assisting or participating in a proceeding under Section 1558.

The interim final rule states the time frames and procedures for bringing a whistleblower complaint under Section 18c and covers the investigation, hearing, and appeals processes. An employee has 180 days from the date of the alleged retaliation to bring a whistleblower complaint to the Secretary of Labor. Where a violation is found, remedies can include reinstatement, compensatory damages, back pay, and reasonable costs and expenses (including attorneys’ fees). If the employee brought the complaint in bad faith, an employer may recover up to $1,000 in reasonable attorneys’ fees.

The bar for an employee bringing such a complaint is relatively low, and the bar for an employer defending against the complaint is relatively high. The employee must only have a subjective, good-faith, reasonable belief that the conduct alleged in the complaint violates the whistleblower protections; the employee need not prove that the conduct was an actual violation of law. The conduct complained of must only be a contributing factor in an adverse employment decision for the employee to make his or her case. The employer must then demonstrate through clear and convincing evidence that it would have taken the same adverse action without the protected activity. 

Each party has 20 days after filing the complaint to submit a position statement and supporting documents, and can also request a meeting to present its position to OSHA. OSHA has 60 days from the filing of the complaint to investigate and issue written findings and, if a violation is found, a preliminary order providing relief to the employee.   There is a process to challenge and appeal OSHA’s written findings and order. There is also a process for an employee to file a complaint in federal court either within 90 days after the employee receives OSHA’s findings, or if no final agency order is issued within 210 days of the filing of the complaint. 

For more information, see the DOL fact sheet, which describes how to file a complaint. If you have comments on this interim final rule, they must be submitted within 60 days of the rule’s publication in the Federal Register (Feb. 27, 2013). Comments may be submitted electronically at the eRulemaking portal.

11th Circuit Disagrees With NLRB And Finds Nurses Are "Supervisors" In Lakeland Health Care Decision

Several weeks ago the U.S. Court of Appeals for the 11th Circuit weighed in on the ongoing debate in labor law over the definition of who is a “supervisor,” and therefore not eligible to join a union, under the federal National Labor Relations Act (“NLRA”). The opinion, Lakeland Health Care Associates , is but the latest installment in an area of labor law that has been evolving over at least the past decade.  While this line of cases, including Lakeland Health Care, are specific to the “supervisor” status of nurses working in the residential care industry, the relevant legal tests are the same for all industries. Employers who may wish to oppose unionization efforts among employees it believes are supervisors will therefore want to continue to pay close attention to these cases to see what could be done to maximize the chance that the National Labor Relations Board (“NLRB” or “Board”) would also find those employees are supervisors. 

LPNs Supervise Other Employees, But Are They “Supervisors” Under The NLRA?

As with many things in labor law, determining who is a “supervisor” is rarely straightforward: simply giving someone the title of “supervisor” is never enough. In many cases employees may have only partial supervisory authority—the issue in cases like Lakeland Health Care is whether the employees had enough supervisory authority to be “supervisors” under the NLRA.

Lakeland Health Care operates residential care facilities (until recently known commonly as “nursing homes”). Consistent with industry-wide practice, Lakeland Health Care staffs its facility primarily with Certified Nursing Assistants (“CNAs”), who perform most of the day-to-day work providing physical care to residents—such as feeding, dressing, bathing, turning, etc.—and charge nurses, usually Licensed Practical Nurses (“LPNs”) or sometimes Registered Nurses (“RNs”), who provide basic medical care to residents such as administering medication, inserting or monitoring intravenous lines, and performing blood draws. Also consistent with industry practice, the RNs and LPNs have general day-to-day supervision over the CNAs with whom they work each shift, but do not have independent hire/fire authority.

Section 2(11) of the NLRA and related case law has a very detailed and complex definition of who is a “supervisor.” To summarize, a “supervisor” is any employee who has the authority to hire, fire, discipline, or assign work to other employees, or to effectively recommend any of those actions, or who “responsibly direct[s]” other employees in their day-to-day work. The supervisor must also use “independent judgment” in performing those supervisory functions and not merely report employee conduct to higher level managers to take action.  Those who meet the "supervisors" tests are not "employees" eligible to organize into unions under the NLRA.

After reviewing the testimony of company witnesses, and employee handbooks and written job descriptions, the 11th Circuit concluded, in contrast to the NLRB, that the Lakeland Health Care LPNs were supervisors under that NLRA definition. Specifically, the Court found that even though LPNs could not hire or fire CNAs, they could independently issue them written and verbal coaching (i.e., discipline) and assign work. The Court also found that LPNs “responsibly directed” CNAs in their day-to-day work in that the LPN ultimately could be held responsible, and disciplined, if the CNAs failed to provide adequate care to residents. The Court found that the LPNs exercised sufficient “independent judgment” in performing all of these functions with respect to CNAs.

A Brief Recent History Of “Supervisor” Status

The supervisory status of charge nurses in the residential care industry has been the subject of much labor litigation over the past 10 years (perhaps because that industry has specifically been targeted for organization drives by many major national and local unions). While the reasoning in Lakeland Health Care summarized above may sound straight-forward, other cases with nearly identical facts have reached very differently results. These differing outcomes make it difficult for employers to know when employees are supervisors, and appear to be largely influenced by two factors.

First, the NLRB’s own interpretation of the law can change dramatically over time depending on whether a pro-union Democrat or pro-business Republican is President. For example, in 2006 the Bush-era Board issued employer-friendly decisions that broadly applied the “supervisor” exception in its Oakwood Health Care “trilogy” (also involving the status of charge nurses in residential care facilities). In so doing, Oakwood Health Care departed from Clinton-era NLRB decisions that had made it much more difficult to show that employees like LPNs are “supervisors.” In recent years, the Obama Board has distinguished Oakwood Health Care to turn back the clock to the broader Clinton-era interpretations of “supervisor.” Perhaps most difficult, the NLRB rarely outright reverses earlier opinions, but instead tries to find subtle factual nuances to harmonize its decisions, even though the different outcomes sometimes seem to be based on very similar factual patterns. 

Second, there is also tension between the (generally pro-union) NLRB and the federal circuit courts, which have jurisdiction to reverse those decisions and may tend to be more pro-employer. For example, the 11th Circuit in Lakeland Health Care specifically held that the employer must only show that the LPNs have the authority to perform the supervisory functions (through written job descriptions, handbooks, and the testimony of managers), not that they demonstrate a practice of actually having used that authority in specific cases. That holding may be a departure from recent cases where the Board found under virtually identical facts that charge nurses were not supervisors, because, even though written policies and job descriptions showed they had supervisory authority, they did not actually discipline CNAs, or did not do so often enough. 

Back To The Future:  More Conflicting Decisions To Come?

It will be interesting to see how the Obama Board will respond to the 11th Circuit’s opinion in Lakeland Health Care.  As we have blogged about repeatedly, the current Obama Board has been very active, tends to be pro-union, and is not afraid of taking positions potentially at odds with federal courts, even the U.S. Supreme Court.  And the NLRB could only be emboldened now that President Obama has won re-election. It is therefore difficult to see how this tug-of-war will play out.  Maybe the only thing that is certain is that more fireworks are likely over the next few months and years in this area.

In the meantime, Lakeland Health Care may offer some help to employers who wish to oppose unionization efforts involving potentially supervisory employees.  While circuit court opinions are not technically binding on the NLRB or its regional offices, they can be persuasive authority.  Also, while this line of cases is particularly relevant for employers like Lakeland in residential care, the “supervisor” tests are the same everywhere.  Employers in all industries may wish to pay particular attention to the weight the 11th Circuit gave to the handbooks and written job descriptions, which helped show that the LPNs in that case had the necessary supervisory authority, and revise their own written job descriptions if needed. If you find yourself in an NLRB hearing involving the supervisory status of employees, the quality of your written job descriptions and handbooks could help make the difference in proving your case.

Recordkeeping: The Often Overlooked Element of FMLA Compliance

Most employers grapple with the better-known aspects of the Family and Medical Leave Act (FMLA), such as determining whether an employee’s illness constitutes a serious medical condition, obtaining required certification or providing adequate coverage for workers on intermittent leave. All too often employers focus on the leave itself and breathe a sigh of relief when notice is provided confirming the dates of leave or when the employee has resumed his or her usual schedule. But an employer’s compliance with federal law includes the obligation to maintain adequate records related to the leave. Failure to do so can have significant consequences.

What Records Must You Keep?

FMLA recordkeeping requirements can be found in a single regulation, 29 C.F.R. § 825.500. That regulation requires employers to keep and preserve records in accordance with the recordkeeping requirements of the Fair Labor Standards Act (FLSA).  Records must be retained for no less than three years. Although no particular order or form is required, the records must be capable of being reviewed or copied. 

Covered employers with eligible employees must also maintain records that include basic payroll and data identifying the employee’s compensation. Failure to maintain accurate records can have significant consequences for employers, who have the burden of establishing eligibility for leave. Accuracy is important:  for example, the regulations demand that records document hours of leave taken in cases of leave in increments less than a full day.  Lack of suitable records documenting when leave was taken can also doom an employer’s defense to claims for leave. Special rules apply to joint employment and to employees who are not covered by or are exempt from the FLSA.

Importantly, copies of employee notices of leave furnished to the employer under FMLA, if in writing, and copies of all general and specific written notices given to employees are required under FMLA regulations. The required copies may be maintained in employee personnel files. In the event of a dispute between the employer and an eligible employee regarding designation of leave as FMLA leave, employers must present the required records, including any written statement from the employer or employee regarding the reasons for the designation and for the disagreement. All too often employers fail to audit their own personnel files to confirm that the required documentation is in place.

Documents (defined to include written and electronic records) describing employee benefits or employer policies and practices regarding the taking of paid and unpaid leaves must also be maintained, along with records of premium payments, if any, of employee benefits.

Compounding The Recordkeeping Requirement:  Don't Forget About Confidentiality

Of particular consequence for employers is the requirement that records and documents relating to medical certifications, recertifications or medical histories of employees or employees’ family members, created for purposes of FMLA, shall be maintained as confidential medical records separately from the usual personnel files. In those circumstances where the Americans with Disabilities Act (ADA) also applies, employers have a duty to maintain such records in conformity with the confidentiality requirements of the ADA. 

Be Proactive, Audit Your Records

Well-intentioned employers recognize that it’s never too late to conduct a compliance audit to determine whether their organization is complying with FMLA requirements.  Identifying and fixing any problems with your recordkeeping processes now could save a lot of headaches down the road.

 

Stoel Rives Presents Webinar On Employer Group Health Plans After U.S. Supreme Court Decision Upholding "Obamacare"

As everyone who was not on Mars this summer knows, the U.S. Supreme Court issued a surprising and historic decision upholding key provisions of President Obama's Affordable Care Act ("ACA").  To help employers navigate the requirements of the law now that it has the stamp of approval of the Supreme Court, and to provide other updates on developments in federal health care reform, members of the Stoel Rives employee benefit and employment groups have been touring the region with a 90-minute presentation entitled "Health Care Reform After the Supreme Court’s Decision: Group Health Plan Update 2012."  The seminars were presented by Stoel Rives attorneys Howard Bye-Torre, Melanie Curtice, Bethany Bacci, Steve Woodland, Matthew Durham, Carolyn Walker, James Dale, Renae Saade, and Tony DeCristoforo in Portland, Seattle, Salt Lake City, Boise, and Anchorage during September and October.

Shameless Plug Alert!  Webinar Presentation on October 25, 2012

If you missed the show when it came to your town or are just interested in learning about this complex and evolving area of employee benefits law, there is one more opportunity to attend the seminar via a webinar which will be conducted on Thursday, October 25 at noon, Pacific Time. To RSVP for the webinar and get instructions for attending, please click here.

What's Covered

The seminars reviewed the Supreme Court decision upholding the constitutionality of the Affordable Care Act (ACA), and also some of the ACA's impacts which have already been felt by group health plans and employers, such as the requirement to cover children through age 26.  Regulatory developments planned for 2013 are also discussed, including:

  • the requirement to report the cost of health care coverage on W-2s;
  • the new disclosure document required by the ACA, the Summary of Benefits and Coverage (SBCs);
  • required 100% coverage for FDA-approved contraceptive methods for women; and
  • the reduction to $2,500 of the maximum amount that an employee can contribute to a health care flexible spending account. 

The seminars also discussed the new two federal fees on group health plans for 2013-2018, the Patient-Centered Outcomes Research Institute fee and the transitional reinsurance program fee. The seminars concluded with a discussion of the ACA requirements for 2014, including

  • the mandate for individuals to have health insurance coverage;
  • employer pay-or-play penalties, including new IRS guidance on the definition of “full-time” employees for purposes of the penalties;
  • recent IRS guidance on the 90-day maximum waiting period for health plans. 

We look forward to seeing you online for the webinar on October 25.

 

 

EEOC's Multifaceted Effort To Aggressively Target Employer Policies Potentially Having "Disparate Impact"

As many of you know, the Equal Employment Opportunity Commission (EEOC) has been on an aggressive tear of late on a broad range of issues.  In addition to upping its investigations of charges of individual “disparate treatment” discrimination, it is undertaking a number of new initiatives that show a renewed focus on facially neutral employer policies that may have a (frequently unintentional) “disparate impact” on protected classes of employees.  Because of the EEOC’s renewed interest in disparate impact, it is prudent for employers to be thoroughly reviewing and auditing their policies and practices to ensure they are not having an unintentional disparate impact on protected categories of employees.  

Below is a quick run-down of the EEOC’s recent efforts on this front.  These and other topics were covered recently in a Stoel Rives Labor & Employment Breakfast Briefing: "Back to School with ‘Hot Topics’ In Employment Law,” by Stoel Rives attorneys Brenda Baumgart and Ryan Gibson, on Sept. 11, 2012 in Portland, OR.

EEOC 2012-16 Strategic Enforcement Plan Targets “Systemic” And Other Forms of Disparate Impact Discrimination
On September 4, 2012, the EEOC issued an updated version of its Strategic Enforcement Plan (“SEP”) for 2012-2016, in which it highlighted its enforcement priorities now and in the coming years.  In addition to highlighting education and outreach efforts, the SEP shows a strong focus on disparate impact concerns, including:

  1. Preventing “Systemic” Discrimination. The EEOC is targeting general practices, handbooks, online applications and similar policies that may have disparate impacts on protected classes of employees such as racial minorities, older workers, or disabled employees.  Examples identified by the EEOC include “exclusionary policies and practices, the channeling/steering of individuals into specific jobs due to their status in a particular group, restrictive application processes, and the use of screening tools (e.g., pre-employment tests, background screens, date of birth screens in online applications) that adversely impact groups protected under the law.”
  2. Protecting “vulnerable workers.”  The EEOC’s efforts here are focused on immigrant, migrant, or seasonal employees who, due to language or other barriers may be unaware of rights or are reluctant to pursue them.  Again, the EEOC is focusing largely on systemic, disparate impact concerns, such as job segregation, pay disparities, and the unintended impact of English fluency requirements for particular jobs where language skills may not really be necessary.
  3. “Emerging issues.”  A decade ago, the EEOC identified discrimination against Muslim and Arabic employees in the wake of the 9/11 attacks as an “emerging issue” in employment law.  Now, EEOC has identified a number of new “emerging issues” where it has shifted its efforts.  Those include enforcement of the 2009 amendments to the ADA (ADAAA) and related regulations, and  the EEOC's recently recognized protections for gay or transgendered employees under Title VII.  They also include another “disparate impact” concern:  accommodation issues specific to pregnant employees who may be forced to take unpaid leave in lieu of (paid) accommodations—such as temporary job restructuring, reduced schedule, temporary job transfers, or light duty assignments—offered to non-pregnant employees with similar short-term health restrictions.
  4. Preserving Access to the Legal System.  The EEOC is prioritizing investigation of retaliation charges,  because they account for over 37% of all charges filed (the most common type), and because the EEOC believes retaliation amounts to a denial of justice by discouraging employees from exercising their rights.  The EEOC also will focus on what it views as other “systemic” barriers to justice, including “overly broad waivers” and settlement agreements with releases that may unfairly discourage employees from exercising rights or pursuing claims.

EEOC Pilot Project To Directly Audit Employer Pay Practices Under Equal Pay Act
In mid-2012, the EEOC began a pilot program in three district offices (Phoenix, Chicago, and New York) pursuant to its authority to enforce the Equal Pay Act (“EPA”), a 1963 statute that prohibits paying female employees differently for the same work done by male employees.  While gender-based pay discrepancies are also prohibited under Title VII, the EPA specifically empowers the EEOC to conduct “Directed Investigations,” or audits, of employer pay practices to search for gender-based pay disparities, without having to wait for a charge to be filed as is often required for it to investigate alleged Title VII violations.  This has been characterized as a fairly “radical” departure for how the EEOC conducts enforcement, and it is.  While the EEOC has provided few details about how the program will work, at the very least it may simply call or show up at an employer’s doorstep and request policies and information related to pay practices.  If it finds that your pay practices may show a gender-based disparate impact, it may decide to take further enforcement action.

Yikes!  These audits could essentially subject employers to a form of wage and hour class action against the EEOC.  And who knows what else the EEOC may find as a result of its audit, including potential evidence of other “systemic” problems it may wish to investigate further. 

Employers, especially in the regions where the pilot project has begun, are well advised to conduct internal audits of their pay practices to identify and remedy any unexplainable gender-based pay disparities that could be unlawful under the EPA.  Practical pointer:  it’s often a good idea to involve your in-house or outside counsel in these internal audits to maximize the chance that any (potentially bad) findings are resolved and the process for doing so is protected by the attorney client privilege. 

EEOC Guidance Limits Employer Use of Criminal Background Checks
A few months ago, the EEOC issued its long-awaited “Enforcement Guidance” document on when using criminal background checks can be unlawful under Title VII.  The guidance will likely require many employers to revise their hiring policies and requirements that rely heavily on criminal background checks to screen applicants. 

The EEOC’s focus here is, again, the “disparate impact” that facially neutral policies may have on particular protected classes.  With criminal background checks, the implicated protected class is usually race, particularly black and Hispanic men, who studies have shown are statistically and disproportionately more likely to have a criminal record than members of other races.  While the EEOC recognizes that using criminal background screens are appropriate for some jobs, excessive use can have a disproportionate impact on members of certain race groups.

Under the new guidance, blanket policies barring employment because of any criminal conviction will be heavily disfavored.  Instead, the EEOC directs employers to adopt “targeted screens” for particular types of jobs, and also conduct an “individualized assessment” for each applicant affected by a screen.  In developing a targeted screen, the employer is to consider the actual requirements of each job and justify why convictions for specific types of offenses should bar employment in that job.  Although the guidance offers few specifics, as an example it is probably appropriate to screen applicants for jobs working with children for child abuse or molestation convictions, for recent drunk or reckless driving convictions in jobs requiring operating vehicles, or for theft or embezzlement convictions in accounting positions or jobs requiring handling large amounts of cash.

In performing the individualized assessment, the employer is to look at the type, severity, date, and number of prior convictions, and any extenuating circumstances such as rehabilitation efforts or post-conviction work history, to determine whether an employee with a conviction could nevertheless be hired.  Under this approach, an employer may have a difficult time justifying not hiring an applicant for a computer programming job who has worked successfully for a decade simply because he was convicted for being drunk and disorderly at a college frat party in the 1990s.  Conversely, an employer may be more justified in denying employment to someone more recently convicted of violently assaulting a coworker, who violated parole, and had been fired from his last job after a short time for insubordination.

The EEOC’s new guidance is technically not a fundamental departure—the EEOC first articulated its position on criminal background checks in the 1980s, and courts have long held that the use of criminal history screens (or any facially neutral policy, for that matter) can be discriminatory under a disparate impact standard.  But, consistent with its renewed focus on “systemic” discrimination, the EEOC now appears to take a stronger stand that employer policies that broadly rely on using criminal history to screen out applicants will be presumed to be discriminatory, and that employers have the burden to show the screen is justified. 

Employers that use criminal history to screen applicants should review such policies, with a particular eye toward identifying any “blanket” screens (e.g., we don’t hire anyone with any criminal conviction ever).  It may be prudent to then develop detailed written policies implementing the targeted screen and individualized assessment approach promulgated by the EEOC.  Employers should also begin training managers and recruiters on the new standards.

In conclusion, it is important for employers to be aware of these areas of concern to the EEOC, and review policies or practices for potential "systemic" or "disparate impact" effects.  And we will also be closely following any other new initiatives the EEOC may consider in the future. 

NLRB Finds Employee Arbitration Agreement Waiving Class Claims Violates Federal Labor Law

In DR Horton, a decision issued on January 3 and applicable to most private sector employers, whether unionized or not, the National Labor Relations Board (NLRB) held that federal labor law prevents employers from requiring their employees, as a condition of employment, to agree to broad waivers that would deny their right to pursue employment-related class actions both in court and in arbitration, leaving them no forum for pursuing class or collective claims.  As a result, an important tool for managing the risk of employment-related litigation has been taken away (for now). 

The facts of the case are straightforward.  DR Horton, like many employers, required its employees to sign an arbitration agreement as a condition of employment.  The agreement required employees to arbitrate all claims arising out of their employment, and precluded arbitrators from issuing class or group relief.  As a result, employees were prevented from bringing class or collective actions in any forum.  Relying on this agreement, DR Horton refused to arbitrate a class action alleging that it had misclassified certain employees as exempt from the protections of the Fair Labor Standards Act (FLSA).

 

Not so fast, according to the NLRB.  Tracing federal labor law back to its origins, the NLRB found that the filing of a class action “to redress workplace wrongs or improve working conditions” is activity at “the core” of what Congress intended to protect when it enacted the National Labor Relations Act in 1935.  This intent, the NLRB reasoned, is reflected in Section 7 of the Act, which gives employees the right to engage in “concerted activities” for the purposes of “mutual aid or protection.”  Relying on Section 7, the NLRB found that Employers cannot compel their employees, as a condition of employment, to entirely waive the right to bring class or collective actions.

 

The NLRB’s ruling in DR Horton clashes with the U.S. Supreme Court’s recent decision in AT&T Mobility v. Concepcion, which held that arbitration clauses that waive the right to bring class claims entirely (in the commercial contract context) may be lawful and enforceable.  But unless and until the courts intervene to resolve this tension, requiring your employees to completely waive the right to bring employment-related class or collective actions - a common feature of arbitration agreements - is probably no longer permissible under federal labor law.

 

If You're Interested In Learning More, Sign Up For Our Webinar

Stoel Rives is hosting a webinar on January 11, 2012, to address employee arbitration agreements generally and the DR Horton decision in particular.  Click here if you're interested in learning more or attending.

Update - New Rule Requires Employers to Post Notice of Employee NLRA Rights

In order to allow more time for legal challenges to its notice-posting rule to be resolved, the National Labor Relations Board has again postponed the rule's effective date, this time to April 30, 2012.  Stay tuned.

For additional information regarding the NLRB's new rule and posting requirement, including links to the new rule and the poster employers must post, see our prior post on this topic by following this link.

It's Time to Ensure Compliance with the California Transparency in Supply Chains Act

Under the California Transparency in Supply Chains Act, beginning January 1, 2012, large retailers and manufacturers that do business in California must disclose information on their websites about what they do to eradicate slavery and human trafficking from their supply chains. The new law applies to companies with worldwide gross receipts of over $100 million.

The law provides that if a covered company has a website, it must disclose certain information via a “conspicuous and easily understood link” on the homepage. The company must disclose to what extent, if any, it does each of the following:

  1. Engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery, specifying if the verification was not conducted by a third party.
  2. Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains.
  3. Requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking.
  4. Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
  5. Provides company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chain of products.

Notably, the law does not require companies to do anything to combat slavery and human trafficking. The law simply requires disclosure of the above information.   

Although the law’s exclusive remedy for noncompliance is an action for injunctive relief brought by the Attorney General, the law does not limit remedies available for a violation of any other state or federal law. On an annual basis, the California Franchise Tax Board will submit to the Attorney General a list of companies required to make the disclosure.

 

Obama Jobs Bill Proposes To Ban Discrimination Against Unemployed

As almost everyone knows, last week President Obama presented a $447 billion jobs bill, called the American Jobs Act, to a joint session of Congress full of proposals designed to stimulate the lagging U.S. economy.  What many people probably don't know is that, tucked into the bill, is a provision that would make it unlawful for employers to refuse to hire someone because that person is unemployed.  This small part of the stimulus bill would create an entirely new protected class under federal discrimination law—the unemployed person.  If enacted it could expose employers to a raft of new employment discrimination lawsuits.

What The Bill Says

Section 375 of the proposed bill  actually has several anti-discrimination provisions.  First, it prohibits employers and employment agencies from refusing to hire an individual “because of the individual’s status as unemployed,” including prohibiting employers from directing employment agencies to do so. It also contains a broad anti-retaliation provision prohibiting employers from interfering or refusing to hire someone because the person reports a violation of the Act.  The Act will provide many of the same remedies available under Title VII of the Civil Rights Act—the same federal law that prohibits discrimination based on race, religion, or sex—including the right to file a charge with the Equal Employment Opportunity Commission (“EEOC”), or file a lawsuit to recover money damages and attorney fees.

The bill would also prohibit employers and employment agencies from expressly advertising in written job posts that unemployed persons are automatically disqualified from applying.

The Rub:  Full Employment...For Employment Lawyers

While the bill expressly states that it is not intended to preclude employers from considering an individual’s employment history or even from “examining the reasons underlying an individual’s status as unemployed,” that subtle distinction will be a small comfort to employers.  Employers routinely scrutinize employment history, and employment “gaps” on a resume have always been a red flag to hiring managers.  Under this new law, however, employers would need to walk a very fine line between scrutinizing only the “reasons underlying” unemployment, while avoiding letting the fact the person is unemployed to begin with affect a hiring decision. 

Those types of mental gymnastics are not only difficult for hiring managers to keep straight while reviewing job applicants, the distinction will be even harder to prove in court if the employer is later sued.  As a practical matter, any unemployed person rejected from a job could demonstrate a prima facie claim for discrimination simply by showing he or she was unemployed and then didn’t get the job.  Further, the cases will invariably turn on "yes you did, no I didn't" factual disputes about the hiring decision: did the employer make the decision because of reasons underlying the person's unemployment (lawful) or simply because the person was unemployed (unlawful)?  Because of those subtle factual nuances, and procedural rules that presume the truth of a plaintiff's allegations until trial, it could be virtually impossible to get even baseless claims dismissed before trial, such as at summary judgment.  That makes defending those cases much more difficult and expensive.

While much remains unsettled about the state of the U.S. economy, including whether Congress will even pass the American Jobs Act, one thing is very certain.  If the current anti-discrimination provision in the American Jobs Act passes, employers will be seeing a lot more discrimination claims from a whole new protected class of protected people--the unhired unemployed.

 

California: "Suitable Seating" Class Actions on the Rise

California employers need to be mindful of a new kind of wage-hour class action – class claims arising from the “suitable seating” requirements of the California Industrial Welfare Commission’s wage orders. 

The wage orders set forth what employers must do with respect to employees’ wages, hours and working conditions. There are 17 wage orders, applying to every industry and occupation. Most of the wage orders provide that “all working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of such seats.” Unfortunately, the wage orders do not define “suitable seats” or “reasonably permits.”   

In Bright v. 99 Cents Only Stores, a cashier at a discount retail chain filed a class action against her employer alleging that the company did not provide cashiers with “suitable seating.” Unlike the typical wage-hour class action, this case does not involve a claim that employees were underpaid. Instead, the plaintiff seeks to use the alleged wage order violation to trigger the penalty provisions of the California Private Attorney General Act (PAGA), which amount to $100 for each aggrieved employee for the first violation and $200 per pay period for each aggrieved employee for subsequent violations. The Court of Appeal recently ruled that the plaintiff can proceed with her case and, if she proves the employer did not provide suitable seating, recover PAGA penalties.

The retail industry is the first industry in the cross-hairs of the plaintiffs’ bar for seating violation class actions, but employers in the hospitality and manufacturing industries should expect to be targeted soon. The decision of the Bright court permitting PAGA penalties for seating violations may lead to class actions for violations of other obscure provisions of the wage orders, such as requirements relating to changing rooms, resting facilities and workplace temperatures. California employers should take immediate measures to ensure they are in compliance with the seating requirements and other provisions of the California wage orders.

 

President Obama to Sign Jobs Bill Today

President Obama is today expected to sign the Hiring Incentives to Restore Employment (HIRE) Act, which in its final form passed The House of Representatives 217-201 on March 4 and the Senate 68-29  on March 17.  Click here to download the final version of the HIRE Act.

Key provisions of the HIRE Act include:

  • An exemption from Social Security payroll taxes for private employers for each worker hired in 2010 who previously had been unemployed for at least 60 days;
  • A $1,000 income tax credit, or a credit of 6.2% of total wages paid, for private employers for each new employee hired in 2010 and retained for at least 52 weeks and claimed on the employer's 2011 income tax return;
  • An extension of the small business “expensing” tax break for one year, allowing small businesses to continue writing off up to $250,000 of certain capital expenditures instead of depreciating them over time;
  • A $4.6 billion Build America Bonds program, which would provide an optional direct subsidy payment in lieu of a tax credit for tax credit bonds issued for certain school and energy projects; and
  • Expanded federal aid for highway programs estimated to save or create 1 million jobs.

As previously reported in the Stoel Rives World of Employment, a slightly different version of the HIRE Act passed through the Senate on February 24.  While the bill was in the House, several changes were to the Act, including increased funding to the Build America Bonds program and greater flexibility to the hiring tax credit program.

Changes Coming to the WARN Act?

The Worker Adjustment and Retraining Notification ("WARN") Act is getting a lot of airplay these days; that's the federal law that requires qualifying employers to give 60 days’ notice of a plant closing, a layoff of 500 or more people at one location, or a cut of at least one-third of the work force at a site.  But many critics of the WARN act think it doesn't go far enough because it covers only the largest layoffs by the largest employers.  Now, some economists are calling for a tougher, broader WARN Act.

We'll be watching to see if these calls for revising the WARN Act gain traction in Congress this term.  For now, there are resources out there to help you cope with the current version of WARN: