LB4HR – March 2014
Welcome to Legal Briefs for HR, an update on employment issues sent to over 5000 individual HR professionals, in-house counsel and business owners plus HR and legal professional organizations (who have been given permission to republish content via their newsletters and websites), to help them stay in the know about employment issues. Anyone is welcome to join the email group . . . just let me know you’d like to be added to the list and you’re in! Back issues are posted at www.munckwilson.com under Media Center/Legal Briefs and you can also join the group by clicking on “Subscribe.”
It’s time to spring some new stuff on you:
1. There’s An App for That – Want to quit your job but can’t find the words? There’s an app for that. The makers of “Breakup Text” and “Makeup Text” have some spiffy emoticons that will say how you really feel. It’s available on the Apple iTunes store as “Quit Your Job.”
2. For the Record – In a rare win for employers, an ALJ for the National Labor Relations Board (NLRB) found that an employer’s “no recording” rule does not violate the NLRA. The Team Member Recordings policy states that conversations are not to be recorded with a tape recorder, including a cellphone or any electronic device, without prior approval of the employee’s store or facility leadership. It further states the purpose as eliminating a chilling effect to the expression of views when one person is concerned that his or her conversation is being secretly recorded because this can inhibit spontaneous and honest dialogue especially when sensitive or confidential matters are discussed. The NLRB’s GC tried to argue that this policy would limit employees’ ability to gather evidence of illegal employer conduct but the ALJ countered that there were other ways for employees to submit such evidence, including contemporaneous written reports and/or their own testimony about what was said. Whole Foods Market (Oct. 2013).
3. Cold Reality – If you have employees who work outside during the winter months, don’t forget that OSHA classifies frigid conditions as a recognized workplace hazard that you should be protecting against under the general duty clause. Go to www.osha.gov/dts/weather/winter_weather/index.html for information on “cold stress” and what you can do to limits its effects on your workers.
4. Handbook Helper – The NLRB thinks some of the usual handbook policies amount to an unfair labor practice. As part of your regular handbook spruce-up, you may want to consider what a NLRB administrative law judge recently found to constitute ULPs:
- Confidentiality – Policy prohibited employees from disclosing or using Confidential Information, which was defined to include “compensation structures and incentive programs.”
- Courtesy – Policy prohibited employees from “use of profanity or disrespect to a customer or co-worker or engaging in any activity which could harm the image of the Company.”
- Employee Inquiries – Policy prohibited anyone except the HR Department from responding to a request for employee information.
- Social Media – Multiple issues, including prohibition on saying negative things about the company in social media, using the company logo and requirement to contact a VP before speaking to the media.
- Solicitation and Distribution – Prohibition against third parties soliciting and distributing literature on property adjacent to the company’s premises.
- Dress Code – Prohibition on wearing insignias on clothing, other than that issued by the company (Note: the prohibition against wearing pins was upheld, as there was a business reason for it . . . the employees work on cars and pins could scratch the car or fall into the engine while repairs are being made). Boch Imports, Inc. dba Boch Honda and Int’l Ass’n of Machinists (Jan. 2014).
5. Heads’ Up, Federal Contractors –
- As promised in his state of the union speech, President Obama signed an executive order on February 12, upping the minimum wage for employees of federal contractors effective January 1, 2015. The new rate is $10.10/hour for nontipped workers and $4.90/hour for tipped workers (so long as the addition of tips raises the tipped workers’ pay to at least $10.10/hour). The increase will apply when a new contract is signed or an existing contract is renewed, after January 15, 2015. The rate will then change annually, beginning in January 2016, and will be tied to the CPI index. If you are in negotiations for a new federal contract and/or renewal, this is going to be part of the discussion.
- The DOL’s VETS division posted proposed changes to employers’ VETS-100 and VETS-100A reporting, to mirror changes in the affirmative action regulations for VEVRAA that kick in on March 24, 2014. VETS proposes to [a] rescind the regulations governing preparation of VETS-100 reports, which are currently required for contracts valued at $25,000 or more that were entered into before December 1, 2003, on the belief that such contracts have either expired or been modified making this regulation obsolete; [b] require reporting via VETS-100A be submitted in the aggregate rather than identifying each category of protected veteran; [c] change the name of the VETS-100A form to VETS-4212 Report; and [d] further technical changes to the definitions, contract clause, methods of filing the Report and more. The changes , if accepted, will take effect one year after the effective date of the final rule.
6. EEOC Attack – The EEOC really does not like your separation agreement. For starters, you shouldn’t use a dusty template or borrowed form since the issues addressed in these agreements are constantly changing and subject to state law variations. More changes may be coming soon. The EEOC filed suit on February 7, to challenge an employer’s use of  employee cooperation clause;  non-disparagement clause;  nondisclosure of confidential information clause;  general release;  covenant not to sue (even though the clause had language stating that this promise does not prevent the employee from filing a charge of discrimination, which is a right that can’t be waived); and  attorney’s fees clause (don’t even get me started on this). EEOC v. CVS Pharmacy, Inc. (E.D. Ill. 2-14). It’s a Title VII lawsuit that claims these clauses interfere with Title VII rights, specifically the right to file a charge with the EEOC or FEPA’s (like the Texas Workforce Commission’s Human Rights Division, in this state) and to cooperate with the agencies’ investigations. This case will be a must read, as it proceeds. Stay tuned for updates!
7. More Fun With FMLA – There are a couple of bills filed recently which employers may want to comment on:
- HR 3712 – Family and Medical Insurance Leave Act, if passed, would add a tax on employers and on employees to fund the entitlement to 66% pay continuation while an eligible employee is on FMLA leave.
- HR 3999 – Family and Medical Leave Enhancement Act, if passed, would expand the definition of “employer” to include those with between 25 and 50 employees and qualify employees to take FMLA if there are 25 employees of the employer working within 75 miles of the employee’s worksite. It would also provide 4 hours within any 30-day period and up to 24 hours in any 12-month period for a FMLA-eligible employee to take parental leave to “ participate in or attend activities that are sponsored by a school or community organization; or  relate to a program of the school or organization that is attended by the employee’s child or grandchild.” Care to join me for the summer solstice and autumn equinox jubilees at the lake?
- You can read full text (although HR 3999 is not posted just yet) at http://beta.congress.gov. This is the new website that will eventually replace the Thomas website.
- If you are real FMLA wonk, then you will take the time to read all 330 pages of the ABA subcommittee report on the FMLA. It’s an annual summary of FMLA cases posted at http://www.americanbar.org/calendar/2013/02/federal_labor_standardslegislationcommitteemidwintermeeting/papers.html. Use the table of contents to find precedent on narrow issues that are bugging you. Pour a big mug of coffee and start reading!
8. Richard’s Road Map – The interim General Counsel of the NLRB, Lafe Solomon, is long gone and the new GC, Richard Griffin is settling in. On February 25, he sent a memo to the regions telling them what issues he wants to be involved with, by mandating that they be submitted to the Division of Advice. Some of the items that caught my eye include:
- Cases that involve whether employees have a Section 7 right to use employer’s email system or that require application of the discrimination standard in Register Guard
- Cases that involve the applicability of Weingarten principles in non-unionized settings
- Cases in organizing situations raising the issue of union access to list of employee names/addresses where the employees are widely dispersed or have no fixed duty location
- Cases involving “at will” provisions in employer handbooks that are not resolved by extant Advice memoranda
9. Background Noise – Yes, your background checks can give you a big liability headache, if not done properly. If you use any third party person or entity to obtain information used to determine suitability for employment, you have triggered the Fair Credit Reporting Act. The FCRA has many technical requirements, including provision of a written notice and authorization to the applicant or employee who is the subject of the background investigation. The regulations are very specific about the limited amount of content that can be on the combo notice and authorization form. One employer is on the receiving end of a class action lawsuit because they added language to release the employer from liability arising from the background checking process. That’s a no-no and the employer remains liable, even where it uses the third party’s (deficient) FCRA forms. Gezahegne v. Whole Foods Market California Inc (N.D. Cal. 2-14).
10. DOL Dissed – The GAO posted a 32-page report on its website, noting the substantial increase in FLSA litigation during a time when the DOL’s Wage and Hour Division almost eliminated dissemination of guidance for employers. The report recommends that WHD should develop a systematic approach for identifying and considering areas of confusion that contribute to violations (e.g. application of exemptions) to help inform the development and assessment of its guidance. Ya think? The report is posted at http://www.gao.gov/products/GAO-14-69.
11. The Sporting Life – Sandwiched between March Madness, MLB spring training camps and the looming NFL draft, here are some tasty treats for your inner sports nut:
- Student Union – A NLRB investigator heard from Northwestern University and former football players in late February, in a dispute where the latter claims they are employees of the university and entitled to form a labor union to protect their interests. The investigator commented that the players’ arguments were “weak” but regardless of her decision, this one is likely headed to the full Board.
- Feeling Used – Class action litigation between the NCAA and student-athletes appears to have survived dueling motions for summary judgment and trial is set for June 9. The student-athletes, led by UCLA basketball player Ed O’Bannon, claim that the NCAA conspired with co-defendants EA Sports and Collegiate Licensing Company (CLC) to restrain competition for commercial use of players’ names, images and likenesses.
- Raiderette Revenge – An Oakland Raiders cheerleader filed suit, claiming the team violates CA wage and hour laws by treating the team’s cheerleaders as independent contractors and not employees. She argues the team is paying their cheerleaders a flat fee that does not approach the applicable minimum wage for the hours worked, which includes time spent cheering at games, rehearsing, performing at charity events and participating in the annual swimsuit photo shoot. She also wants reimbursement for work-related expenses, like false eyelashes, hair stylist services and yoga mats. The cheerleaders are paid once, at the end of the season, which violates state law requiring at least twice monthly payment of wages, if the cheerleaders are employees. Lacy T. v. The Oakland Raiders (CA Sup. Ct. Jan. 2014).
- March Badness – It is hoops fans’ favorite time of year and watching the game no longer requires calling in sick or taking a long lunch at the nearest sports bar. Live feeds are readily accessible via desktop computer, laptop and smartphone. If you’ve got concerns about lack of individual productivity and a drain on computer system bandwidth, you may want to say “no.” Gambling can be a concern, too. Increasingly, though, employers are looking for ways to tap into the excitement about the games to amp up spirits, build camaraderie and have some fun. Ideas range from casual days (sporting of one’s team colors/logo); converting a TV-equipped conference room into a watch party with snacks, brackets/pools with prizes or donating the cash to a favorite charity; games (match the mascot or logo to the university) and talent contests (e.g., chili cook-off, sing your alma matter, free throw prowess, best celebration dance). Be creative and have some fun, bay-bee!
12. Stated Differently – Here are some hot topics for you multi-state employers:
- California – Effective August 13, 2014 employers located or doing business in San Francisco who have 20 or more employees regardless of location are subject to a “ban the box” requirement. Job applicants may not be asked via an employment application or otherwise, before the first “live” interview, to disclose criminal history information. Certain offenses (e.g., arrest not leading to conviction, deferred adjudication, juvenile offenses) are off limits at all times. There is a notice of rights to be given to the applicant after the first “live interview” or conditional offer if criminal history info is requested and a multi-step process if criminal information is used to deny employment, including a seven-day waiting period which gives the applicant an opportunity to rebut a negative report. There is a mandatory poster, to be displayed in San Francisco workplaces (in three languages) and ads targeted at San Fran applicants must affirmatively state the employer will consider qualified applicants with criminal histories. Enforcement options include fines and civil litigation.
- Illinois – The IL Supreme Court has endorsed one of the toughest employee misclassification statutes in the U.S., finding that it is not unconstitutional and upholding a $1.6 million penalty assessed against a small roofing company that insisted the ten workers were contractors and not employees. Bartlow v. Costigan (Dir. of the IL Dept’ of Labor)(Ill. Feb. 2014). The IL law presumes that most workers in the construction industry are employees. That presumption can be overcome if the employer can prove up a three-point test. The elements are that [a] the individual is free from direction and control of the company over the means and manner of performing the work; [b] the work done is outside the usual scope of services performed by the company; and [c] the individual is engaged in an independently established business. An “individual” can also be a sole proprietorship or a partnership unless both the three-point test plus an additional 12-point test is satisfied. The penalties are stiff, with each day of misclassification being a separate offense, triple damages for willful damages and further doubling of damages for repeat offenders. That’s how you get to $1.6 million with only ten workers misclassified. Even though the statute limits the three-point test to the construction industry (for now), the same three-point test is used on all employers under the IL unemployment compensation statute . . . leaving scofflaws vulnerable to penalties for failure to properly classify and remit UI taxes to the State.
- Massachusetts – Failure to pay wages can expose both the company and individual managers to treble damages under the Massachusetts Wage Act, and some enterprising workers are trying to use this statute to sue for unpaid bonuses by claiming they are “wages.” A recent decision clues employers in on how to pen an employment agreement to avoid that outcome, by doing these three things –  put the base salary and the bonus in different sections of the agreement;  have a fully integrated clause that says the document contains the entire agreement of the parties; and  put contingencies on the bonus, such as remaining as an employee through the end of the year or reserving the discretion to grant to deny bonuses. Boesel v. Swaptree, Inc. (Mass Super. Ct. Dec. 2013).
- New Mexico – NM, AL, KY and SD are the only states which do not have a data breach notification law. That list may be one state shorter, since NM legislators passed a bill on February 17 which appears to be poised for enactment. If passed, the bill would require companies to notify state residents if their unencrypted personal information has been breached while in the possession or control of the company. If the breach affects 1000 or more residents, the company must let the state attorney general know about it within 14 of discovering the breach and must notify the affected individuals within 45 days.
- New York City – The Earned Sick Time Act, which takes effect on April 1, 2014, has been amended in significant ways. The law now applies to employers of 5 or more employees instead of the original cut-off of 25 employees. The original version phased in the effective date based on economic tests, but now it applies on April 1 for all covered employers. The definition of an employee’s “family member” has been expanded to include siblings, grandchildren and grandparents. The exemption for manufacturing industry employers is gone. The time in which an employee can file a complaint has been stretched from 270 days to two years. Employers must keep records of use of the benefit for three years, not two. For full text of the changes, go to http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=1636850&GUID=FD23CC16-F69E-4F06-B448-251F1CFC922D&Options=ID%7CText%7C&Search=&FullText=1.
- North Carolina – The NC Business Court found that a noncompete signed by an employee who was acquired by the successor employer via an equity purchase (not an asset purchase) was not enforceable. The employee had not been previously bound by a noncompete and the new one imposed by the successor employer stated the consideration as including initial employment, continued employment, promotion, incentive compensation and/or an increase in pay. The Court found there was no “new” employment due to the nature of the purchase and the pay/benefits were pretty much what he had enjoyed while working for the predecessor, so there was no consideration and no enforceable noncompete. Amerigas Propane LP v. Coffey (NC BC Feb. 2014).
13. Calendar This – Break out that fresh 2014 calendar and pencil in May 15 and 16 for the University of Texas School of Law’s 21st Annual Labor and Employment Law Conference in Austin, TX. The agenda and registration info is now posted at https://utcle.org/conferences/EL14. Libby Sartain, former CHRO at Southwest Airlines and Yahoo!, has accepted my invitation to be our luncheon keynote on Friday, May 16 and I will co-present with Bill Munck on a combo labor and employment/intellectual property topic, right after lunch. Hope to see you there! I’m also looking forward to speaking at the TAB Employment Law Symposium in San Antonio (July 17 & 18), the North Texas Compensation Association meeting (August 21) and the North Texas SHRM conference in Denton (September 5).
14. For the Birds – If you like being tweeted and want breaking news on employment law changes (and the occasional random cheer for K-State and my hometown Wichita State Shockers, who are killin’ it in hoops), follow me on Twitter. I’m at @amross.
Until next time,
Audrey E. Mross
Labor & Employment Attorney
Munck Wilson Mandala LLP
600 Banner Place
12770 Coit Road
Dallas, TX 75251
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