LB4HR – May 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.” I’m happy to share the news that yours truly and four of my partners have been named to D Magazine’s “Best Lawyers in Dallas” for 2014. Celebrate!
School’s almost out but your education never ends . . . read on:
1. Your Presence is Not Required– The Sixth Circuit has held, in an Americans with Disabilities Act (ADA) case, that “attendance” as an essential function of the job does not necessarily mean the employee must be physically within the workplace, opening the door to more widespread acceptance of telecommuting as a reasonable accommodation. A resale steel buyer for an auto company asked to work from home when needed to accommodate her irritable bowel syndrome. The employer declined, noting that attendance at work was an essential function of the job due to the need to work with others and engage in problem-solving as a team. The district court agreed that the request was not reasonable and granted the employers motion for summary judgment. The Sixth Circuit Court of Appeals reversed and remanded for further determination of whether the request to work from home was reasonable. The Court observed that advancing technology means that the workplace is anywhere the employee can perform her duties, other resale buyers had been allowed to telecommute (albeit on a less frequent basis than expected for the plaintiff) and there was a failure to engage in the ADA interactive process to explore alternatives. EEOC v. Ford Motor Company (6th Cir. April 2014). Employers have been encouraged to make “attendance” an essential function where physical presence is truly needed to perform the job. Generally, courts prefer to avoid second-guessing employers who understand the job requirements and take care to lay them out in a solid job description. This case is some indication that making attendance an essential function will not always pass muster, particularly if a court feels an interactive discussion to consider alternate reasonable accommodations did not happen.
2. NLRB Nukes Niceness– In yet another case that will have employers scratching their heads, the NLRB has found work rules that bar “negativity” violate federal law. The work rules at issue were:
1. We will not make negative comments about our fellow team members and we will take every opportunity to speak well of each other.
2. We will represent Hills and Dales in the community in a positive and professional manner in every opportunity.
3. We will not engage in or listen to negativity or gossip. We will recognize that listening without acting to stop it is the same as participating.
Hills and Dales Hospital had adopted these work rules in response to low employee morale, inter-department lack of cooperation and general “back biting and back stabbing.” Employees and patients were fleeing the hospital, so an employee task force met and developed a Values and Standards of Behavior Policy which included these rules. The ALJ, as affirmed by the NLRB, concluded that these rules were too broad and could be interpreted by employees as prohibiting their Section 7 right to engage in concerted activity such as public protests or making statements to third parties about their terms and conditions of employment. The fact that the rules had been developed with employee input provided no defense. There was no claim that an employee had been disciplined under these rules, so the remedy was to rescind the unlawful rules. Hills and Dales General Hospital and Danielle Corlis (April 2014). The Board continues its assault on so-called “courtesy” rules which could have a chilling effect on employees’ right to band together and kvetch about their jobs, pay, benefits, co-workers, bosses, customers and more. Although it pains me to say so, you may want to examine your policies and take these common-sense provisions out or narrow them to be very specific about the kind of behavior that’s not OK. L
3. Silicon Settlement– The last domino has fallen in the matter involving anti-poaching agreements between big tech employers in Silicon Valley. The first domino fell with a DOJ investigation that concluded in a September 2010 settlement involving Adobe Systems, Apple, Google, Intel, Inuit and Pixar. The press release explained that “the agreements eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities.” The next domino was an eventually successful effort to cobble together a class action on behalf of workers who claimed the agreements depressed their job mobility and wages. The third domino was a $20 million settlement in 2013 involving Lucasfilm, Pixar and Intuit, prior to certification of the class. The final domino fell with the remaining defendants (Apple, Google, Intel and Adobe) settling in April 2014 for more than $300 million, after certification of the plaintiff class and failure of the employers’ motion for summary judgment.
4. At Will Alive and Well in Texas– Employer decides to spin off a work unit into a new subsidiary. Many of the affected employees are covered by a collective bargaining agreement (CBA) which gives them the right to transfer to other jobs at the company rather than move to the new subsidiary. The employees were worried that the employer would sell the subsidiary and their wages and benefits might be reduced by a new employer. The employer allegedly assured the employees that they would keep the subsidiary, even though the employer was already in negotiations with a potential buyer. Most of the employees decided to stick with the subsidiary and a few months later, a sale of the subsidiary was announced. The new employer did reduce both the pay and retirement benefits of the acquired employees. A group of the employees sued their former employer for fraud over the misrepresentation that the subsidiary would not be sold. The employer countered, saying the employees were “at will” and could not sue for fraud. The Fifth Circuit Court of Appeals certified questions to the Texas Supreme Court, for input on whether at-will employees could sue for fraud arising from loss of employment and whether the union employees (whose CBA had a “just cause” limitation on discharges from employment) could do the same. The Texas Supreme Court answered “no” to both. On the first question, the Court noted there is no duty of good faith and fair dealing on employers and that an illusory promise of at will employment cannot support a fraud claim. On the second question, the Court said the employees could not bring a fraud claim because they already had a contractual remedy available to them under their CBA. Sawyer et al v. E.I. Du Pont De Nemours and Company (Tex. April 2014).
5. I-9s and the Three Bears – Employers may want to remind themselves that verifying applicants’ and employees’ authorization to work in the U.S. echoes the lesson learned in the tale of the three bears. You can get in trouble if you do not get enough information. You can get in trouble if you ask for too much (or the wrong) information. You need to shoot for the “just right” middle option, as strictly defined in the regulations. One Texas employer was tagged by the DOJ for requiring existing employees who were lawful permanent residents to present new documents when their Permanent Resident cards expired. The regs explain that their authorization to work is permanent, even when the card expires. The employer was also accused of asking permanent residents to produce specific documents during the employment application process, instead of allowing them to show any combination of acceptable documents as explained on the Form I-9. The damage? $43K in civil penalties, mandatory training on the antidiscrimination provisions of the INA and 12 months of monitoring by the DOJ. Not a fairy tale ending.
1. I-9 Verification OK Via Webcam? – In a word, no. Employers asked USCIS if observing a new employee’s documents via webcam would be OK, where the employee is in a remote location which makes it impossible for the employer to physically handle and examine the documents before attesting to their authenticity on the Form I-9. The USCIS said “no” and suggested that employers designate an authorized rep for that duty. The employer remains liable for any paperwork violations, so make sure that your designee is schooled in proper completion of the form.
6. Hairy Situation– In LB4HR #9-2013, I wrote about a lawsuit filed by the EEOC against an insurance company after it rescinded its job offer because the applicant refused to cut off her dreadlocks in conformance with the employer’s grooming standards. The EEOC claimed this action was discrimination against African-Americans based on their physical and/or cultural characteristics. The suit is over and the employer prevailed on its motion to dismiss the Title VII lawsuit on a showing of numerous cases where grooming policies did not support a race claim. EEOC v. Catastrophe Management Solutions, Inc. (S.D. Ala. April 2014). Note, however, that the outcome may have been different if the claim had been for religious discrimination especially in light of the EEOC’s recently issued guidance on religious garb and grooming. “Rastafarian dreadlocks” are expressly listed as a grooming practice that an employer may have to accommodate.
7. The Skinny on Confidentiality Policies– HR professionals and lawyers alike are accustomed to protecting employers’ interests by drafting and implementing confidentiality policies and agreements that are written very broadly, to try to avoid the error of omission. We don’t want the employer left without recourse because a particular type of employee misconduct was not prohibited in the policy or agreement. That is getting harder to do, as the NLRB continues to broaden its interpretation of employee’s Section 7 rights under the NLRA. Briefly stated, that right is to form, join or assist labor organizations and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. With increasing frequency, common and reasonable limits on employee misconduct are seen as being at odds with this right to disclose, discuss, grouse over and cause a commotion when one’s terms and conditions of employment are at issue. The latest salvo has the 5th Circuit agreeing with the NLRB in finding that a common policy statement is unlawful. A non-union trucking company in Texas had its employees sign an employment agreement that prohibits disclosure of confidential information including “financial information, including costs, prices” and “personnel information and documents.” An employee was fired for disclosing customer contract prices and filed an unfair labor practice claim with the NLRB. The administrative law judge said the rule violated Section 7 because it banned employees from discussing their wages with third parties. The ALJ tacked on a Section 8 violation based on the discharge arising from the unlawful rule. The NLRB affirmed the Section 7 violation, claiming the “sweeping nonexhaustive categories” in the rule supported employees’ reasonable belief they would be fired if they discussed their wages with a third party. The Board did not agree with the finding of a Section 8 violation since the employee was not engaged in activity that implicates Section 7 (e.g., discussing one’s wages), as the basis of the termination of employment. The employer appealed to the 5th Circuit, who upheld the finding of a Section 7 violation. The employer tried to argue there was no evidence it had enforced its rule in a manner that would discourage discussion of one’s wages. The Court replied the evidence was not needed because the rule, as written, was too broad and failed to spell out the types of “personnel information” that could not be disclosed or put a limit on the types of “personnel information” that could not be disclosed. This implicit prohibition on discussion of one’s wages violated the NLRA. Flex Frac Logistics LLC et al v. NLRB. Take a look at your policies and agreements and see if you need to replace broad prohibitions with skinnied-down and specific language, to avoid having your policy used against you.
8. Employer Schooled by Class Action– Waiter is removed from the work schedule on the day his employer receives a copy of a wage and hour lawsuit he had filed “on behalf of himself and similarly situated . . . current and former tipped employees.” Although the employer later argues waiter was fired for having an affair with the bookkeeper, that relationship surfaced weeks earlier and no action was taken at that time. In addition to the FLSA lawsuit, the employee now has a claim under the NLRA. The issue before the NLRB’s ALJ was whether he was acting alone (not a Section 7 case) or whether filing a collective action implicates Section 7 even though he was not authorized by any co-workers to file on their behalf. A Section 7 violation was found because an individual who files a class or collective action regarding wages “seeks to induce group action and is engaged in conduct protected by Section 7.” More importantly, the ALJ opined that the employer believed the employee was engaged in concerted activity after reading the class action complaint and a discharge based on that belief violates Section 7. 200 East 81st Restaurant Corp. dba Beyoglu (April 2014).
9. Resources for Military Vets and Federal Contractors – The new Veterans Employment Center, which can be found at https://www.ebenefits.va.gov/ebenefits/jobs, is a tool to connect military vets and transitioning service members and their spouses with public and private sector employers. In addition to job listings, the site includes a database of resumes that employers can access to find qualified workers. Employers can also go to http://www.dol-esa.gov/errd/resources.html to locate community service providers needed to facilitate outreach to disabled and veteran job applicants. These services are available to all employers but will be of particular interest to those with affirmative action plan obligations.
10. Lunch Money– Under federal and state law, workers who are classified as nonexempt from the FLSA’s (and states’) minimum wage and overtime requirements are generally paid 1.5 times their “regular rate” when they work more than 40 hours in a workweek. There are some state law variations in the number of hours worked (e.g., daily overtime) and the multiplier used (e.g., double time), but for most employers the federal rule applies. An employer’s failure to include all types of pay that are not expressly excluded from the “regular rate” when calculating overtime pay is a ticket to a wage and hour lawsuit. One common boo-boo made by employers is the failure to include certain per diem payments made to nonexempt workers when doing the math. A group of nonexempt engineers who worked remotely and received a per diem recently prevailed on their claim that the per diem amounted to a “shadow wage” and was impermissibly excluded from their overtime calculations. The district court granted the employer’s motion for summary judgment, but the 1st Circuit Court of Appeals reversed the grant of MSJ and granted part of the employees’ MSJ on the issue of improper overtime calculations. The Court noted that the per diem was based on and varied by the number of hours worked and the employer incorrectly reduced the per diem rates by the hours worked. They could’ve avoided that outcome if they had done reductions based on days worked and not hours worked. Newman v. Advanced Technology Innovation Corp. (1st Cir. April 2014). This case is a great read for anyone offering per diems to nonexempt workers, at http://media.ca1.uscourts.gov/pdf.opinions/13-1132P-01A.pdf.
11. Stated Differently– Here are some hot topics for you multi-state employers:
1.California– The CA Department of Labor Standards Enforcement launched a new website that instructs employees on how to file wage and hour claims and provides the necessary form which must be mailed in, to commence a proceeding. The forms and guidance are posted in English, Spanish, Chinese, Korean, Vietnamese, Tagalong and Punjabi.
2.Massachusetts– A public sector employee complained that the romance between her boss and a co-worker made the workplace uncomfortable. The employee was transferred to another location at the same rate of pay. She sued for retaliation under the state’s anti-discrimination law, and won $750K in damages. The employer tried, unsuccessfully, to argue that there was no “adverse employment action” because the transfer was not a demotion. That did not work because the court noted that she had a new start time, a shorter lunch break, she had to take a course in skills not needed for her job and the new job required skills she did not possess. Kelley v. Commonwealth (Mass. Sup. Ct. April 2014).
3.Minnesota– The state has teed up a series of increases in the minimum wage with varying amounts tied to the size of the employer, the age of the employee and for hotel or restaurant workers under an Exchange Visitor non-immigrant visa for summer work who receive a lodging or food benefit. The first wave of increases take effect August 1, 2014. For a chart of the varying rates and a link to the legislation, go to http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx. This chart has minimum wage info for other states, too.
4.Missouri– Employee who refused to sign a noncompete agreement was eligible for unemployment compensation even though he resigned in anticipation of being fired due the refusal. Darr v. Roberts Marketing Group LLC (MO Ct. App. April 2014).
5.New Jersey (Newark)– Effective May 29, 2014, private employers conducting business in Newark with ten or more employees must provide employees with 40 hours of paid sick leave per year. Employers with less than ten employees must provide 24 hours of paid sick leave to employees, per year. Child care workers and home health care workers must be provided with 40 hours of paid sick leave per year, regardless of the number of employees.
6.Oregon – The state has released a combo form that allows employers to seek information verifying the need for family and medical leave under both the federal (FMLA) and state law. The form is posted at http://www.oregon.gov/boli/TA/docs/OFLA_SHC_Cert_template.pdf.
7.Virginia –Effective July 1, 2014, employers with more than two employees who fail to provide workers’ compensation insurance face a fine of up to $250 per day, with a max penalty of $50K plus collection costs. The law broadly defines “employee” to include every person in the service of another under any contract of hire, written or implied, lawfully or unlawfully employed and includes corporate officers, minors, aliens, working family members, apprentices, temps, and seasonal workers. Even those classified as independent contractors may be “employees” for purposes of this statute.
12. Last Call – 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).
13. For the Birds – If you like being tweeted and want breaking news on employment law changes (and the occasional random cheer for K-State), 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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