FLSA’s anti-retaliation provisions permit lawsuits against persons, including entities, even if not enterprises within interstate commerce

The Tenth Circuit held that, unlike its other provisions, FLSA’s anti-retaliation provision applies to persons whether or not they are engaged in interstate commerce. In the case, two workers became convinced that their employer owed them overtime under federal law (FLSA, the Fair Labor Standards Act). They complained to the DOL, were fired and the DOL sued the company alleging that the discharges were retaliation for cooperating with the DOL’s investigation.

FLSA’s overtime (and other provisions) apply only to employers who are engaged in interstate commerce. Here the company argued it had established it was not. The Tenth Circuit held that, whether it was or wasn’t was irrelevant in a retaliation claim. The court held that, as written, FLSA’s anti-retaliation provisions do not require proof that the defendant is engaged in interstate commerce. The court held, therefore, the company could be sued for retaliation, whether or not it was engaged in interstate commerce.

Source: Acosta v. Foreclosure Connection, Inc., case no. 17-4111 (10th Cir. 2018).

NLRB GC sets goal for 5% reduction in across-the-board casehandling time

NLRB General Counsel Robb announced a goal of reducing Board processing times by 5%. This goal applies to all aspects of the Board’s activities.

I am pleased to announce that the Agency has adopted a Strategic Plan calling for a 5% reduction per year in case processing time. This reduction includes not only case handling in the field, but also applies to the time between issuance of an Administrative Law Judge’s decision and Board Order, and to issuance of a Board Order and closure of the case.

All General Counsel side divisions are subject to this 5% reduction goal, including the Divisions of Advice, Legal Counsel, Enforcement Litigation,1 and Operations-Management in connection with case processing in Regional offices, where a significant number of cases will be affected.

The NLRB GC left it to the Divisions and Regions to determine for themselves how best to reach the 5% goal.

In that regard, I am vesting the Divisions and the Regions with wide discretion to develop systems and processes they believe will enable them to meet the Agency’s strategic goal.

Source: NLRB General Counsel memo no. GC 19-02 (12/7/18).

Supreme Court ruled driver wasn’t required to arbitrate

The Supreme Court held that a driver for a trucking company need not arbitrate wage and related claims, even though the driver is technically an independent contractor, not an employee. In reaching its holding, the Supreme Court, first, decided that such driving falls within the Federal Arbitration Act’s exclusion for transportation workers, meaning, the Court held, the FAA does not apply. The FAA is of course the federal law that permits the arbitration of federal lawsuits. Next, the Supreme Court held that the FAA’s exclusion applies not only to employees but independent contractors.

Applicability of the decision is expected to be argued in a number of pending cases, including lawsuits brought by independent contractors who drive for social media based delivery services.

Source: New Prime, Inc. v. Oliveira, case no. 17-340 (1/15/19).

NLRB requires unions to state explicitly that they will work not to harm neutral employers when threatening “area standards” picketing

When companies work at the same site or even just near each other, a union — unhappy with one of them — may come to feel that actions at that location — such as that particular employer’s wage or benefit levels — are depressing “area standards.” Unions (like everyone) have a right to protest actions that affect their community, even if for example none of their members work for that employer. That is often the case because that particular employer is often a non-union company that the union is trying to organize.

Before commencing their protest activities, the union may warn not only that employer but all the employers at that location. The Board calls those other employers “neutrals.”

The Board require unions who give such warnings to explicitly state that they will work to minimize the impact on neutrals.

A union’s broadly worded and unqualified notice, sent to a neutral employer, that the union intends to picket a worksite the neutral shares with the primary employer is inherently coercive. Without any details, such a notice is ambiguous about whether the threatened picketing will lawfully target only the primary employer or will unlaw- fully enmesh the neutral employer. The neutral would understandably question why the union is sending a strike notice to an employer with no role in the dispute, and this question would reasonably lead it to at least sus- pect, if not believe, that its business would be targeted by the picketing and that it would be prudent to cease doing business with the primary employer to avoid losses. It would be unrealistic to expect neutral employers, many with little experience in arcane common-situs picketing law, to assume the union would avoid enmeshing them in the picketing. Thus, an unqualified picketing threat communicated to a neutral at a common situs is an am- biguous threat, and such an ambiguous threat enables a union to achieve the proscribed objective of coercing the neutral employer to cease doing business with the prima- ry employer—the very object a union seeks to achieve when it makes a blatantly unlawful threat to picket or unlawfully pickets a neutral. Accordingly, as our dis- senting colleague refuses to acknowledge, it is reasona- ble to conclude that when a union sends to a neutral an unqualified and therefore ambiguous notice of its intent to picket a common situs, it does so with an object to coerce the neutral to cease doing business with the pri- mary employer. A union may still lawfully inform a neutral of its intent to picket as long as it qualifies the notice by clearly indicating that its picketing will comply with legal limitations on such picketing.

Source: Electrical Workers IBEW Local 357, N.L.R.B., Case 28-CC-115255, 12/27/18

Shutdown shuts down E-Verify

DHS has shut down E-Verify during the pendency of the current government shutdown. DHS explains:

E-Verify Accounts Inaccessible

While E-Verify is unavailable, employers will not be able to access their E-Verify accounts to:

  • Enroll in E-Verify;
  • Create an E-Verify case;
  • View or take action on any case;
  • Add, delete or edit any user account;
  • Reset passwords;
  • Edit company information;
  • Terminate accounts; and
  • Run reports.

Also, employees will be unable to resolve E-Verify Tentative Nonconfirmations (TNCs).

What’s an employer to do? For starters, DHS has suspended the 3-day deadline, which normally would require an E-Verify case to be commenced within the deadline for completing I-9’s, i.e., within the first three business business days following hire. Here is DHS’ list of accommodations and advice for employers during the shutdown:

  • The “three-day rule” for creating E-Verify cases is suspended for cases affected by the unavailability of E-Verify.

  • The time period during which employees may resolve TNCs will be extended. The number of days E-Verify is not available will not count toward the days the employee has to begin the process of resolving their TNCs.

  • We will provide additional guidance regarding “three-day rule” and time period to resolve TNCs deadlines once operations resume.

  • Employers may not take adverse action against an employee because the E-Verify case is in an interim case status, including while the employee’s case is in an extended interim case status due to the unavailability of E-Verify.

  • Federal contractors with the Federal Acquisition Regulation (FAR) E-Verify clause should contact their contracting officer to inquire about extending federal contractor deadlines.

Source: See the DHS’ web page regarding the impact of the current shutdown on E-Verify, https://www.e-verify.gov/e-verify-and-e-verify-services-are-unavailable

Tenth Circuit holds that the False Claims Act protects only individuals who are employed at the time of retaliation

The Tenth Circuit held that the False Claims Act (FCA) protects only individuals who are employed at the time of the alleged retaliation. In this case, the employee left the employer complaining of what she believed were violations of the False Claims Act. She then entered into a settlement, in which she promised not to disparage her former employer. The company believed she proceeded to do just that — disparage it — and sued. She responded by, well, suing, alleging that the company’s lawsuit against her was retaliation prohibited by the FCA. The Court held that the FCA did not apply to her claims. The Court held that that FCA protects “only persons who were current employees when their employers retaliated against them.” Since, by that point, she was a former employee, she was no longer protected by the FCA; even if the company’s lawsuit were construed as retaliation, it was not retaliation prohibited by the FCA.

However, the Tenth Circuit cautioned that its ruling doesn’t mean all “former employees” lack FCA protection. Instead the question is whether the individual was employed at the time of the alleged retaliation. “If that condition is met, it doesn’t matter whether the employee remains a current employee of the employer when suing.”

Source: Potts v. Center for Excellence in Higher Education, case no 17-1143 (10th Cir. 2018)

Impact of Supreme Court’s Janus decision continues to expand, even beyond labor law

Bloomberg BNA published an interesting article looking at the expanding reach of the Supreme Court’s Janus decision in 2018, which held that public employers could not, under the First Amendment, be required to pay union dues or even a service fee. Many have predicted that Janus will have a major impact on unions in America. Its application to unionized workforces in the private sector is already being litigated. Bloomberg BNA’s article notes that its impact is expanding even beyond labor law:

  • Legal commentators are debating whether it has heightened the protections afforded commercial speech under the First Amendment. Historically commercial speech has of course enjoyed less protection than political speech.
  • It may have rendered unconstitutional laws in states that require attorney bar membership.
  • It may mean that statutes, like Title VII, which require one party to pay the other’s attorney fees are unconstitutional.
  • It may have rendered the NLRB’s longstanding rules that require, within limitations, that employers sometimes allow workers to wear political or pro-union buttons in the workplace.

D.C. Circuit confusingly has affirmed the Obama Board’s Joint Employer doctrine

The D.C. Circuit has affirmed the Obama Board’s Joint Employer doctrine, which holds that “indirect” control is sufficient to establish Joint Employer status. The rule has proven to be exceptionally controversial and politically sensitive, so much so that the Trump Board has already announced it will be issuing a formal regulatory rule to address the issue.

While the dissent in the D.C. case would have preferred to remand the case and let the Board issue its own rule, the majority decided to tackle the issue head on, or nearly so, or actually not at all head on. Rather the D.C. Circuit’s decision has left employers, unions and individuals more confused than ever over the current status of the law.

The majority held that, as a general principle, the Obama Board had been within its rights to re-articulate the Joint Employer rule in a way that made “indirect” control sufficient to establish Joint Employer status.

We hold that the right-to-control element of the Board’s joint-employer standard has deep roots in the common law. The common law also permits consideration of those forms of indirect control that play a relevant part in determining the essential terms and conditions of employment. Accordingly, we affirm the Board’s articulation of the joint-employer test as including consideration of both an employer’s reserved right to control and its indirect control over employees’ terms and conditions of employment.

What exactly is “indirect” control? That’s been the issue throughout the evolution of this controversial issue, and unfortunately the D.C. Circuit offered no guidance. It simply chided the Board for not, itself, having offered such “legal scaffolding” and suggested that an appropriate standard will somehow distinguish between control over the “matters governing essential terms and conditions of employment” versus “those types of employer decisions that set the objectives, basic ground rules, and expectations for a third-party contractor.”

Employers, unions and individuals are left now to wait for the NLRB to issue its own rule. When the NLRB develops its own rule, one thing seems clear from the D.C. Circuit’s decision, it cannot simply ignore “indirect” control.

A categorical rule against even considering indirect control—no matter how extensively the would-be employer exercises determinative or heavily influential pressure and control over all of a worker’s working conditions—would allow manipulated form to flout reality.

Tenth Circuit reaffirms Adverse Employment Action element of discrimination claims, including failure-to-accommodate claims under the ADA

The Tenth Circuit reaffirmed that plaintiffs must prove they suffered an Adverse Employment Action in all discrimination claims, including claims alleging a failure to accommodate under the ADA.

(A)n adverse employment action is an element of a failure-to-accommodate claim 
To establish an Adverse Employment Action, the plaintiff must prove more than that she suffered a “a mere inconvenience or an alteration of job responsibilities.” Rather, the Tenth Circuit held she must prove that she suffered harm to “a term, condition, or privilege of employment.”

Positive drug tests continue to rise, and not just for marijuana

With a growing number of states embracing marijuana for assorted reasons (pain relief, cash crop, recreational use), it’s no surprise that U.S. workers in every sector keep failing urine tests. Drug monitor Quest Diagnostics found that everyone has been doing more of everything (cocaine, pot, meth) over the past few years. The results of its latest survey shows double-digit leaps in employee drug use across the board, with notable spikes in “consumer-facing industries, including jobs in retail and health care and social assistance.”
— Read on www.bloomberglaw.com/exp/eyJjdHh0IjoiRExOVyIsImlkIjoiMDAwMDAxNjctY2NkMC1kNzdiLWFmNzctY2ZmNGM0YWUwMDAyIiwic2lnIjoicjZ1L0x6Z3VwbDFOalhrVnNJSHhkRE8xVEcwPSIsInRpbWUiOiIxNTQ1Mzk0MDk2IiwidXVpZCI6IjhleTB4elVZdjZGTHBmUTBSSXlwcVE9PWJRVmZHRnhvdnhmbTl6VWdabU53MlE9PSIsInYiOiIxIn0=

Would-be class action plaintiffs jujitsu Uber’s arbitration agreement

In a move Bruce Lee would have admired, a group of 12,501 drivers seeking to assert wage-hour and related claims against Uber — faced with having each executed arbitration agreements — have filed a Petition in the federal courts for the Northern District of California demanding just that, 12,501 individual arbitrations.

The Petition illustrates what is likely to become a powerful tactic for would-be class/collective action plaintiffs who find themselves otherwise stymied by arbitration agreements that do not permit class/collective actions. As reported here, the U.S. Supreme Court recently endorsed arbitration agreements as effective tools against class/collective action litigation. This move turns that tool back onto the employer itself.

The drivers allege that, as early as August 18, 2018, they began submitting claims to arbitration under the arbitration agreements. The drivers allege that, as of the time of the Petition, 12,501 demands for arbitration had been submitted.

Of those 12,501 demands, in only 296 has Uber paid the initiating filing
fees necessary for an arbitration to commence. Out of those matters, only 47 have
appointed arbitrators, and out of those 47, in only six instances has Uber paid the
retainer fee of the arbitrator to allow the arbitration to move forward..

Why hasn’t Uber (allegedly) paid the arbitrator’s retainer fees in the other cases? Well, if true, it might be related to the (alleged) fact that (according to the Petition, the fee in each such case is a “NON-REFUNDABLE filing fee of $1,500 for each.” As in, according to the Petition, a total of $18,681,000 (12,501-47x$1,500), just to start each of the 12,501 cases.

Are the Uber drivers asking the court to, therefore, let them out of their arbitration agreements? Are they asking the court to allow them to pursue a class/collective action in court? No, because that would be contrary to recent Supreme Court decision. Instead, they’re asking the Court to order Uber to comply with the (alleged) arbitration agreements, starting by paying the initial arbitration fees. The Petition seeks other relief to include an order requiring Uber to continue to participate in each of the 12,501 arbitrations and to pay the drivers’ attorney fees and costs in prosecuting their Petition.

 

What Does ACA Ruling Mean? | Colorado’s Morning News | KOA NewsRadio

Great time this morning on 850 KOA Colorado’s Morning News, discussing the Texas court’s recent ruling, holding that the Individual Mandate in Obamacare exceeds Congressional power and is inseverable from the remainder of Obamacare. Reminder, although the judge has struck down Obamacare, the judge has not yet issued a final ruling. How and whether the Texas court will issue an injunction freezing Obamacare is yet to be seen. Employers should continue to comply with Obamacare at this time.

We discuss this week’s healthcare ruling and what it means going forward.  Does the ruling have an immediate impact on those depending on the…
— Read on koanewsradio.iheart.com/featured/colorado-s-morning-news/content/2018-12-18-what-does-aca-ruling-mean/

Fifth Circuit affirms OSHA’s Controlling Employer doctrine

Applying Chevron deference, the Fifth Circuit has affirmed OSHA’s controversial Controlling Employer doctrine, which allows OSHA “to issue citations to controlling employers at multi-employer worksites for violations of the Act’s standards,” even if none of the controlling employer’s workers were exposed.

Source: Acosta v. Hensel Phelps Construction Company (5th Cir. 11/16/18). 

Three new expansions of California law warrant employer considerations

Employers in California should carefully consider three new legal developments there.

1. California has restricted the use of nondisclosure agreements.

In California, employers may not include nondisclosure (confidentiality) provisions in settlement agreements involving allegations of sexual harassment or sex discrimination, or certain other sexual offenses (whether in the workplace or housing). See Senate Bill 820.

2. California has expanded its requirements for sexual harassment training.

Senate Bill 1343 has required sexual harassment training for most employers, effective January 1, 2020. Training is required for new hires, then again once every two years. California law also specifies particular topics that must be covered in the training.

3. California has expanded liability for discrimination.

Senate Bill 1300 has expanded liability for discrimination in a variety of ways. For example, the definition of sexual harassment has been expanded. Compared to federal law, California state law now provides that a single act of sexual harassment may itself be enough to be actionable, and further, under California law, the courts must now refuse to apply the stray remark doctrine. Additionally, this new California law creates the possibility of personal liability, in retaliation cases at least. Also, it limits the situations in which employers may require employees to sign a release and nondisparagement clauses, and limits an employer’s ability to recover its own costs and fees in litigation.

These are just some aspects of these new laws. California employers should carefully consider these new laws.

 

Court may enter default judgment if party refuses in “bad faith” to pay arbitration fees

As noted in a previous post, arbitration isn’t just a private form of litigation. It’s a fundamentally different process than litigation. One major difference is that, in arbitration, one or both parties (depending on their arbitration agreement) pays the arbitrator’s fees, and those fees need to be paid as the case is being processed. The parties can’t typically just wait and decide whether to pay after they receive the arbitrator’s award. Refusal to pay those fees — held the Eleventh Circuit — can result in a judgment against a party, if in bad faith, as opposed to inability to afford them.

The case followed a bit of a contorted process.

  • The litigation began when a recently discharged worker (Hernandez) filed a wage claim lawsuit in court against his former employer (Acosta Tractors).
  • The company moved to compel arbitration and provided the court with a copy of the arbitration agreement that Hernandez had signed. The court agreed and ordered the case to proceed to arbitration.
  • Then, additional claims were filed, separately, by Hernandez’s attorney on behalf of other individuals, which also went to arbitration.
  • Acosta Tractors asked the arbitrator to consolidate the various proceedings, but the arbitrator refused.
  • Within a year, the various arbitrations were still being processed, going through pre-hearing discovery.  The arbitrator’s fees alone were nearing $100,000.
  • Acosta Tractors filed a motion back in court asking the judge to take the case back from the arbitrator, saying it was costing too much time and money in arbitration. Acosta Tractors said the whole arbitration agreement had been intended to provide a quicker, less expensive process than litigation, but, it said, at that point “the Arbitration in this matter has failed its essential purpose.”
  • The court refused. Acosta Tractors asked the court to reconsider, and it again refused.
  • Stuck with a process it no longer wanted, and possibly could not afford, Acosta Tractors refused to pay the arbitrator’s fees.
  • At that point the arbitrator cancelled further proceedings, and Hernandez asked the court to enter default judgment against Acosta Tractors on his wage claim. The court did so. Never having had its day in court, this left Acosta Tractors, not only owing the arbitrator $100,000 in arbitrator fees, to process matters that hadn’t even gone to hearing yet, plus owing Hernandez on his underlying wage claim, a claim in which Acosta Tractors had been denying liability.

How much was Hernandez’s underlying claim for wages? According to the Eleventh Circuit decision, he demanded only $7,293, a relatively small amount no doubt in light of the overall time, money and energy spent defending his claim, even before any actual hearing was held on the merits of the case.

On appeal the Eleventh Circuit held that, when a party refuses to pay the arbitrator’s fees, a court can indeed enter default judgment against that party, but only if the court finds, first, that the party’s refusal to pay was in “bad faith,” as opposed to an inability to afford the fees.

On remand, the District Court may well find that Acosta acted in bad faith in choosing not to pay its arbitration fees. After all, Acosta acknowledges it quit paying after the arbitrator failed to consolidate Mr. Hernandez’s case with the other cases brought by other Acosta employees, and because it thought the arbitrator had allowed too much discovery. Acosta also noted that arbitration was set to cost more than Mr. Hernandez’s claim was worth. A calculated choice to abandon arbitration after getting adverse rulings from the arbitrator certainly looks like forum shopping. And this type of behavior would surely be a factor the District Court could consider in deciding whether to sanction Acosta by entering a default judgment. At the same time, a party’s good faith inability to afford the arbitration fees would be a factor properly considered to weigh against such a sanction. See Tillman v. Tillman, 825 F.3d 1069, 1074 (9th Cir. 2016) (finding that plaintiff’s inability to pay arbitration fees was “not culpable and so does not merit a harsh penalty, particularly given the public policy favoring disposition of cases on their merits” (quotation omitted)).

The case is a powerful reminder that arbitration is an entirely different process than litigation, and in arbitration, the courts will rule that parties get what they get. Arbitration agreements are powerful and potentially useful tools. Their pros and cons should be carefully considered.

Source: Hernandez v. Acosta Tractors, Inc.case nos. 17-13057 and 17-13673 (11th Cir. 8/8/18).

OSHA confirms that employers can require post-incident drug tests and can also offer safety incentives

Clarifying what had been a controversial approach, OSHA issued a memo that clarifies its position regarding two common employer policies, confirming that neither constitutes unlawful retaliation:

1. Post-accident drug testing will not generally violate OSHA’s anti-retaliation provisions.

Action taken under a safety incentive program or post-incident drug testing policy would only violate 29 C.F.R. § 1904.35(b)(1)(iv) if the employer took the action to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health.

In addition, OSHA clarified, other common forms of drug testing also do not generally violate OSHA’s anti-retaliation provisions.

In addition, most instances of workplace drug testing are permissible under § 1904.35(b)(1)(iv). Examples of permissible drug testing include:

  • Random drug testing.
  • Drug testing unrelated to the reporting of a work-related injury or illness.
  • Drug testing under a state workers’ compensation law.
  • Drug testing under other federal law, such as a U.S. Department of Transportation rule.
  • Drug testing to evaluate the root cause of a workplace incident that harmed or could have harmed employees.  If the employer chooses to use drug testing to investigate the incident, the employer should test all employees whose conduct could have contributed to the incident, not just employees who reported injuries.

2. Common safety incentive programs also do not violate OSHA’s anti-retaliation provisions.

OSHA’s Memorandum reverses course on a 2016 approach in which OSHA had announced an intent to find that such programs might violate the anti-retaliation provisions of OSHA if they had the effect of disincentivizing employees from reporting injuries and accidents at work. OSHA’s Memorandum explains it, now, believes such programs can be effective tools for enhancing, not reducing, workplace safety.

The purpose of this memorandum is to clarify the Department’s position that 29 C.F.R. § 1904.35(b)(1)(iv) does not prohibit workplace safety incentive programs or post-incident drug testing. The Department believes that many employers who implement safety incentive programs and/or conduct post-incident drug testing do so to promote workplace safety and health. In addition, evidence that the employer consistently enforces legitimate work rules (whether or not an injury or illness is reported) would demonstrate that the employer is serious about creating a culture of safety, not just the appearance of reducing rates. Action taken under a safety incentive program or post-incident drug testing policy would only violate 29 C.F.R. § 1904.35(b)(1)(iv) if the employer took the action to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health.

Source: OSHA Memorandum (10/11/18).

NLRB signals willingness to revisit its Settlement Bar doctrine

In a footnote to a recent decision, two current NLRB members signaled a willingness to revisit its Settlement Bar doctrine.

Under its Settlement Bar doctrine, the Board has held that workers may not attempt to “decertify” a union for at least a “reasonable” period of time after their employer has entered into an agreement to bargain. Decertification is the process, at the NLRB, whereby workers can vote a union “out.” The purpose of the Settlement Bar doctrine is to allow the union a “reasonable” time to prove its value to the workers by negotiating a collective bargaining agreement. The Board explained this rule in its 2017 decision, CTS Construction, Inc.:

Under the Board’s settlement bar doctrine, as stated in Poole Foundry & Machine Co., 95 NLRB 34 (1951), enfd. 192 F.2d 740 (4th Cir. 1951), and its progeny, an employer that enters into a settlement agreement requiring it to bargain with a union must bargain for a reasonable period of time before the union’s majority status can be questioned. In deciding whether the parties have bargained for a reasonable period of time, the Board considers the following five factors: whether the parties were bargaining for an initial agreement; the complexity of the issues negotiated and the parties’ bargaining procedures; the total amount of time elapsed since the commencement of bargaining and the number of bargaining sessions; the amount of progress made in negotiations and how near the parties were to agreement; and the presence or absence of a bargaining impasse.

In this recent case, two of the Board members said in a footnote that they were applying the current Settlement Bar doctrine in this case but only for precedential reasons. They cautioned that they would be willing to jettison the Board’s approach in a future case.

Stay tuned to the Board’s decisions to see if it does indeed abandon its current Settlement Bar doctrine.

Source: Krise Transportation, Inc.

You get what you get with arbitration, holds Colorado Court of Appeals

Employers considering adopting arbitration agreements might be interested in a recent decision by the Colorado Court of Appeals. The Court’s ruling highlights some of the major differences between litigating in courts and arbitrating before a private arbitrator.

The case involved an arbitration agreement that required arbitration of claims “arising” under the parties’ contract. One of the parties brought a claim for violation of the implied duty of good faith and fair dealing, which is a separate claim that sounds in tort, not contract. The argument was that, because it is a tort claim not a contract claim, it was not subject to arbitration. Even though the arbitration agreement’s language was narrower than the more customary phrase, “related to or arising out of,” the Court held it was, nonetheless, broad enough to require arbitration of the tort claim.

Next, the arbitrator’s ruling was challenged on substantive grounds. The party contended the arbitrator had gone so far as to improperly re-characterize its claim, then deny the claim as re-characterized. The party felt it had never gotten a ruling on its actual, original claim. However, arbitration does not generally provide for a right of appeal. There are only very limited grounds for appeal. Additionally arbitration does not typically involve a court reporter being present, so there is generally no transcript of testimony. The Colorado Court of Appeals held that, even if the arbitrator had erred, there was no way for the Court of Appeals to analyze the arbitrator’s ruling, since with no transcript of testimony, it had no way of knowing what had occurred in the hearing.

We know from the arbitrator’s award that the evidentiary part of the hearing lasted two days, two witnesses testified, the arbitrator admitted about fifty-five exhibits, and the parties gave their closing arguments over the telephone. But we do not know what anyone said during the hearing. As a result, we must, as we have previously concluded, presume that the transcript would support the arbitrator’s award.

The case is a good reminder that, for all its advantages, arbitration comes with its own set of disadvantages. It isn’t just a quicker more private version of litigation. Companies considering arbitration agreements should carefully consider both the pro’s and con’s of arbitration.

Source: Digital Landscape v. Media Kings, case no. 17 CA 1111 (Colo.App. 9/20/18).

Tenth Circuit holds that FLSA’ anti-retaliation provision reaches farther than its other clauses

The Fair Labor Standards Act (FLSA) is the nation’s leading wage-hour law. Most notably it includes requirements such as minimum wage, overtime and child labor laws. Those provisions apply onto to an “enterprise” that is engaged in interstate commerce. It also prohibits retaliation against workers who exercise FLSA rights. In a recent case, the Tenth Circuit held that the anti-retaliation provisions apply more broadly than the rest of FLSA.

As the Court explained the bulk of FLSA applies only to “‘an enterprise engaged in commerce.’ 29 U.S.C. § 207(a)(1). ”Commerce’ means trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.’ § 203(b).”

However, the anti-retaliation provision of FLSA does not refer to an enterprise engaged in commerce. It states that “it shall be unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such
employee has filed any complaint . . . related to [FLSA].” § 215(a)(3) (emphasis added). A person is defined as “an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons.” § 203(a).

Accordingly, the Tenth Circuit held that the anti-retaliation provision in FLSA reaches farther than its other protections to apply to any “person,” not just an “enterprise,” that engages in retaliatory conduct.

Source: Acosta v. Foreclosure Connection, Inc., — F.3d —, case no. 2:15-CV-00653-DAK (10th Cir. 8/15/18).

Unions face increased exposure for DFR charges

The NLRB General Counsel issued a memorandum directing the Board’s enforcement personnel to be more aggressive in prosecuting charges against unions under the National Labor Relations Act sec. 8(b)(1)(A), which imposes a Duty of Fair Representation (“DFR”) on unions. Under Sec. 8(b)(1)(A), workers who are represented by a union may file a DFR charge alleging that the union failed to represent them adequately. To prove a DFR violation, the worker must show the failure to represent was arbitrary, discriminatory or in bad faith. Historically, union have been able to assert, as a defense, that their failure was “mere negligence.”

The NLRB General Counsel’s memo keeps in place the “mere negligence” defense but offers a tighter definition for what does and does not constitute “mere negligence.” The memo orders NLRB staff to now follow this tighter definition.

Under the tighter definition, unions face increased exposure for DFR charges. What was once “mere negligence” will no longer be tolerated by the Board.

The memo provides two specific examples:

  1. “(H)aving lost track, misplaced or otherwise forgotten about
    a grievance, whether or not (the union) had committed to pursue it,” will no longer be considered “mere negligence,” unless the union proves it did so in spite of its previously established and routinely used should be required procedural systems to process such concerns (i.e., despite proof of the prior “existence of established, reasonable procedures or systems in place to track grievances”).
  2. “(A) union’s failure to communicate decisions related to a grievance or to
    respond to inquiries for information or documents by the charging party” will generally not be considered “mere negligence.” “Regions issuing a complaint in these cases should argue that a union’s failure to return phone calls or emails or other efforts by the charging party to inquire about a grievance or attempt to file one, constitutes” a DFR violation.

The General Counsel is aware that the above-described approaches may be
inconsistent with the way the Board and Regional Directors have historically interpreted duty of fair representation law. Going forward, Regions are directed to apply the above principles to Section 8(b)(1)(A) duty affair representation cases, issue a complaint where appropriate, and make arguments consistent with those set out above.

Source: NLRB General Counsel Memorandum ICG 18-09 (9/14/18).

Bureau of Consumer Financial Protection Issues Updated FCRA Model Disclosures

The Bureau of Consumer Financial Protection (Bureau) issued an interim final rule that updates its model disclosures under the Fair Credit Reporting Act (FCRA). The new FCRA forms advise individuals of their right to, now, request a free “national security freeze” under the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The “national security freeze” restricts prospective lenders from obtaining access to a consumer’s credit report, which makes it harder for identity thieves to open accounts in the consumer’s name.

The Bureau has made the new forms available on its website, in a variety of languages.

Employers that run background checks should ensure that they — and their background checking companies — are using the new forms.
Source: www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-issues-updated-fcra-model-disclosures/

Denver federal court, one of the most pro-employee?

In what is likely to be a bombshell article amongst Colorado labor and employment attorneys, Bloomberg BNA reported today that its analysis of judicial statistics shows Denver’s federal court to be the most employee-plaintiff friendly of 11 federal courts it has analyzed. “The other courts Bloomberg Law has reviewed are: the Eastern District of New York, the Northern District of Alabama, the Northern District of Illinois, the Western District of Washington, the Middle District of Florida, the Western District of Wisconsin, the Northern District of Texas, the Central District of California, the Western District of Oklahoma, and the Northern District of Ohio.”

The District of Colorado grants employers’ motions for early dismissal—made right after a lawsuit is filed—just 36.7 percent of the time in job bias and similar cases. It dismisses such cases on the eve of trial—following a motion for summary judgment—at a 45.8 percent clip. That gives Denver workers something extra to be cheery about, in addition to the more than 200 beers crafted in the city each day and the playoff-contending Colorado Rockies.

Interested in how particular judges rank? Bloomberg BNA analyzed them individually and provides what it views as the relevant statistics for each, concluding,In all, eight of the 11 judges granted early motions to dismiss in employment cases less than 40 percent of the time.

Source: Workers Suing in Denver Federal Court Feeling Rocky Mountain High, P. Dorrian (9/21/18).

NLRB proposes rule to reverse Obama-era Joint Employer standard

As explained in earlier posts, the Board’s Obama-era decision in Browning Ferris, revising its Joint Employer standard, has proven exceptionally controversial. At the close of 2017, the Board voted, in Hy-Brand, to reverse Browning Ferris, but that decision was rendered unenforceable when Board Member Emanuel was ruled to have had a conflict.

Now, the NLRB has issued proposed regulations that will do what it would have done by decision in Hy-Brand, namely, return the Board to the pre-Browning Ferris Joint Employer standard, which had required proof that a purported joint employer has actually exercised “direct and immediate” control. Under this new rule, if made final, even contract provisions that reserve to a company the possibility of control would not be sufficient to establish a joint employer relationship, nor would limited or routine involvement in operational matters. Rather, to be a joint employer under the proposed rule, a company would have to be proven to have actively involved itself in hiring, firing, discipline, supervision and the direction of workers.

The Joint Employer doctrine has importance for any company that uses independent contractors, which is virtually every company, and has been especially significant to companies whose very business models involve the use of contractors, including franchisors and gig economy companies.

Source: NLRB, “The Standard for Determining Joint Employer Status,” 83 Fed.Reg. 46681 (9/14/18).

Massachusetts non-compete law

Massachusetts has adopted what may be the country’s singlemost employee-side non-compete law. That law, among other things, mandates at least 1/2-year’s garden leave, in other words, at least 1/2 of an employee’s average salary (with the formula to calculate specified in the statute). Timing requirements are imposed regarding the process by which covenants can be entered into with an employee. Additional constraints exist on the duration and geographic scope of permitted non-competes. The law applies to non-competes entered into on or after 10/1/18. It does not apply to a number of other types of covenants, including non-solicits of employees, non-solicits of customers, non-competes entered into for the sale of a business and non-competes entered into outside of employment. Employers with non-competes in Massachusetts are advised to immediately begin analyzing their agreements.

Source: Massachusetts’ 2018 act entitled, “An act relative to the judicial enforcement of noncompetition agreements”

Tenth Circuit holds that failure to exhaust is an affirmative defense not a jurisdictional defect in Title VII claims

The Tenth Circuit has reversed longstanding precedent to, now, hold that a plaintiff’s failure to exhaust the administrative charge requirements of a Title VII claim is a mere affirmative defense, not a jurisdictional defect. What’s the difference? The courts have jurisdiction to hear the circumstances surrounding the failure to exhaust when it is asserted as an affirmative defense. In this case, the plaintiffs apparently had failed to exhaust; however, they pointed to a prior stipulation by the defendant in which the company had agreed that they had in fact exhausted. The trial court had originally ruled, in line with the Tenth Circuit’s longstanding precedent, that a failure to exhaust is jurisdictional and that it, therefore, lacked jurisdiction over the claims and could not, as a result, entertain argument over the stipulation. The Tenth Circuit remanded, holding that the failure to exhaust was merely an affirmative defense, and as such the trial court is authorized to consider the stipulation.

Source: Lincoln v. BNSF Railway Co., case no. 17-3120 (10th Cir. 8/17/18).

Troubled by NLRB Member Emanuel’s recusal in Hy-Brand?

If, like many, you are troubled by the recent recusal of NLRB Member Emanuel from the Hy-Brand case, you might want to read an article in the latest newsletter by the ABA Labor and Employment Law Section.

What’s Hy-Brand? Hy-Brand Industrial Contractors, 365 NLRB No. 186 (2015), was a decision by the NLRB under President Trump. It overruled Browning-Ferris Industries, 362 NLRB No. 186 (2015), which had been a decision by the NLRB under President Obama. In Browning-Ferris the Obama Board expanded the joint employer standard. The case set off a political firestorm. Thus it was no surprise when the Trump Board, in Hy-Brand, reversed Browning-Ferris, returning the Board to its prior approach to joint employers.

How did Member Emanuel end up being recused, and what did that mean for Hy-Brand? After Hy-Brand was announced, the Board’s own Inspector General called a foul on the play. The Inspector General opined that Member Emanuel should have recused himself from the decision because, it contended, he had a conflict of interest. With his vote subtracted, the Board was left split 2-2, effectively nullifying Hy-Brand and keeping Browning Ferris in place.

What was Member Emanuel’s conflict? This is where the case takes a sharp turn around President Trump’s own policies. Member Emanuel himself had no actual conflict. But for the Trump Administration’s own policies, the Trump Board’s vote in Hy-Brand would have stood. The conflict was imputed to Member Emanuel because he, like many NLRB Members, came from a large law firm. On the union side, it’s common for NLRB Members to come from large unions. It’s not uncommon therefore for Board Members to be called upon to decide cases that involve legal issues their prior law firm/union/company may have argued. In fact, it’s not just not uncommon, it’s expected. Nonetheless, the Inspector General imputed a conflict to Board Member Emanuel because his prior law firm had handled a matter involving the joint employer issue. It should be noted it did not involve the same parties, or the same evidence, simply the same legal issue. Normally that would not be enough to create a conflict, and even now it arguably should not be enough, but in this particular instance, at this particular time, it was, because, the Inspector General pointed out, the Trump Administration has required its appointees to agree to a voluntary ethics pledge (Executive Order 13770) that prohibits them from participating in “any particular matter involving specific parties that is directly and substantially related to (their) former employer or former clients” during the first two years of government service.

Source: “The NLRB Recusal Standard: How Will Hy-Brand, The Inspector General, and a Federal Regulation Affect Employees and Employers?,” G. Enis and S. Hamilton, American Bar Association Labor and Employment Law Section newsletter, vol. 46, no. 4 (Summer 2018).

Want to hear my thoughts about the latest twist in the Masterpiece Cakeshop case?

Fun morning on 850 KOA’s Colorado Morning News. Hear the audio below.

Bill Berger – L2S Legal, LLC – Best Lawyers in America

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Honored to have been selected again for inclusion in Best Lawyers in America: Employment Law – Management!

Supreme Court’s new expansive reading of FLSA is applied for first time by a Circuit Court

The Supreme Court held earlier this year in Encino Motorcars, LLC v. Navarro that the Fair Labor Standards Act (FLSA) should no longer be construed narrowly in favor of employees but should, instead, be given a “fair” reading based on its own language. The Supreme Court’s ruling has just seen its first application in a Circuit Court case, entitled Mosquera v. MTI Retreading Co., decided by the Sixth Circuit.

In Mosquera, the employee held an engineering degree but argued he spent less than 50% of his time doing work that required an engineering degree and should, therefore, not have been classified as a professional employee exempt from overtime. The Sixth Circuit disagreed. The Sixth Circuit noted the evidence that had been submitted in support of the employer’s summary judgment motion and dismissed the plaintiff’s own affidavit to the contrary, saying it was “unsubstantiated” and “self-serving.” The Sixth Circuit noted that, prior to Encino Motorcars, it would have looked on the plaintiff’s claim more favorably, interpreting the professional exemption “narrowly,” but under the Supreme Court’s new ruling, it was required to give the law a broader “fair” reading instead. Under the new approach to FLSA, the Sixth Circuit held the employer’s motion for summary judgment was “compelling” and as such, it held, the employee was properly characterized as a professional who was exempt from overtime.

Mosquera is no doubt the first in a long line of cases to come that will take a less “narrow” approach to interpreting FLSA.

Source:  Mosquera v. MTI Retreading Co. (6th Cir. 8/14/18).

Are you ready for Colorado’s new data privacy law?

Colorado just passed a new data privacy law that will take effect September 1, 2018. It’s recommended that companies immediately take steps to conduct internal audits and develop compliance policies, which may also entail policy reviews.

For an excellent summary of this new law, check out this article from Brownstein Hyatt Farber Schreck.

Source: Colorado HB 18-1128.

Will other states follow California’s lead with enhanced National Origin protections?

Effective July 1, 2018, California has, by way of administrative regulations, enhanced the protections against national origin discrimination found in its mini-Title VII called the California Fair Employment and Housing Act.

These well-intentioned but poorly drafted regulations expand the definition of national origin, now, to include an individual’s or their “ancestor’s” “actual or perceived”:

  1. physical, cultural, or linguistic characteristics associated with a national origin group;
  2. marriage to or association with persons of a national origin group;
    tribal affiliation;
  3. membership in or association with an organization identified with or seeking to promote the interests of a national origin group;
  4. attendance or participation in schools, churches, temples, mosques, or other religious institutions generally used by persons of a national origin group; and
  5. name that is associated with a national origin group.

The regulations offer few helpful definitions to interpret these new rules.

  • What is a “physical, cultural or linguistic characteristic” besides an obvious accent?
  • What is a church “generally used by persons of a national origin group”? For example, one can guess that the Greek members of a Greek Orthodox church are protected, but how about the non-Roman members of a Roman Catholic church parish that includes people of every national origin?
  • What is a “name that is associated with a national origin group”? For example, is the name “Garcia” such a name, where it is generally considered the most common Hispanic last name, even though it is common in nearly every Latino country and non-Latino country, and is actually of Basque origin (with the Basque arguably not being Hispanic in the sense their traditional language is Basque not Spanish)?

One definition that is offered in these vague regulations is for the phrase, “national origin groups”:

“National origin groups” include, but are not limited to, ethnic groups, geographic places of origin, and countries that are not presently in existence.

Unfortunately that definition raises more questions than it answers. For example, what does it mean to say someone identifies with “countries that are not presently in existence”?

The regulations also take a strong position against English-only rules. Under these new California regulations, English-only rules are never permitted during employee breaks, lunch, or employer-sponsored events, and only rarely permitted during working time and in workplaces when narrowly tailored as required by a business necessity.

With regard to accents, again, those seem to be protected as a national origin “characteristic,” and as such discrimination on the basis of accents is only permitted when, again, mandated as narrowly tailored to a business necessity.

The regulations expressly state that they protect even unauthorized immigrants. The only exception is when mandated otherwise by federal law. This is true even where the individual presents, as part of the I-9 process, a California driver’s license that expressly identifies the individual as an undocumented worker. The regulations also state that even a “single unwelcome act of harassment” may be sufficient to violate these laws, without explaining how it is that an employer can ask such a worker about their work authorization without inadvertently crossing the line into having asked a question that the worker found to be a “single unwelcome act of harassment.”

It remains to be seen whether other states will follow California’s lead, or if at some point the federal government will do so under Title VII. However, employers in every state may wish to take a moment to review these new regulations. Arguably their poorly drafted language does not, at least in some instances, expand Title VII so much re-interpret its existing requirements. If other jurisdictions do decide to follow California’s lead, they will hopefully provide employers with more clear language, especially since employers generally probably agree with the basic thrust of what the California bureaucrats who drafted these regulations intended.

Source: 2 California Code of Reglations 11027, et seq.

Union Leader Salaries Soar

Issued just before the Supreme Court’s Janus decision, a survey of union leader salaries is a stunning bookmark to the Court’s blockbuster decision holding that public employees cannot be required to pay “fair share” fees, much less dues, to unions. The survey is based on public filings by the unions. It lists total compensation packages for the 10 highest paid union presidents, ranging from $449,852 to $792,483, which the survey notes is several times higher than the average salary for CEOs, $196,050, as reported by the U.S. B.L.S. Statistics like this are likely to continue to fuel right-to-work legislation and Janus-related litigation across the country.

“Colorado denies widow half of late husband’s workers’ compensation due to his marijuana use”

The Denver Post reports, “The state of Colorado is denying half the workers’ compensation death benefits to a woman whose husband died while working on a ski lift because he had marijuana in his system.” Colorado workers compensation law does impose a 50% penalty on workers compensation benefits (not including medical expenses) for workers who violated safety rules, including positive drug tests. The Denver Post article reports that in this, the first case to raise the issue, a worker’s positive test for marijuana, following his having been killed on the job, was deemed grounds to deny his widow 50% of the death benefits to which she and their family would otherwise have been entitled. The case has not been appealed to the courts; it currently remains at the agency level. However the issue is ultimately resolved, the case remains a powerful reminder that marijuana remains, in all states, a criminally prohibited drug. While some states, like Colorado, have exceptions from prosecution for state law enforcement, applicable to medical and even recreational use, those are merely exceptions from criminal law enforcement; the use of marijuana itself remains a criminally prohibited act. 

Source: “Colorado denies widow half of late husband’s workers’ compensation due to his marijuana use,” the Denver Post (7/17/18).

Transfer to new supervisor held not a “reasonable accommodation”

What if a disabled employee’s preferred accommodation is to be transferred to a new supervisor? In a recent Pennyslvania case, the Third Circuit held that an employer was within its rights to deny such a request as it would not have been a “reasonable accommodation” required under the ADA (the Americans with Disabilities Act).

The Third Circuit observed that the employer had met its obligation to engage in the ADA’s required “interactive process” by exploring the disabled worker’s purported need for accommodation. The company had “met with her, considered her requests, and offered several accommodations, including a part-time work schedule.” The worker had, in turn, rejected all efforts to reach an accommodation. The Court observed that she was simply “unwilling to agree to any accommodation that included continued supervision by” her supervisor. The Court rejected her request for a new supervisor, holding it was not required by the ADA, and noting further that courts are not authorized by the ADA to restructure the terms of employment.

Source: Sessoms v. Univ. of Penn., case no. 17-2369 (3rd Cir. 6/20/18).

“Zero Tolerance” policies go too far according to … the EEOC?

Employers should steer clear of “zero tolerance” policies according to the EEOC. A “zero tolerance” policy provides that any form of proscribed behavior (typically sexual harassment or discrimination) will result in immediate discharge.

Zero tolerance policies can “chill reporting,” cautions EEOC Commissioner Chai Feldblum (a Democrat appointee). According to Commissioner Feldblum, individuals may choose not to report harassment when they know it might result in the accused’s discharge: “A lot of people don’t want their co-worker to be fired, they just want the conduct to stop.”

It’s not just one EEOC Commissioner who doesn’t like zero-tolerance policies. It’s also the position taken by the EEOC’s 2015 task force on harassment. Its July 2016 report called “zero tolerance” policies “misleading and potentially counterproductive.” Like Commissioner Feldblum, the task force cautioned that such policies “may contribute to employee under-reporting of harassment.”

Instead, the EEOC recommends a policy that reserves to employers the ability to determine the appropriate level of discipline, up to and including, but not necessarily, immediate discharge.

Source: “Beware of ‘Zero Tolerance’ Policies, EEOC Commissioner Warns,” BNA Bloomberg (7/11/18).

California Court of Appeals rejects double-dipping for penalties in certain wage-hour cases

California state law provides for penalties and other liability under California’s Private Attorney Generals Act when an employer fails to provide an accurate, itemized wage statement (which statements must contain certain types of information further specified under California law). But what if the statement was correct when issued but later the employer is held liable for additional amounts, such as overtime or minimum wage amounts? Do otherwise correct wage statements become retroactively inaccurate because the employer is later held liable for additional amounts like overtime or minimum wage? Contending that it does, it has not been uncommon in California for plaintiffs in wage-hour casesto file wage-statement claims demanding the extra penalties.

A division of the California Court of Appeals recently rejected double-dipping, holding that, no, the wages statement do not become retroactively inaccurate, such that an employer becomes liable for extra wage-statement related penalties when they are found liable for amounts like overtime and minimum wage.

Source: Maldonado v. Epsilon Plastics, case no. B278022 (Cal.App. 4/18/18).

Will the Supreme Court’s recent blockbuster in Janus apply to private employers?

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Employers have begun arguing that the Supreme Court’s recent blockbuster decision in Janus should be extended to private employers. In Janus, the Supreme Court ruled government workers cannot be required to pay “fair share” fees, much less union dues. The decision will have a huge impact on labor in America. Effectively, Janus converted government workforces into right-to-work workplaces. The decision is anticipated to strip organized labor of billions of dollars in revenues, much that had previously, in no small part, been used towards political contributions. The Supreme Court reasoned that requiring workers to pay even “fair share” fees, much less dues, was ultimately requiring them to support the unions’ political activities; workers should be free, as part of the constitution speech rights, to decide whether or not to support the unions’ political activities.

Janus was decided under the First Amendment, which only applies to government action. Private workers do not have First Amendment rights in their workplaces, at least as against their employers.

However, one employer is arguing that Janus should be extended to cover private workers nonetheless because, the employer argues, when the NLRB and courts attempt to enforce union requirements for dues and service fee collection, then the NLRB and courts are themselves the government actors. In other words, while the First Amendment does not limit a private employer’s ability to curtail worker speech, it limits the NLRB and courts’ ability to curtail worker speech. The employer already has a pending appeal before the Ninth Circuit, where it has just asked the Ninth Circuit to consider this new argument based on the Supreme Court’s Janus ruling (Communication Workers of America, AFL-CIO v. NLRB v. Purple Communications, Inc., Case Nos. 17-70948, 17-71062, and 17-71276).

The issue is no doubt going to be heavily litigated, but it appears the employer has the better side of this particular argument. If — as we now know from Janus — the Constitution’s speech rights in the First Amendment protect workers against compelled union contributions, they arguably constrain not only governmental employers, but all other governmental actors, including the NLRB and courts, from stripping employees, even private employees, of those same rights.

The EEOC and a mixed fallout from #MeToo

Recent developments at the EEOC reflect a mixed fallout from the #MeToo movement.

Despite massive social change seen at many levels from #MeToo, with celebrities, politicians and business leaders all being called to answer for allegations of sexual harassment — and despite many lawyers who anecdotally report seeing increased charges in their own practices — EEOC Acting Chair Victoria Lipnic reported June 11 that the EEOC has yet to see a significant increase in sexual harassment charges.

Notwithstanding a lack of increased charges, the EEOC is determined not to be left behind by the #MeToo movement. The agency itself has formed a task force to study sexual harassment and, immediately following the task force’s meeting, the EEOC filed seven lawsuits (on and and about June 11, 2018) involving allegations of sexual harassment. Additionally, the EEOC has identified sexual harassment as one of its 2017-21 strategic enforcement priorities.

Want to hear my thoughts on recent developments at the Supreme Court?

Great morning today discussing the resignation of Justice Kennedy and other recent developments.

Source: 850 KOA, Colorado’s Morning News.

Is this the end of unions in America? The Supreme Court’s “fair share” ruling in five questions

The Supreme Court ruled that unions cannot charge government workers a “fair share” representation fee, much less union dues. The decision may well be beginning of the end for America’s unions, at least as the political and social juggernauts that we’ve come to know.

  1. What’s a “fair share” fee? A “fair share” fee is like dues, but is less than dues. It’s just the portion of dues that represents the union’s cost of representing the workers. A “fair share” fee is often also referred to as a representation fee. Under this ruling a union cannot charge government workers either dues or even just a “fair share” fee.
  2. What was the Supreme Court’s reasoning? Because the First Amendment protects a person’s right to choose whether or not to speak in support of various things. The fact that a union might want to use money to support its political agenda for example might be important for the union, it might even be very helpful to the workers, but particular individuals may choose not to support that speech. Therefore the Supreme Court held that a union can’t force government workers to give it money if the worker doesn’t want to support the union’s speech.
  3. Why does this apply only to government workers? This case was decided under the First Amendment, which only applies as to governmental action. The First Amendment does not protect workers at private companies. This doesn’t mean private-company employees have no rights, they just don’t have First Amendment rights. Instead, they always have the right under federal labor law to refuse to pay full “dues” and instead can pay the reduced “fair share” representation fee, and in some states with right-to-work laws, they can even refuse to pay “fair share” fees.
  4. Why is this case so important? Many commentators think this case signals the end of unionism as America has known it for more than a century. Union representation has been steadily declining for decades. Unions represent only 34% of the government workforce and 6% of the private workforce, with many such private-company workers at construction companies that do work for the government. This case — having given government workers the right to refuse to pay even “fair share” fees — is likely to cause a precipitous decline in the revenue streams for unions overall — the Supreme Court noted these fees have aggregated to “billions of dollars” over the years. The decline in revenue streams is in turn likely to result in a greatly reduced ability for unions overall to support political movements.
  5. Can this decision be overruled by Congress? No, only the Supreme Court can decide what the Constitution does and does not permit, so only a future Supreme Court could reverse this decision.

In announcing this highly controversial 5-4 decision, the majority recognized the impact its ruling is likely to have on unions.

We recognize that the loss of payments from nonmem­bers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members. But we must weigh these disadvantages against the consider­ able windfall that unions have received under Abood for the past 41 years. It is hard to estimate how many bil­lions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment. Those unconstitutional exactions cannot be allowed to continue indefinitely.

In contrast, the dissent noted that, in order to reach this result, the majority had overruled more than 40 years of precedent.

There is no sugarcoating today’s opinion. The majority overthrows a decision entrenched in this Nation’s law—and in its economic life—for over 40 years. As a result, it prevents the American people, acting through their state and local officials, from making important choices about workplace governance. And it does so by weaponizing the First Amendment, in a way that unleashes judges, now and in the future, to intervene in economic and regulatory policy.

Right or wrong, this case is now the Supreme Court’s ruling and likely to have a major impact on unionism in America.

Source: Janus v. AFSCME, case no. 16-1466 (6/27/18).

Are drug-testing policies over in marijuana-permissive states?

SHRM published this fun lunchtime read: A point-counterpart debating the viability of drug-testing policies in marijuana-permissive states.

Source: “Are Employer Drug-Testing Programs Obsolete?” (5/23/18).

Bill Berger – L2S Legal, LLC – Denver – Lawyer Profile Chambers USA Guide 2018 – Chambers and Partners

Honored to have been selected again for inclusion in Chambers!

Source: Bill Berger – L2S Legal, LLC – Denver – Lawyer Profile Chambers USA Guide 2018 – Chambers and Partners

Joint Employer rule coming from NLRB?

The NLRB’s approach to the Joint Employer doctrine has proven exceedingly controversial. The NLRB’s approach has sparked similar controversy in both the courts and at the D.O.L. Soon, more fuel will be added to the political fires. The N.L.R.B. announced its intent to publish a proposed joint employer rule. What’s it likely to say? Stay tuned. IT is likely to continue the Board’s rollback against the Obama-era Board’s Joint Employer approach. Some recent developments at the Board suggest some possibilities. The draft rule is expected this summer. At that point, the Board advises it will follow formal administrative rulemaking procedures, which will include a comment period.

Source: NLRB news release (6/5/18), disclosing an otherwise unpublished letter by NLRB Chairman to certain Senators.

Board steers a sharp 180 in the application of Section 7 to handbooks and policies

During President Obama’s administration, the NLRB substantially expanded its scrutiny of handbooks, workplace rules and workplace policies that, it felt, conflicted with Section 7 of the National Labor Relations Act. Section 7 is the part of the Act that permits both unionized and non-unionized workers to act together in concert to further their wages, hours and working conditions.

On June 6, 2018, NLRB General Counsel Peter B. Robb announced the Board will no longer lean towards finding violations of Section 7 in workplace policies. The General Counsel’s memo implements the Board’s own decision in The Boeing Company, 365 NLRB No. 154 (Dec. 14, 2017), where it reversed much of the doctrines associated with the Obama-era Board’s Section 7 analysis and the General Counsel’s previous memo in December 2017.

Now the Board is directed to no longer err on the side of finding a violation when it determines language is merely on its face, without evidence of actual anti-union animus, potentially ambiguous.

Regions should now note that ambiguities in rules are no longer interpreted against the drafter, and generalized provisions should not be interpreted as banning all activity that could conceivably be included.

NLRB General Counsel advised Board personnel that, now, the following types of policies should be considered presumptively lawful:

  • Civility codes (for example, policies that prohibit language or behavior that is offensive, rude, discourteous, negative, annoying, disparaging, condescending, etc.)
  • Rules that prohibit photography/recording in the workplace
  • Rules that prohibit insubordination or non-cooperation
  • Rules that prohibit disruptive or boisterous conduct
  • Rules that protect confidential, proprietary or customer information
  • Rules that prohibit defamation or misrepresentation
  • Rules that protect company logos and I.P.
  • Rules that prohibit speaking on behalf of the company without authorization
  • Rules that prohibit disloyalty, nepotism or self-enrichment

NLRB General Counsel advised Board personnel that, now, the following types of policies will no longer be considered presumptively unlawful, but rather will now require individualized analysis of the particular circumstances of each case:

  • Rules that prohibit conflicts of interest “that do not specifically target fraud and self-enrichment”
  • Broad confidentiality rules that merely protect “employer business” or “employer information”
  • Anti-disparagement rules that prohibit criticizing the company only
  • Rules that broadly prohibit the use of a company’s name
  • Rules that restrict workers’ ability to speak to media or third-parties on their own behalf
  • Rules that prohibit lawful off-duty conduct that is otherwise protected
  • Rules that broadly prohibit making any kind of “false or inaccurate statements”

Finally, NLRB General Counsel identified the following as rules that remain presumptively unlawful:

  • Rules that prohibit employees from discussing their wages, hours and working conditions
  • Rules that prohibit employees from disclosing their own wages, hours and working conditions to the media
  • Rules that prohibit employees from joining “outside organizations”

NLRB General Counsel also cautioned that the Board’s historical (pre-Obama era) approach to the following types of policies remains unchanged:

  • Solicitation/distribution policies
  • Workplace access policies
  • Uniform policies (to include rules re buttons, tshirts, etc.)

Source: NLRB General Counsel Memorandum GC 18-04 (6/6/18).

Religious accommodation need not preserve overtime opportunities

The Tenth Circuit recently decided a case where the plaintiff’s requested religious accommodation gave him the time he needed off for religious reasons but meant losing overtime. The Court held the employer did not have to allow him to work more later in the week to make up for the lost overtime.

The worker had asked for Saturdays off as a religious accommodation. The employer agreed. However, because Saturdays were the day of the week when the worker (and the other workers apparently) worked overtime, it left him with no overtime opportunity. Wanting to keep his Saturdays off, he asked to be allowed to make up the lost hours by working overtime on Sundays. The employer refused.

The Tenth Circuit recognized that granting the worker his requested accommodation of Saturdays off had cost him his overtime opportunities but held that the company was not required to allow him to work make up hours on Sundays. The Court held that an accommodation is reasonable if it allows the plaintiff “to engage in his religious practice despite the employer’s normal rules to the contrary.” Here letting him take Saturdays off allowed him to engage in his religious practices. The Court rejected the argument that Title VII required the company to then allow him to work make-up overtime on Sundays.

Though (the plaintiff) may have requested an opportunity to make up his overtime hours on Sunday, Title VII did not require (the company) to offer (his) preferred accommodation.

The case illustrates Title VII’s basic principle that a worker may be entitled to a reasonable accommodation of his religious practices, and so long as it is effective at allowing him to engage in his religious beliefs, it need not be his preferred accommodation, even where the difference means lost pay opportunities.

Source: Christmon v. B&B Airparts, Inc., case no. 17-3209 (10th Cir. 5/24/18).

SCOTUS rules for baker in Masterpiece Cakeshop

By 7-2, the Supreme Court ruled for the baker in the Masterpiece Cakeshop case. All seven of the judges that formed the majority were struck by comments from the Colorado Civil Rights Commissioners that evidenced an anti-religious bias among the Commissioners when they decided the case. The Supreme Court called those comments “inappropriate,” “dismissive,” and “disparag(ing) of religion.”

What were these unacceptable comments? Well, in short, they included what can only be described as a gratuitous rant by one Commissioner about how, in her opinion, “religion has been used to justify all kinds of discrimination throughout history, whether it be slavery, whether it be the holocaust … we can list hundreds of situations.” It really didn’t help when the Commission, faced with three different cases involving bakers who refused to sell anti-gay marriage cakes, held for each of those bakers. The Supreme Court held that, pulling that all together, it seemed the Commission had made its decision not on the evidence and law but “the government’s own assessment of offensiveness.”

Along those lines, Justice Gorsuch, in his concurrence, noted that, if the government could make decisions on the basis of what it deems offensive, freedome of speech and expression would be lost. This is the oft-recognized principle that the only speech that really needs Constitutional protection is offensive speech.

The Constitution protects not just popular religious exercises from the condemnation of civil authorities. It protects them all.

In reversing based on the Commission’s own bias, the Supreme Court never reached the underlying question whether/when does a baker/florist/other expressive craftsman have a First Amendment right to refuse to sell their good/service to a consumer for religious reasons. Instead, the Supreme Court held that the baker had at least been entitled to a fair hearing of that issue, and that the Commission’s own bias had stripped him of that right.

(T)he delicate question of when the free exercise of his religion must yield to an otherwise valid exercise of state power needed to be determined in an adjudication in which religious hostility on the part of the State itself would not be a factor in the balance the State sought to reach. That requirement, however, was not met here. When the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires.

Justice Kennedy — who has been the Court’s champion of both gay rights and speech rights, as well as religious liberty rights — wrote the majority opinion. He acknowledged that the Court was dodging the real question of how to balance those rights.

The outcome of cases like this in other circumstances must await further elaboration in the courts….

Still, his opinion suggested how he thought the Court should rule in future cases.

Some examples of cases where he suggested future bakers/florists/etc. might lose on the merits included the following:

  • A baker who “refused to sell any goods or any cakes for gay weddings”

Some examples of future cases where bakers/etc. might win included the following:

  • A “refusal to put certain religious words or decorations on the cake”
  • A “refusal to attend the wedding to ensure that the cake is cut the right way”
  • A “refusal to sell a cake that has been baked for the public generally but includes certain religious words or symbols on it”

We may not have to wait long to find out how the Supreme Court will rule on the underlying issues. A similar case — involving a florist from Washington — is already pending a decision by the Supreme Court whether to hear the appeal in the fall.

Separate opinions in Masterpiece Cakeshop seemed to preview how the Justices might vote:

  • Justice Gorsuch wrote suggesting that he is likely to rule broadly for future bakers/florists/etc.
  • Justice Thomas wrote along such lines as well, though his opinion suggested concern over the concept of even trying to protect the rights of a gay couple in this type of circumstance.
  • Justices Kagan and Breyer, who joined the majority in this case, suggested they would lean split on future cases, ruling against bakers/etc., where there is no evidence of anti-religiouis bias among the state agencies.
  • Justice Ginsburg joined by Justice Sotomayor wrote to express their concerns that the anti-religious comments by the Commission, while unacceptable, were simply not so substantial as to warrant reversal; they would have ruled on the merits, and in doing so, for the gay couple who wished to buy the cake.

That means future cases are likely to have 4 Justices inclined to rule for and 4 Justices inclined to rule against the bakers/florists/etc., and as was expected here, Justice Kennedy is likely to be the swing vote. Expect to see him flesh out his balancing test based on those examples.

As for future cases, Justice Kennedy gave one word of warning — frankly simply restating the concern most of America seemingly has had and had hoped the Supreme Court would wrestle with in this decision — that these rights must be balanced such that religious liberty is not so broadly defined that it becomes an easy excuse for discrimination:

And any decision in favor of (a future) baker would have to be sufficiently constrained, lest all purveyors of goods and services who object to gay marriages for moral and religious reasons in effect be allowed to put up signs saying “no goods or services will be sold if they will be used for gay marriages,” something that would impose a serious stigma on gay persons.

Readers of course will note that this concern exists not only as to LGBTQ individuals (which is all that quote discusses) but also individuals on the basis of race, gender, age, etc., and, yes, even religion. It simply cannot be the law that a business may refuse to do business on the grounds that a consumer is of a different race, color, gender or even religion.

Readers should also note that this line of cases isn’t just about consumers, and it certainly isn’t about just cakes. This line of cases has potential to touch all aspects of American life. It cannot be, for example, that a business has a right to refuse to hire someone simply because they assert a religious belief against that person’s sexual orientation, gender preference, race, gender, religion, etc.

Source: Masterpiece Cakeshop, Ltd. v. C.C.R.C., case no. 16-11 (Sup.Ct. 6/4/18).

Want to hear about Governor Hickenlooper’s latest nominee to Colorado Supreme Court?

Tune in tomorrow morning to 850 KOA at 6:50 AM to hear my thoughts on Governor Hickenlooper’s latest nominee to the Colorado Supreme Court.

First and Seventh Circuit decisions illustrate the “adverse employment action” requirement in EEO cases

As a general rule, the EEO laws, such as Title VII (race, gender, religion, etc.) and the ADEA (age), do not allow a plaintiff to sue for the everyday “slings and arrows” they might suffer in the workplace (quoting Shakespeare’s Hamlet). Rather, the law requires an “adverse employment action.” The adverse employment action test requires the plaintiff to show material harm to the terms and conditions of their employment. That doesn’t always have to mean being fired or demoted. In retaliation cases, it can be anything a reasonable worker would find sufficient to chill them from reporting misconduct.

Two recent decisions by the First and Seventh Circuit illustrate the kinds of conduct that do not rise to the level of an adverse employment action.

In the First Circuit case, the plaintiff argued that each of the following, separately and together, was sufficient, but the court disagreed:

  • The plaintiff’s supervisor allegedly demonstrated anger and overreacted when the plaintiff went over his head.
  • The supervisor allegedly made a temporary change to the plaintiff’s schedule.
  • The supervisor allegedly told the plaintiff to pull down his pants when the plaintiff said he had a skin condition.
  • The supervisor and two coworkers allegedly called the plaintiff a “cry baby.”
  • When the plaintiff took a medical leave but did not provide the required medical documentation, his leave was converted to paid vacation.

In the Seventh Circuit case, that court held the following was insufficient to prove an adverse employment action:

  • The plaintiff’s request for medical leave was, allegedly, originally misclassified as paid sick leave not FMLA leave.
  • A psychological examination had, allegedly, been requested of him in circumstances where the evidence such a request was “not unusual” (the plaintiff was a police officer and the psychological exam was requested as part of his clearance to return to duty).
  • Approval of his request to work a secondary job had allegedly been delayed for three months.

As the First Circuit noted, the adverse employment action requirement may seem harsh, but it remains the well established threshold that a plaintiff must cross to warrant court litigation.

Today’s opinion is a lesson straight out of the school of hard knocks. No matter how sympathetic the plaintiff or how harrowing his plights, the law is the law and sometimes it’s just not on his side. See Medina-Rivera v. MVM, Inc., 713 F.3d 132, 138 (1st Cir. 2013) (quoting Turner v. Atl. Coast Line R.R. Co., 292 F.2d 586, 589 (5th Cir. 1961) (Wisdom, J.) (“[H]ard as our sympathies may pull us, our duty to maintain the integrity of the substantive law pulls harder.”)

Source: Freelain v. Village of Oak Park, case no. 16-4074 (7th Cir. 4/30/18); Sepulveda-Vargas v. Caribbean Restaurants, LLC, case no. 16-2451 (1st Cir. 4/30/18).

California adopts ABC Test for gauging independent contractor classification

The California Supreme Court announced a new test for determining whether a worker is truly an independent contractor or an employee under California’s wage orders (regulating wages, hours and working conditions).

(I)n determining whether, under the suffer or permit to work definition, a worker is properly considered the type of independent contractor to whom the wage order does not apply, it is appropriate to look to a standard, commonly referred to as the “ABC” test, that is utilized in other jurisdictions in a variety of contexts to distinguish employees from independent contractors. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes:

(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

This new test continues California’s approach to scrutinizing whether the relationship includes a right to control and direct the work (test A) and whether the worker is engaged in an independent trade (test C), but adds a focus on whether the worker is doing “work that is outside the usual course” of the company’s own business (test B).

Companies that use independent contractors to do work that is within the company’s own “usual course” of work, much less that is being done by its own employees, should take special care to review this new test and determine if they are in compliance.

Source: Dynamex Operations v. Superior Court, case no. S222732 (Cal. 4/30/18).

Tune in tomorrow 7:50 AM MT @KOANewsRadio I’ll be discussing today’s @Scotus blockbuster re arbitration agreements in the workplace.

Here’s a preview.

Supreme Court upholds mandatory pre-dispute arbitration agreements, even when they bar class/collective actions

In a 5-4 decision the Supreme Court may have given employers — at least in some states — to block class and collective actions. The Court ruled that mandatory pre-dispute arbitration agreements are enforceable under the Federal Arbitration Act (FAA), even in employment cases, and even as a block against class/collective actions. The Court had previously so ruled in the context of consumer contracts. In this case, the Supreme Court extended that ruling to employment agreements.

This ruling means companies can now lawfully require — at least under federal law — both consumers (as a condition of buying their product or service) and now employees (as a condition of working for the company) to agree,

  • Before any dispute ever arises,
  • To submit any future possible disputes to arbitration,
  • Instead of litigating them in court, and
  • Unless otherwise spelled out in the arbitration agreement, to waive any future rights to participate in class or collective actions.

In extending its ruling to employment cases, the Court rejected the argument that the National Labor Relations Act protects an employee’s right to join class/collective actions.

Perhaps of greatest importance the Court signaled a sharp curtailing of precedent holding that courts must defer to administrative agencies. That principle is called Chevron deference (after the Supreme Court’s 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.). Chevron deference has become highly controversial and is seen by conservative legal theorists as the chief vehicle for creation of the so-called administrative state. Here the issue of Chevron deference was raised because the National Labor Relations Board had held that the statute it oversees, the National Labor Relations Act, does include protection for class/collective actions and therefore should have rendered illegal the agreement at-issue. Over a heated dissent, the Supreme Court rejected the argument that the Board’s interpretation of the NLRA was entitled to deference. Whether this portends an end to Chevron deference or will prove an isolated ruling remains to be seen.

A “collective” action is like a class action. Some laws, notably, some wage-hour laws (such as minimum wage and overtime laws) permit “collective” actions instead of class actions. Simply put, the difference is that in a class action, the judge declares the existence of a class, and class members opt out of the class if they do not wish to participate; whereas, in a collective action, members must opt in to join the class.

Employers that have previously been concerned about stepping into the waters of mandatory pre-dispute arbitration agreements may now wish to consult with counsel about doing so. Employers should remember that, although this is a strong case for employers, it does not necessarily apply to claims brought under state laws, and some states, notably both New York and California, have taken strong positions against this type of agreement.

Source: Epic Systems Corp. v. Lewis, case no. 16-285 (5/21/18)

“Spiritual coercion,” “volunteers” and children under federal wage laws

Two recent decisions by the U.S. Circuit Court of Appeals address the applicability of federal labor laws to church volunteers. The Fair Labor Standards Act (FLSA) is the nation’s leading wage-hour law. FLSA requires a minimum wage, overtime pay and prohibits child labor. FLSA applies only to “employees.” Volunteers are generally not considered to be “employees;” therefore, FLSA generally does not apply to volunteers. These two recent cases addressed these concepts in the context of church volunteers.

One case was decided by the Sixth Circuit, Acosta v. Cathedral Buffet, Inc. It involved a restaurant, operated by a church, on the church’s campus, that was open to the public and staffed in part by church volunteers.

The other case was decided by the Tenth Circuit, Acosta v. Paragon Contractors Corp. It involved a pecan ranch, at which church members, including children, harvested pecans.

In both cases, the Courts held the businesses were commercial enterprises subject to FLSA, and that the church members were doing work. Thus both courts were called to decide if the church members were truly volunteering their time, such that FLSA did not apply to their work. Both courts looked to a 1985 Supreme Court decision, Alamo Foundation, where the Supreme Court held that a volunteer is, among other things, someone who works “without promise or expectation of compensation” and “for his own personal purpose or pleasure.” And, there, the Courts split. The Sixth Circuit held that the church members were volunteers, and the Tenth Circuit held they were not.

Why did the Courts split? The Sixth Circuit decided its case after the Tenth Circuit, and it held that the difference was because (a) the Tenth Circuit case involved children and (b) the Tenth Circuit case involved more than “spiritual coercion.”

Under Alamo Foundation, a worker cannot be held a “volunteer” if his work is coerced. A person who is coerced into working is not working purely “for his own personal purpose or pleasure.” The Sixth Circuit held that, in the Cathedral Buffet case, the workers, who were adults, were working because they felt it was expected of them to be “faithful stewards of God’s grace in its various forms.” The Sixth Circuit held that, even if such religious dogma was considered to be coercive, it is “spiritual coercion,” and as such insufficient to transform a volunteer into an “employee” under FLSA. However, the Court held that in the Tenth Circuit’s case, the workers were children and, further, in its own case, the Tenth Circuit highlighted facts suggesting more than mere spiritual coercion. For example, the Tenth Circuit pointed to evidence, including “one child (who) stated that if she had not worked, she would have lost her family and been kicked out of the community.”

Non-profits that benefit from the work of volunteers, especially church-related non-profits, should carefully review these two new cases.

Source: Acosta v. Cathedral Buffet, Inc.case no. 17–3427 (6th Cir. 4/16/18); Acosta v. Paragon Contractors Corp., case no. 17-4025 (10th Cir. 5/13/18).

Individual liability possible for wage claims, in Colorado

In a 2003 decision, Leonard v. McMorris, the Colorado Supreme Court ruled that the Colorado Wage Claim Act does not itself create statutory liability for individuals who own or manage a company. But what about other theories?

In a recent decision, Paradine v. Goei, the Colorado Court of Appeals held that Leonard does not foreclose personal liability. Rather, it simply held that the Colorado Wage Claim Act itself cannot be a vehicle for imposing personal liability. The Colorado Court of Appeals held in this case that there are, at least, two other “well-established” theories for holding an individual liable for the acts of a company: “peircing the corporate veil, and when an officer acts on behalf of an undisclosed principal.” Oversimplifying these two principles, (1) the first allows a person to be held liable for the acts of his entity if, in running that entity, he has not obeyed corporate formalities and ignored the distinction between the entity and himself; (2) the latter allows a person to be held liable when he seems to have acted on his own behalf but later wishes to claim, unbeknownst to the plaintiff, that he was actually acting behind an entity.

In this case the Court of Appeals held the plaintiff had adequately pled a case to pierce the corporate veil and was, therefore, entitled to seek discovery in pursuit of his allegations. In particular the court noted the plaintiff alleged that the individual collected the company’s money to be used to pay wages, used the company’s revenues for “his own personal use” and “diverted corporate funds” to pay his own expenses, including his “apartment lease” and “vehicle payments,” treating the company as his “alter ego” while commingling bank accounts and credit cards.”

Paradine will no doubt stimulate the filing of individual liability claims in Colorado wage cases.

Source: Paradine v. Goei, case no. 16CA1909 (Colo.App. 4/19/18).

Obama-era Executive Order 13673 (entitled Fair Pay and Safe Workplaces”) repealed

Congress has repealed regulations implementing President Obama’s 2014 Executive Order 13673, titled the Fair Pay and Safe Workplaces Act, and, as he signed that Congressional Resolution into effect, President Trump signed his own Executive Order repealing President Obama’s Executive Order itself.

This brings an end to Executive Order 13673 in its entirety. The executive order had been highly controversial. On one hand its proponents praised it as a means of protecting civil rights for workers at government contractors; on the other its critics called it unclear, impractical, ineffectual and harmful. Worse for the order, parts were quickly blocked by the courts as an unconstitutional Presidential overreach in violation of the Constitution’s separation of powers and speech principles.

The Executive Order’s now-defunct provisions had included a requirement that government contractors self-disclose labor and employment violations and a prohibition against government contractors entering into mandatory pre-dispute arbitration agreements.

Source: House Joint Resolution 37 and Executive Order dated 3/27/18.

San Francisco enacts Ban-The-Box ordinance for marijuana offenses

San Francisco is the latest to join a trend of authorities enacting ban-the-box legislation with an ordinance that supplements its “fair chance” law by, now, prohibiting employers from inquiring into marijuana use within California‘s marijuana-permissive law.

Source: San Francisco Ordinance No. 17-14.

Fun time speaking at Spring employment law conference

Fun time speaking Friday 4-20-18 at CBA CLE’s spring conference for the CBA Labor and Employment Law Section, “Employment Law How-To: Hot Topics.”

Source: cle.cobar.org/HomeStudies/Product-Info/productcd/EM042018D

Interested in my thoughts on mediation?

Interested in mediation, even in the context of labor relations (union matters)? Check out this article, including my thoughts, by Law Week Colorado.

When an “interstate” driver isn’t, but is …

Both federal law (the Fair Labor Standards Act, “FLSA”) and Colorado law (the Colorado Minimum Wage Act, the Colorado Wage Claim Act, and the Colorado Minimum Wage Order) exempt “interstate drivers.” Under FLSA, a driver can be considered “interstate” if she, like taxi drivers, is subject to the federal Motor Carrier Act, even where she drives only within the state. This means taxi drivers are not entitled to overtime under federal law.

In this case, the Colorado Court of Appeals affirmed the Colorado Department of Labor and Employment’s view that Colorado intended a stricter approach. According to the Court and the DOLE, Colorado’s overtime exemption does require that a driver actually drive across state lines as part of their job. Accordingly, the Court held, Colorado taxi drivers are entitled to overtime under state law, even though they would not be under federal law. As the Court explained, FLSA permits states to adopt stronger protections for employees than federal law. Here, the Court held Colorado did so because Colorado’s overtime exemption is worded slightly differently than FLSA’s.

Remaining issues include the applicability of this ruling to “gig” drivers, like those who drive through Uber or Lyft. Also, while this case has held that taxi drivers who don’t actually drive in and outside the state are entitled to overtime, it did not address whether other parts of Colorado wage law, including minimum wage requirements, also apply to such drivers.

Source: Brunson v. Colorado Cab Company, LLC, case no. 16CA1864 (1/8/18).

DOL revives self-reporting program

The United States Department of Labor (DOL) has revived its Payroll Audit Independent Determination (PAID) program, which is designed to allow employers who suspect they have violated the Fair Labor Standards Act (FLSA) to self-report the suspected violation and get the DOL’s take on the situation. Unfortunately that’s about all an employer gets.

The program is open to employers who suspect they’ve underpaid workers, unless the employer is already involved in an audit, litigation or has received a demand from an employee or their attorney. Unfortunately the DOL doesn’t say what happens if the employer self-reports and then receives the demand, does that kick the employer out of the PAID program?

We aren’t likely to find out because the PAID program offers very little real benefit to a self-reporting employer. On its face, it is supposed to allow an employer to self-report and, in doing so, self-identify their own calculations of backpay owed. If the DOL agrees, it will then process the payments to workers. Although that is likely helpful to mitigate against penalties — especially in cases that involve a large total amount at-issue, consisting of small payments to individual workers, incurred as a result of an inadvertent violation — participation in the program doesn’t result in either the employees or the DOL waiving future claims, audits, litigation, etc.

Participating in the program comes with an especially high price. In order to be eligible, the employer must effectively lay out a plaintiff’s case, by submitting the following information to the DOL (quoting the DOL):

  1. specifically identify the potential violations,

  2. identify which employees were affected,

  3. identify the timeframes in which each employee was affected, and

  4. calculate the amount of back wages the employer believes are owed to each employee.

Source: US DOL PAID program.

Under the Supreme Court’s new “fair reading” doctrine, will FLSA exemptions be interpreted more broadly?

Historically courts have interpreted the overtime exemptions in FLSA (the Fair Labor Standards Act) narrowly in favor of employees. This “narrow construction” doctrine has made it difficult to treat employees who may be exempt as such unless they clearly fit an exemption. Now, the Supreme Court has rejected the “narrow construction” doctrine, ruling that it has not been “a useful guidepost for interpreting FLSA.”

The Supreme Court held that FLSA’s overtime obligations consist of two basic chunks of statutory language: The first requires employees to be paid overtime; the second chunk of language is a series of exemptions from that general rule. The Supreme Court held that FLSA provided courts with no basis for giving the first chunk of language any greater significance than the second chunk, in other words, to read the overtime requirement broadly at the expense of having to read the exemptions narrowly. Instead the Supreme Court held, both chunks of language should be given equal importance. The Supreme Court called this a “fair reading.”

Those exemptions are as much a part of theFLSA’s purpose as the overtime-pay requirement. See id., at ___ (slip op., at 9) (“Legislation is, after all, the art of compromise, the limitations expressed in statutory terms often the price of passage”). We thus have no license to give the exemption anything but a fair reading.

Having rejected the narrow-construction doctrine, and instead applying its fair-reading doctrine, the Supreme Court then held that, in this case, service advisors at the car dealership in question qualified for an overtime exemption under FLSA’s special exemption for salesmen at car dealerships.

It is likely this ruling will have substantial impact in all FLSA overtime cases. It will not be limited to the FLSA’s exemption for salesmen at car dealerships. Rather the fair-reading doctrine will substantially expand the reach of all of FLSA’s overtime exemptions.

Source: Encino Motorcars, LLC v. Navarro, case no. 16-1362 (2018).

Michigan and Wisconsin preemptively ban prohibitions against salary history inquiries

In stark contrast to a trend of authorities that have begun to prohibit inquiries into salary histories, Michigan and Wisconsin have each now passed legislation that prohibits and preempts any effort within those states by local governments to enact such a prohibition.

While Wisconsin’s ban is more limited in nature, Michigan’s makes no effort to limit its ban to questions involving salary histories. It is a broad ban on any effort in the state to limit or mandate the type of questions asked on applications. Here is the operative language of Michigan’s law:

A local governmental body shall not adopt, enforce, or administer an ordinance, local policy, or local resolution regulating information an employer or potential employer must request, require, or exclude on an application for employment or during the interview process from an employee or a potential employee. This section does not prohibit an ordinance, local policy, or local resolution requiring a criminal background check for an employee or potential employee in connection with the receipt of a license or permit from a local governmental body.

Source: Michigan S.B. 0353; Wisconsin A.B. 748.

Bad faith required for spoliation instruction, holds Tenth Circuit

There is a general requirement that parties not destroy evidence; bolstering that, there is a specific requirement in EEOC regulation 29 CFR 1602.14 that employers preserve personnel records for 1 year and that the parties in an EEOC charge preserve evidence until final disposition of the charge.

In this case, the EEOC and plaintiffs argued that an Excel file contained information that was allowed to be destroyed as the file was routinely updated. Additionally notes of a meeting were at-issue. The employer’s witnesses testified that they did not know how the records had been lost and, further, that, even if they hadn’t been destroyed, they had never contained evidence relevant to the case at-issue. The EEOC argued it should, nonetheless, be entitled to a presumption that the records would have been helpful to its case, and further that the jury should be so instructed. Such an instruction is called a “spoliation” instruction.

The Tenth Circuit reviewed its precedents and held that, first, a litigant must show the destroying party did so in bad faith. Merely allowing records to be destroyed is not sufficient to warrant a spoliation instruction. The EEOC responded that, unlike general litigants, it should, even despite the lack of bad faith, be entitled to a spoliation instruction because, whatever the employer’s intent had been, it had allowed the records to be destroyed in violation of that regulation. The Tenth Circuit rejected the argument that a spoliation instruction should be a remedy for such a violation absent bad faith, noting that was especially true where, as here, the EEOC and plaintiffs failed to produce any evidence countering the employer’s evidence that, if the records had been preserved, there was nothing helpful to the EEOC and plaintiffs in them.

Source: EEOC v. JetStream Ground Services, Inc., case no. 17-1003 (10th Cir. 12/28/17).

Sixth Circuit holds transgendered workers are already protected by Title VII

Following a recent Second Circuit decision holding that sexual preference (LGB) is already protected by Title VII within the meaning of “sex,” the Sixth Circuit has held that being transgendered is also so protected.

While both cases may be heading for Supreme Court review, they suggest that LGBT may well be determined by other federal Circuit Courts to have been protected by Title VII since its inception in 1964. Employers are reminded that many states and local governments already have express protections for LGBT workers.

Source: EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., case no. 16-2424 (6th Cir. 3/7/18).

Fun morning on 850 KOA talking about the rule of law

Fun morning on 3/20/18 talking about the Rule of Law and a recent Colorado Supreme Court case involving … a tree in Denver’s Wash Park neighborhood. In the case, the Court went all the way back to Merry Old England in the 1600’s to find relevant precedent.

Colorado Supreme Court holds statute of limitations on wage claims runs from pay period following its due date

The Colorado Supreme Court held that the statute of limitations under the Colorado’s Wage Claim Act, CRS. 8-4-101 to -123, begins to run from the pay period when the wage first becomes due and is unpaid.

The facts of the case illustrate the importance of this holding. Like many states, Colorado’s wage claim laws permit an employee to sue at the time of termination for any unpaid wages. Most commonly wage claims involve amounts that are claimed due in that final paycheck, for example, vacation pay, but what about wages that were claimed due in prior periods? This case involved a group of workers who sought wages “as far back as 1992.” Colorado’s wage laws, like federal law (Fair Labor Standards Act, FLSA), set a 2-year statute of limitations on wage claims, or 3 years if the violation is deemed wilful. The plaintiffs argued that the Act allowed them to seek all of their claimed wages, going back decades. In contrast, the company argued that they could seek only wages that came due in their final paycheck, nothing earlier.

The Colorado Supreme Court disagreed with both parties, holding that the plaintiffs can seek any wages that came due in their final paychecks plus any that came due in the 2 years preceding their termination (or 3 if the claim is deemed wilful), but that they cannot seek wages going back farther than that.

We conclude that under section 109, terminated employees may seek wages or compensation that had been earned in prior pay periods but remain unpaid at  termination. This right, however, is subject to the statute of limitations in section 122, which runs from the date when the wages first became due and payable—the payday following the pay period in which they were earned. A terminated employee is thus limited to claims for the two (or three) years immediately preceding termination.

It is noted that the Court there said plaintiffs could seek claims for 2 (or 3) years “immediately preceding termination;” however, it would seem from the language of the Act and the Court’s own reasoning that the Court meant “immediately preceding (the filing of their lawsuit seeking wages upon) termination.” That issue is likely to be litigated in future cases.

Source: Hernandez v. Ray Domenico Farms, Inc., case no. 17SZ77 (Colo. 3/5/18).

To be a Dodd-Frank whistleblower, individual must complain to SEC

Dodd-Rank is the nation’s leading securities-related whistleblower law. What if an individual complains, not to the SEC, but to the company at-issue, is a mere internal complaint to the company sufficient to trigger Dodd-Frank’s protections? In a unanimous 9-0 decision, the Supreme Court, after reviewing the text of Dodd-Frank itself, held the answer was clear: Congress wrote Dodd-Frank to protect only complaints to the SEC. Therefore a complaint to the company at-issue, alone, is insufficient to trigger Dodd-Frank’s protections.

The case is also notable for the absence of analysis regarding Chevron deference. Chevron deference is the legal term used to refer to the practice of courts deferring to agency interpretations of statutes. Here, while Dodd-Frank itself clearly required a complaint to the SEC, the SEC had interpreted the language more broadly, saying that a complaint to a company alone should also be protected. The concept of Chevron deference has become quite controversial, and commentators anticipated this might be the case by which the Supreme Court revisited the topic. However, the Supreme Court, having decided the language of the statute itself was clear, had no opportunity to do so. The continuing viability of Chevron deference remains an issue for another case to resolve.

Source: Digital Realty v. Somers, case no. 16-01276 (Sup. Ct. 2/21/18).

Dissenter rights include ability to terminate non-compete?

The Colorado Court of Appeals held that a shareholder’s statutory dissent rights, in at least the facts of the case before it, included the ability to terminate an existing non-compete. In this case, the plaintiff was a doctor at and a shareholder of a clinic. When his clinic merged with another, he disagreed and exercised his statutory right under C.R.S. 7-113-202 to dissent and demand payment for the fair market value of his shares. In addition, he contested the continuing viability of his then-existing non-compete.

In this case, the Colorado Court of Appeals held that he was entitled to be paid the fair market value of his shares but added that he was also relieved of his non-compete. To hold otherwise, the Court of Appeals said, would “further penalize Crocker’s exercise of his right to dissent, rather than protect him from the conduct of the majority” who had voted for the merger.

The decision drew a dissent as to the ruling relieving him of the non-compete. It remains to be seen whether the case will be heard by the Colorado Supreme Court.

In analyzing the case, the Court of Appeals noted a variety of facts, including the geographic radius of the non-compete versus the location of the plaintiff’s residence. It also remains to be seen whether this decision will be limited to its facts.

Source: Crocker v. Greater Colorado Anesthesia, P.C., case no. 2018COA33 (Colo.App. 3/8/18).

California is at it again, this time, how to calculate overtime

Under federal law (the Fair Labor Standards Act, “FLSA”), a non-exempt employee’s regular rate of pay is calculated, for overtime purposes, for each workweek, by totaling their compensation that week (excluding only certain limited things likely discretionary bonuses) then dividing by their total hours worked that week. They receive half that on top of the pay they’ve already received as compensation for overtime hours worked (in excess of 40).

Under a recent California case, California has decided, yet again, to be the odd jurisdiction out and, now, mandates that the denominator is only non-overtime hours.

What’s the difference? Here’s a simple hypothetical to illustrate. Assume in Week-1 of the year, John works 42 hours at a rate of $10 per hour. He gets paid $420 for that straight time (42x$10). That same week, John also receives an attendance bonus of $42. So far, his pay that week totals $462 ($420+$42). His regular rate is therefore, under FLSA, $11 ($462/42). He still hasn’t been overtime, so for overtime, he gets paid half that regular rate $5.50 ($11/2) for the 2 hours he worked overtime, in other words, an extra $11. His total pay that week, under FLSA, is $473.

Under the California approach, when it comes to calculating the regular rate, the company can only divide by 40. So his regular rate of pay is $11.55 ($462/40), nearly a 10% increase. That means his overtime rate is half that, making his total pay that week is $473.50 ($420+$42+$11.50).

Source: Alvarado v. Dart Container Corp. of Calif., case no. S232607 (Cal. 3/5/18).

Pay history bans coming, at a federal level, by way of the Circuit Courts?

A growing number of state and local governments prohibit asking applicants about their pay history or using prior employer pay histories as a basis for setting employee pay. Two Circuit Court cases suggest that such a ban may be coming, not by way of state and local legislation, but at a federal level under currently existing federal laws known as Title VII and the Equal Pay Act.

The Circuit Courts are the nation’s federal appellate courts. They are divided (and numbered) by region. They are for practical purposes generally the highest courts in the land, just beneath the Supreme Court of the United States. Very few cases result in Supreme Court review; the Circuit Courts resolve the vast bulk of federal appellate litigation without cases ever rising to the Supreme Court.

Pay history bans are growing across the country because advocates for equal pay, particularly between men and women, contend that one reason women earn less than men in many positions, is simply that women tend to have previously earned less than men in prior positions. In other words, they contend it is a self-perpetuating cycle.

In one case, the Ninth Circuit held last year, in 2017, that, consistent with its precedent, an employer may set pay levels purely on the basis of pay histories. However last summer the Ninth Circuit withdrew that decision and ordered the matter reheard en banc (by the entire bench of its judges). The case is pending reconsideration.

In the other case, the Eleventh Circuit just ruled in a Georgia case that an employer was not entitled to summary judgment, in other words, it would have to explain itself to a jury, where the female plaintiff argued she was underpaid compared to her male predecessor. The Eleventh Circuit case did not go so far as to hold that pay histories cannot be considered. It simply held, on the basis of the record before it, that pay histories were not themselves enough to warrant ruling for that employer. The Eleventh Circuit’s decision may be limited to its facts in that, there, the company’s HR manager had testified to general female-male pay disparities at the company and further that the company’s general manager had made an anti-female remark.

Employers should consider monitoring pay history bans.

Source: Rizo v. Yovino, case no. 15-372 (9th Circuit) (case pending reconsideration en banc); Bowen v. Manheim Remarketing, Inc., case no. 16-17237 (11th Cir. 2/21/18).

Second Circuit holds Title VII has always protected sexual orientation within its protection of “sex”

Following a recent series of cases discussed earlier on this blog, the Second Circuit has held that sexual orientation is, and has always been, included within the meaning of Title VII’s protection of “sex.”

Title VII prohibits discrimination on the basis of sexual orientation as discrimination “because of . . . sex.” To the extent that our prior precedents held otherwise, they are overruled.

Source: Zarda v. Altitude Express, Inc., case no. 15-3775 (2nd Cir. 2/26/18).

NLRB holds hotel owner REIT liable as a “statutory employer” for otherwise lawful lawsuit against union

Companies that own properties, such as hotels, may find themselves being damaged by the activities of unions who represent or seek to represent workers on the property, even workers who are employed by other companies. Such property owners may have legal rights at-issue and may sue unions and workers for violation of those rights. However, in response, unions and workers can file charges at the NLRB alleging that the real reason for the lawsuit was to retaliate for lawfully protected concerted activities.  That kind of NLRB charge is often called a Bill Johnson charge after the Supreme Court case recognizing the theory behind such a charge. The NLRB will permit a Bill Johnson charge even when it was proven in the underlying lawsuit that the union had violated the property owner’s rights. In a recent decision, the NLRB revisited multiple doctrines involved with that kind of scenario.

As an initial matter, the hotel owner argued before the NLRB that it was not subject to the National Labor Relations Act because it was not the “employer” of the workers, it had no collective bargaining relationship with their union. Indeed it was undisputed that the company, being a REIT (Real Estate Investment Trust), could not have employed the workers. The Board rejected the argument finding that the owner was a “statutory employer,” subject to the NLRA, along with the operator that actually employed the workers. First the Board held the owner had “a significant financial interest in the hotel’s profitability.” More importantly the operator was an affiliate of the hotel owner; it was owned by two of the same individuals who were owners in the REIT/property owner. And, perhaps most importantly to the Board, the REIT/property owner had a management agreement with the operator, in which it required the operator to consult with it over personnel matters, including wages.

Next, the Board rejected the hotel owner’s argument that it had a meritorious basis for its lawsuit against the union. The Board explained that whether the owner’s lawsuit against the union had a “reasonable basis” or not was simply not an issue in the case. The Board said that its “reasonable basis” test did not apply where, as here, the owner’s lawsuit had been directed specifically at activity protected by the NLRA. Here, the REIT/property owner’s lawsuit was, the Board held, entirely focused on the union’s boycott and related activities and speech by the Union and the workers. In so holding, the Board distinguished cases where the underlying lawsuit had targeted unprotected activities, such as defamatory statements made with malice, threats to the public order, or violence. Finally the Board held, that even if the “reasonable basis” test applied, it would not find the underlying lawsuit as having had a reasonable basis.

The decision is a sharp reminder that the NLRB may punish companies who exercise their otherwise lawful right to pursue litigation against a union. The Board’s ruling that a “reasonable basis” for the underlying lawsuit is not a defense arguably has increased the potential for future Bill Johnson charges.

Source: Ashford TRS Nickel, LLC, 366 NLRB No. 6 (2/1/18).

Google memo litigation continues, on two fronts

As previously reported on this blog, the NLRB recently cleared Google of charges that it had allegedly violated Section 7 of the National Labor Relations Act by discharging the author of a controversial memo that attempted to explain his view that men are biologically more fit to be engineers than women. The NLRB held that, while some aspects of his memo might have been protected under Section 7 — a part of the NLRA that applies to both unionized and non-unionized workplaces — there were parts that stereotyped women and warranted Google’s decision to “nip in the bud” (quoting the NLRB General Counsel) his sexist communication.

The NLRB General Counsel’s decision, though, doesn’t end the litigation. There are now at least two separate lawsuits on-going: One by the memo’s author, James Damore, and another by a critic of Damore’s views, Tim Chevalier.

Both are former employees, terminated by Google for their speech involving Damore’s memo. In his memo, Damore advocated that Google had a culture of discrimination against white men and conservatatives, despite his view that men were in fact biologically better fit to be engineers at the highest level of the tech industry. In contrast Chevalier advocated verbally, through conduct, by email, on social media and on Google’s internal systems, that the Damore memo was “misogynistic,” that it was hostile to protected classes including gender, sex and race, and that it reflected, he alleged, a larger culture of hostility, including bullying, at Google on those same bases.

Damore’s lawsuit includes allegations, under California’s anti-discrimination laws, that Google discriminates against conservatives, Caucasians and men. Damore seeks to represent a class of such individuals against Google.

Chevalier’s lawsuit, also filed under California state law, asserts that he too was terminated for his political speech, including his activities to oppose not only Damore’s memo but also the Trump Administration’s politics and to protect the rights of minorities and women and rights associated with gender preference and sexual orientation. Also, Chevalier, a transgendered man, alleges his termination was linked to his efforts to protect related to sexual orientation and gender preference.

Both complaints are lengthy and warrant additional review by interested readers. Those are just some of their allegations. The merits of Mr. Damore and Mr. Chevalier’s complaints will be litigated, but the filing of their lawsuits illustrates how labor laws like the NLRA interact with employment laws like those at-issue in these lawsuits. An employer can comply with one set of laws and run afoul of another.

Sources: Duvalier complaint; Chevalier complaint.

NLRB clears Google, signals more employer-respectful approach to discipline of workplace misconduct

In a shift from recent NLRB decisions holding employers liable under the National Labor Relations Act’s Section 7 for disciplining employee misconduct that is offensive, disrespectful and harassing, the NLRB General Counsel recently cleared Google of charges that, by disciplining an employee for having written an offensive memo, it had somehow violated the Act.

Section 7 is a part of the National Labor Relations Act that applies to both unionized and non-unionized workforces, so this decision is of equal interest to companies without unions as to companies with unions representing their workforces.

In this case, Google’s employee famously wrote a memo that sought to explain why men received more favorable treatment than women in Google’s high tech workplace. The memo was considered by many to be highly offensive and received substantial national press. Included in his memo were stereotyping comments about women, such that women are more prone to “neuroticism” and therefore less able to work in a stressful environment and that more men score in the “top of the curve” than women.

Although the employee “cloaked” his memo in “science,” especially biology, quoting the NLRB, the Board’s General Counsel refused to engage on the so-called science, instead finding that the stereotyping comments were offensive and specifically offensive in a gender-specific manner, implicating the nation’s laws against sex discrimination. The Board’s General Counsel noted that the memo triggered internal complaints of sexual harassment and multiple female engineering candidates withdrew their applications.

The Board’s General Counsel also refused to condone the parts of the memo that may have been protected under Section 7, which protects an employee’s efforts to further his workplace’s wages, hours and working conditions.

(W)hile much of the Charging Party’s memorandum was likely protected, the statements regarding biological differences between the sexes were so harmful, discriminatory, and disruptive as to be unprotected.

In reaching that conclusion, the Board’s General Counsel noted that Google had drafted the employee’s termination notice to expressly say he was not being let go for any lawful aspects of his memo, but rather specifically and only for “(a)dvancing gender stereotypes.”

Finally the Board rejected the argument that the memo was merely speech and that, as such, it alone may not have been a violation of the anti-discrimination laws.

(E)mployers must be able to “nip in the bud” the kinds of employee conduct that could lead to a “hostile workplace,” rather than waiting until an actionable hostile workplace has been created before taking action.

It is this “nip in the bud” comment that is mostly likely to be cited by future employers. Recognizing that an employer has the right to “nip in the bud” misconduct seems to be a reversal of recent Obama- era Board decisions.

Source: NLRB Advice Memorandum, case no. 32-CA-205351 (1/16/18).

BNA’s 2018 outlook for labor and employment law

Looking for an interesting report on what lies ahead in 2018 for labor and employment law? BNA has released its 2018 report.

NLRB employees set to protest against … the NLRB’s General Counsel

What a tangled web… NLRB employees are expected to protest the Board’s own General Counsel with leaflets and speech as soon as he arrives at an event to speak today February 6.

Source: “Agency Workers Protest Trump Labor Board Prosecutor’s Agenda,” H.A. Kanu and J. Eidleson (2/6/18).

“Tolling” versus “Suspending”: Which is it? SCOTUS says “tolling” means tolling.

Imagine a plaintiff who has both federal and state law claims. This is commonly the case in employment lawsuits where a plaintiff may, for example, have federal discrimination claims (often under Title VII) and state law claims (such as assault). Imagine that plaintiff faces a 2-year statute of limitations on their state law claims. Assume he files his EEOC charge, receives a right to sue and, exactly 1 year after the incidents at-issue, files his federal lawsuit. In that lawsuit he also asserts his state law claims. 14 months later, the federal court dismisses the federal claims, then, without ruling on the merits of the state law claims, dismisses them because there is no longer a federal claim to establish federal jurisdiction. At that point, it’s been 26 months (12+14) since the incidents at-issue occur, in other words, the 2-year (24 month) statute of limitations is 2-months expired.

So does the state law 24-month statute of limitations bar the plaintiff from re-filing his state law claims, this time in state court? No, there is a federal statute, 28 USC 1367(c), that says state law claims are “tolled” while the case is pending in federal court and, thereafter, for another 30 days. In other words, our hypothetical plaintiff can still file his state lawsuit, but he has to do so quickly, at least within that 30-day period.

But what if our hapless plaintiff misses that 30-day period? In other words, the judge ruled 26 months after the incidents at-issue. He clearly had the right to file during that 27 month, but what if he misses that window and doesn’t file until, say, the 30th month? Did his deadline expire at the end of that 30-day period or, because sec. 1367(c) says the state statute of limitation is “tolled,” does he get that 30 days plus another 14 months for the period his case was pending in federal court?

Faced with a choice between reading sec. 1367(c) as giving that plaintiff either just 1 month (30 days) or 15 months (30 days plus 14 months), the Supreme court held, in a divided opinion, that he has15 months in that scenario. In other words, the majority held that, because the federal tolling statute says the state statute of limitations is “tolled,” the plaintiff stopped the clock when he filed his federal lawsuit. He gets all the rest of the state statute of limitations after that, in other words, all the time that the case was pending before the federal court, plus the federal tolling statute’s 30 extra days.

That is, the limitations clock stops the day the claim is filed in federal court and, 30 days postdismissal, restarts from the point at which it had stopped.

The majority’s 5-4 decision reverses the lower Circuit Court and overrules a dissent, both of which would have held that the plaintiff only had 30 days. In a frankly odd dissent, the normally articulate J. Gorsuch explained the dissent’s view of sec. 1367 by analogizing to an obscure 1929 book:

Chesterton reminds us not to clear away a fence just because we cannot see its point. Even if a fence doesn’t seem to have a reason, sometimes all that means is we need to look more carefully for the reason it was built in the first place. The same might be said about the law before us.

The decision is a victory for plaintiffs. Although a relatively unusual scenario, the majority’s reading of sec. 1367 provides plaintiffs with time to carefully consider their next move (whether and what to file in state court) following an adverse ruling in federal court.

Source: Artis v. District of Columbia, 138 S.Ct. 594 (2018).

DOL adopts Primary Beneficiary test for interns under FLSA

The U.S. Department of Labor has adopted the Primary Beneficiary test for deciding whether an intern must be paid as an employee or can be treated instead as an unpaid intern. This brings the DOL into alignment with a number of circuit courts, including the Sixth, Ninth and Eleventh. The Primary Beneficiary test is generally seen as more favorable towards employers and students who wish to be treated as unpaid interns.

The Primary Beneficiary test asks, given the “economic reality” of the relationship, whether the putative intern or the company is the real “primary beneficiary” of the relationship. When asking that question, the DOL and courts that follow this test consider the following seven factors (quoting new DOL Fact Sheet #71):

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

L2S blog featured in Law Week Colorado

Honored to see this blog featured in Law Week Colorado!

Source: “Feeding the Beast: Is keeping a law blog worth the time for sole practitioners?,” by Doug Chartier, Law Week Colorado (1/25/18).

Workplace investigations in the #MeToo era

Looking for an interesting read to brainstorm workplace investigations in the #MeToo era? Here’s a recent article from SHRM that’s worth your time.

Source: “How to Investigate Sexual Harassment Allegations,” SHRM, by Dori Meinert (1/18/18).

State legislatures considering sexual harassment reforms

As previously reported in this blog, Congress has already addressed sexual harassment reforms, including by implementing significant restrictions on the tax treatment and ability to keep confidential settlements and awards related to sexual harassment. Now, as state legislatures begin convening, it is expected that reform efforts related to sexual harassment will be debated at at the state level. Already proposals have been put forth in multiple states. Topics likely to be debated include the following:

  • State level restrictions on the tax treatment of settlements and awards involving sexual harassment.
  • The ability to include confidentiality clauses in settlements involving sexual harassment.
  • Enhanced training obligations.
  • Enhanced reporting procedures and protections.

It is anticipated that such debates will involve not only private workplaces but also government workplaces, and especially the state legislatures themselves as workplaces.

In Colorado, our legislature just convened its 2018 session, and already one bill is pending to enhance training requirements for early childhood providers.

Eighth Circuit weighs in on Shifting Reasons doctrine

In a recent post, this blog discussed an Eleventh Circuit case on the Shifting Reasons doctrine, in which a plaintiff argues that their case warrants a trial because the employer has provided shifting reasons, suggesting the real reason was an unlawful intent. As noted in our prior blog post, this is one of the most common arguments plaintiffs make in response to a motion for summary judgment.

Now it’s the Eighth Circuit’s turn, and like the its sister, the Eleventh Circuit, the Eighth Circuit rejected the plaintiff’s claim of shifting reasons, holding that an employer can “elaborate” on its reason, provide additional examples or flesh out its reason, without it being considered “shifting reasons.”

(I)t is well-established that a employer may elaborate on its explanation
for an employment decision. Evidence of a substantial shift in an employer’s explanation for a decision may be evidence of pretext, but an elaboration generally is not.

(Citations omitted.)

In this case, when Rock-Tenn fired Rooney, it told him the reason was poor performance with regard to his “interaction with coworkers” and “failure to support” one particular client. Then after he sued, it gave as additional examples his (alleged) poor performance as to other clients. The Court held that was not a shift in the reason for his discharge, just further explanation.

These two Circuit Court decisions illustrate how common the Shifting Reasons doctrine is used by plaintiffs and the need for plaintiffs to show a true shift in the reason, not simply an elaboration of the reason.

Source: Rooney v. Rock-Tenn Services, Inc. (8th Cir. 1/9/18).

NLRB likely to rescind Obama-era expedited election rules

In a continuing trend of reversing Obama-era precedents, the Trump Board has signaled it will soon be rescinding the prior administration’s 2014 election rules. Those rules govern the election for (or against) unions to be recognized as a group of workers’ exclusive bargaining agent. The Obama-era rules greatly expedited the timeline for such an election and included a number of substantive changes that many commentators contend infringe on worker rights and employer rights. These controversial rules are known as — depending on the speaker’s perspective — the “expedited” or “ambush” or “quickie” election rules.

The NLRB posted a Request for Information on its website and in the Federal Register, December 14, 2017, inviting comment on three questions involving the rules:

  1. Should the 2014 Election Rule be retained without change?
  2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
  3. Should the 2014 Election Rule be rescinded? If so, should the Board revert to the Representation Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Representation Election Regulations? If the Board should make changes to the prior Representation Election Regulations, what should be changed?

The deadline for responses is February 12, 2018. Responses may be submitted at that website (limit 250 characters), where they will be posted immediately.

Source: NLRB Request for Information regarding expedited election rules.

 

NLRB reverses micro-unit rule

Continuing its trend of reversing Obama-era precedents, the NLRB has reversed 2011’s Specialty Healthcare, which had recognized the possibility of a union representing only a portion of a bargaining unit, i.e., a micro-unit. Micro-units were favored by unions when they felt they were able to persuade a majority of the smaller group to vote Yes for union representation, even though the union might not be successful in convincing the entire bargaining unit to so vote. It was seen as a way for the union to gain a foothold in an otherwise unreceptive workforce. In this case, the Board reversed Specialty Healthcare.

Source: PCC Structurals, Inc., 365 NLRB No. 160 (2017).

NLRB reverses course on workplace civility rules

As previously reported on this blog, with a now Republican majority on its Board, the NLRB has begun reversing course on a number of issues. On December 14, 2017, the Board overruled its 2004 precedent in Lutheran Heritage Village-Livonia, which had suggested that workplace civility rules violated the NLRB. This case confirms that the National Labor Relations Act does not guaranty to workers the right to be uncivil.

In this case, Boeing had a rule that prohibited the use of cameras, including in cell phones, on company property. Boeing asserted the reasons for its policy included the protection of highly sensitive, classified information, as well as the prevention of terrorist activities.

Under Lutheran Heritage, the Board had analyzed such policies by asking whether an employee would “reasonably construe” them as chilling the employee’s right to engage in protected concerted activity under Section 7 of the NLRA. In this case, the Board held that the “reasonably construe” standard was too narrow, “single-minded,” and did not take “into account any legitimate justifications” for the policy. The Board noted the “reasonably construe” standard had been applied “to invalidate facially neutral work rules solely because they were ambiguous in some respect” (emphasis in original).

Instead the Board will first ask if the policy is “facially neutral” and, if so, whether “when reasonably interpreted,” it “would potentially interfere” with Section 7 rights.

The Board explained this new approach will produce three categories of rules:

  • “Category 1” rules that are lawful. These include Boeing’s no-camera rule, as well as “harmonious interactions and relationships” rules and general “civility” rules.
  • “Category 2” rules whose lawfulness will depend on the circumstances.
  • “Category 3” rules that are  unlawful because their constraint on Section 7 rights “is not outweighed by justifications associated with the rule. An example of a Category 3 rule would be a rule that prohibits employees from discussing wages or benefits with one another.”

Source: The Boeing Co., 365 NLRB No. 154 (12/14/17).

NLRB reverses Obama-era joint employer doctrine

Continuing its trend of reversing Obama-era NLRB decisions, the Trump Board has reversed one of the most controversial, the Board’s 2015 decision, Browning-Ferris Industries, in which the Board had held that mere proof of indirect or even potential control was sufficient to create a joint employer relationship. In this decision, Hy-Brand Industry Contracts, Ltd., the Board returns to requiring proof of actual control by the putative joint employer.

The impact of the Board’s decision on the pending legislation regarding the Joint Employer doctrine, previously reported in this blog is yet to be determined.

Source: Hy-Brand Industry Contractors, Ltd., 365 NLRB No. 156 (12/14/17).

UPDATE: On February 26, 2018, the Board vacated the foregoing decision in Hy-Brand due to a purported conflict of interest bearing upon one of its members. On June 5, 2018, the Board announced it will, instead, issue a proposed rule addressing the Joint Employer doctrine. On June 6, 2018, the Board then refused to reinstate the foregoing decision, apparently leaving the issue instead to be determined as part of the forthcoming rulemaking process.

NLRB General Counsel issues memo outlining likely reversals to Obama-era precedents

As previously reported here in this blog, the Trump Board (NLRB Boards are often colloquially but not pejoratively referred to by the President during their term) has begun overruling Obama-era precedents. Further reversals are anticipated. Curious which Obama-era NLRB precedents are likely to be reversed?

NLRB General Counsel Robb issued a controversial memo, shortlisting the cases he thinks most warrant attention. Indeed to call it a shortlist is a stretch. The General Counsel lists 26 categories, that range from employee access to email, to protections for section 7 rights, obscene and harassing behavior, off-duty access to property, the Weingarten right to have a representative present, rights of employees during contract negotiations, successorship and of course the joint employer doctrine, unilateral changes consistent with past practice, information requests during the processing of a grievance, dues check-offs, remedies, deferral, and, well, the list goes on, as will employers’ need to stay tuned to forthcoming developments at the Board.

Source: NLRB General Counsel Memorandum GC 18-02.

Colorado minimum wage increase effective 1/1/18 to $10.20/$7.18

Effective 1/1/18, Colorado increased its minimum wage to $10.20 or, for tipped employees, $7.18.

Source: Colorado Department of Labor Minimum Wage web page.

Honored to be named a 5280 Top Lawyer

I am very honored to be named by Denver’s 5280 magazine, again, a Top Lawyer for 2018 in the area of Labor and Employment Law for Defense.

Disability discrimination claim denied, despite claims of shifting reasons and temporal proximity

Shifting reasons and temporal proximity are two of the most common arguments in discrimination cases. Employees often (correctly) argue either or both as part of efforts to withstand a motion for summary judgment. A recent Eleventh Circuit case illustrates how these arguments work.

An employer may file a motion for what is called “summary judgment” when it believes that the undisputed evidence requires dismissal of a plaintiff’s claims. In employment discrimination cases, when an employer has given a legitimate nondiscriminatory reason for the adverse employment action at-issue (discharge, demotion, etc.), a plaintiff most prove an issue of fact suggesting that the employer’s reason is “pretext” for discrimination. The plaintiff need not convince the judge of discrimination, merely produce sufficient evidence to support a jury verdict, assuming the jury were to believe that evidence. Two common ways that employees try to establish pretext are to show that the employer gave shifting reasons and that there was a temporal proximity. This case illustrates both arguments.

When an employer gives shifting reasons, it can suggest that its failure to provide a consistent statement of its reasoning suggests its reasons were in fact pretext for discrimination. Here, the plaintiff made such an argument. The Eleventh Circuit disagreed, noting that the employer’s reasons didn’t shift, its supervisors just didn’t articulate the company’s reasoning clearly. But, as unclear as the supervisors might have been, they all said the same basic reason: Her performance. Likewise, one supervisor gave an extra reason (“the needs of the Center”), but that reason was also related to performance. Thus, the Eleventh Circuit rejected the argument that the employer’s position had shifted.

(H)ere Cappetta’s supervisors consistently gave verbal and written warnings about her workplace violations. The fact that one supervisor also pointed to the needs of the Center does not undermine its consistent concern about her attendance issues, attitude problems, and cash handling violation.

Next she argued that there was a temporal proximity (a closeness in time) between an MRI she’d undergone for her disability and her suspension. The Eleventh Circuit agreed that the timing was certainly close and might have suggested more than coincidence; however, when a plaintiff establishes a temporal proximity, the employer can respond that there was no coincidence, rather, there was an intervening act that produced the adverse employment action. Here, the employer argued that was an incident with her handling of cash. The Eleventh Circuit agreed that intervening act broke the alleged temporal proximity.

Second, Cappetta argues that the close temporal proximity between her MRI and her suspension demonstrates pretext. We have held that close temporal proximity can be evidence of pretext, but it is not necessarily sufficient on its own. Hurlbert, 439 F.3d at 1298 . Cappetta has presented no evidence, other than closeness in time, that the MRI or her diagnosis impacted the Center’s decision. And the remaining evidence actually suggests otherwise. The day she had the MRI taken was the same day as the cash handling violation, and the forced leave came after weeks of documented concerns about her attendance and attitude. Given that evidence, the close temporal proximity between her diagnosis and her termination is insufficient to rebut the Center’s reasons for her termination.

Lacking evidence of pretext, the Eleventh Circuit affirmed summary judgment in favor of the employer. HR professionals interested in temporal proximity and shifting position arguments may find the Cappetta case a helpful, brief illustration.

Source: Cappetta v. North Fulton Eye Center, Case No. 17-11581 (11th Cir. 2017).

Republican-majority NLRB begins overruling Obama-era precedents

As reported here, the Trump administration, earlier this year, completed nominations to the NLRB sufficient to constitute a Republican majority of the Board. As predicted, the new Republican-led Board has begun overruling Obama-era precedents.

The first case, UPMC, involves the Board’s procedural requirements for accepting settlement agreements. Historically an administrative law judge (ALJ) at the Board was authorized to accept settlement agreements if “reasonable” under a set of factors articulated in Independent Stave, 287 NLRB 740 (1987).

In 2016, the Obama Board (NLRB Boards are often colloquially and non-pejoratively referred to by the last name of the President at their time) rejected the Reasonableness standard, saying instead an ALJ was authorized to accept settlement agreements only if they provided a “full remedy” for all violations alleged in the complaint. United States Postal Service, 364 NLRB No. 116 (2016).

What’s the difference between the Reasonableness standard and the Full Remedy standard? The facts of this case, UPMC, illustrate. Here, a complaint was filed against UPMC and its affiliate, Presbyterian Shadyside, alleging violations committed by Presbyterian Shadyside. The allegations alleged that UPMC was liable as a joint employer for Presbyterian Shadyside’s violations. Presbyterian Shadyside negotiated a settlement in which it promised to fully remedy any violations; however, the settlement required the Board to dismiss the joint employer allegations against UPMC. Instead of agreeing to be held a joint employer, UPMC promised to guaranty Shadyside’s performance of the settlement.

The ALJ accepted the settlement, but the Board’s General Counsel and the Charging Party objected to how he did so, arguing that UPMC should have been required to admit to being a joint employer, instead of a mere guarantor, in order to provide a “full remedy.” The ALJ held, and in this case, the Board agreed that the settlement with UPMC being a guarantor provided the same effective relief and that it did so more quickly than continuing to litigate the joint employer issue.

UPMC’s remedial guarantee is as effective as a finding of single-employer status.  As noted above, when a parent company is found to be a single employer with its subsidiary, the parent company is liable for the subsidiary’s unfair labor practices to the same extent as the subsidiary. The practical aim of the General Counsel’s single-employer allegation in this matter, then, is to hold UPMC responsible for Presbyterian Shadyside’s unfair labor practices along with Presbyterian Shadyside.

In overruling the Obama Board’s “full remedy” standard, the Board gave a preview of how it will overrule other decisions in the coming months and years, saying the Obama-era case had “imposed an unacceptable constraint” and “was an ill-advised and counterproductive departure from longstanding precedent.”

Furthermore, we overrule Postal Service, and we agree with the dissenting views of Chairman (then-Member) Miscimarra in that case, who pointed out that Postal Service imposed an unacceptable constraint on the Board itself, which retained the right under prior law to review the reasonableness of any respondent’s offered settlement terms that were accepted by the judge. We believe the “full remedy” standard adopted by the Board in Postal Service was an ill-advised and counterproductive departure from longstanding precedent. As illustrated by the instant case, adhering to the Postal Service standard would predictably cause incalculable delay in resolving the alleged violations, while potentially jeopardizing the prospect of obtaining any remedy against UPMC. Today, we return to the Board’s prior practice of analyzing all settlement agreements, including consent settlement agreements, under the “reasonableness” standard set forth in Independent Stave, 287 NLRB 740 (1987)

While UPMC involves a relatively dry procedural issue, it foreshadows a wave of decisions by which the Trump Board will overrule a number Obama Board decisions.

Source: UPMC, 365 NLRB No. 153 (12/11/17).

Impact of Tax Overhaul on Employers

As President Trump readies to sign the Tax Cuts and Jobs Act of 2017, employers can begin to prepare for several impacts of the Act. Aspects of this tax overhaul that will affect employers include the following:

  • Addition of a prohibition against deducting settlements — and attorney fees and costs involved in defending matters — involving sexual harassment or sexual abuse when the settlement includes a nondisclosure agreement.
  • Creation of a new paid leave-related tax credit, permitting eligible employers to claim a tax credit equal to 12.5 of wages paid to an employee during a qualifying family and medical leave.
  • Prohibition of certain deductions related to expenses incurred as a result of governmental penalties, investigations, not including amounts identified in the order as restitution, remediation or otherwise required to come into compliance.
  • Modifications, including suspension of some aspects, of the ability to deduct/exclude income related to the following:
    • Moving expenses,
    • Business entertainment expenses, including so-called “country club” membership dues and expenses,
    • Transportation fringes, like parking expenses, bus passes, etc.,
    • Food and beverages provided as a courtesy to employees at the employer’s facility for the benefit of employers,
    • Employee lifetime achievement awards,
    • Certain miscellaneous expenses previously deductible when they exceeded, in the aggregate, 2% of the employee’s gross income, including the employee’s ability to deduct for such things as a home office, union dues and licensing fees,
    • Compensation under $1-million for certain “covered employees” of a publicly traded company, including the previous exemption for commission- and performance-based pay, with limited grandfathering rules.
  • Addition of a 20% excise tax for nonprofits (including 501(c)(3) and (6)’s) whose five highest paid employees earn more than $1-million.
  • Changes to tax brackets with anticipated changes to tax withholding  commencing in 2018.
  • Repeal of Obamacare’s individual mandate.

There are sure to be more lessons in this new law as it is analyzed. Employers should review this new tax law with experienced Benefits legal counsel and accounting professionals.

Please note the bold and italicized bullet points in particular warrant particular attention, not only of an employer’s accounting, compensation and payroll professionals, but also its Legal and HR departments.

Source: Tax Cuts and Jobs Act of 2017.

DOL proposes reversing course on Obama-era tip-pooling rule

The U.S. Department of Labor has issued a proposed rule that would reverse an Obama-era tip-pooling rule, which has proven controversial since its issuance. As previously reported in this blog, the courts have split over whether — and the Tenth Circuit has joined the majority that hold that — employers need not comply with the tip-pooling rule if they otherwise meet the Fair Labor Standards Act’s minimum wage requirements. These courts hold that the tip-pooling rule is merely a condition of claiming the credit for tips against the minimum wage; if an employer does not claim the tip credit — if the employer pays at or above the minimum wage — then the tip-pooling rule does not apply. One part of the tip-pooling rule prohibits employers from sharing tips with any worker in a position that is not customarily and regularly tipped, such as dishwashers, cooks, etc. Thus, by paying tipped employees (e.g., waiters) at or above the minimum wage, without claiming the tip credit, employers are free to require a tip pool that is shared with other employees, even dishwashers, cooks, etc. This proposed rule would confirm this view in the formal FLSA regulations, in other words, that the tip-pooling rule only applies as a condition of claiming the tip credit. The proposed rule would codify the approach already taken by the Tenth Circuit.

Star Wars: The Last Jedi … a $1-billion hit to worker productivity?!

Bloomberg BNA published an article today predicting the much-awaited release of Star Wars: The Last Jedi might result in so many employees missing work that “lost productivity could exceed $1 billion.” In fact, the article reports if workers take “the entire day off” to see the movie, the impact will be closer to $1.4 billion. However, the article suggests the hit to productivity may net out against future productivity gains because “allowing workers to take that time off can do wonders for employee morale.”

Wonder what a wage-hour class (collective) action complaint looks like?

A group of employees recently filed a lawsuit in federal district court in Denver, Colorado, against DaVita Healthcare Partners, Inc., and Total Renal Care, Inc. Their complaint, which is publicly available in court records, lays out their claims and provides HR professionals with a chance to see what this kind of lawsuit can look like. Reminder as you review, the defendants have yet to respond to the complaint; therefore, the plaintiffs’ allegations are merely, just that, at this time, allegations, which are unproven. The plaintiffs’ allegations have yet to even be tested in litigation.

The complaint alleges violations of the Fair Labor Standards Act (FLSA), which is the nation’s leading, federal wage-hour law.

It was filed as a class action, more specifically, a collective action. Simply put, the difference between a class action and a wage-hour collective action is this: In a class action, representatives can sue on behalf of a group of similarly situated individuals, who can then opt out of the class if they choose not to be involved. FLSA provides for “collective” actions, in which individuals have to opt in to join the class. Either way court approval is required to proceed as a class/collective action, and this Complaint signals the plaintiffs’ intent to seek such approval.

Here the plaintiffs describe their alleged class as a group called the “Trailblazers,” which they describe, as follows:

2. Plaintiffs and those similarly situated are non-exempt hourly employees of Defendants. Plaintiffs and those similarly situated are all located within a geographic area designated and defined by Defendants as encompassing the states of Tennessee and Mississippi, and parts of Indiana, Ohio, Kentucky, Alabama, and Georgia, and are collectively referred to by Defendants as the “Trailblazers.”

3. Plaintiffs and those similarly situated in the “Trailblazers” zone are subject to the same illegal policy and practice of failing to pay workers for all time worked and failing to pay overtime wages. That policy and practice is based, in part, on direct patient care hours per treatment and the calculation of direct patient care hours for each facility established by corporate DaVita that reduces Defendants’ patient to staff ratios and require Plaintiffs and those similarly situated to work more hours for which they are not properly compensated.

They allege, as follows, that wages were not paid for all hours worked and, as a result, overtime is also claimed:

6. Defendants required Plaintiffs and those similarly situated to clock out for
their meal breaks. Plaintiffs and those similarly situated were/are required to perform work-related duties during meal breaks. Plaintiffs and those similarly situated were/are not paid for work-related interruptions that occurred/occur during meal breaks during their shifts wherein they worked more than five consecutive hours. Defendants failed to change Plaintiffs’, and those similarly situateds’, time records to reflect the additional time worked on behalf of the employer even when Plaintiffs and those similarly situated requested that their time records be corrected by management.

7. Plaintiffs and those similarly situated were/are not properly paid for other work-related duties which occurred outside of their scheduled shift hours and/or on weekends. Defendants failed to change Plaintiffs’, and those similarly situateds’, time records to reflect the additional time worked on behalf of the employer even when Plaintiffs and those similarly situated requested that their time records be corrected by management.

Allegedly compounding their claim for failure to pay, they also claim the employer “failed to properly maintain accurate daily records of all hours worked by Plaintiffs and those similarly situated as required by federal law because Defendants are not properly recording all hours worked, including overtime.”

What is sought in a class (collective) action like this under FLSA? These Plaintiffs claim “unpaid wages, overtime compensation, a declaratory judgment, liquidated damages, compensatory damages, punitive damages, costs and attorneys’ fees and pre and post judgment interest associated with the bringing of this action, plus any additional relief that is just and proper for Plaintiffs and those similarly situated under federal law.”

Again, it is emphasized these are merely unproven allegations at this point. Still, the complaint itself, being public, provides HR professionals an opportunity to see what this kind of case can look like.

Employers in New York City face potential for greater punitive damages

The New York Court of Appeals ruled in Chauca v. Abraham that employers face greater exposure for punitive damages under New York City’s anti-discrimination laws than under the federal anti-discrimination law known as Title VII.

The Court observed that existing law mandates that New York City’s law be “as a floor below which the City’s Human Rights Law cannot fall, rather than a ceiling above which the local law cannot rise.”

The Court then noted that New York City’s law is worded differently and, as such, it “requires neither a showing of malice or awareness of the violation of a protected right.” This means a lower standard than Title VII. However, the Court cautioned the standard should not be so low that punitive damages are available whenever a violation is proven warranting compensatory damages.

Punitive damages represent punishment for wrongful conduct that goes beyond mere negligence and are warranted only where aggravating factors demonstrate an additional level of wrongful conduct (see Home Ins. Co., 75 NY2d at 203-204 ). Accordingly, there must be some heightened standard for such an award.

As a middle ground, the Court articulated a new standard for punitive damages under New York City’s law: The plaintiff must prove “the wrongdoer has engaged in discrimination with wilful or wanton negligence, or recklessness, or a ‘conscious disregard of the rights of others or conduct so reckless as to amount to such disregard.'”

A dissenter disagreed arguing the majority had set the bar too low. The dissenter would have allowed punitive damages “whenever liability is proved, unless an employer has adopted and fully implemented the antidiscrimination programs, policies, and procedures promulgated by the Commission on Human Rights, as an augmentation to compensatory damages, and would answer the certified question accordingly.”

Source: https://www.bloomberglaw.com/document/X1OFI9SU0000N?

Turn on your radios!

The Supreme Court holds oral arguments tomorrow in Masterpiece Cakeshop. I will be live in-studio on 850 KOA Colorado’s Morning News, for a series of segments starting about 8:00 AM tomorrow morning discussing the case.

Tenth Circuit reaffirms need for irreparable harm to obtain injunction in trade secrets case

Both federal and state law (respectively, the Defend Trade Secrets Act (DTSA) and Colorado’s Uniform Trade Secrets Act (CUTSA)) authorize a company to obtain a preliminary injunction against a former employee who is using or threatening to use its trade secrets. The Tenth Circuit recently reaffirmed that, among the requirements for such an injunction, is proof of irreparable harm. (The other requirements are (1) substantial likelihood of success once the merits of the case are decided, (2) the threatened injury outweighs the harm of the injunction, and (3) the injunction will not be adverse to the public interest.)

To be “irreparable” the harm that will be suffered but for the preliminary injunction must be the kind that cannot be reversed, repaired or even compensated for in damages.

In this case, the trial court found that the harm the former employer would suffer if no injunction was issued could be compensated for in damages. In other words, quoting the trial court, it could be “reasonably quantified” in terms of dollars, and such an award of damages “would have adequately made (the company) whole.” Typically that is enough to show such harm is not “irreparable” and therefore a preliminary injunction should be denied.

However, the trial court decided that no showing of actual harm was necessary to prove the irreparable harm element; it decided that the element of irreparable harm could instead be presumed. The court so decided “because both the DTSA … and the CUTSA … provide for injunctive relief.”

The Tenth Circuit reversed. The Tenth Circuit held that legislatures can create presumptions of irreparable harm but to do so they need to say so. Both DTSA and CUTSA lack such language. They merely allow for injunctive relief:

DTSA and CUTSA … merely authorize and do not mandate injunctive relief and thus do not allow a presumption of irreparable harm.

Without a presumption of irreparable harm and lacking proof of irreparable harm, the Tenth Circuit reversed.

The case illustrates the need to prove irreparable harm, in order to obtain a preliminary injunction in cases involving trade secrets. The case is also a reminder that irreparable harm cannot exist where monetary damages will make the plaintiff whole.

Source: FIRST WESTERN CAPITAL MANAGEMENT COMPANY v. MALAMED, Court of Appeals, 10th Circuit 2017 – Google Scholar