*By Helena Oroz
The beginning of that tag-line is perfectly obnoxious and overly worn, but the ending is new, and, interestingly enough, true—at least according to the Illinois federal court that recently handed down its decision in Ballard v. Chicago Park District. In Ballard, the U.S. District Court for the Northern District of Illinois held that an employee who provided care to her terminally-ill mother during a Las Vegas vacation “cared for” her mother within the meaning of the FMLA.
In Ballard, the employee filed suit under the Family and Medical Leave Act (“FMLA”) after she was terminated for unauthorized absences from work. She alleged that her former employer interfered with her rights by denying her request for leave to care for a sick parent. The employee was the primary caretaker for her terminally ill mother and did almost everything for her: prepared her meals; administered medicine; operating a pump to remove fluids from her mother’s heart; bathed her; provided her with transportation; and provided comfort and support, among other responsibilities. Why would her employer deny her leave under such seemingly clear-cut circumstances?
Vegas, baby.
Yes, the employee in this case requested leave to accompany her sick mother to that adult playground in the desert, Las Vegas, Nevada; and this detail, probably more than any other in this case, has captured the hearts and minds of employers (and their lawyers) everywhere. Vegas? Vegas?! Why would a super fun trip to Vegas be FMLA-protected?
The court closely reviewed the (pre-2009 amendment) FMLA regulations to make just that determination: whether the employee was entitled to leave under the FMLA to “care for” her mother on the Vegas trip, as the employee argued. The employer argued that the trip was not FMLA-protected because the “care” has to have some connection with the family member’s need for treatment, and the mother did not seek treatment during the trip. The court disagreed, finding that the FMLA includes no such limitation.
Under the FMLA, an eligible employee is entitled to leave to “care for” a parent with a “serious health condition.” The Court noted that FMLA’s implementing regulations explain that “to care for” encompasses both physical and psychological care; but such care does not depend on a particular location or on participation in medical treatment itself.
There was no question in the case that the employee’s mother suffered from a “serious health condition” (end-stage congestive heart failure); that she was unable to care for her own basic needs; and that the employee provided physical care for her mother at home. The court reasoned that because her mother’s needs did not change during the trip, the employee also “cared for” her mother while traveling to and vacationing in Las Vegas.
The court also gave short shrift to the employer’s argument that the employee did not “care for” her mother because there were no plans for the mother to seek medical care or treatment in Las Vegas. The court found “no statutory or regulatory text stating something to the effect that ‘care’ must involve some level of participation in the ongoing treatment of the family member’s condition under the FMLA” as the regulations cover “terminal illnesses for which there is no active treatment at all.”
The court opined that at base, the text of the FMLA requires only that the employee sought leave to “care for” her mother who had a “serious health condition.” “So long as the employee provides ‘care’ to the family member, where the care takes place has no bearing on whether the employee receives FMLA protections.”
Fiji, anyone?
Whether or not such a decision actually “broadens” the FMLA is debatable. While not relevant to the legal analysis, it should be noted that the Vegas trip here was a gift, a charitable grant from an organization that grants wishes to persons with terminal illnesses. The employee asked for leave to take the trip so that her dying mother could take the trip. This is not a common situation for most employers (and arguably, considering the circumstances, one that the employer could have met with less scrutiny and more compassion).
It does, however, seem to open the door to abuse, a la “I need two weeks off to travel to (fill in fun destination) to care for my ill (family member)!” But at the end of the day, the same rules would apply to such a request as to any regular FMLA-leave request, and the same tools would be available to the employer to determine its legitimacy.
*Helena Oroz practices in all areas of labor and employment law. For more information about FMLA leave, please contact Helena (hot@zrlaw.com) at 216.696.4441.
Wednesday, December 12, 2012
Friday, December 7, 2012
EMPLOYMENT LAW QUARTERLY | Winter 2012, Volume XIV, Issue i
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Paid Time Off programs (“PTO”) allow employees to earn leave that they later can use for vacations, sicknesses and personal holidays. Under such programs, employees typically earn leave in accordance with factors such as years of service, position, and full or part-time status. PTO programs generally require employees to obtain approval from their employers prior to using their leave (except when advance notice is not possible, as in the case of an illness) and do not permit employees to carry a negative leave balance. Many employers believe PTO programs are less burdensome to administer because the employer does not have to track both “vacation” and “sick” time. However, employers must evaluate their PTO programs to ensure they comply with all applicable state and federal regulations.
When an employee separates from service, the employee often receives his or her unused leave balance in a single lump-sum payment. However, most employers may not know that amounts paid to an employee for unused leave upon separation constitute wages subject to income tax withholding and employment taxes. Employers must treat such payments accordingly.
Allowing employees to sell unused PTO back to the company at the end of the year is also another practice that can create tax problems for the employer and employee. If the employee has the option to either cash-out the PTO or roll it over to the next year, the employer must immediately tax the employee on the entire amount even if the employee actually elects to roll over the unused PTO. Under the federal income tax “constructive receipt” doctrine, the IRS considers the roll over amount received and taxable at the time the PTO is available for a taxpayer to cash out, even if the taxpayer elects to defer his or her receipt of the amount. To avoid this situation, employers should not give employees a choice to cash out or roll over their PTO. The IRS stated that mandatory cash outs do not create a “constructive receipt problem.”
To avoid these and other unintended tax consequences, employers should discuss the design of their PTO plans with a knowledgeable attorney.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of employment law and has experience designing employee PTO plans. For more information about paid time off plans and the potential tax consequences, please contact Michele at mlj@zrlaw.com or 216-696-4441.
The Eleventh Circuit recently held that the Family & Medical Leave Act (“FMLA”) protects a pre-eligibility request for post-eligibility leave. Pereda v. Brookdale Senior Living Communities, Inc., No. 10-14723 (11th Cir. Jan. 10, 2012).
Brookdale Senior Living Communities (“Brookdale”) operates numerous senior living facilities. Brookdale hired Kathryn Pereda (“Pereda”) in October 2008. Pereda informed management in June 2009 that she was pregnant and would need leave under the FMLA after the birth of her child in November 2009. At the time Pereda requested leave, she was not eligible for FMLA protection because she had not worked the requisite hours (1,250 hours during the previous 12-month period) and had not yet experienced a triggering event, the birth of her child.
Pereda alleged she was a top performer but that Brookdale began harassing her after they learned of her pregnancy. She claimed Brookdale criticized her job performance and placed her on a performance improvement plan with “unattainable goals.” Moreover, Pereda alleged that Brookdale had given her permission to attend pregnancy-related doctors’ appointments but then subsequently disciplined her for attending those appointments. Brookdale terminated Pereda’s employment when she took time off in September 2009.
Pereda filed suit in the United States Court for the Southern District of Florida, alleging FMLA interference and retaliation. The Southern District held that Brookdale did not interfere with Pereda’s FMLA rights because she was not entitled to leave at the time she requested it, and that because she was not eligible for leave she could not have engaged in “protected activity” under the FMLA. Thus, according to the Southern District, Brookdale could not have retaliated against Pereda.
Pereda appealed to the Eleventh Circuit Court of Appeals. The Eleventh Circuit reversed and found for Pereda on both counts. As part of its decision, the Court resolved a question it had left open in a previous case, Walker v. Elmore County Bd. of Educ., 379 F.3d 1249 (11th Cir. 2004). The Walker court held that the FMLA did not protect a pregnant teacher who requested leave which would begin several days prior to her eligibility.
The Pereda court first found that, because the FMLA requires advance notice of a need for future leave, the FMLA protects employees from interference before a triggering event occurs. The Court reasoned that any other outcome would be illogical and “becom[e] a trap for newer employees and exten[d] to employers a significant exemption from liability.” After examining the various elements of the FMLA regulatory scheme, the court concluded that allowing the district court’s ruling to stand would frustrate the purpose of the FMLA.
The court then examined Pereda’s FMLA retaliation claim. The court held that a pre-eligible request for post-eligible leave is “protected activity” because the FMLA “aims to support both employees in the process of exercising their FMLA rights and employers for the absence of employees on FMLA leave.” Thus, Pereda also had stated a potential claim for FMLA retaliation.
The Court narrowed its finding to state that a pre-eligible discussion of post-eligible FMLA leave is protected activity and stated that an employer could still terminate an employee for legitimate reasons. While this case arose in the Eleventh Circuit, all employers must be mindful of employee eligibility for FMLA leave and evaluate all FMLA requests carefully – especially if the employee will become FMLA-eligible in the future.
by Lois A. Gruhin
The Occupational Safety and Health Administration (“OSHA”) recently issued an interim final rule amending its whistleblower regulations under the Sarbanes-Oxley Act of 2002 (“SOX”). OSHA published its interim rule in the Federal Register on November 3, 2011, and it became effective upon publication.
The Dodd-Frank Wall Street Reform and Consumer Protection Act amended SOX, making significant changes to SOX whistleblower procedures. The new regulations classify subsidiaries of publicly-traded companies as covered employers. Additionally, the regulations protect employees from retaliation, extend the statute of limitations for retaliation complaints from 90 days to 180 days, provide those who complain with the right to a jury trial in some instances, and restrict the ability of individuals to waive or arbitrate whistleblower claims under SOX. The regulations improve OSHA’s procedures for handling SOX whistleblower complaints and make the procedures consistent with OSHA’s procedures for handling other OSHA-administered statutes.
Another significant change pertains to the filing of whistleblower claims. The new regulations permit oral SOX whistleblower complaints. Upon receipt of an oral complaint OSHA prepares a written complaint. OSHA intended this change to be consistent with the Supreme Court’s recent decision in Kasten v. Saint-Gobain Perf. Plastics Corp., 131 S. Ct. 1325 (2011). OSHA will also now accept a complaint filed in any language. Finally, any person can file a complaint so long as the person has the consent of the affected employee.
Perhaps the most significant change for employers is that OSHA may order a company to provide a SOX whistleblower complainant with the same pay and benefits that he or she received prior to termination of employment, or what is referred to as “economic reinstatement.” This “economic reinstatement” differs from “preliminary reinstatement” in that the whistleblower is not obligated to return to work before the complaint is resolved, as he or she could have been under prior SOX regulations. Furthermore, employers do not have the option to choose between economic reinstatement and actual reinstatement. Instead, the interim rule allows OSHA to make the decision as to whether to allow for economic reinstatement, as opposed to decide on a case-by-case basis. The stated purpose for this rule change is to accommodate situations where the evidence indicates that reinstatement prior to the conclusion of administrative adjudication is inadvisable for some reason, such as where the company demonstrates the complainant to be a security risk.
If you would like further information about the whistleblower provisions of SOX and how they may affect your company, please contact us.
Change is a-comin’ to California’s employment laws. Employers who operate in California should be aware of these important changes.
Gender Expression
Gender expression is now a protected class under California’s Fair Employment & Housing Act (“FEHA”). Gender expression refers to a person’s gender-related appearance and behavior, whether or not stereotypically associated with the person’s assigned sex at birth. “Sex” is now defined in several anti-discrimination statutes, including the FEHA, to include gender expression. The redefinition aims to protect the rights of transgender people. With this change, employers must allow employees to appear or dress consistently with his or her gender expression.
Wage-and-Hour Related Changes
The following wage and hour changes, a result of the Wage Theft Protection Act of 2011, went into effect January 1, 2012. The new changes require immediate employer action as employers must keep a signed, written acknowledgement for each employee. A template of the notice and acknowledgement is available via the Department of Industrial Relation’s website:
http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html.
Employers who misclassify employees as independent contractors face increased sanctions, including:
*Jason Rossiter practices in all areas of labor and employment law and has extensive compliance experience. He is licensed to practice law in California, Pennsylvania and Ohio. For more information about these and other changes to California law contact Zashin & Rich at 216-696-4441.
Governor Mitch Daniels signed Indiana’s “Right-to-Work” (“RTW”) law on February 2, 2012 – making Indiana the first state in over a decade to do so. The law prohibits companies and unions from negotiating a contract requiring non-members to pay fees for union representation.
Indiana’s contentious RTW law came after much-heated debate. In February, 2011, Democratic representatives left the state for five weeks to deny a quorum prohibiting their Republican colleagues from moving forward on RTW legislation. However, Governor Daniels succeeded in signing the RTW law, making Indiana the 23rd state with RTW laws on its books.
The National Right to Work Legal Defense Foundation launched a task force to defend the law and announced that it will give free legal advice to workers who wish to exercise their new rights. Current union members will not be able to stop paying dues immediately as the law only applies to contracts enteredinto after March 14, 2012.
For or Against Right-to-Work Laws
Supporters of the law emphasize that it will attract business and create jobs pointing to research showing employers favor states with RTW laws. They also lodge ideological arguments against compulsory payment for an unwanted service. Specifically, they argue that forcing employees to pay union dues violates their Constitutional right to freedom of association.
Critics argue that Indiana’s new law will fail to provide the benefits promised by legislators. In addition, critics believe that RTW laws harm workers by encouraging freeloading. The National Labor Relations Act forces unions to intervene on behalf of members when their employers take illegal action, regardless of whether the member pays dues. Critics fear this costly and time-consuming burden will significantly weaken union power.
What Can We Learn from Oklahoma
Oklahoma was the last state to sign a RTW law. Proponents of the law expected it to bring new companies to Oklahoma and increase job growth. On the ten-year anniversary of its signing, the National Right to Work Committee celebrated what it claimed was a 12.2% growth in employee compensation since 2001 and a 3.2% increase in private sector employment between 2003 and 2010.
However, the Economic Policy Institute (“Institute”) tells a different story. According to the Institute, the number of new companies coming to Oklahoma has decreased by one-third as has the number of manufacturing jobs. The Oklahoma Department of Commerce admits the latter, but emphasizes that the law has increased productivity. However, the Institute points out that this means fewer workers are producing more, an outcome it does not applaud.
On the National Level
President Barack Obama made his stand on RTW laws clear during a Labor Day Speech last year stating “when I hear of these folks trying to take collective bargaining rights away, trying to pass so-called ‘right-to-work’ laws for private sector workers, that really means the right to work for less and less.” It comes as no surprise that the Republican presidential candidates have a much different attitude. After the Indiana House passed its RTW law, presidential candidate Ron Paul wrote a congratulatory letter to the National Right to Work Committee stating, “every American owes you a debt of gratitude for your leadership and dedication.” According to his official website, Paul has made passing a national RTW act a “centerpiece” of his campaign. While Paul has been the most enthusiastic RTW supporter, Newt Gingrich, Rick Santorum and Mitt Romney have all spoken approvingly of a national RTW law.
What Can Indiana Expect
Organizations disagree as to what the citizens of Indiana can expect. The Indiana Chamber of Commerce estimates that “personal income per capita in 2021 [will] be $968 higher, or $3,872 higher for a family of four, than if a RTW law [had] not [been] enacted.” However, The Economic Policy Institute found that in Oklahoma, wages and benefits are approximately $1,500 lower than comparable (union and non-union) workers in non-RTW states. Additionally, Oklahoma workers are less likely to get health care or retirement benefits. The Institute also warns that RTW laws have no effect on job growth.
Union members went to federal court on February 22, 2012 asking that Indiana's new right-to-work law not be enforced. This is the first lawsuit and latest conflict over the divisive legislation. The long-term impact of Indiana’s RTW legislation remains to be seen.
As the map shows, Indiana was the first in the generally union-friendly “Rust Belt” to pass RTW legislation, and the first nationally to do so in a decade. The highlighted states represent “Right-to-Work” states:
*Patrick J. Hoban, an OSBA Certified Specialist in Labor & Employment law, practices in all areas of labor & employment law and has extensive experience representing management in labor disputes. For more information about right-to-work laws, please contact Pat at pjh@zrlaw.com or 216-696-4441.
The New Jersey Department of Labor and Workforce Development (“NJDLWD”) recently issued new regulations concerning employer posting and notice requirements. These changes come on the heels of New Jersey’s 2010 law requiring employers to maintain and report records under state wage, benefit, and tax laws.
These newly-implemented regulations require an employer to “conspicuously post” a notice of its obligations in an accessible place. Employers can access a sample notice online at the NJDLWD’s website (http://lwd.state.nj.us/labor/forms_pdfs/EmployerPosterPacket/MW-400.pdf). Employers can comply either by posting the notice where other employment-related notices are posted or by posting the notice on the employer's Internet/intranet site, provided the employer has an Internet/intranet site for exclusive use by its employees and to which all employees have access. Along with the posting requirement, employers must also provide every employee a copy of the notification.
Additionally, New Jersey employers must provide employees hired after November 7, 2011 with written copies of the notification upon hire, and all current employees should have received written copies by December 7, 2011. New Jersey employers can comply with the notice requirement by sending copies of the notice via e-mail.
The required postings address employers’ obligation to maintain payroll records, temporary disability insurance records, workers’ compensation records, and Employer’s Quarterly Reports pursuant to the New Jersey Gross Income Tax Act. New Jersey employers should assess whether they are in compliance with these new regulations. Failure to comply with the posting and distribution requirements could lead to a fine of up to $1,000, as well as criminal penalties.
- Good Intentions, Unintended Consequences: Paid Time Off Can Lead to Tax Liability
- Family & Medical Leave Act Protects a Pre-Eligibility Request for Post-Eligibility Leave
- Blowing the Whistle - OSHA Issues New Regulations and Revises Its Whistleblower Complaint Procedure
- California Dreamin' – Employers Need to Be Aware of Important Changes to California Employment Law
- Indiana Becomes First State in Over Ten Years to Pass "Right-to-Work" Law
- Writing on the Wall: New Jersey Employers Subject to New Posting and Notice Requirements
- Z&R Shorts
Good Intentions, Unintended Consequences: Paid Time Off Can Lead to Tax Liability
by Michele L. Jakubs*Paid Time Off programs (“PTO”) allow employees to earn leave that they later can use for vacations, sicknesses and personal holidays. Under such programs, employees typically earn leave in accordance with factors such as years of service, position, and full or part-time status. PTO programs generally require employees to obtain approval from their employers prior to using their leave (except when advance notice is not possible, as in the case of an illness) and do not permit employees to carry a negative leave balance. Many employers believe PTO programs are less burdensome to administer because the employer does not have to track both “vacation” and “sick” time. However, employers must evaluate their PTO programs to ensure they comply with all applicable state and federal regulations.
When an employee separates from service, the employee often receives his or her unused leave balance in a single lump-sum payment. However, most employers may not know that amounts paid to an employee for unused leave upon separation constitute wages subject to income tax withholding and employment taxes. Employers must treat such payments accordingly.
Allowing employees to sell unused PTO back to the company at the end of the year is also another practice that can create tax problems for the employer and employee. If the employee has the option to either cash-out the PTO or roll it over to the next year, the employer must immediately tax the employee on the entire amount even if the employee actually elects to roll over the unused PTO. Under the federal income tax “constructive receipt” doctrine, the IRS considers the roll over amount received and taxable at the time the PTO is available for a taxpayer to cash out, even if the taxpayer elects to defer his or her receipt of the amount. To avoid this situation, employers should not give employees a choice to cash out or roll over their PTO. The IRS stated that mandatory cash outs do not create a “constructive receipt problem.”
To avoid these and other unintended tax consequences, employers should discuss the design of their PTO plans with a knowledgeable attorney.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of employment law and has experience designing employee PTO plans. For more information about paid time off plans and the potential tax consequences, please contact Michele at mlj@zrlaw.com or 216-696-4441.
Family & Medical Leave Act Protects a Pre-Eligibility Request for Post-Eligibility Leave
by Patrick M. WattsThe Eleventh Circuit recently held that the Family & Medical Leave Act (“FMLA”) protects a pre-eligibility request for post-eligibility leave. Pereda v. Brookdale Senior Living Communities, Inc., No. 10-14723 (11th Cir. Jan. 10, 2012).
Brookdale Senior Living Communities (“Brookdale”) operates numerous senior living facilities. Brookdale hired Kathryn Pereda (“Pereda”) in October 2008. Pereda informed management in June 2009 that she was pregnant and would need leave under the FMLA after the birth of her child in November 2009. At the time Pereda requested leave, she was not eligible for FMLA protection because she had not worked the requisite hours (1,250 hours during the previous 12-month period) and had not yet experienced a triggering event, the birth of her child.
Pereda alleged she was a top performer but that Brookdale began harassing her after they learned of her pregnancy. She claimed Brookdale criticized her job performance and placed her on a performance improvement plan with “unattainable goals.” Moreover, Pereda alleged that Brookdale had given her permission to attend pregnancy-related doctors’ appointments but then subsequently disciplined her for attending those appointments. Brookdale terminated Pereda’s employment when she took time off in September 2009.
Pereda filed suit in the United States Court for the Southern District of Florida, alleging FMLA interference and retaliation. The Southern District held that Brookdale did not interfere with Pereda’s FMLA rights because she was not entitled to leave at the time she requested it, and that because she was not eligible for leave she could not have engaged in “protected activity” under the FMLA. Thus, according to the Southern District, Brookdale could not have retaliated against Pereda.
Pereda appealed to the Eleventh Circuit Court of Appeals. The Eleventh Circuit reversed and found for Pereda on both counts. As part of its decision, the Court resolved a question it had left open in a previous case, Walker v. Elmore County Bd. of Educ., 379 F.3d 1249 (11th Cir. 2004). The Walker court held that the FMLA did not protect a pregnant teacher who requested leave which would begin several days prior to her eligibility.
The Pereda court first found that, because the FMLA requires advance notice of a need for future leave, the FMLA protects employees from interference before a triggering event occurs. The Court reasoned that any other outcome would be illogical and “becom[e] a trap for newer employees and exten[d] to employers a significant exemption from liability.” After examining the various elements of the FMLA regulatory scheme, the court concluded that allowing the district court’s ruling to stand would frustrate the purpose of the FMLA.
The court then examined Pereda’s FMLA retaliation claim. The court held that a pre-eligible request for post-eligible leave is “protected activity” because the FMLA “aims to support both employees in the process of exercising their FMLA rights and employers for the absence of employees on FMLA leave.” Thus, Pereda also had stated a potential claim for FMLA retaliation.
The Court narrowed its finding to state that a pre-eligible discussion of post-eligible FMLA leave is protected activity and stated that an employer could still terminate an employee for legitimate reasons. While this case arose in the Eleventh Circuit, all employers must be mindful of employee eligibility for FMLA leave and evaluate all FMLA requests carefully – especially if the employee will become FMLA-eligible in the future.
Blowing the Whistle - OSHA Issues New Regulations and Revises Its Whistleblower Complaint Procedure
by Lois A. Gruhin
The Occupational Safety and Health Administration (“OSHA”) recently issued an interim final rule amending its whistleblower regulations under the Sarbanes-Oxley Act of 2002 (“SOX”). OSHA published its interim rule in the Federal Register on November 3, 2011, and it became effective upon publication.
The Dodd-Frank Wall Street Reform and Consumer Protection Act amended SOX, making significant changes to SOX whistleblower procedures. The new regulations classify subsidiaries of publicly-traded companies as covered employers. Additionally, the regulations protect employees from retaliation, extend the statute of limitations for retaliation complaints from 90 days to 180 days, provide those who complain with the right to a jury trial in some instances, and restrict the ability of individuals to waive or arbitrate whistleblower claims under SOX. The regulations improve OSHA’s procedures for handling SOX whistleblower complaints and make the procedures consistent with OSHA’s procedures for handling other OSHA-administered statutes.
Another significant change pertains to the filing of whistleblower claims. The new regulations permit oral SOX whistleblower complaints. Upon receipt of an oral complaint OSHA prepares a written complaint. OSHA intended this change to be consistent with the Supreme Court’s recent decision in Kasten v. Saint-Gobain Perf. Plastics Corp., 131 S. Ct. 1325 (2011). OSHA will also now accept a complaint filed in any language. Finally, any person can file a complaint so long as the person has the consent of the affected employee.
Perhaps the most significant change for employers is that OSHA may order a company to provide a SOX whistleblower complainant with the same pay and benefits that he or she received prior to termination of employment, or what is referred to as “economic reinstatement.” This “economic reinstatement” differs from “preliminary reinstatement” in that the whistleblower is not obligated to return to work before the complaint is resolved, as he or she could have been under prior SOX regulations. Furthermore, employers do not have the option to choose between economic reinstatement and actual reinstatement. Instead, the interim rule allows OSHA to make the decision as to whether to allow for economic reinstatement, as opposed to decide on a case-by-case basis. The stated purpose for this rule change is to accommodate situations where the evidence indicates that reinstatement prior to the conclusion of administrative adjudication is inadvisable for some reason, such as where the company demonstrates the complainant to be a security risk.
If you would like further information about the whistleblower provisions of SOX and how they may affect your company, please contact us.
California Dreamin’ – Employers Need to Be Aware of Important Changes to California Employment Law
by Jason Rossiter*Change is a-comin’ to California’s employment laws. Employers who operate in California should be aware of these important changes.
Gender Expression
Gender expression is now a protected class under California’s Fair Employment & Housing Act (“FEHA”). Gender expression refers to a person’s gender-related appearance and behavior, whether or not stereotypically associated with the person’s assigned sex at birth. “Sex” is now defined in several anti-discrimination statutes, including the FEHA, to include gender expression. The redefinition aims to protect the rights of transgender people. With this change, employers must allow employees to appear or dress consistently with his or her gender expression.
Wage-and-Hour Related Changes
The following wage and hour changes, a result of the Wage Theft Protection Act of 2011, went into effect January 1, 2012. The new changes require immediate employer action as employers must keep a signed, written acknowledgement for each employee. A template of the notice and acknowledgement is available via the Department of Industrial Relation’s website:
http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html.
- Employer must provide all employees with:
- The rate(s) of pay and basis for such rate(s); allowances including meal or lodging, and the regular payday as designated by the employer.
- The full legal name of the employer, including any “doing business as” names used by the employer, as well as the address of the employer’s main office and the telephone number of the employer;
- The name, address, and telephone number of the employer’s workers’ compensation insurance carrier;
- The new regulations also require the employer to furnish new employees with “any other information the Labor Commissioner deems material and necessary;” and,
- If the above-mentioned information ever changes, all
affected employees must receive notice of the change within seven days
of the effective date of the change.
- If an employer has non-California employees working in the
state of California, including temporary or daily employees, these
employees are entitled to overtime under California’s laws.
- Additionally, any agreements between employers and employees who receive commissions must be in writing and signed by the employee in question.
- This writing must “set forth the method by which the commissions shall be computed and paid,” and the employee must receive a copy of his or her signed writing.
- California employees are also now entitled to up to six weeks of paid leave each year to donate organs and bone marrow.
- This is more expansive than federal and prior California law.
- The new law, California Labor Code sections 1508 through 1512, applies to employers with 15 or more employees.
- Pregnancy leave policies in California must also now allow for continuation of medical insurance benefits for pregnancy-related disabilities.
- Employers may no longer use credit checks in the employment application process.
Employers who misclassify employees as independent contractors face increased sanctions, including:
- criminal sanctions;
- joint-and-several liability for those who advise employers to misclassify; and,
- civil penalties of up to $25,000 for each infraction.
*Jason Rossiter practices in all areas of labor and employment law and has extensive compliance experience. He is licensed to practice law in California, Pennsylvania and Ohio. For more information about these and other changes to California law contact Zashin & Rich at 216-696-4441.
Indiana Becomes First State in Over Ten Years to Pass “Right-to-Work” Law
by Patrick J. Hoban*Governor Mitch Daniels signed Indiana’s “Right-to-Work” (“RTW”) law on February 2, 2012 – making Indiana the first state in over a decade to do so. The law prohibits companies and unions from negotiating a contract requiring non-members to pay fees for union representation.
Indiana’s contentious RTW law came after much-heated debate. In February, 2011, Democratic representatives left the state for five weeks to deny a quorum prohibiting their Republican colleagues from moving forward on RTW legislation. However, Governor Daniels succeeded in signing the RTW law, making Indiana the 23rd state with RTW laws on its books.
The National Right to Work Legal Defense Foundation launched a task force to defend the law and announced that it will give free legal advice to workers who wish to exercise their new rights. Current union members will not be able to stop paying dues immediately as the law only applies to contracts enteredinto after March 14, 2012.
For or Against Right-to-Work Laws
Supporters of the law emphasize that it will attract business and create jobs pointing to research showing employers favor states with RTW laws. They also lodge ideological arguments against compulsory payment for an unwanted service. Specifically, they argue that forcing employees to pay union dues violates their Constitutional right to freedom of association.
Critics argue that Indiana’s new law will fail to provide the benefits promised by legislators. In addition, critics believe that RTW laws harm workers by encouraging freeloading. The National Labor Relations Act forces unions to intervene on behalf of members when their employers take illegal action, regardless of whether the member pays dues. Critics fear this costly and time-consuming burden will significantly weaken union power.
What Can We Learn from Oklahoma
Oklahoma was the last state to sign a RTW law. Proponents of the law expected it to bring new companies to Oklahoma and increase job growth. On the ten-year anniversary of its signing, the National Right to Work Committee celebrated what it claimed was a 12.2% growth in employee compensation since 2001 and a 3.2% increase in private sector employment between 2003 and 2010.
However, the Economic Policy Institute (“Institute”) tells a different story. According to the Institute, the number of new companies coming to Oklahoma has decreased by one-third as has the number of manufacturing jobs. The Oklahoma Department of Commerce admits the latter, but emphasizes that the law has increased productivity. However, the Institute points out that this means fewer workers are producing more, an outcome it does not applaud.
On the National Level
President Barack Obama made his stand on RTW laws clear during a Labor Day Speech last year stating “when I hear of these folks trying to take collective bargaining rights away, trying to pass so-called ‘right-to-work’ laws for private sector workers, that really means the right to work for less and less.” It comes as no surprise that the Republican presidential candidates have a much different attitude. After the Indiana House passed its RTW law, presidential candidate Ron Paul wrote a congratulatory letter to the National Right to Work Committee stating, “every American owes you a debt of gratitude for your leadership and dedication.” According to his official website, Paul has made passing a national RTW act a “centerpiece” of his campaign. While Paul has been the most enthusiastic RTW supporter, Newt Gingrich, Rick Santorum and Mitt Romney have all spoken approvingly of a national RTW law.
What Can Indiana Expect
Organizations disagree as to what the citizens of Indiana can expect. The Indiana Chamber of Commerce estimates that “personal income per capita in 2021 [will] be $968 higher, or $3,872 higher for a family of four, than if a RTW law [had] not [been] enacted.” However, The Economic Policy Institute found that in Oklahoma, wages and benefits are approximately $1,500 lower than comparable (union and non-union) workers in non-RTW states. Additionally, Oklahoma workers are less likely to get health care or retirement benefits. The Institute also warns that RTW laws have no effect on job growth.
Union members went to federal court on February 22, 2012 asking that Indiana's new right-to-work law not be enforced. This is the first lawsuit and latest conflict over the divisive legislation. The long-term impact of Indiana’s RTW legislation remains to be seen.
As the map shows, Indiana was the first in the generally union-friendly “Rust Belt” to pass RTW legislation, and the first nationally to do so in a decade. The highlighted states represent “Right-to-Work” states:
*Patrick J. Hoban, an OSBA Certified Specialist in Labor & Employment law, practices in all areas of labor & employment law and has extensive experience representing management in labor disputes. For more information about right-to-work laws, please contact Pat at pjh@zrlaw.com or 216-696-4441.
Writing on the Wall: New Jersey Employers Subject to New Posting and Notice Requirements
by Stefanie L. BakerThe New Jersey Department of Labor and Workforce Development (“NJDLWD”) recently issued new regulations concerning employer posting and notice requirements. These changes come on the heels of New Jersey’s 2010 law requiring employers to maintain and report records under state wage, benefit, and tax laws.
These newly-implemented regulations require an employer to “conspicuously post” a notice of its obligations in an accessible place. Employers can access a sample notice online at the NJDLWD’s website (http://lwd.state.nj.us/labor/forms_pdfs/EmployerPosterPacket/MW-400.pdf). Employers can comply either by posting the notice where other employment-related notices are posted or by posting the notice on the employer's Internet/intranet site, provided the employer has an Internet/intranet site for exclusive use by its employees and to which all employees have access. Along with the posting requirement, employers must also provide every employee a copy of the notification.
Additionally, New Jersey employers must provide employees hired after November 7, 2011 with written copies of the notification upon hire, and all current employees should have received written copies by December 7, 2011. New Jersey employers can comply with the notice requirement by sending copies of the notice via e-mail.
The required postings address employers’ obligation to maintain payroll records, temporary disability insurance records, workers’ compensation records, and Employer’s Quarterly Reports pursuant to the New Jersey Gross Income Tax Act. New Jersey employers should assess whether they are in compliance with these new regulations. Failure to comply with the posting and distribution requirements could lead to a fine of up to $1,000, as well as criminal penalties.
Z&R Shorts
George S. Crisci will present “Social Media in the Workplace” on May 17, 2012, at the Ohio State Bar Association and NLRB Region 8 Annual Labor Law Seminar beginning at 9 AM at Ritz Carlton Hotel in Cleveland, Ohio. To register, go to www.ohiobar.org.Sunday, November 11, 2012
NLRB ALJ Doubles Down on D.R. Horton – Employment Arbitration Program Prohibiting Class Litigation but Allowing Employees to Opt-Out Found Unlawful
*By Patrick J. Hoban
In a decision issued on November 6, 2012, a National Labor Relations Board (“NLRB”) administrative law judge (“ALJ”) ruled that an employer’s decade-old employment arbitration program violated the National Labor Relations Act (“NLRA”). The ALJ decision in 24 Hour Fitness USA, Inc., JD(SF)-51-12, NLRB Case No.: 20-CA-035419, is the NLRB’s most recent assault on employment arbitration policies and doubles down on its 2012 decision in D.R. Horton, 357 NLRB No. 184 (2012) by invalidating arbitration programs that waive an employee’s right to pursue class action litigation.
The employer maintained the mandatory arbitration policy requiring arbitration of employment disputes for over a decade. The policy was contained in the employee handbook presented to all employees at the time of hire and included a written acknowledgement. In 2005, the employer amended the policy to include a waiver of class litigation – including class arbitration. In 2007, the employer further amended the policy to allow employees to opt out of the arbitration program by submitting a form within 30 days of hire. At the time of the ALJ’s decision, the employer was attempting to compel arbitration of employment disputes under its policy in 11 state and federal courts.
An employee hired in 2008, who had the opportunity to opt out of the arbitration program but did not do so, filed an unfair labor practice charge alleging that the class action waiver provision violated the NLRA. The employer contended that requiring a waiver of class litigation and arbitration rights did not violate the NLRA and, if it did, the employee’s failure to opt out rendered his subsequent waiver of class action rights voluntary. After characterizing the arbitration program as “unilaterally devised” and “highly self-serving,” the ALJ relied on D.R. Horton to find that the class waiver provision was unlawful.
Specifically, the ALJ rejected the employer’s reliance on a string of recent U.S. Supreme Court decisions applying the Federal Arbitration Act (“FAA”) to uphold class waivers in arbitration agreements. The ALJ referred to the employer’s reliance on the Supreme Court’s rulings as “tedious” and proclaimed that “they have little, if anything, to do with arbitration in the context of the employer-employee relationship.” The ALJ went on to discount the opt-out provision, stating that it was “an illusion” and that employees could not be required to “affirmatively act to preserve rights already protected by Section 7 [of the NLRA].” The ALJ further questioned whether the thousands of employees who had not taken advantage of the opt-out really knew what they were doing.
The ALJ also ruled that the arbitration policy’s non-disclosure provision separately violated the NLRA. The provision in question stated that, “except as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties.” The ALJ found that this language “imposes extreme limitations on activities protected by [the NLRA]” and speculated that it would lead a reasonable employee to conclude that he was prohibited from discussing employment claims with fellow employees, identifying supporting witnesses, seeking monetary contributions to pay for “the very expensive costs of” arbitration or asking fellow employees to provide moral support.
On the basis of his decision, the ALJ ordered the employer to stop maintaining any provision of the policy that prohibited class litigation and attempting to enforce the arbitration policy’s provisions in state and federal courts. The ALJ specifically ordered the employer to withdraw any motion it had in state or federal court seeking to enforce the arbitration policy and notify the courts that it “no longer objected to its employees bringing or participating in ... class or collective actions.”
In 24 Hour Fitness, the ALJ issued a full-throated defense of the NLRB’s D.R. Horton decision – despite the fact that numerous federal courts have refused to follow the decision on grounds that the NLRB is not competent to interpret and apply the FAA and/or hold that the NLRA’s protection of concerted activity extends to employment litigation unrelated to the NLRA. The decision also refutes the NLRB’s suggestion in D.R. Horton that an opt-out provision might save an arbitration program including a class waiver. Moreover, the ALJ’s expansive and highly speculative reading of the non-disclosure provision threatens to undermine arbitration confidentiality provisions generally.
In the end, the NLRB continues and intensifies its assault on employment arbitration programs and employers may want to review and carefully consider implementing new programs to avoid violating the NLRA. However, given federal courts’ almost unanimous rejection of D.R. Horton, employers may be best served by awaiting a federal court decision either upholding or striking down the NLRB’s stance on class waivers in arbitration agreements before making any changes to current arbitration programs. Z&R will provide further updates and analysis as this issue develops.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, appears before the National Labor Relations Board and practices in all areas of private and public sector labor relations. For more information about the NLRB’s decisions on employment arbitration programs or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
In a decision issued on November 6, 2012, a National Labor Relations Board (“NLRB”) administrative law judge (“ALJ”) ruled that an employer’s decade-old employment arbitration program violated the National Labor Relations Act (“NLRA”). The ALJ decision in 24 Hour Fitness USA, Inc., JD(SF)-51-12, NLRB Case No.: 20-CA-035419, is the NLRB’s most recent assault on employment arbitration policies and doubles down on its 2012 decision in D.R. Horton, 357 NLRB No. 184 (2012) by invalidating arbitration programs that waive an employee’s right to pursue class action litigation.
The employer maintained the mandatory arbitration policy requiring arbitration of employment disputes for over a decade. The policy was contained in the employee handbook presented to all employees at the time of hire and included a written acknowledgement. In 2005, the employer amended the policy to include a waiver of class litigation – including class arbitration. In 2007, the employer further amended the policy to allow employees to opt out of the arbitration program by submitting a form within 30 days of hire. At the time of the ALJ’s decision, the employer was attempting to compel arbitration of employment disputes under its policy in 11 state and federal courts.
An employee hired in 2008, who had the opportunity to opt out of the arbitration program but did not do so, filed an unfair labor practice charge alleging that the class action waiver provision violated the NLRA. The employer contended that requiring a waiver of class litigation and arbitration rights did not violate the NLRA and, if it did, the employee’s failure to opt out rendered his subsequent waiver of class action rights voluntary. After characterizing the arbitration program as “unilaterally devised” and “highly self-serving,” the ALJ relied on D.R. Horton to find that the class waiver provision was unlawful.
Specifically, the ALJ rejected the employer’s reliance on a string of recent U.S. Supreme Court decisions applying the Federal Arbitration Act (“FAA”) to uphold class waivers in arbitration agreements. The ALJ referred to the employer’s reliance on the Supreme Court’s rulings as “tedious” and proclaimed that “they have little, if anything, to do with arbitration in the context of the employer-employee relationship.” The ALJ went on to discount the opt-out provision, stating that it was “an illusion” and that employees could not be required to “affirmatively act to preserve rights already protected by Section 7 [of the NLRA].” The ALJ further questioned whether the thousands of employees who had not taken advantage of the opt-out really knew what they were doing.
The ALJ also ruled that the arbitration policy’s non-disclosure provision separately violated the NLRA. The provision in question stated that, “except as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties.” The ALJ found that this language “imposes extreme limitations on activities protected by [the NLRA]” and speculated that it would lead a reasonable employee to conclude that he was prohibited from discussing employment claims with fellow employees, identifying supporting witnesses, seeking monetary contributions to pay for “the very expensive costs of” arbitration or asking fellow employees to provide moral support.
On the basis of his decision, the ALJ ordered the employer to stop maintaining any provision of the policy that prohibited class litigation and attempting to enforce the arbitration policy’s provisions in state and federal courts. The ALJ specifically ordered the employer to withdraw any motion it had in state or federal court seeking to enforce the arbitration policy and notify the courts that it “no longer objected to its employees bringing or participating in ... class or collective actions.”
In 24 Hour Fitness, the ALJ issued a full-throated defense of the NLRB’s D.R. Horton decision – despite the fact that numerous federal courts have refused to follow the decision on grounds that the NLRB is not competent to interpret and apply the FAA and/or hold that the NLRA’s protection of concerted activity extends to employment litigation unrelated to the NLRA. The decision also refutes the NLRB’s suggestion in D.R. Horton that an opt-out provision might save an arbitration program including a class waiver. Moreover, the ALJ’s expansive and highly speculative reading of the non-disclosure provision threatens to undermine arbitration confidentiality provisions generally.
In the end, the NLRB continues and intensifies its assault on employment arbitration programs and employers may want to review and carefully consider implementing new programs to avoid violating the NLRA. However, given federal courts’ almost unanimous rejection of D.R. Horton, employers may be best served by awaiting a federal court decision either upholding or striking down the NLRB’s stance on class waivers in arbitration agreements before making any changes to current arbitration programs. Z&R will provide further updates and analysis as this issue develops.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, appears before the National Labor Relations Board and practices in all areas of private and public sector labor relations. For more information about the NLRB’s decisions on employment arbitration programs or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Thursday, October 11, 2012
The Ohio Supreme Court Has Vacated and Modified Its Opinion in Fishel
*By Jason Rossiter
Today, the Ohio Supreme Court reversed itself. The Court has vacated its earlier opinion in Acordia of Ohio LLC v. Fishel, and has held instead that a successor entity can jump into the shoes of its predecessor and enforce the predecessor’s noncompetition agreements.
The earlier opinion had stated that the predecessor entity met its end once the merger took place, and that this event started the running of the “noncompete clock” if that clock was triggered by the employee’s termination of employment with the predecessor entity (as opposed to termination of employment with the predecessor entity “or its successors and assigns”).
The problem with the earlier opinion, according to the Court, was its false assumption that once an entity merged into some other entity, the older entity necessarily ceased to exist. That is a wrong statement of Ohio corporation law, according to today’s opinion.
Instead, “the absorbed company becomes a part of the resulting company following merger. The merged company has the ability to enforce noncompete agreements as if the resulting company had stepped into the shoes of the absorbed company. It follows that omission of any ‘successors or assigns’ language in the employees’ noncompete agreements in this case does not prevent the L.L.C. from enforcing the noncompete agreements.”
The Supreme Court did note that this does not necessarily mean that old noncompetes that had passed through several iterations of mergers and whatnot are always enforceable. “[T]he employees still may challenge the continued validity of the noncompete agreements based on whether the agreements are reasonable and whether the numerous mergers in this case created additional obligations or duties so that the agreements should not be enforced on their original terms.”
Since the lower courts had not yet analyzed whether or not the particular noncompete agreement at issue in Fishel was reasonable under this test, the Supreme Court sent the case back down to the lower court for that analysis to be conducted.
*Jason Rossiter practices in all areas of labor and employment law.
Today, the Ohio Supreme Court reversed itself. The Court has vacated its earlier opinion in Acordia of Ohio LLC v. Fishel, and has held instead that a successor entity can jump into the shoes of its predecessor and enforce the predecessor’s noncompetition agreements.
The earlier opinion had stated that the predecessor entity met its end once the merger took place, and that this event started the running of the “noncompete clock” if that clock was triggered by the employee’s termination of employment with the predecessor entity (as opposed to termination of employment with the predecessor entity “or its successors and assigns”).
The problem with the earlier opinion, according to the Court, was its false assumption that once an entity merged into some other entity, the older entity necessarily ceased to exist. That is a wrong statement of Ohio corporation law, according to today’s opinion.
Instead, “the absorbed company becomes a part of the resulting company following merger. The merged company has the ability to enforce noncompete agreements as if the resulting company had stepped into the shoes of the absorbed company. It follows that omission of any ‘successors or assigns’ language in the employees’ noncompete agreements in this case does not prevent the L.L.C. from enforcing the noncompete agreements.”
The Supreme Court did note that this does not necessarily mean that old noncompetes that had passed through several iterations of mergers and whatnot are always enforceable. “[T]he employees still may challenge the continued validity of the noncompete agreements based on whether the agreements are reasonable and whether the numerous mergers in this case created additional obligations or duties so that the agreements should not be enforced on their original terms.”
Since the lower courts had not yet analyzed whether or not the particular noncompete agreement at issue in Fishel was reasonable under this test, the Supreme Court sent the case back down to the lower court for that analysis to be conducted.
*Jason Rossiter practices in all areas of labor and employment law.
Thursday, August 30, 2012
EMPLOYMENT LAW QUARTERLY | Fall 2012, Volume XIV, Issue iii
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A trade secrets suit accusing former PhoneDog LLC employee Nathan Kravitz of continuing to use a company Twitter account after his separation recently settled following litigation in the United States District Court for the Northern District of California. Despite the case’s settlement and the lack of a formal court opinion, the case should serve as a warning to employers whose policies fail to address social media and related issues.
PhoneDog is an interactive mobile news web resource that reviews mobile products and services and allows users to research, price, and shop mobile carriers. PhoneDog hired Kravitz in April 2006 as a product reviewer and video blogger and assigned him a Twitter account with the name (or handle) of “@PhoneDog_Noah”. Kravitz regularly updated and submitted content (or tweeted) through the account. PhoneDog assigned other employees Twitter accounts with similar names (“@PhoneDog_Name”) and claimed that all the Twitter accounts used by its employees, as well as the account passwords, constituted the company’s proprietary, confidential information.
Kravitz left PhoneDog in 2010. After leaving PhoneDog, the company asked Kravitz to relinquish control of the Twitter account, which at the time had 17,000 followers. Kravitz refused and instead changed the Twitter account name to “@noahkravitz”. Kravitz continued to use the account and often tweeted to his followers, which had increased dramatically.
PhoneDog responded by filing suit for theft of company property, alleging $340,000 in damages calculated as $2.50 per follower per month for an eight month period. PhoneDog claimed that Kravitz’s list of Twitter followers was akin to a client or customer list. However, Kravitz’s attorneys presented documents demonstrating that PhoneDog had agreed to let Kravitz continue using the account following his separation and, in fact, asked him to continue tweeting occasionally on its behalf, which he did. Under the only public terms of the parties’ settlement, Kravitz maintained sole custody of the account.
While the parties ultimately settled without a judicial decision, this case presents a valuable lesson for employers – that they should establish clear guidelines as to the use of social media and what happens to various social media accounts upon an employee’s discharge or separation.
*B. Jason Rossiter practices in all areas of employment litigation and is licensed to practice law in Ohio, Pennsylvania, and California. Jason has extensive experience helping employers navigate through social media and related technology issues. For more information about this ever changing area, please contact Zashin & Rich at 216.696.4441.
The Sixth Circuit recently affirmed a district court’s dismissal of a former Wal-Mart employee’s claim of wrongful discharge. The employee tested positive for marijuana, which he was using in accordance with the Michigan Medical Marijuana Act (“MMMA”).
The former Wal-Mart employee in Casias v. Wal-Mart Stores, Inc., used medical marijuana on the advice of his doctor and in accord with the MMMA. The employee suffered from sinus cancer and an inoperable brain tumor. When the employee suffered an injury at work, his manager took him to the hospital. Pursuant to Wal-Mart’s policies, the hospital tested the employee for drugs, and he tested positive. In response, the employee produced his user registry card to the hospital staff and explained that he was a qualifying patient under Michigan law. He further stated that he did not use marijuana at work and that he did not come to work under the influence.
Wal-Mart’s corporate office directed the manager to discharge the employee for his use of marijuana. The employee filed suit in state court, claiming wrongful discharge and violations of the MMMA. Wal-Mart removed the case to federal court and moved to dismiss on the grounds that the employee failed to state a claim. The district court dismissed the employee’s action for failure to state a claim.
The Sixth Circuit affirmed the district court’s ruling. The court first analyzed and interpreted the statute, which provides that, “[a] qualifying patient who has been issued and possesses a registry identification card shall not be subject to arrest, prosecution, or penalty in any manner, or denied any right or privilege, including but not limited to civil penalty or disciplinary action by a business or occupational or professional licensing board or bureau, for the medical use of marijuana in accordance with this act . . .” Casias argued that the term “business” in the MMMA is independent, while Wal-Mart countered that it modifies the phrase “licensing board or bureau.” The Sixth Circuit sided with Wal-Mart's interpretation. The Court found that the MMMA imposes no restrictions on private employers, including Wal-Mart. The MMMA does not refer in any way to employment. The Court also noted that its interpretation was in line with those of courts in California, Montana, and Washington holding that similar state medical marijuana laws do not govern private employment actions.
This decision is likely to surface in Colorado and Washington, two states which have recently legalized the use of marijuana for more than medical use. To combat the tension between state laws which allow for marijuana use, and federal laws which do not, some states have introduced bills to reconcile these differences. For example, a U.S. Representative from Colorado has recently introduced legislation which urges the Department of Justice to respect Colorado’s state law and not prosecute those citizens who are in compliance with state law, even if in violation of federal law.
The laws governing the use of marijuana throughout the country are ever-changing and employers need to be wary of these changes and how they impact the workplace.
On November 6, 2012, Americans voted to keep President Barack Obama in office for another four years. What can employers expect from President Obama’s second term as President?
First, it is noteworthy that the GOP retained control of the House of Representatives. This makes it unlikely that the President will be able to push through any sweeping legislation, at least not until after the 2014 midterm elections. However, a Republican controlled House is nothing new to the President, and he has worked around it in two ways. First, the President has issued a large number of Executive Orders. Second, the President has urged various federal agencies, including the Equal Employment Opportunity Commission (“EEOC”) and the Occupational Safety and Health Administration (“OSHA”), to take expansive, aggressive positions on existing laws. The President is expected to utilize similar actions in his second term.
OSHA is one such agency which may become much more active. OSHA’s Injury and Illness Prevention Program has been in development for over three years, but the Agency is expected to make it a focus during Obama’s second term. OSHA also is expected to put comprehensive rulemaking in place to regulate crystalline silica, which is a form of quartz to which workers performing blasting, foundry work, tunneling, and sandblasting regularly are exposed. Finally, OSHA has proposed stricter injury and illness reporting obligations on employers. These regulations would require employers to report workplace amputations to OSHA within 24 hours, as well as all inpatient hospitalizations within eight (8) hours.
The EEOC is expected to take similar actions. The EEOC’s Strategic Enforcement Plan calls for taking action against employers who require pregnant employees to take medical leaves of absence if they are unable to perform their job duties. Currently, reasonable accommodation of normal pregnancy is not required. The EEOC also intends to enforce non-discrimination against individuals based on their lesbian, gay, bisexual, or transgender status. Currently, some courts have said that “gender stereotyping” and discrimination based on gender identity is a form of sex discrimination, but Title VII does not directly address this, and it does not prohibit discrimination based on sexual orientation.
The National Labor Relations Board (“NLRB”) has been aggressive during the last four years and that is not expected to change. During the President’s first term, the Board’s decisions and rulemaking have favored organized labor. This trend is expected to continue into the President’s second term. Based on the Board’s actions during the President’s first term, employers should expect more Board decisions and opinions invalidating employer social media policies, taking a dim view toward employment-at-will disclaimers, and taking an expansive view on protected concerted activity.
President Obama’s reelection also means that the Patient Protection and Affordable Care Act (“PPACA”) is here to stay. The three federal agencies tasked with PPACA’s enforcement are expected to move quickly to promulgate new regulations. Although several legal challenges are still moving through the courts, employers need to ensure that they are compliant with the requirements of the Act.
Employers must also navigate new legalized marijuana statutes in two states. Voters in Colorado and Washington have approved legalization of the sale or possession of marijuana in small amounts. However, employers operating in these states should note that legalized marijuana may not affect the exclusion from protection under the Americans with Disabilities Act for “current use of illegal drugs.” This is true because the illegal drug definitions in the ADA are based on federal law. In other words, under the ADA as currently enacted, it may not be a violation for a Colorado or Washington employer to take action against an employee for testing positive for marijuana. This is far from a settled area, however, as representatives in Congress from both states have introduced federal legislation asking the federal government to respect their states’ laws.
These are but a few of the changes and issues the President’s second term may pose for employers. If the President’s first four years were any indication, employers can expect many more changes.
*David R. Vance practices in all areas of labor & employment law and has extensive experience dealing with administrative agencies, particularly the EEOC. If you have any questions on how any of these potential changes may affect your company, please contact David (drv@zrlaw.com) at 216.696.4441.
Many employers maintain insurance coverage for the defense of claims brought by current or former employees. This type of insurance is commonly known as employment practices liability insurance (“EPLI”). EPLI policies typically provide coverage for a broad-range of claims including discrimination, retaliation, harassment and wrongful termination. Most EPLI policies also cover other workplace torts.
Certain EPLI policies exclude coverage for claims arising under the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act, Occupation Safety and Health Administration claims, claims for punitive damages, claims alleging intentional acts and claims arising under workers’ compensation laws. When purchasing a policy, employers need to be aware of any exclusions to the policy. However, even with potential exclusions, most EPLI policies offer substantial coverage and can be tailored to the needs of an employer’s business.
Employers can purchase EPLI policies with coverage amounts up to millions of dollars. EPLI policies generally include a deductible, which is often referred to as a self-insured retention, which varies based on the cost of the policy. Typically, the cost of legal defense is included in the aggregate insurance limits, along with the costs of judgments and settlements. The assignment of legal counsel is outlined in policy. Oftentimes, the insurance company may appoint counsel from a pre-approved list of “panel counsel.” Members of these pre-approved panels often have a continuing relationship with the insurance company and are selected based on their skill in defending employment based claims.
EPLI coverage is usually written on a claims-made basis. This means the incident resulting in the claim must have occurred during the coverage period. Employers often cannot forecast when a claim may be filed against them, and employees often file such claims months or even years after the alleged discrimination, harassment, or discharge occurred. Therefore, it is important for employers to maintain consistent coverage.
No matter how carefully and skillfully an employer manages workplace conduct, a potential for a claim always exists. The number of discrimination claims filed with the Equal Employment Opportunity Commission alone has steadily risen over the past few years, as has the amount of damages the EEOC has collected. EPLI coverage can be an excellent resource for employers defending against an ever increasing number of employment related lawsuits and can help control the legal costs associated with such lawsuits.
The best way to avoid litigation is to establish strong workplace rules and strictly enforce them. However, an employer’s management of workplace conduct is not foolproof and with employee lawsuits on the rise, now is good time for employers to consider obtaining an EPLI policy or renegotiating their current policy.
*Zashin & Rich Co., L.P.A. is approved to defend claims covered by most EPLI carriers. Stephen Zashin, an OSBA Certified Specialist in Labor and Employment Law and the head of the firm’s labor and employment group, has worked closely with numerous representatives from various insurance providers and can help put those relationships to work for you. For more information about EPLI coverage and how it can help protect your business, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
Recently, the Ohio Supreme Court addressed when the 90-day period begins for a discharged employee to notify his or employer of a possible workers’ compensation retaliation claim under Ohio Revised Code Section 4123.90. Under R.C. 4123.90, employers are prohibited from taking retaliatory action—defined as discharging, reassigning, demoting, or taking any other punitive action—against an employee following the employee’s pursuit of benefits associated with workers’ compensation. The Court held that, as a general rule, the 90-day period begins to run on the date the employee is discharged. However, the employer has an affirmative duty to notify the employee of the discharge within a reasonable period of time following the discharge so as not to interfere with the employee’s 90-day period.
In Lawrence v. City of Youngstown, the City of Youngstown suspended employee Keith Lawrence without pay. Two days later, the city terminated Lawrence’s employment. Lawrence alleged that he never received a copy of the termination letter. Lawrence filed his complaint against the city in Mahoning County Common Pleas Court on July 6, 2007, alleging workers’ compensation retaliation under R.C. 4123.90 and racial discrimination. In support of Lawrence’s R.C. 4123.90 claim, the complaint asserted that he had filed a workers’ compensation claim against the city and that his termination related to the filing.
After holding a hearing, the trial court ruled in Youngtown’s favor, and the magistrate granted summary judgment in favor of Youngstown. As to Lawrence’s R.C. 4123.90 claim, the magistrate construed the disputed facts in favor of Lawrence and assumed that he did not know of his discharge until February 19, 2007. However, the magistrate concluded that the operative date for starting the 90-day notification period was January 9, 2007, the date the city’s records indicated it discharged Lawrence, and that Lawrence’s delayed awareness of the termination was not relevant.
The Seventh District Court of Appeals affirmed. As to the sole issue appealed by Lawrence, the court held that R.C. 4123.90’s 90-day notice period begins on the date of actual discharge, not the date the employee receives notice of his or her discharge. Therefore, the appellate court determined that the trial court had no jurisdiction over the retaliation claim because Lawrence’s notice to his employer was received more than “ninety days immediately following the discharge.”
The Ohio Supreme court reversed the appellate court’s decision. It held that “discharge” as used in R.C. 4123.90 means the date that the employer issued the notice of discharge, not the date of the employee’s receipt of that notice or the date of the employee’s discovery of a R.C. 4123.90 cause of action. In this case, the employer apparently never sent a written notice to the employee (it sent it to the Union instead). Lawrence eventually learned of his discharge, but his attorney did not send his notice of the claim until more than 90 days after Lawrence’s discharge (but less than 90 days after Lawrence received notice of his discharge). The Court held that the lack of notice to the employee precluded dismissal of the case for failure to comply with the 90-day notice requirement. The Court also concluded that R.C. 4123.90, when read in conjunction with R.C. 4123.95, places an implicit affirmative responsibility on an employer to provide its employee notice of the employee’s discharge within a reasonable time after the discharge occurs in order to avoid impeding the discharged employee’s 90-day notification obligation under R.C. 4123.90. The Court reasoned that a reasonable time for an employer to inform an employee of a discharge is an inquiry dependent on the facts of each situation. The Court did opine though that a delay of several days would not prevent the 90-day notification period from beginning to run on the actual day of the discharge.
Based upon this decision, employers should provide their employees with clear and timely notice of their discharges within a reasonable time after the discharge occurs. According to the Ohio Supreme Court, this ensures that an employee will not be given additional time to meet his or her 90-day notice obligation.
*Scott Coghlan, the chair of the firms’ Workers’ Compensation Group, has extensive experience in all aspects of workers’ compensation law. For more information about workers’ compensation compliance, please contact Scott (sc@zrlaw.com) at 216.696.4441.
Helena’s practice encompasses all aspects of general workplace counseling, compliance, and employment litigation defense work. After working as employment counsel for a Fortune-500 company and representing employers at an internationally esteemed law firm, Helena returned to Z&R to put her varied experiences and sharpened expertise to work for the firm's clients.
Emily’s practice focuses on labor relations, equal employment opportunity, employment discrimination, unfair competition, and all other employment related torts. Prior to joining Z&R, Emily practiced in the areas of director and officer liability insurance coverage, employment practices liability coverage, and other professional liability coverage. Emily practices in Z&R’s Columbus office.
Jonathan's practice encompasses all areas of employment and labor law, including employment discrimination, retaliation, and labor relations. Jonathan earned his law degree from Cleveland-Marshall College of Law. While in law school, Jonathan was a legal extern with the United States Equal Employment Opportunity Commission. Jonathan also was a member of the school's nationally-ranked moot court team, where he earned the Lewis F. Powell Medal for Excellence in Oral Advocacy.
Please join us in welcoming Helena, Emily, and Jonathan to Z&R!
There is also a slight change for companies that have to pay minimum wage. As of next year, the minimum wage will apply to businesses with annual gross receipts of $288,000, a $5,000 increase over this year. Companies with gross receipts under $288,000 must pay the federal minimum wage of $7.25 per hour. The federal rate also applies to 14- and 15-year-old employees.
- Putting a Price on Twitter Followers: The Importance of Employers Retaining Control of Their Social Media Accounts/li>
- Bad Medicine: Michigan Medical Marijuana Act Imposes No Restrictions on Private Employers Who Terminate Employees For Use of Medical Marijuana
- The Voters Have Spoken: What Employers Can Expect From President Obama’s Second Term
- Does Your Company Need Employment Practices Liability Insurance?
- Time Is Not On Your Side: Ohio Supreme Court Interprets 90-Day Notice Requirement Following Discharge for Workers’ Compensation Retaliation Claims
- Z&R Shorts
Putting a Price on Twitter Followers: The Importance of Employers Retaining Control of Their Social Media Accounts
By: B. Jason Rossiter*A trade secrets suit accusing former PhoneDog LLC employee Nathan Kravitz of continuing to use a company Twitter account after his separation recently settled following litigation in the United States District Court for the Northern District of California. Despite the case’s settlement and the lack of a formal court opinion, the case should serve as a warning to employers whose policies fail to address social media and related issues.
PhoneDog is an interactive mobile news web resource that reviews mobile products and services and allows users to research, price, and shop mobile carriers. PhoneDog hired Kravitz in April 2006 as a product reviewer and video blogger and assigned him a Twitter account with the name (or handle) of “@PhoneDog_Noah”. Kravitz regularly updated and submitted content (or tweeted) through the account. PhoneDog assigned other employees Twitter accounts with similar names (“@PhoneDog_Name”) and claimed that all the Twitter accounts used by its employees, as well as the account passwords, constituted the company’s proprietary, confidential information.
Kravitz left PhoneDog in 2010. After leaving PhoneDog, the company asked Kravitz to relinquish control of the Twitter account, which at the time had 17,000 followers. Kravitz refused and instead changed the Twitter account name to “@noahkravitz”. Kravitz continued to use the account and often tweeted to his followers, which had increased dramatically.
PhoneDog responded by filing suit for theft of company property, alleging $340,000 in damages calculated as $2.50 per follower per month for an eight month period. PhoneDog claimed that Kravitz’s list of Twitter followers was akin to a client or customer list. However, Kravitz’s attorneys presented documents demonstrating that PhoneDog had agreed to let Kravitz continue using the account following his separation and, in fact, asked him to continue tweeting occasionally on its behalf, which he did. Under the only public terms of the parties’ settlement, Kravitz maintained sole custody of the account.
While the parties ultimately settled without a judicial decision, this case presents a valuable lesson for employers – that they should establish clear guidelines as to the use of social media and what happens to various social media accounts upon an employee’s discharge or separation.
*B. Jason Rossiter practices in all areas of employment litigation and is licensed to practice law in Ohio, Pennsylvania, and California. Jason has extensive experience helping employers navigate through social media and related technology issues. For more information about this ever changing area, please contact Zashin & Rich at 216.696.4441.
Bad Medicine: Michigan Medical Marijuana Act Imposes No Restrictions on Private Employers Who Terminate Employees For Use of Medical Marijuana
By: Patrick M. WattsThe Sixth Circuit recently affirmed a district court’s dismissal of a former Wal-Mart employee’s claim of wrongful discharge. The employee tested positive for marijuana, which he was using in accordance with the Michigan Medical Marijuana Act (“MMMA”).
The former Wal-Mart employee in Casias v. Wal-Mart Stores, Inc., used medical marijuana on the advice of his doctor and in accord with the MMMA. The employee suffered from sinus cancer and an inoperable brain tumor. When the employee suffered an injury at work, his manager took him to the hospital. Pursuant to Wal-Mart’s policies, the hospital tested the employee for drugs, and he tested positive. In response, the employee produced his user registry card to the hospital staff and explained that he was a qualifying patient under Michigan law. He further stated that he did not use marijuana at work and that he did not come to work under the influence.
Wal-Mart’s corporate office directed the manager to discharge the employee for his use of marijuana. The employee filed suit in state court, claiming wrongful discharge and violations of the MMMA. Wal-Mart removed the case to federal court and moved to dismiss on the grounds that the employee failed to state a claim. The district court dismissed the employee’s action for failure to state a claim.
The Sixth Circuit affirmed the district court’s ruling. The court first analyzed and interpreted the statute, which provides that, “[a] qualifying patient who has been issued and possesses a registry identification card shall not be subject to arrest, prosecution, or penalty in any manner, or denied any right or privilege, including but not limited to civil penalty or disciplinary action by a business or occupational or professional licensing board or bureau, for the medical use of marijuana in accordance with this act . . .” Casias argued that the term “business” in the MMMA is independent, while Wal-Mart countered that it modifies the phrase “licensing board or bureau.” The Sixth Circuit sided with Wal-Mart's interpretation. The Court found that the MMMA imposes no restrictions on private employers, including Wal-Mart. The MMMA does not refer in any way to employment. The Court also noted that its interpretation was in line with those of courts in California, Montana, and Washington holding that similar state medical marijuana laws do not govern private employment actions.
This decision is likely to surface in Colorado and Washington, two states which have recently legalized the use of marijuana for more than medical use. To combat the tension between state laws which allow for marijuana use, and federal laws which do not, some states have introduced bills to reconcile these differences. For example, a U.S. Representative from Colorado has recently introduced legislation which urges the Department of Justice to respect Colorado’s state law and not prosecute those citizens who are in compliance with state law, even if in violation of federal law.
The laws governing the use of marijuana throughout the country are ever-changing and employers need to be wary of these changes and how they impact the workplace.
The Voters Have Spoken: What Employers Can Expect From President Obama’s Second Term
By: David R. Vance*On November 6, 2012, Americans voted to keep President Barack Obama in office for another four years. What can employers expect from President Obama’s second term as President?
First, it is noteworthy that the GOP retained control of the House of Representatives. This makes it unlikely that the President will be able to push through any sweeping legislation, at least not until after the 2014 midterm elections. However, a Republican controlled House is nothing new to the President, and he has worked around it in two ways. First, the President has issued a large number of Executive Orders. Second, the President has urged various federal agencies, including the Equal Employment Opportunity Commission (“EEOC”) and the Occupational Safety and Health Administration (“OSHA”), to take expansive, aggressive positions on existing laws. The President is expected to utilize similar actions in his second term.
OSHA is one such agency which may become much more active. OSHA’s Injury and Illness Prevention Program has been in development for over three years, but the Agency is expected to make it a focus during Obama’s second term. OSHA also is expected to put comprehensive rulemaking in place to regulate crystalline silica, which is a form of quartz to which workers performing blasting, foundry work, tunneling, and sandblasting regularly are exposed. Finally, OSHA has proposed stricter injury and illness reporting obligations on employers. These regulations would require employers to report workplace amputations to OSHA within 24 hours, as well as all inpatient hospitalizations within eight (8) hours.
The EEOC is expected to take similar actions. The EEOC’s Strategic Enforcement Plan calls for taking action against employers who require pregnant employees to take medical leaves of absence if they are unable to perform their job duties. Currently, reasonable accommodation of normal pregnancy is not required. The EEOC also intends to enforce non-discrimination against individuals based on their lesbian, gay, bisexual, or transgender status. Currently, some courts have said that “gender stereotyping” and discrimination based on gender identity is a form of sex discrimination, but Title VII does not directly address this, and it does not prohibit discrimination based on sexual orientation.
The National Labor Relations Board (“NLRB”) has been aggressive during the last four years and that is not expected to change. During the President’s first term, the Board’s decisions and rulemaking have favored organized labor. This trend is expected to continue into the President’s second term. Based on the Board’s actions during the President’s first term, employers should expect more Board decisions and opinions invalidating employer social media policies, taking a dim view toward employment-at-will disclaimers, and taking an expansive view on protected concerted activity.
President Obama’s reelection also means that the Patient Protection and Affordable Care Act (“PPACA”) is here to stay. The three federal agencies tasked with PPACA’s enforcement are expected to move quickly to promulgate new regulations. Although several legal challenges are still moving through the courts, employers need to ensure that they are compliant with the requirements of the Act.
Employers must also navigate new legalized marijuana statutes in two states. Voters in Colorado and Washington have approved legalization of the sale or possession of marijuana in small amounts. However, employers operating in these states should note that legalized marijuana may not affect the exclusion from protection under the Americans with Disabilities Act for “current use of illegal drugs.” This is true because the illegal drug definitions in the ADA are based on federal law. In other words, under the ADA as currently enacted, it may not be a violation for a Colorado or Washington employer to take action against an employee for testing positive for marijuana. This is far from a settled area, however, as representatives in Congress from both states have introduced federal legislation asking the federal government to respect their states’ laws.
These are but a few of the changes and issues the President’s second term may pose for employers. If the President’s first four years were any indication, employers can expect many more changes.
*David R. Vance practices in all areas of labor & employment law and has extensive experience dealing with administrative agencies, particularly the EEOC. If you have any questions on how any of these potential changes may affect your company, please contact David (drv@zrlaw.com) at 216.696.4441.
Does Your Company Need Employment Practices Liability Insurance?
By: Stephen S. Zashin*Many employers maintain insurance coverage for the defense of claims brought by current or former employees. This type of insurance is commonly known as employment practices liability insurance (“EPLI”). EPLI policies typically provide coverage for a broad-range of claims including discrimination, retaliation, harassment and wrongful termination. Most EPLI policies also cover other workplace torts.
Certain EPLI policies exclude coverage for claims arising under the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act, Occupation Safety and Health Administration claims, claims for punitive damages, claims alleging intentional acts and claims arising under workers’ compensation laws. When purchasing a policy, employers need to be aware of any exclusions to the policy. However, even with potential exclusions, most EPLI policies offer substantial coverage and can be tailored to the needs of an employer’s business.
Employers can purchase EPLI policies with coverage amounts up to millions of dollars. EPLI policies generally include a deductible, which is often referred to as a self-insured retention, which varies based on the cost of the policy. Typically, the cost of legal defense is included in the aggregate insurance limits, along with the costs of judgments and settlements. The assignment of legal counsel is outlined in policy. Oftentimes, the insurance company may appoint counsel from a pre-approved list of “panel counsel.” Members of these pre-approved panels often have a continuing relationship with the insurance company and are selected based on their skill in defending employment based claims.
EPLI coverage is usually written on a claims-made basis. This means the incident resulting in the claim must have occurred during the coverage period. Employers often cannot forecast when a claim may be filed against them, and employees often file such claims months or even years after the alleged discrimination, harassment, or discharge occurred. Therefore, it is important for employers to maintain consistent coverage.
No matter how carefully and skillfully an employer manages workplace conduct, a potential for a claim always exists. The number of discrimination claims filed with the Equal Employment Opportunity Commission alone has steadily risen over the past few years, as has the amount of damages the EEOC has collected. EPLI coverage can be an excellent resource for employers defending against an ever increasing number of employment related lawsuits and can help control the legal costs associated with such lawsuits.
The best way to avoid litigation is to establish strong workplace rules and strictly enforce them. However, an employer’s management of workplace conduct is not foolproof and with employee lawsuits on the rise, now is good time for employers to consider obtaining an EPLI policy or renegotiating their current policy.
*Zashin & Rich Co., L.P.A. is approved to defend claims covered by most EPLI carriers. Stephen Zashin, an OSBA Certified Specialist in Labor and Employment Law and the head of the firm’s labor and employment group, has worked closely with numerous representatives from various insurance providers and can help put those relationships to work for you. For more information about EPLI coverage and how it can help protect your business, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
Time Is Not On Your Side: Ohio Supreme Court Interprets 90-Day Notice Requirement Following Discharge for Workers’ Compensation Retaliation Claims
By: Scott Coghlan*Recently, the Ohio Supreme Court addressed when the 90-day period begins for a discharged employee to notify his or employer of a possible workers’ compensation retaliation claim under Ohio Revised Code Section 4123.90. Under R.C. 4123.90, employers are prohibited from taking retaliatory action—defined as discharging, reassigning, demoting, or taking any other punitive action—against an employee following the employee’s pursuit of benefits associated with workers’ compensation. The Court held that, as a general rule, the 90-day period begins to run on the date the employee is discharged. However, the employer has an affirmative duty to notify the employee of the discharge within a reasonable period of time following the discharge so as not to interfere with the employee’s 90-day period.
In Lawrence v. City of Youngstown, the City of Youngstown suspended employee Keith Lawrence without pay. Two days later, the city terminated Lawrence’s employment. Lawrence alleged that he never received a copy of the termination letter. Lawrence filed his complaint against the city in Mahoning County Common Pleas Court on July 6, 2007, alleging workers’ compensation retaliation under R.C. 4123.90 and racial discrimination. In support of Lawrence’s R.C. 4123.90 claim, the complaint asserted that he had filed a workers’ compensation claim against the city and that his termination related to the filing.
After holding a hearing, the trial court ruled in Youngtown’s favor, and the magistrate granted summary judgment in favor of Youngstown. As to Lawrence’s R.C. 4123.90 claim, the magistrate construed the disputed facts in favor of Lawrence and assumed that he did not know of his discharge until February 19, 2007. However, the magistrate concluded that the operative date for starting the 90-day notification period was January 9, 2007, the date the city’s records indicated it discharged Lawrence, and that Lawrence’s delayed awareness of the termination was not relevant.
The Seventh District Court of Appeals affirmed. As to the sole issue appealed by Lawrence, the court held that R.C. 4123.90’s 90-day notice period begins on the date of actual discharge, not the date the employee receives notice of his or her discharge. Therefore, the appellate court determined that the trial court had no jurisdiction over the retaliation claim because Lawrence’s notice to his employer was received more than “ninety days immediately following the discharge.”
The Ohio Supreme court reversed the appellate court’s decision. It held that “discharge” as used in R.C. 4123.90 means the date that the employer issued the notice of discharge, not the date of the employee’s receipt of that notice or the date of the employee’s discovery of a R.C. 4123.90 cause of action. In this case, the employer apparently never sent a written notice to the employee (it sent it to the Union instead). Lawrence eventually learned of his discharge, but his attorney did not send his notice of the claim until more than 90 days after Lawrence’s discharge (but less than 90 days after Lawrence received notice of his discharge). The Court held that the lack of notice to the employee precluded dismissal of the case for failure to comply with the 90-day notice requirement. The Court also concluded that R.C. 4123.90, when read in conjunction with R.C. 4123.95, places an implicit affirmative responsibility on an employer to provide its employee notice of the employee’s discharge within a reasonable time after the discharge occurs in order to avoid impeding the discharged employee’s 90-day notification obligation under R.C. 4123.90. The Court reasoned that a reasonable time for an employer to inform an employee of a discharge is an inquiry dependent on the facts of each situation. The Court did opine though that a delay of several days would not prevent the 90-day notification period from beginning to run on the actual day of the discharge.
Based upon this decision, employers should provide their employees with clear and timely notice of their discharges within a reasonable time after the discharge occurs. According to the Ohio Supreme Court, this ensures that an employee will not be given additional time to meet his or her 90-day notice obligation.
*Scott Coghlan, the chair of the firms’ Workers’ Compensation Group, has extensive experience in all aspects of workers’ compensation law. For more information about workers’ compensation compliance, please contact Scott (sc@zrlaw.com) at 216.696.4441.
Z&R Shorts
Zashin & Rich Co., L.P.A. is pleased to announce the addition of Helena Oroz, Emily A. Smith, and Jonathan D. Decker to its Employment and Labor Group.Helena’s practice encompasses all aspects of general workplace counseling, compliance, and employment litigation defense work. After working as employment counsel for a Fortune-500 company and representing employers at an internationally esteemed law firm, Helena returned to Z&R to put her varied experiences and sharpened expertise to work for the firm's clients.
Emily’s practice focuses on labor relations, equal employment opportunity, employment discrimination, unfair competition, and all other employment related torts. Prior to joining Z&R, Emily practiced in the areas of director and officer liability insurance coverage, employment practices liability coverage, and other professional liability coverage. Emily practices in Z&R’s Columbus office.
Jonathan's practice encompasses all areas of employment and labor law, including employment discrimination, retaliation, and labor relations. Jonathan earned his law degree from Cleveland-Marshall College of Law. While in law school, Jonathan was a legal extern with the United States Equal Employment Opportunity Commission. Jonathan also was a member of the school's nationally-ranked moot court team, where he earned the Lewis F. Powell Medal for Excellence in Oral Advocacy.
Please join us in welcoming Helena, Emily, and Jonathan to Z&R!
Ohio’s 2013 Minimum Wage Increase
On January 1, 2013, Ohio’s minimum wage will increase. The new wage will increase by $.15 per hour to $7.85 for non-tipped employees. The new minimum for tipped employees will be $3.93 per hour, plus tips, a wage increase of $.08 per hour.There is also a slight change for companies that have to pay minimum wage. As of next year, the minimum wage will apply to businesses with annual gross receipts of $288,000, a $5,000 increase over this year. Companies with gross receipts under $288,000 must pay the federal minimum wage of $7.25 per hour. The federal rate also applies to 14- and 15-year-old employees.
Friday, August 3, 2012
Are Confidential Employer Investigations Unlawful?
*By George S. Crisci
The National Labor Relations Board is at it again!
We have reported in the past on recent efforts by the NLRB and its Acting General Counsel to invalidate long-standing, well-established, and eminently reasonable employment policies, some of which have existed for decades (or longer), because these policies allegedly interfered with employee rights under Section 7 of the National Labor Relations Act to engage in protected concerted activity. For instance, the Acting General Counsel issued a complaint against an employer because the employer’s handbook contained a traditional “at-will employment” acknowledgement that is found in countless employment policy handbooks throughout the country.
Now the full Board itself has gotten into the act, and is targeting a practice that most employers consider essential in complying with their obligations under many other employment laws – laws that the NLRB lacks any jurisdiction to enforce and regulate. We are speaking of the practice of ensuring that investigations are kept confidential.
In Banner Health System d/b/a Banner Estrella Medical Center, the NLRB held that an employer’s direction to employees to keep an investigation confidential (i.e., not discuss it with others) violates Section 7 of the National Labor Relations Act.
Interestingly, the NLRB rejected the recommendation of the Administrative Law Judge, who found that maintaining confidentiality “is for the purpose of protecting the integrity of the investigation,” explaining that, “It is analogous to the [witness] sequestration rule,” and meant to ensure that “employees give their own version of the facts and not what they heard [somewhere else].” The NLRB didn’t see it that way, holding instead that to "justify a prohibition on employee discussion of ongoing investigations, an employer must show that it has a legitimate business justification that outweighs employees’ Section 7 rights.”
The NLRB apparently does not believe that compliance with several other employment laws that obligate employers to conduct effective internal investigations of employee complaints was legitimate enough to trump whatever Section 7 rights might be attendant to breaching confidentiality. Instead, the NLRB reduced the importance of complying with these other laws to a mere "generalized concern with protecting the integrity of ... investigations" and as such "insufficient to outweigh employees’ Section 7 rights." According to the NLRB, an employer must “first determine whether in any given investigation witnesses needed protection, evidence was in danger of being destroyed, testimony was in danger of being fabricated, or there was a need to protect a cover up." Of course, the NLRB offered no explanation or guidance as to how an employer is supposed to make that determination.
Whether any Court will enforce this order remains to be seen.
But, if enforced, this ruling will be both severe and debilitating. Every well-written employment policy concerning investigations of employee complaints mandates confidentiality to the extent practicable. The investigation component of a standard workplace harassment policy immediately comes to mind. Harassment investigations must be kept confidential in order to encourage employees to report violations, as well as to ensure that witnesses provide honest and helpful information based only upon their own first-hand knowledge (as opposed to "information" received by gossip). All investigators know that confidentiality during the investigation process is essential to maintaining the integrity of any proper investigation. The NLRB’s ruling will directly interfere with employers' efforts to comply with these other employment laws, and will almost certainly discourage employees from coming forward with valid complaints about workplace issues--since there would no longer be any means for the employer to assure truthfully that confidentiality will be maintained to the extent practicable.
We will continue to monitor this decision, including whether the employer will challenge the ruling in the federal court of appeals, and stand ready to assist any employer who may have need to conduct a confidential investigation.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about NLRB rulings or labor & employment law, please contact George (gsc@zrlaw.com) at 216.696.4441.
The National Labor Relations Board is at it again!
We have reported in the past on recent efforts by the NLRB and its Acting General Counsel to invalidate long-standing, well-established, and eminently reasonable employment policies, some of which have existed for decades (or longer), because these policies allegedly interfered with employee rights under Section 7 of the National Labor Relations Act to engage in protected concerted activity. For instance, the Acting General Counsel issued a complaint against an employer because the employer’s handbook contained a traditional “at-will employment” acknowledgement that is found in countless employment policy handbooks throughout the country.
Now the full Board itself has gotten into the act, and is targeting a practice that most employers consider essential in complying with their obligations under many other employment laws – laws that the NLRB lacks any jurisdiction to enforce and regulate. We are speaking of the practice of ensuring that investigations are kept confidential.
In Banner Health System d/b/a Banner Estrella Medical Center, the NLRB held that an employer’s direction to employees to keep an investigation confidential (i.e., not discuss it with others) violates Section 7 of the National Labor Relations Act.
Interestingly, the NLRB rejected the recommendation of the Administrative Law Judge, who found that maintaining confidentiality “is for the purpose of protecting the integrity of the investigation,” explaining that, “It is analogous to the [witness] sequestration rule,” and meant to ensure that “employees give their own version of the facts and not what they heard [somewhere else].” The NLRB didn’t see it that way, holding instead that to "justify a prohibition on employee discussion of ongoing investigations, an employer must show that it has a legitimate business justification that outweighs employees’ Section 7 rights.”
The NLRB apparently does not believe that compliance with several other employment laws that obligate employers to conduct effective internal investigations of employee complaints was legitimate enough to trump whatever Section 7 rights might be attendant to breaching confidentiality. Instead, the NLRB reduced the importance of complying with these other laws to a mere "generalized concern with protecting the integrity of ... investigations" and as such "insufficient to outweigh employees’ Section 7 rights." According to the NLRB, an employer must “first determine whether in any given investigation witnesses needed protection, evidence was in danger of being destroyed, testimony was in danger of being fabricated, or there was a need to protect a cover up." Of course, the NLRB offered no explanation or guidance as to how an employer is supposed to make that determination.
Whether any Court will enforce this order remains to be seen.
But, if enforced, this ruling will be both severe and debilitating. Every well-written employment policy concerning investigations of employee complaints mandates confidentiality to the extent practicable. The investigation component of a standard workplace harassment policy immediately comes to mind. Harassment investigations must be kept confidential in order to encourage employees to report violations, as well as to ensure that witnesses provide honest and helpful information based only upon their own first-hand knowledge (as opposed to "information" received by gossip). All investigators know that confidentiality during the investigation process is essential to maintaining the integrity of any proper investigation. The NLRB’s ruling will directly interfere with employers' efforts to comply with these other employment laws, and will almost certainly discourage employees from coming forward with valid complaints about workplace issues--since there would no longer be any means for the employer to assure truthfully that confidentiality will be maintained to the extent practicable.
We will continue to monitor this decision, including whether the employer will challenge the ruling in the federal court of appeals, and stand ready to assist any employer who may have need to conduct a confidential investigation.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about NLRB rulings or labor & employment law, please contact George (gsc@zrlaw.com) at 216.696.4441.
Tuesday, July 24, 2012
Alaska Supreme Court Establishes Broad "Union Relations" Privilege for Communications Between Union Representatives and Bargaining Unit Employees
*By George S. Crisci, Esq
In a recent decision, the Supreme Court of Alaska established a broad “union relations” privilege that appears to be the first of its kind in public sector employment, if not the entire country. In Peterson v. State of Alaska, No. S-14233, Opinion No. 6693, 2012 Alaska LEXIS l04 (Alaska July 20, 2012), the Court established a “union relations privilege” that “extends to communications made: (1) in confidence; (2) in connection with representative services relating to anticipated or ongoing disciplinary or grievance proceedings; (3) between an employee (or the employee’s attorney) and union representatives; and (4) by union representatives acting in official representative capacity.” The Court added that, “The privilege may be asserted by the employee or by the union on behalf of the employee.”
The case involved a discharged employee who unsuccessfully grieved his discharge (because the union opted not to pursue arbitration) and then filed suit for wrongful termination. The labor agreement provided that only the union, and not any private counsel, could represent an employee in the grievance process. However, the union representative communicated with the discharged employee’s private counsel regarding strategy. The employer (which was the State) subpoenaed the union representative and the union’s grievance file for a deposition, including all communications between the union representative and the employee’s private counsel.
The Court recognized that no existing privilege (including the attorney-client privilege) covered these types of communications, so it decided to create a new privilege under Alaska’s Rules of Evidence, which provides that no person has a privilege “[e]xcept as otherwise provided ... by these or other rules promulgated by the Alaska Supreme Court ....” Although the New York courts (for New York public sector employees) and the National Labor Relations Board (for private sector employees) had protected certain communications between union representatives and employees, those decisions involved attempts to gain access to communications while the disciplinary or grievance proceedings were pending. The Alaska Supreme Court’s ruling appears to be the first to provide protection after those proceedings have concluded and covering communications with a private attorney (who was contractually excluded from the disciplinary/grievance process) involving strategy for a court action.
The Court did establish two limitations on this new privilege. First, “[l]ike the attorney-client privilege, the union-relations privilege extends only to communications, not to underlying facts.” Thus, a union representative who also is a fact witness to certain events cannot refuse to provide relevant information under the guise of a privilege. Second, “the privilege is applicable only when the union representative is acting in an official union role because protecting informal conversations would extend the privilege too far, unnecessarily burdening the search for truth.”
Ohio does not have such a union-relations privilege, and it remains to be seen whether any such privilege would be established. Ohio’s Rules of Evidence have a similarly broad, but not precisely worded, rule that allows the courts to establish privileges under the common law. To this point, there are no cases where a union or an employee has attempted to assert such a privilege.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about union-relations or labor & employment law, please contact George (gsc@zrlaw.com) at 216.696.4441.
In a recent decision, the Supreme Court of Alaska established a broad “union relations” privilege that appears to be the first of its kind in public sector employment, if not the entire country. In Peterson v. State of Alaska, No. S-14233, Opinion No. 6693, 2012 Alaska LEXIS l04 (Alaska July 20, 2012), the Court established a “union relations privilege” that “extends to communications made: (1) in confidence; (2) in connection with representative services relating to anticipated or ongoing disciplinary or grievance proceedings; (3) between an employee (or the employee’s attorney) and union representatives; and (4) by union representatives acting in official representative capacity.” The Court added that, “The privilege may be asserted by the employee or by the union on behalf of the employee.”
The case involved a discharged employee who unsuccessfully grieved his discharge (because the union opted not to pursue arbitration) and then filed suit for wrongful termination. The labor agreement provided that only the union, and not any private counsel, could represent an employee in the grievance process. However, the union representative communicated with the discharged employee’s private counsel regarding strategy. The employer (which was the State) subpoenaed the union representative and the union’s grievance file for a deposition, including all communications between the union representative and the employee’s private counsel.
The Court recognized that no existing privilege (including the attorney-client privilege) covered these types of communications, so it decided to create a new privilege under Alaska’s Rules of Evidence, which provides that no person has a privilege “[e]xcept as otherwise provided ... by these or other rules promulgated by the Alaska Supreme Court ....” Although the New York courts (for New York public sector employees) and the National Labor Relations Board (for private sector employees) had protected certain communications between union representatives and employees, those decisions involved attempts to gain access to communications while the disciplinary or grievance proceedings were pending. The Alaska Supreme Court’s ruling appears to be the first to provide protection after those proceedings have concluded and covering communications with a private attorney (who was contractually excluded from the disciplinary/grievance process) involving strategy for a court action.
The Court did establish two limitations on this new privilege. First, “[l]ike the attorney-client privilege, the union-relations privilege extends only to communications, not to underlying facts.” Thus, a union representative who also is a fact witness to certain events cannot refuse to provide relevant information under the guise of a privilege. Second, “the privilege is applicable only when the union representative is acting in an official union role because protecting informal conversations would extend the privilege too far, unnecessarily burdening the search for truth.”
Ohio does not have such a union-relations privilege, and it remains to be seen whether any such privilege would be established. Ohio’s Rules of Evidence have a similarly broad, but not precisely worded, rule that allows the courts to establish privileges under the common law. To this point, there are no cases where a union or an employee has attempted to assert such a privilege.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about union-relations or labor & employment law, please contact George (gsc@zrlaw.com) at 216.696.4441.
Thursday, June 28, 2012
U.S. Supreme Court Upholds PPACA'S "Individual Mandate" as a "Tax"
*By George S. Crisci, Esq.
This morning, the U.S. Supreme Court, by a 5-4 vote, upheld the “individual mandate” portion of the Patient Protection and Affordable Care Act (“PPACA”) as a “tax” and also upheld most of PPACA against constitutional challenges. The Court reasoned that the penalty paid by persons who violate the mandate to obtain health insurance is constitutional under Congress’ power to tax. The majority, however, rejected the argument that the mandate is constitutional under Congress’ Commerce Clause powers. That conclusion, though, does not affect either the constitutionality or ultimate enforcement of the individual mandate. The Court also upheld other challenged portions of PPACA. However, it narrowly construed the requirement that States comply with new eligibility requirements for Medicaid or risk losing their funding, holding that the provision is constitutional as long as States would only lose new funds if they did not comply with the new requirements, rather than all of their funding. The vote was surprising, with Chief Justice Roberts joining the Court’s “liberals” in the majority and Justice Kennedy (the perceived “swing vote”) joining the conservatives in the dissent. We will have a more detailed analysis in the very near future.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about the PPACA or labor & employment law, please contact George (gsc@zrlaw.com) at 216.696.4441.
This morning, the U.S. Supreme Court, by a 5-4 vote, upheld the “individual mandate” portion of the Patient Protection and Affordable Care Act (“PPACA”) as a “tax” and also upheld most of PPACA against constitutional challenges. The Court reasoned that the penalty paid by persons who violate the mandate to obtain health insurance is constitutional under Congress’ power to tax. The majority, however, rejected the argument that the mandate is constitutional under Congress’ Commerce Clause powers. That conclusion, though, does not affect either the constitutionality or ultimate enforcement of the individual mandate. The Court also upheld other challenged portions of PPACA. However, it narrowly construed the requirement that States comply with new eligibility requirements for Medicaid or risk losing their funding, holding that the provision is constitutional as long as States would only lose new funds if they did not comply with the new requirements, rather than all of their funding. The vote was surprising, with Chief Justice Roberts joining the Court’s “liberals” in the majority and Justice Kennedy (the perceived “swing vote”) joining the conservatives in the dissent. We will have a more detailed analysis in the very near future.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about the PPACA or labor & employment law, please contact George (gsc@zrlaw.com) at 216.696.4441.
Tuesday, June 26, 2012
EMPLOYMENT LAW QUARTERLY | Summer 2012, Volume XIV, Issue ii
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After a five-year battle, Indiana became smoke-free on July 1, 2012 joining thirty-nine other states with similar smoking bans. The Indiana ban prohibits smoking in public places, places of employment, and government vehicles. The new law defines “place of employment” broadly as “an enclosed area of a structure that is a place of employment.” In addition, the law prohibits smoking within eight feet of a public entrance to a “public place” or “place of employment.” However, employers may designate smoking areas that are located outside the employment structure and eight feet from all public entrances.
While the vast majority of Indiana employers are required to comply with the new law, some exceptions include bars, gambling facilities, and private clubs. All other Indiana employers must remove all ashtrays and smoking paraphernalia from their premises, unless the employers are displaying the ashtrays or other smoking paraphernalia for retail sale. Employers and operators must also post signs at each public entrance informing entrants that “no smoking is permitted within eight feet of any public entrance.” If a “place of employment” is also a “public place” – and many are – the owner, operator, manager, or official in charge must also: post conspicuous signs in the public place that read “Smoking is Prohibited by State Law” or other similar language; ask anyone smoking in violation of the Act to cease smoking; and cause anyone who refuses to cease smoking “to be removed from the public place.”
Under the new law, employers must inform current employees and applicants of the prohibition. Therefore, Z&R recommends that Indiana employers add the smoking prohibition to their employment applications and handbooks. The state law specifically authorizes local governments to enact more restrictive ordinances. Thus, employers must also comply with any more restrictive local ordinances if they exist. Violations of the state smoking ban include fines up to $1,000.
*Ami J. Patel has experience representing employers in all types of labor and employment matters. Ami also has experience assisting employers with state-specific compliance issues. Please contact Ami (ajp@zrlaw.com) at 216.696.4441 for any questions on Indiana’s smoking ban.
The Equal Employment Opportunity Commission (“EEOC”) issued new enforcement guidance regarding the use of arrests and convictions in employment decisions. The EEOC last issued guidance on this issue over twenty years ago.
The EEOC enforces Title VII of the Civil Rights Act of 1964 (“Title VII”) which prohibits employment discrimination based on race, color, religion, sex, or national origin. Title VII does not list “criminal record” as a protected status against employment discrimination. Therefore, whether an employer’s reliance on a criminal record violates Title VII depends on whether it is part of a claim of employment discrimination based on race, color, religion, sex, or national origin.
The guidance describes the circumstances under which the use of arrest and conviction records in hiring may violate Title VII. Similar to prior EEOC guidance, the new EEOC guidance encourages the use of the Green factors. See Green v. Missouri Pacific Railroad Company, 523 F.2d 1158, 1160 (8th Cir. 1975). In Green, the court outlines factors employers should consider when making employment decisions based on an employee’s or applicant’s criminal history. The Green factors are:
The EEOC suggests employers should conduct an individualized assessment when making employment decisions on criminal history.The new guidance focuses on how an employer can show the exclusion is job-related and consistent with business necessity. The EEOC discusses two circumstances in which an employer's criminal conviction policy will “consistently meet” Title VII's “job-related and consistent with business necessity” defense. According to the EEOC, employers can validate their use of background screening policies and practices or develop a targeted screen using the Green factors. If the employer develops a targeted screen, the employer must provide employees with criminal records an opportunity for an “individualized assessment.”
The guidance acknowledges that Title VII does not necessarily require an individualized assessment; however, the guidance strongly suggests that employers use an “individualized assessment” in these circumstances. The individualized assessment would consist of:
The EEOC offers best practice tips for employers that include:
The Massachusetts Criminal Offender Record Information ("CORI") law created a new method and database for employers to access criminal records. CORI imposes a host of new obligations for employers. As previously reported by Z&R, part of the "ban the box" law became effective in 2010. The "ban the box" provision mandates employers remove all questions seeking information about an applicant's criminal record or criminal history on "initial written employment applications."
In addition to the "ban the box" requirement, Massachusetts employers must also maintain several CORI records and policies. The significant changes include:
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment law, has experience representing employers in all types of labor and employment matters. Stephen also has experience assisting employers with state-specific compliance issues. Please contact Stephen (ssz@zrlaw.com) at 216.696.4441 for any questions on the new prohibitions under Massachusetts law.
In U.S. Equal Employment Opportunity Commission v. Dillard’s, Inc., et al., the Southern District of California held that a company’s attendance policy which required an employee to submit a doctor’s note stating “the nature of the absence” and “the condition being treated” was an impermissible disability-related inquiry under the Americans with Disabilities Act, 42 U.S.C. § 12112(d)(4)(A) (“ADA”).
The ADA prohibits an employer from “making inquiries of an employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity.” However, an employer “may make inquiries into the ability of an employee to perform job-related functions.” See 42 U.S.C. § 12112(d)(4)(B).
Dillard’s, Inc. El Centro Store (“Dillard’s”) had an attendance policy that would not excuse an employee’s health-related absence unless the employee submitted a doctor’s note stating “the nature of the absence (such as a migraine, high blood pressure, etc…)” and “the condition being treated.” Dillard’s terminated any employee who accumulated four unexcused absences of any kind. Three separate employees experienced difficulty in getting health-related absences approved because the doctor’s notes they submitted did not state the medical conditions that led to their absences. After bringing their concerns to the Equal Employment Opportunity Commission (“EEOC”), the EEOC brought a suit against Dillard’s on behalf of 60 individuals, claiming these individuals also were subjected to Dillard’s allegedly unlawful attendance policy. Dillard’s rescinded the attendance policy in July 2007. However, the EEOC still pursued this case on behalf of the individuals affected under the policy from 2005-2007.
The EEOC defines a “disability-related inquiry” as a question that is likely to elicit information about a disability. For example, the EEOC allows an employer to ask questions about an employee’s general well-being, whether they can perform job functions, and about current illegal drug use. Here, however, the EEOC argued that requiring the employee to disclose the health condition was a “disability-related inquiry.” Dillard’s argued that the attendance policy did not violate the plain language of the statute.
The court relied on two court decisions to find that the attendance policy made impermissible inquiries into medical conditions. First, the court relied on Conroy v. New York Department of Correctional Services, 333 F.3d 88 (2d Cir. 2003). In Conroy, the court found that an inquiry regarding a “general diagnosis” may tend to reveal a disability violating § 12112(d)(4)(A). Likewise, in Indergard v. Georgia-Pacific Corporation, 582 F.3d 1049 (9th Cir. 2009) the court found a policy impermissible which required employees to submit to a physical capacity evaluation prior to returning to work from medical leave. The Indergard court stated that an employer could inquire “into the ability of an employee to perform job-related functions,” but that it could not require a medical examination unless such examination was job-related and consistent with business necessity. Based on Conroy and Indergard, the Court concluded that Dillard’s attendance policy, on its face, permitted supervisors to conduct impermissible disability-related inquiries under the ADA. In response, Dillard’s failed to show both job-relatedness and business necessity to know the nature of the employee’s medical condition.
Employers must remain vigilant, especially in light of recent amendments that make it easier for employees to be “disabled” under the law, that their absence policies do not make impermissible inquiries into health conditions. Employers must also train managers and human resources professionals on what types of questions constitute impermissible inquiries.
*B. Jason Rossiter practices in all areas of labor & employment law and has extensive experience representing employers in disability discrimination matters. If you have any questions about your attendance policy or whether an inquiry will be permissible, contact Zashin & Rich at 216.696.4441.
Earlier this year, the Equal Employment Opportunity Commission (“EEOC”) released a decision stating that Title VII sex discrimination claims include discrimination against transgender individuals. By definition, transgender individuals self-identify as a different gender from their biological sex at birth.
The Bureau of Alcohol, Tobacco, Firearms (“ATF”) denied Mia Macy, a transgender woman, a position as a ballistics technician after she announced she was transitioning from male to female. Ms. Macy had several conversations with the lab director who allegedly told her that the position was hers, subject to a background check. During the process, she informed the lab director of her transition. A few days later, she received an email stating that the job was no longer available due to budget restrictions. However, Ms. Macy later learned that the ATF hired someone else.
Ms. Macy filed a formal internal complaint with the ATF claiming “sex stereotyping” and “gender identity” discrimination. However, the ATF only accepted her claim “based on sex (female)” under Title VII as part of its complaint process. Ms. Macy then appealed to the EEOC, which serves as an appellate tribunal for final ATF decisions and the EEOC reversed the ATF’s final decision.
The EEOC determined that the term “sex” encompasses both the biological differences between men and woman, as well as gender differences. Title VII thus bars not just discrimination on the basis of biological sex, but also on the basis of gender stereotyping—targeting someone for failing to act and appear according to expectations defined by gender. The EEOC found that if an employer intentionally discriminates against an applicant or employee because he or she is transgender, such discrimination is by definition unlawful sex discrimination.
Employers should review their employment policies and practices and consider revising them to conform to the EEOC’s decision. In some instances, employers may have to create new policies. Some policies and/or procedures that may need to be updated include:
If you are interested in attending, please RSVP to Cassandra by Thursday October 11: cflanigan@cedarbrookfinancial.com or by phone 440.683.9240- Indiana Prohibits Smoking in Places of Employment
- The EEOC Issues Guidance on Criminal Background Checks and Suggests Focusing on Individualized Assessments
- Massachusetts Criminal Background Check Law Adds to the "Ban the Box" Requirement
- Tread Lightly When Inquiring Into Employee Absences – Asking for a Doctor's Note May Violate the ADA
- EEOC Clarifies that Title VII Protects Transgendered Individuals from Employment Discrimination
- Z&R Shorts
Indiana Prohibits Smoking in Places of Employment
by Ami J. Patel*After a five-year battle, Indiana became smoke-free on July 1, 2012 joining thirty-nine other states with similar smoking bans. The Indiana ban prohibits smoking in public places, places of employment, and government vehicles. The new law defines “place of employment” broadly as “an enclosed area of a structure that is a place of employment.” In addition, the law prohibits smoking within eight feet of a public entrance to a “public place” or “place of employment.” However, employers may designate smoking areas that are located outside the employment structure and eight feet from all public entrances.
While the vast majority of Indiana employers are required to comply with the new law, some exceptions include bars, gambling facilities, and private clubs. All other Indiana employers must remove all ashtrays and smoking paraphernalia from their premises, unless the employers are displaying the ashtrays or other smoking paraphernalia for retail sale. Employers and operators must also post signs at each public entrance informing entrants that “no smoking is permitted within eight feet of any public entrance.” If a “place of employment” is also a “public place” – and many are – the owner, operator, manager, or official in charge must also: post conspicuous signs in the public place that read “Smoking is Prohibited by State Law” or other similar language; ask anyone smoking in violation of the Act to cease smoking; and cause anyone who refuses to cease smoking “to be removed from the public place.”
Under the new law, employers must inform current employees and applicants of the prohibition. Therefore, Z&R recommends that Indiana employers add the smoking prohibition to their employment applications and handbooks. The state law specifically authorizes local governments to enact more restrictive ordinances. Thus, employers must also comply with any more restrictive local ordinances if they exist. Violations of the state smoking ban include fines up to $1,000.
*Ami J. Patel has experience representing employers in all types of labor and employment matters. Ami also has experience assisting employers with state-specific compliance issues. Please contact Ami (ajp@zrlaw.com) at 216.696.4441 for any questions on Indiana’s smoking ban.
The Equal Employment Opportunity Commission Issues Guidance on Criminal Background Checks and Suggests Focusing on Individualized Assessments
by Patrick M. WattsThe Equal Employment Opportunity Commission (“EEOC”) issued new enforcement guidance regarding the use of arrests and convictions in employment decisions. The EEOC last issued guidance on this issue over twenty years ago.
The EEOC enforces Title VII of the Civil Rights Act of 1964 (“Title VII”) which prohibits employment discrimination based on race, color, religion, sex, or national origin. Title VII does not list “criminal record” as a protected status against employment discrimination. Therefore, whether an employer’s reliance on a criminal record violates Title VII depends on whether it is part of a claim of employment discrimination based on race, color, religion, sex, or national origin.
The guidance describes the circumstances under which the use of arrest and conviction records in hiring may violate Title VII. Similar to prior EEOC guidance, the new EEOC guidance encourages the use of the Green factors. See Green v. Missouri Pacific Railroad Company, 523 F.2d 1158, 1160 (8th Cir. 1975). In Green, the court outlines factors employers should consider when making employment decisions based on an employee’s or applicant’s criminal history. The Green factors are:
- The nature or gravity of the offense or conduct;
- The time elapsed since the offense, conviction, and/or completion of the sentence; and
- The nature of the job sought or held.
The EEOC suggests employers should conduct an individualized assessment when making employment decisions on criminal history.The new guidance focuses on how an employer can show the exclusion is job-related and consistent with business necessity. The EEOC discusses two circumstances in which an employer's criminal conviction policy will “consistently meet” Title VII's “job-related and consistent with business necessity” defense. According to the EEOC, employers can validate their use of background screening policies and practices or develop a targeted screen using the Green factors. If the employer develops a targeted screen, the employer must provide employees with criminal records an opportunity for an “individualized assessment.”
The guidance acknowledges that Title VII does not necessarily require an individualized assessment; however, the guidance strongly suggests that employers use an “individualized assessment” in these circumstances. The individualized assessment would consist of:
- notice to the individual that he or she has been screened out because of a criminal conviction;
- an opportunity for the individual to demonstrate that the exclusion should not be applied due to his or her particular circumstances; and
- consideration by the employer as to whether the additional information provided by the individual warrants an exception to the exclusion and shows that the policy as applied is not job-related and consistent with business necessity.
- the facts and circumstances surrounding the offense or conduct;
- the number of offenses for which the individual was convicted;
- the age of the individual at the time of conviction or release, as evidence suggests that recidivism rates tend to decline as ex-offenders’ ages increase;
- any evidence that the individual performed the same type of work, post-conviction, with the same or a different employer, with no known incidents of criminal conduct;
- the length and consistency of employment history before and after the offense or conduct;
- rehabilitation efforts, including education or training;
- employment or character references and any information regarding fitness for the particular position; and
- whether the individual is bonded.
The EEOC offers best practice tips for employers that include:
- Eliminating policies that impose an absolute bar to employment based on any conviction;
- Training hiring managers about appropriate use of conviction history in hiring and promotion and separation;
- Tailoring screening procedures to ensure that they are job-related and consistent with business necessity;
- Prohibiting asking applicants for disclosure of convictions that are not job-related and consistent with business necessity; and
- Keeping information about applicants’ and employees' conviction history confidential.
Massachusetts Criminal Background Check Law Adds to the "Ban the Box" Requirement
by Stephen S. Zashin*The Massachusetts Criminal Offender Record Information ("CORI") law created a new method and database for employers to access criminal records. CORI imposes a host of new obligations for employers. As previously reported by Z&R, part of the "ban the box" law became effective in 2010. The "ban the box" provision mandates employers remove all questions seeking information about an applicant's criminal record or criminal history on "initial written employment applications."
In addition to the "ban the box" requirement, Massachusetts employers must also maintain several CORI records and policies. The significant changes include:
- Employer Access
CORI data soon will be available to all employers via a new Web-based criminal background database, known as "iCORI."
- Notification Requirements
Employers must provide applicants and current employees with a copy of their criminal history reports before either questioning them about the reports or making adverse employment decisions based on the information therein. This requirement applies to all criminal background information, regardless of whether it is obtained through iCORI.
- Record-keeping Requirements
Employers that receive CORI data must obtain signed acknowledgment forms before conducting a search, and employers must keep the record for one year from the date of the request for information.
- Dissemination Restrictions
Employers may share CORI data only with employees that have a need to know the information. Employers also must keep a log of all persons with whom they share CORI data for a year after the date of dissemination.
- Data Storage
Employers are required to store hard copies of CORI data in locked and secured locations. Electronically stored data must be password-protected and properly encrypted.
- Written Policy Requirements
Employers that annually conduct five or more criminal background investigations must maintain a written CORI policy. This policy must indicate that the employer will notify applicants of any potential adverse decision based on CORI information, provide applicants with their CORI report and the employer policy, and provide information concerning the process for correcting a criminal record.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment law, has experience representing employers in all types of labor and employment matters. Stephen also has experience assisting employers with state-specific compliance issues. Please contact Stephen (ssz@zrlaw.com) at 216.696.4441 for any questions on the new prohibitions under Massachusetts law.
Tread Lightly When Inquiring Into Employee Absences – Asking for a Doctor’s Note May Violate the ADA
by B. Jason Rossiter*In U.S. Equal Employment Opportunity Commission v. Dillard’s, Inc., et al., the Southern District of California held that a company’s attendance policy which required an employee to submit a doctor’s note stating “the nature of the absence” and “the condition being treated” was an impermissible disability-related inquiry under the Americans with Disabilities Act, 42 U.S.C. § 12112(d)(4)(A) (“ADA”).
The ADA prohibits an employer from “making inquiries of an employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity.” However, an employer “may make inquiries into the ability of an employee to perform job-related functions.” See 42 U.S.C. § 12112(d)(4)(B).
Dillard’s, Inc. El Centro Store (“Dillard’s”) had an attendance policy that would not excuse an employee’s health-related absence unless the employee submitted a doctor’s note stating “the nature of the absence (such as a migraine, high blood pressure, etc…)” and “the condition being treated.” Dillard’s terminated any employee who accumulated four unexcused absences of any kind. Three separate employees experienced difficulty in getting health-related absences approved because the doctor’s notes they submitted did not state the medical conditions that led to their absences. After bringing their concerns to the Equal Employment Opportunity Commission (“EEOC”), the EEOC brought a suit against Dillard’s on behalf of 60 individuals, claiming these individuals also were subjected to Dillard’s allegedly unlawful attendance policy. Dillard’s rescinded the attendance policy in July 2007. However, the EEOC still pursued this case on behalf of the individuals affected under the policy from 2005-2007.
The EEOC defines a “disability-related inquiry” as a question that is likely to elicit information about a disability. For example, the EEOC allows an employer to ask questions about an employee’s general well-being, whether they can perform job functions, and about current illegal drug use. Here, however, the EEOC argued that requiring the employee to disclose the health condition was a “disability-related inquiry.” Dillard’s argued that the attendance policy did not violate the plain language of the statute.
The court relied on two court decisions to find that the attendance policy made impermissible inquiries into medical conditions. First, the court relied on Conroy v. New York Department of Correctional Services, 333 F.3d 88 (2d Cir. 2003). In Conroy, the court found that an inquiry regarding a “general diagnosis” may tend to reveal a disability violating § 12112(d)(4)(A). Likewise, in Indergard v. Georgia-Pacific Corporation, 582 F.3d 1049 (9th Cir. 2009) the court found a policy impermissible which required employees to submit to a physical capacity evaluation prior to returning to work from medical leave. The Indergard court stated that an employer could inquire “into the ability of an employee to perform job-related functions,” but that it could not require a medical examination unless such examination was job-related and consistent with business necessity. Based on Conroy and Indergard, the Court concluded that Dillard’s attendance policy, on its face, permitted supervisors to conduct impermissible disability-related inquiries under the ADA. In response, Dillard’s failed to show both job-relatedness and business necessity to know the nature of the employee’s medical condition.
Employers must remain vigilant, especially in light of recent amendments that make it easier for employees to be “disabled” under the law, that their absence policies do not make impermissible inquiries into health conditions. Employers must also train managers and human resources professionals on what types of questions constitute impermissible inquiries.
*B. Jason Rossiter practices in all areas of labor & employment law and has extensive experience representing employers in disability discrimination matters. If you have any questions about your attendance policy or whether an inquiry will be permissible, contact Zashin & Rich at 216.696.4441.
Equal Employment Opportunity Commission Clarifies that Title VII Protects Transgendered Individuals from Employment Discrimination
by Stefanie L. BakerEarlier this year, the Equal Employment Opportunity Commission (“EEOC”) released a decision stating that Title VII sex discrimination claims include discrimination against transgender individuals. By definition, transgender individuals self-identify as a different gender from their biological sex at birth.
The Bureau of Alcohol, Tobacco, Firearms (“ATF”) denied Mia Macy, a transgender woman, a position as a ballistics technician after she announced she was transitioning from male to female. Ms. Macy had several conversations with the lab director who allegedly told her that the position was hers, subject to a background check. During the process, she informed the lab director of her transition. A few days later, she received an email stating that the job was no longer available due to budget restrictions. However, Ms. Macy later learned that the ATF hired someone else.
Ms. Macy filed a formal internal complaint with the ATF claiming “sex stereotyping” and “gender identity” discrimination. However, the ATF only accepted her claim “based on sex (female)” under Title VII as part of its complaint process. Ms. Macy then appealed to the EEOC, which serves as an appellate tribunal for final ATF decisions and the EEOC reversed the ATF’s final decision.
The EEOC determined that the term “sex” encompasses both the biological differences between men and woman, as well as gender differences. Title VII thus bars not just discrimination on the basis of biological sex, but also on the basis of gender stereotyping—targeting someone for failing to act and appear according to expectations defined by gender. The EEOC found that if an employer intentionally discriminates against an applicant or employee because he or she is transgender, such discrimination is by definition unlawful sex discrimination.
Employers should review their employment policies and practices and consider revising them to conform to the EEOC’s decision. In some instances, employers may have to create new policies. Some policies and/or procedures that may need to be updated include:
- Equal Employment Opportunity non-discrimination and harassment policies;
- Pre-employment screening policies;
- Employee codes of conduct;
- Dress codes and appearance policies;
- Use of pronouns;
- Procedures to change information, e.g., personnel records to reflect gender change identity; and
- Policies regarding use of restrooms, locker rooms, and other gender-specific facilities.
Z&R Shorts
Soon To Be Expired Form I-9 To Remain Valid
The current Form I-9 is set to expire on August 31, 2012. The expiration date is on the upper right hand corner of the form. However, the U.S. Citizenship and Immigration Services (“USCIS”) announced earlier this month that the form would remain valid beyond this expiration date. As such, employers should continue to use the current Form I-9, until further notice from the USCIS.American Arbitration Association University
George Crisci will be part of the panel presenting “Grievance Processing” on September 13, 2012, at the Cleveland Metropolitan Bar Association, 1301 East Ninth Street, Second Level, Cleveland, Ohio. To register go to www.aaau.org.2012 Masters Series: Employment Law CLE seminar
Stephen Zashin will co-present “Wage/Hour Litigation” on September 18, 2012 at the Columbus Bar Association, 175 South Third Street, Suite 1100, Columbus, Ohio. To register go to www.cbalaw.org.ACI’s 16th National Forum on Wage & Hour Claims and Class Actions
Stephen Zashin will be part of the panel presenting “Arbitrating Wage & Hour in the Wake of AT&T Mobility and D.R. Horton on September 28, 2012 at the Hilton San Francisco Financial District in San Francisco, California. To register go to AmericanConference.com/WageHourSNF.49th Annual Midwest Labor and Employment Law Seminar
Stephen Zashin will be part of the panel presenting “Managing Cost of E-Discovery” on October 12, 2012 at the Hilton, Easton Town Center in Columbus, Ohio. To register go to www.ohiobar.org.Health Care Reform… How will it affect you?
Pat Hoban is the keynote speaker for the FREE seminar and breakfast presented by Cedar Brook Financial Partners on Tuesday, October 16th, 2012 at 9:00am at Cedar Brook Financial Partners, 5885 Landerbrook Drive, Mayfield Heights, Ohio 44124. Seminar will take place in the Garage Level Conference RoomLabor Law Seminar presented by Faulkner, Hoffman & Phillips, LLC
Jon Dileno will co-present “Grievance/Arbitration Processing Strategy” on October 29, 2012 at the FOP 67 Lodge Hall.American Bar Association Section of Labor and Employment Law
6th Annual Labor and Employment Law ConferenceGeorge Crisci will be part of the panel presenting “One Year After Wisconsin and Ohio – The State of the Public Sector” on November 2, 2012, at the Westin Peachtree Plaza, 210 Peachtree St SW. Atlanta, GA. To register go to www.americanbar.org.
Wednesday, June 20, 2012
Supreme Court Finds Pharmaceutical Sales Representatives Exempt From Overtime Compensation Under the Fair Labor Standards Act
*By Stephen S. Zashin
On Monday, June 18, 2012, the U.S. Supreme Court issued its highly-anticipated opinion in Christopher v. SmithKline Beecham Corp., addressing whether pharmaceutical sales representatives qualify for the “outside sales” overtime exemption under the Fair Labor Standards Act. The Court, by a 5-4 vote, held that pharmaceutical sales representatives do indeed qualify for this exemption and are exempt from overtime. In the process, the Court steamrolled right over arguments and interpretations to the contrary that had been made by the U.S. Department of Labor (“DOL”).
The FLSA generally requires that employers pay employees at a premium overtime rate for hours worked in excess of 40 in a workweek. However, the FLSA contains many exemptions from this requirement. One of those exemptions covers people who are “employed … in the capacity of outside salesman.” 29 U.S.C. § 213(a)(1).
The FLSA does not define what is meant by the phrase “outside salesman,” though DOL regulations provide that this exemption covers employees whose primary duty is either “making sales” or “obtaining orders” and who are customarily and regularly away from the employer’s places of business while so doing (see 29 C.F.R. § 541.500(a)(1)-(2)).
This case turned on what the above language means – more specifically, what it means to “sell” something.
The pharmaceutical sales reps in this case – urged by the DOL – argued that they are not “selling” because the reps are not obtaining actual orders or binding commitments from doctors to purchase anything. Indeed, industry rules generally forbid them from actually hawking drugs in exchange for firm orders. The doctors placed their actual orders for drugs with third party distributors, not with these sales representatives. Instead, the sales reps would call upon doctors’ offices, talk up their drug companies’ products, hand out free samples, notepads, clippies, and whatnot—and hopefully obtain the doctor’s “nonbinding commitment” to prescribe the medication in question if doing so was medically appropriate. If and when the doctors followed through, the sales representatives received a commission.
The Court noted that the FLSA’s use of the word “capacity” when describing the exemption (“…employed … in the capacity of outside salesman…”) suggested a “functional, rather than a formal, inquiry” into whether the exemption applied, and functional approaches require a hard look at the context, rather than rigid application to objective tests. The Supreme Court also pointed out that the FLSA itself defines sale very broadly, covering not just the actual hawking of orders, but “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” 29 U.S.C. § 203(k). From this, the Supreme Court concluded that these pharmaceutical sales reps “bear all of the external indicia of salesman,” in that they are hired for their sales experience, trained to close sales, work away from the office with minimal supervision, and are paid on an incentive basis.
Along the way to its conclusion, the Supreme Court gave no deference whatsoever to the DOL’s own interpretation of the statutory and regulatory language above. The DOL had previously submitted briefs in other cases arguing for a more restrictive view of the outside sales exemption, but its reasoning and its interpretation had waffled over time—a fact noted by the Court. By the time the Christopher case hit the Supreme Court’s docket, the DOL was claiming that “[a]n employee does not make a ‘sale’ for purposes of the ‘outside salesman’ exemption unless he actually transfers title to the property at issue.”The Court held that this interpretation was not only wrong in light of the statutory language, but entitled to no deference at all because it was “flatly inconsistent with the FLSA,” which imposed no such limitation concerning transfers of title.
What’s next? The pharmaceutical industry’s field sales force is somewhat unique—in most other field sales roles, it is usually clearer that employees are engaged in activities that fit more squarely into the FLSA’s definition of a “sale.” Thus, the application of the literal holding in this case in the real world may be somewhat limited – Christopher may put the kibosh on FLSA-based overtime suits by pharmaceutical sales representatives, but may do little else.
The real impact of Christopher may be in its rejection of a federal agency’s interpretation of the law. It is rare to see the Supreme Court decline to give deference to a federal agency—especially when the agency in question is attempting to interpret the very law that it was tasked to interpret. Other DOL interpretations of the FLSA may be similarly suspect, especially where (as here) the interpretation arguably butts heads with the text of the FLSA itself. There are innumerable “fuzzy” corners around the other FLSA exemptions — most notably the administrative exemption—where existing laws and regulations are less than clear. Overtime lawsuits abound in these areas. Employers should continue to tread carefully around all FLSA exemptions, though Christopher shows a possible way out should the DOL come calling.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about the FLSA or labor & employment law, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
On Monday, June 18, 2012, the U.S. Supreme Court issued its highly-anticipated opinion in Christopher v. SmithKline Beecham Corp., addressing whether pharmaceutical sales representatives qualify for the “outside sales” overtime exemption under the Fair Labor Standards Act. The Court, by a 5-4 vote, held that pharmaceutical sales representatives do indeed qualify for this exemption and are exempt from overtime. In the process, the Court steamrolled right over arguments and interpretations to the contrary that had been made by the U.S. Department of Labor (“DOL”).
The FLSA generally requires that employers pay employees at a premium overtime rate for hours worked in excess of 40 in a workweek. However, the FLSA contains many exemptions from this requirement. One of those exemptions covers people who are “employed … in the capacity of outside salesman.” 29 U.S.C. § 213(a)(1).
The FLSA does not define what is meant by the phrase “outside salesman,” though DOL regulations provide that this exemption covers employees whose primary duty is either “making sales” or “obtaining orders” and who are customarily and regularly away from the employer’s places of business while so doing (see 29 C.F.R. § 541.500(a)(1)-(2)).
This case turned on what the above language means – more specifically, what it means to “sell” something.
The pharmaceutical sales reps in this case – urged by the DOL – argued that they are not “selling” because the reps are not obtaining actual orders or binding commitments from doctors to purchase anything. Indeed, industry rules generally forbid them from actually hawking drugs in exchange for firm orders. The doctors placed their actual orders for drugs with third party distributors, not with these sales representatives. Instead, the sales reps would call upon doctors’ offices, talk up their drug companies’ products, hand out free samples, notepads, clippies, and whatnot—and hopefully obtain the doctor’s “nonbinding commitment” to prescribe the medication in question if doing so was medically appropriate. If and when the doctors followed through, the sales representatives received a commission.
The Court noted that the FLSA’s use of the word “capacity” when describing the exemption (“…employed … in the capacity of outside salesman…”) suggested a “functional, rather than a formal, inquiry” into whether the exemption applied, and functional approaches require a hard look at the context, rather than rigid application to objective tests. The Supreme Court also pointed out that the FLSA itself defines sale very broadly, covering not just the actual hawking of orders, but “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” 29 U.S.C. § 203(k). From this, the Supreme Court concluded that these pharmaceutical sales reps “bear all of the external indicia of salesman,” in that they are hired for their sales experience, trained to close sales, work away from the office with minimal supervision, and are paid on an incentive basis.
Along the way to its conclusion, the Supreme Court gave no deference whatsoever to the DOL’s own interpretation of the statutory and regulatory language above. The DOL had previously submitted briefs in other cases arguing for a more restrictive view of the outside sales exemption, but its reasoning and its interpretation had waffled over time—a fact noted by the Court. By the time the Christopher case hit the Supreme Court’s docket, the DOL was claiming that “[a]n employee does not make a ‘sale’ for purposes of the ‘outside salesman’ exemption unless he actually transfers title to the property at issue.”The Court held that this interpretation was not only wrong in light of the statutory language, but entitled to no deference at all because it was “flatly inconsistent with the FLSA,” which imposed no such limitation concerning transfers of title.
What’s next? The pharmaceutical industry’s field sales force is somewhat unique—in most other field sales roles, it is usually clearer that employees are engaged in activities that fit more squarely into the FLSA’s definition of a “sale.” Thus, the application of the literal holding in this case in the real world may be somewhat limited – Christopher may put the kibosh on FLSA-based overtime suits by pharmaceutical sales representatives, but may do little else.
The real impact of Christopher may be in its rejection of a federal agency’s interpretation of the law. It is rare to see the Supreme Court decline to give deference to a federal agency—especially when the agency in question is attempting to interpret the very law that it was tasked to interpret. Other DOL interpretations of the FLSA may be similarly suspect, especially where (as here) the interpretation arguably butts heads with the text of the FLSA itself. There are innumerable “fuzzy” corners around the other FLSA exemptions — most notably the administrative exemption—where existing laws and regulations are less than clear. Overtime lawsuits abound in these areas. Employers should continue to tread carefully around all FLSA exemptions, though Christopher shows a possible way out should the DOL come calling.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment Law, represents public and private employers in all aspects of workplace law. For more information about the FLSA or labor & employment law, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
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