*By Michele L. Jakubs
As part of an Amendment to the Ohio Constitution, Ohio’s minimum wage will increase by thirty cents on January 1, 2012. The Amendment provides for an increase, tied to the rate of inflation, every January 1st. The think tank Policy Matters Ohio estimates 347,000 Ohio workers will see an increase in wages.
The hourly rate for workers 16 years and older who do not receive tips will increase thirty cents to $7.70 per hour. Tipped employees’ hourly rate will increase fifteen cents, to $3.85 per hour. This new wage affects employers who gross more than $283,000 annually, up from the current $271,000 threshold.
Employers who gross less than $283,000 annually must pay their employees the federal minimum wage, currently set at $7.25 per hour. Fourteen and 15-year old employees must receive $7.25 per hour, regardless of company revenue. Minimum-wage workers in other states, including Arizona, Colorado, Florida, Montana, Oregon, Vermont, and Washington will also see an increase in their paychecks on January 1, 2012.
If you have any questions about complying with these new wage increases, please contact Michele L. Jakubs.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience in all aspects of workplace law, including wage and hour compliance. For more information about employment law, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
Tuesday, December 27, 2011
Wednesday, November 9, 2011
SB 5 Repealed: Now What??
*By George S. Crisci
As all of you now know, Ohio’s voters repealed Senate Bill 5 by more than 60% of the vote. This outcome is consistent with the polling data that had been conducted since last August, so the outcome was not surprising.
This outcome raises serious questions about what will happen next. There is a two-part answer.
First, Senate Bill 5 never went into effect. The successful petition drive that put the repeal referendum on the ballot delayed its effective date, if at all, until after referendum. Ohio already has a collective bargaining law and related public sector employment laws (e.g., civil service, teacher tenure, etc.); those laws remained in effective throughout the referendum campaign; and they remain in effect today. Our best suggestion is to continue living with the terms of the existing laws that had developed over the years and before Senate Bill 5 ever surfaced.
Second, there are some aspects of Senate Bill 5 that also were included in the biennial appropriations bill. Those changes survive the referendum, because a referendum cannot repeal an appropriations measure. Those changes address: (1) licensure examinations, evaluations, performance-based compensation and layoffs for public school teachers; (2) laying off or transferring public school transportation employees and replacing them with independent contractors; (3) limiting sick leave benefits for less than regular full-time public school employees; (4)restructuring low-performing public schools; (5) health care plans requirements for certain political subdivisions; and (6) civil service appointment and promotion selection procedures. Public sector employers who are subject to these provisions in the biennial appropriations bill should continue their efforts to comply. If you have any questions concerning the changes that survived the repeal of Senate Bill 5 or whether you are subject to these requirements, please contact us.
Finally, commentators and political analysts have started discussions about how Governor Kasich and the Republican leadership will respond to the repeal of Senate Bill 5. Any such discussions are grounded in speculation and uncertainty. It is too soon to tell what, if anything, will happen and when it will occur. We will continue to monitor the situation and alert you to any significant and substantive developments.
*George S. Crisci
, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. For more information about legislation affecting the public sector, or any other labor or employment issue, please contact George at 216.696.4441 or gsc@zrlaw.com.
As all of you now know, Ohio’s voters repealed Senate Bill 5 by more than 60% of the vote. This outcome is consistent with the polling data that had been conducted since last August, so the outcome was not surprising.
This outcome raises serious questions about what will happen next. There is a two-part answer.
First, Senate Bill 5 never went into effect. The successful petition drive that put the repeal referendum on the ballot delayed its effective date, if at all, until after referendum. Ohio already has a collective bargaining law and related public sector employment laws (e.g., civil service, teacher tenure, etc.); those laws remained in effective throughout the referendum campaign; and they remain in effect today. Our best suggestion is to continue living with the terms of the existing laws that had developed over the years and before Senate Bill 5 ever surfaced.
Second, there are some aspects of Senate Bill 5 that also were included in the biennial appropriations bill. Those changes survive the referendum, because a referendum cannot repeal an appropriations measure. Those changes address: (1) licensure examinations, evaluations, performance-based compensation and layoffs for public school teachers; (2) laying off or transferring public school transportation employees and replacing them with independent contractors; (3) limiting sick leave benefits for less than regular full-time public school employees; (4)restructuring low-performing public schools; (5) health care plans requirements for certain political subdivisions; and (6) civil service appointment and promotion selection procedures. Public sector employers who are subject to these provisions in the biennial appropriations bill should continue their efforts to comply. If you have any questions concerning the changes that survived the repeal of Senate Bill 5 or whether you are subject to these requirements, please contact us.
Finally, commentators and political analysts have started discussions about how Governor Kasich and the Republican leadership will respond to the repeal of Senate Bill 5. Any such discussions are grounded in speculation and uncertainty. It is too soon to tell what, if anything, will happen and when it will occur. We will continue to monitor the situation and alert you to any significant and substantive developments.
*George S. Crisci
, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. For more information about legislation affecting the public sector, or any other labor or employment issue, please contact George at 216.696.4441 or gsc@zrlaw.com.
Thursday, October 6, 2011
National Labor Relations Board Delays Implementation of Employee Rights Notice Posters Rule
*By Patrick J. Hoban
The National Labor Relations Board (“NLRB”) has postponed the effective date for its new employee rights notice posters rule until January 31, 2012. Previously, most private sector employers were required to post the notice as of November 14, 2011.
The NLRB delayed the effective date after receiving inquiries from business and trade organizations asking whether they fell under the Board’s jurisdiction and needed to comply with the notice requirements. The delay in implementation is designed to allow employers time to determine if the new rule applies to them and ensure broad, voluntary compliance with its requirements.
Importantly, this delay will not affect the rule’s very specific form and content requirements for the poster. Therefore, most private sector employers will still be required to post the 11-by-17 inch notice available through download at www.nlrb.gov/poster or from a regional NLRB office. To ensure compliance, employers must obtain and post the NLRB poster at all its work locations in the same manner that it posts other required employment posters before January 31, 2012.
*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 labor relations. For more information about the new posting rule, its applicability to your business, or the NLRB, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
The National Labor Relations Board (“NLRB”) has postponed the effective date for its new employee rights notice posters rule until January 31, 2012. Previously, most private sector employers were required to post the notice as of November 14, 2011.
The NLRB delayed the effective date after receiving inquiries from business and trade organizations asking whether they fell under the Board’s jurisdiction and needed to comply with the notice requirements. The delay in implementation is designed to allow employers time to determine if the new rule applies to them and ensure broad, voluntary compliance with its requirements.
Importantly, this delay will not affect the rule’s very specific form and content requirements for the poster. Therefore, most private sector employers will still be required to post the 11-by-17 inch notice available through download at www.nlrb.gov/poster or from a regional NLRB office. To ensure compliance, employers must obtain and post the NLRB poster at all its work locations in the same manner that it posts other required employment posters before January 31, 2012.
*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 labor relations. For more information about the new posting rule, its applicability to your business, or the NLRB, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Wednesday, October 5, 2011
Buying or Selling a Business in Ohio? Be Careful to Consider the Impact of Ohio Workers’ Compensation Experience Issues
*By Scott Coghlan
The Franklin County Court of Appeals recently released its decision in State of Ohio ex rel. The K&D Group, Inc. v. Marsha Ryan, Administrator, Ohio Bureau of Workers’ Compensation, 2011-Ohio-5051 (“K&D Group”) upholding the Ohio Bureau of Workers’ Compensation’s (“BWC”) determination that K&D Group, Inc., a property management company, was the successor-in-interest to another property management company despite the fact that neither management company was a party to the sale of the apartment complex at issue.
This decision illustrates the need to include consideration of workers’ compensation transfer of liability issues as part of your due diligence checklist when purchasing, leasing or acquiring business interests or entering into management contracts related to such business interests.
Chapter 4123-17-2 of the Ohio Administrative Code permits the BWC to transfer the workers’ compensation experience rating and liabilities of a predecessor company to the “successor-in-interest.” In practical terms this means that the purchaser is liable to the BWC for all of the seller’s unpaid workers’ compensation premiums and it inherits the seller’s workers’ compensation experience rating. This often leads to higher than expected workers’ compensation premiums.
The K&D Group Court clearly articulated that the BWC can transfer liabilities and experience ratings between entities that are not in privity of contract with one another. At issue in K&D Group was an apartment complex that was operated by a professional management company hired by the owner. The apartment complex was sold by its owner to K&D Enterprises. K&D Enterprises, using several holding companies, eventually caused K&D Group to become the new property management company for the apartments.
Following an audit, the BWC found that K&D Group was a partial successor-in-interest to the prior management company despite the fact that neither management company was involved in the sale of the apartment complex. As a result, it transferred a portion of Mid-America’s experience rating to K&D Group, including a significant workers’ compensation claim that negatively impacted the transferred experience rating.
K&D Group protested the transfer. However, the BWC Adjudicating Committee and the Administrator’s Designee (which are the statutorily assigned entities to which premium rate making appeals are filed) upheld the BWC’s finding of successorship. The matter then was appealed to the Franklin County Court of Appeals.
The Court of Appeals upheld the BWC’s finding of successorship as well. The Court noted that OAC 4123-17-2 does not require an alleged successor to actually acquire something in order to be deemed a successor. Thus, the fact that K&D Group did not purchase the apartment complex or have a contract with the prior management company was irrelevant. The Court found that K&D Group was affiliated with K&D Enterprises (the purchaser of the apartments) despite the use of several holding companies to distance one from the other. It then focused on the management operations of the apartment complex before and after the sale. After stripping away the layers of holding companies employed to complete the assignment of the property management duties to K&D Group, the Court noted that the day-to-day operations of the apartment complex were unchanged before and after the sale; that K&D Group assumed all of the tenants’ prior leases; that it retained many of the prior management company’s former employees and the employees operated under the same manual job classification numbers. As a result, K&D Group was saddled with the prior management company’s workers’ compensation experience rating.
Management contracts are becoming commonplace, particularly in the healthcare industry. This decision reinforces the need to consider the successor-in-interest rules imposed by the BWC and the need to review workers’ compensation experience ratings as part of your due diligence in negotiating the sale, lease or assignment of business entities and contracts.
If you have any questions regarding the K&D Group decision or how to recognize, manage and reduce the impact that successor-in-interest issues may have on your business transactions, please contact us.
*Scott Coghlan, the chair of the firm’s Workers’ Compensation Group, has extensive experience in all aspects of workers’ compensation law and work safety and health matters. For more information, please contact Scott sc@zrlaw.com at 216.696.4441.
The Franklin County Court of Appeals recently released its decision in State of Ohio ex rel. The K&D Group, Inc. v. Marsha Ryan, Administrator, Ohio Bureau of Workers’ Compensation, 2011-Ohio-5051 (“K&D Group”) upholding the Ohio Bureau of Workers’ Compensation’s (“BWC”) determination that K&D Group, Inc., a property management company, was the successor-in-interest to another property management company despite the fact that neither management company was a party to the sale of the apartment complex at issue.
This decision illustrates the need to include consideration of workers’ compensation transfer of liability issues as part of your due diligence checklist when purchasing, leasing or acquiring business interests or entering into management contracts related to such business interests.
Chapter 4123-17-2 of the Ohio Administrative Code permits the BWC to transfer the workers’ compensation experience rating and liabilities of a predecessor company to the “successor-in-interest.” In practical terms this means that the purchaser is liable to the BWC for all of the seller’s unpaid workers’ compensation premiums and it inherits the seller’s workers’ compensation experience rating. This often leads to higher than expected workers’ compensation premiums.
The K&D Group Court clearly articulated that the BWC can transfer liabilities and experience ratings between entities that are not in privity of contract with one another. At issue in K&D Group was an apartment complex that was operated by a professional management company hired by the owner. The apartment complex was sold by its owner to K&D Enterprises. K&D Enterprises, using several holding companies, eventually caused K&D Group to become the new property management company for the apartments.
Following an audit, the BWC found that K&D Group was a partial successor-in-interest to the prior management company despite the fact that neither management company was involved in the sale of the apartment complex. As a result, it transferred a portion of Mid-America’s experience rating to K&D Group, including a significant workers’ compensation claim that negatively impacted the transferred experience rating.
K&D Group protested the transfer. However, the BWC Adjudicating Committee and the Administrator’s Designee (which are the statutorily assigned entities to which premium rate making appeals are filed) upheld the BWC’s finding of successorship. The matter then was appealed to the Franklin County Court of Appeals.
The Court of Appeals upheld the BWC’s finding of successorship as well. The Court noted that OAC 4123-17-2 does not require an alleged successor to actually acquire something in order to be deemed a successor. Thus, the fact that K&D Group did not purchase the apartment complex or have a contract with the prior management company was irrelevant. The Court found that K&D Group was affiliated with K&D Enterprises (the purchaser of the apartments) despite the use of several holding companies to distance one from the other. It then focused on the management operations of the apartment complex before and after the sale. After stripping away the layers of holding companies employed to complete the assignment of the property management duties to K&D Group, the Court noted that the day-to-day operations of the apartment complex were unchanged before and after the sale; that K&D Group assumed all of the tenants’ prior leases; that it retained many of the prior management company’s former employees and the employees operated under the same manual job classification numbers. As a result, K&D Group was saddled with the prior management company’s workers’ compensation experience rating.
Management contracts are becoming commonplace, particularly in the healthcare industry. This decision reinforces the need to consider the successor-in-interest rules imposed by the BWC and the need to review workers’ compensation experience ratings as part of your due diligence in negotiating the sale, lease or assignment of business entities and contracts.
If you have any questions regarding the K&D Group decision or how to recognize, manage and reduce the impact that successor-in-interest issues may have on your business transactions, please contact us.
*Scott Coghlan, the chair of the firm’s Workers’ Compensation Group, has extensive experience in all aspects of workers’ compensation law and work safety and health matters. For more information, please contact Scott sc@zrlaw.com at 216.696.4441.
Tuesday, September 27, 2011
EMPLOYMENT LAW QUARTERLY | Fall 2011, Volume XIII, Issue iii
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The United States Court of Appeals for the Ninth Circuit ("Ninth Circuit") recently held that a public employee was not entitled to leave under the Family Medical Leave Act ("FMLA") based on a request made prior to reinstatement. Walls v. Central Contra Costa Transit Authority, 2010 U.S. Dist. LEXIS 40596 (N.D. Cal., Apr. 26, 2010). Instead, the Court held the employee possessed a protected property interest in his continued employment. In doing so, the Ninth Circuit reversed in part the trial court's summary judgment ruling.
Kerry Walls ("Walls") worked as a bus driver for the Central Contra Costa Transit Authority ("CCCTA") until his termination on January 26, 2006. Walls filed a grievance based on his termination with his union. Following the grievance process, CCCTA reinstated Walls subject to a Last Chance Agreement. When Walls violated the attendance requirement of his Last Chance Agreement, CCCTA terminated his employment again on March 6, 2006. Walls subsequently claimed his discharge violated the FMLA and his due process right to a pre-termination hearing under the U.S. and California Constitutions. The trial court initially granted summary judgment to CCCTA on all of Walls' claims; however, the Ninth Circuit reversed the trial court's ruling on Walls' due process claim.
In line with the trial court, the Ninth Circuit held that Walls' discharge on March 6th did not violate the FMLA. Walls argued that his discharge, which was based on his absence on March 3rd, interfered with his FMLA rights because he made a verbal request for leave during a meeting on March 1st. The parties agreed that Walls had not been reinstated to his position until March 2nd – when he signed and executed the Last Chance Agreement. Therefore, CCCTA had not reinstated him when he made his request for leave on March 1st. The trial court held (and the Ninth Circuit agreed) that because Walls was not an "employee" under the FMLA when he made his request for leave he was not protected by the FMLA.
The Ninth Circuit reversed the trial court's decision regarding Walls' due process rights. As a public employee, under California law, CCCTA could dismiss Walls for cause only because he possessed a property interest in his continued employment. As a preliminary matter, the Ninth Circuit first had to determine whether Walls' Last Chance Agreement modified or somehow altered this property interest. The Ninth Circuit, however, determined that the language contained within the Last Chance Agreement was not strong enough to demonstrate Walls had knowingly or voluntarily waived his due process rights.
The Ninth Circuit then examined whether Walls received both pre- and post-employment safeguards. The court found that CCCTA denied Walls due process because he did not have an opportunity to respond prior to his termination. Further, even though the Last Chance Agreement stated that Walls could not participate in the post-termination procedures of arbitration or file a grievance, it did not include a waiver of Walls' right to pre-termination procedures. Because Walls did not receive a pre-termination hearing, the Court held that CCCTA denied him due process under both the California and Federal Constitutions. The Court sent the case back to the trial court to determine the appropriate remedy for the denial of due process.
This decision reinforces the need for public employers to closely follow pre- and post-employment procedures. Failure to do so could result in costly litigation as it did here.
*Ami J. Patel practices in all areas of labor and employment law, with a focus on private and public sector labor law. For more information on this case or any other labor or employment issue, contact Ami at 216.696.4441 or ajp@zrlaw.com.
The United States Court of Appeals for the Fourth Circuit ("Fourth Circuit") held that the Fair Labor Standard Act's ("FLSA") anti-retaliation provision does not protect prospective employees. Dellinger v. Sci. Applications Int'l Corp., No. 10-1499, 2011 U.S. App. LEXIS 16635 (4th Cir. Aug. 12, 2011). In this case, Natalie Dellinger ("Dellinger"), a job applicant, brought suit against Science Applications when it decided not to hire her shortly after learning she recently filed an FLSA action against her previous employer. The Fourth Circuit, agreeing with the district court, concluded that Dellinger was not an "employee" of Science Applications as defined by the FLSA and that the FLSA's anti-retaliation provision did not cover prospective employees or job applicants.
Dellinger sued her former employer, CACI, Inc., in July 2009 for alleged violations of the FLSA's minimum wage and overtime provisions. Around this same time period, Dellinger applied for a position with Science Applications. Science Applications offered Dellinger a job in late August 2009. The job offer was contingent upon Dellinger passing a drug test, completing specified forms, and verifying and transferring her security clearance. Dellinger accepted the offer and began satisfying the provisions of her offer.
On her security clearance form, Dellinger was required to list any pending noncriminal court actions to which she was a party. Dellinger listed her FLSA lawsuit against CACI, Inc. Several days after Dellinger submitted her security clearance form, Science Applications withdrew its offer of employment. Dellinger then brought an FLSA action against Science Applications claiming that Science Applications violated the FLSA's anti-retaliation provision by refusing to hire her after it learned she had sued her former employer.
Science Applications filed a motion to dismiss Dellinger's complaint, contending that Dellinger did not state a claim for which relief could be granted because the FLSA's anti-retaliation provision protects only employees, not prospective employees or applicants. The district court granted Science Applications' motion to dismiss, and Dellinger appealed to the Fourth Circuit.
The Fourth Circuit upheld the district court's ruling. In doing so, the Fourth Circuit took a plain-meaning approach in examining the text of the FLSA. The FLSA prohibits retaliation "against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter." 29 U.S.C. § 215 (a)(3).
The Fourth Circuit first answered the threshold question of whether an applicant for employment is an "employee" authorized to sue and obtain relief for retaliation under the FLSA as Dellinger had not sued her employer, but rather her prospective employer. While Section 215(a)(3) prohibits retaliation "against any employee" the FLSA defines employee as "any individual employed by an employer" under the FLSA. The Fourth Circuit determined that Congress was referring to the employer-employee relationship in providing protection to those in an employment relationship with their employer. The Fourth Circuit also reasoned that because Dellinger was an applicant for employment with Science Applications and her application had been approved only on a contingent basis, she never began work. The FLSA defines "employ" as to "suffer or permit to work." The Fourth Circuit, therefore, concluded that an applicant who never began or performed any work could not, by the language of the FLSA, be an "employee."
The Fourth Circuit also distinguished the FLSA from other statutes, including the National Labor Relations Act and the Occupational Safety and Health Act, noting the definition of "employee" under those statutes and enabling regulations is broader than its definition under the FLSA. As a result, the Fourth Circuit held that the FLSA allows private civil actions only by employees against employers and that 29 U.S.C. § 215(a)(3) does not authorize prospective employers to bring retaliation claims against prospective employers.
The Fourth Circuit's decision significantly curbs the ability of job applicants to bring any type of FLSA action against prospective employers. Employers should rest a little easier knowing that the FLSA – on its face – provides no protection to individuals who have never actually worked for the employer.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment law, practices in all areas of employment litigation and has extensive experience counseling employers on the FLSA. For more information on this decision or any other FLSA compliance question, please contact Michele at mlj@zrlaw.com or 216.696.4441.
The Ohio Supreme Court recently held that a discharged employee was ineligible to receive unemployment benefits when her employer discharged her for failing to obtain a professional license required as a condition of continued employment. Williams v. Ohio Dep't of Job & Family Services, Slip. Op. 2011-Ohio-2897 (June 22, 2011).
Bridgeway, Inc. ("Bridgeway") is a community mental health center that provides a variety of services to the mentally ill, including housing services, employment services, and counseling. Bridgeway hired Mary Williams ("Williams") as a full-time residential social worker. After working for Bridgeway for three months, Bridgeway offered Williams a promotion to residential services program manager. Bridgeway conditioned the promotion on Williams obtaining certification as a Licensed Independent Social Worker ("LISW") within 15 months. When Williams accepted the promotion, she signed a letter which included a statement that her failure to complete the LISW certification by May 2008 "w[ould] make [her] ineligible to keep this position."
Williams scheduled her LISW certification test for April 2008. However, due to health concerns, she rescheduled her test receiving Bridgeway's consent to extend the 15-month deadline. When Williams finally took the exam, she failed. After a failed exam, the exam cannot be retaken for 90 days. As such, Bridgeway terminated Williams employment for failing to obtain her LISW certification within the allotted time.
Williams then applied for unemployment compensation with the Ohio Department of Job & Family Services. The agency denied Williams benefits after it determined she had been discharged for just cause. Several appeals followed and the Unemployment Review Commission ("URC") conducted a hearing. During the hearing before the URC, Williams argued that two other residential program managers did not have the LISW certification. However, the URC affirmed that Bridgeway discharged Williams for just cause. The URC noted that the other residential program managers had been with Bridgeway for a much longer period and that it was not uncommon for an employer to increase the educational pre-requisites for a position.
Williams appealed to Ohio's Eighth District Court of Appeals. The Eighth District Court of Appeals reversed the URC holding. Relying on Shaffer v. Am. Sickle Cell Anemia Ass'n., No. 50127, 1986 Ohio App. LEXIS 7116 (Cuyahoga Ct. App. June 12, 1986), the Eighth District Court of Appeals held that Bridgeway did not fairly apply its LISW certification requirement.
The Ohio Supreme Court accepted Bridgeway's appeal to decide "whether an employee who fails to obtain a license or certification that was a condition of employment, as verified by the letter of appointment signed by the employee at the time of hire, is discharged in connection with work within the meaning of Ohio Revised Code § 4141.29(D)(2)(a)." The Ohio Supreme Court unanimously reversed the Eighth District Court of Appeals. In doing so, the Court emphasized that Williams accepted the promotion knowing that the LISW certification was required. Moreover, Williams also controlled the timing of her certification exam and chose to wait until nearly the end of her 15-month period before taking it. As for the other two program managers who were not LISW-certified, the Court found that they were considerably more experienced and hired several years before Williams; thus, Williams was not "similarly situated" to them.
Ohio employers should take notice that an employee's failure to comply with a condition of employment will likely render him or her ineligible for unemployment compensation benefits.
The U.S. District Court for the Southern District of Ohio recently held that a former employee may be entitled to liquidated damages and attorneys' fees under the Family & Medical Leave Act ("FMLA") despite already receiving reinstatement and back pay damages through his union arbitration process. Poling v. Core Molding Technologies, No. 10-cv-963 (S.D. Ohio June 22, 2011).
Terry Poling ("Poling") began working for Core Molding Technologies ("Core") in 2006. While working at Core, Poling was a member of the International Association of Machinists and Aerospace Workers, AFL-CIO District Lodge 34, Local Lodge 1471 (the "Union"). As a member of the Union, Poling was subject to a collective bargaining agreement ("CBA"). The CBA included an employee attendance provision which provided a set amount of unpaid days off for unexcused absences and tardiness. If the employee exhausts this set amount of unpaid days off, additional absences result in termination.
Poling had a history of Reflex Sympathetic Dystrophy Syndrome ("RSDS") that required regular treatment. He asked that some of his absences be covered under the FMLA. Core approved and certified Poling's FMLA request.
In September, 2008, Poling missed a period of mandatory overtime. Having exhausted his unpaid days off, as provided under the CBA, Poling submitted evidence that his absence was due to his RSDS. However, after reviewing the evidence, Core determined that his absence was not covered by the FMLA because the evidence did not address why he was unable to work that particular day. Given Core's determination that Poling's absence was not covered by the FMLA and that he had exhausted his unpaid days off, Core terminated Poling's employment.
Poling filed a grievance with the Union based on his discharge. In his grievance, Poling argued that Core did not have "just cause" for terminating his employment. The arbitrator agreed with Poling and ordered reinstatement and a monetary award which covered back pay, benefits, and lost opportunities for overtime. Poling returned to his position until April, 2010 when Core moved his position to Mexico.
After his termination, Poling filed suit against Core alleging that Core violated his rights under the FMLA. If an employer violates the FMLA, an employee is entitled to "any wages, salary, employment benefits, or other compensation denied or lost" as a result of the violation, in addition to liquidated damages. Core filed a motion for summary judgment arguing that Poling's claims for compensatory damages (lost wages, benefits, etc.) equitable relief, liquidated damages, and court costs were void and foreclosed by that fact that Poling recovered all lost wages and benefits in his earlier arbitration process. The Court granted in part and denied in part Core's motion for summary judgment.
The Court granted Core's motion for summary judgment with respect to compensatory damages. Poling conceded that Core had paid all back wages owed to him. The Court determined Poling failed to raise a genuine issue of material fact concerning his back pay. As a result, the Court granted Core's motion for summary judgment regarding compensatory damages.
The Court, however, denied Core's motion for summary judgment on the liquidated damages issue. Poling claimed he was entitled to liquidated damages. Under the FMLA, a plaintiff is entitled to liquidated damages in an amount equal to his or her lost compensation award plus interest (unless the employer can show it acted in good faith). In denying Core's motion for summary judgment on the liquidated damages issue, the Court relied on the United States Court of Appeals for the Tenth Circuit's decision in Jordan v. U.S. Postal Service, 379 F.3d 1196 (10th Cir. 2004).
The Jordan court found that compensation that is "unlawfully denied but restored before trial, but after a significant delay" could be considered "denied or lost wages under the FMLA" for the purposes of calculating damages. Id. at 1201 (internal quotation marks omitted). The Jordan court was also motivated by the fact that an unlawful deprivation of wages for a significant amount of time can result in "damages too obscure and difficult of proof [sic] for estimate other than by liquidated damages." Id. Poling argued that Core unlawfully kept him from working and receiving compensation for fourteen months. The Court agreed determining that Poling was not foreclosed from seeking liquidated damages. The Court also based its decision on the strong presumption in favor of awarding liquidated damages to affected employees in FMLA and Fair Labor Standards Act cases.
As this case demonstrates, it is important for all employers to conduct thorough analyses when employees seek FMLA protection so as to limit their potential exposure to FMLA litigation and damages.
The United States Supreme Court recently rejected an attempt by Wal-Mart employees to pursue a nationwide class action on behalf of all female employees. The lawsuit was based on generic accusations that Wal-Mart maintained a company-wide policy of sex discrimination. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011).
To bring any type of class action, a plaintiff must prove "commonality" -- that there is some common issue of law or fact in common among all of the members of the proposed class. In the Dukes decision, the Supreme Court held that for the female plaintiffs to pursue a class action on behalf of employees based upon a supposedly discriminatory company policy, they must establish something in common more than merely "their sex and this lawsuit." Instead, they must offer "significant proof" of a "specific" employment practice that affected everyone in the proposed class and led to sex-based discrimination. In other words, there must be "some glue holding the alleged reasons for all those [nationwide employment] decisions together."
Dukes makes it clear that employees who wish to join together and pursue a class action cannot rely only on extrapolations from statistics, collections of anecdotal evidence, or expert testimony about corporate "culture" to meet Federal Rule of Civil Procedure 23's ("Rule 23") "commonality" requirement. Instead, they most point to a concrete, specific, and identifiable employment policy or practice that truly affected every employee and that gave rise to the discrimination in question. Plaintiffs must prove that they have something else in common apart from their protected status and their desire to sue a common employer.
Not only does the Dukes decision impact sex discrimination cases, it also impacts wage and hour litigation. The standards to bring a class, or collective action under the Fair Labor Standards Act ("FLSA"), are related but different to class action requirements under Rule 23. Under a Rule 23 class action, class members must meet a "commonality" requirement. Under a FLSA collective action, class members must be "similarly situated" to receive conditional certification. Since the FLSA's inception, courts have struggled to define "similarly situated," because the phrase is not defined within the FLSA. However, many courts have looked to interpretations of Rule 23's "commonality" requirement for guidance, which makes the Dukes' discussion of "commonality" extremely important to wage and hour litigation.
The Dukes decision is barely three months old, but several courts around the country have already found themselves grappling with the decision's impact on wage and hour actions. A sampling of cases dealing with issues presented by Dukes includes the following:
In light of the number of cases that have already relied upon Dukes, it is clear that the decision has and will continue to have major ramifications on wage and hour litigation. Dukes requires courts to pay attention to the disparities that exist in collective action cases (e.g., differences in supervisors, departments, facilities, divisions and regions). The "dissimilarities," not the common questions raised, have the most potential to determine whether class-wide resolution of a matter is permissible. Dukes should lead courts to narrowly interpret the "similarly situated" requirement under the FLSA.
The extent to which Dukes will impact collective actions is unclear. Some predict Dukes will have more of an impact in other nationwide discrimination class actions including pending cases against Toshiba Corp., Goldman Sachs Group, Inc., Cigna Corp. and Bayer. Dukes also played a major role in the Ninth Circuit's recent ruling in a Costco disparate impact case (discussed above). Nevertheless, it is clear that Dukes alters the landscape of class or collective actions in dramatic ways.
While Dukes is an employer-friendly decision, the best defense to class discrimination claims and collective wage and hour claims are strong company policies prohibiting discrimination and wage and hour violations and vigilant compliance efforts.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor & Employment law, has extensive experience defending class and collective actions. Stephen represents employers in all aspects of labor & employment. For more information on class or collective litigation, please contact Stephen at ssz@zrlaw.com or 216.696.4441.
48th Annual Midwest Labor and Employment Law Seminar
October 13-14, 2011
Hilton, Easton Town Center, Columbus, Ohio
Stephen Zashin will co-present "Emerging FMLA Case Law: Effective Employee Notice and Avoiding Employer Interference" and George Crisci will present "SERB and Public Sector Issues." To register go to www.ohiobar.org.
Temple Emanu El non-partisan State Issues Program
October 27, 2011 – 8 PM
4545 Brainard Road (at Emery), Orange Village, Ohio 44022
Jon Dileno will explain and present opposing views regarding Issue 2 (Senate Bill 5), as well as other current Ohio voter issues.
Bucking the Trends and Curving the Costs, How to Stay on top in Today's Health Care Market
November 1, 2011 – 8:30 AM
The Bertram Inn, Aurora, Ohio
Patrick Hoban will present an update on PPACA developments. To register contact Shawna Altman at 440.893.9882 x6.
Congratulations to George Crisci!
George S. Crisci has been appointed to a three-year term as the Management Co-Chair of the American Bar Association's Labor & Employment Law Section Committee on State and Local Government Bargaining and Employment Law. George was also named one of the "Best Lawyers in America" for 2012.
EEOC Claims on the Rise
After dropping slightly in 2009, claims filed with the Equal Employment Opportunity Commission ("EEOC") hit record highs in 2010. The EEOC received 99,922 complaints in 2010, up over 6,000 from the previous year. The most common complaints were for retaliation and race discrimination. All indications point to the EEOC receiving more than 100,000 complaints in 2011. As the economy continues to struggle and complaints continue to rise, employers must remain vigilant in understanding and complying with employment laws.
- Public Employee's Discharge Without Pre-Termination Hearing Violates Due Process
- Job Applicants Are Not Protected Under the Fair Labor Standards Act's Anti-Retaliation ProvisionI
- An Employee's Failure to Comply with a Condition of Employment Is a Just Cause Discharge for Unemployment Compensation Purposes
- Court Awards Liquidated Damages Under the Family & Medical Leave Act Despite Prior Arbitration Award
- How Much Will the Dukes v. Wal-Mart Decision Impact Wage and Hour Litigation?
- Z&R Shorts
Public Employee's Discharge without Pre-Termination Hearing Violates Due Process
by Ami J. Patel*The United States Court of Appeals for the Ninth Circuit ("Ninth Circuit") recently held that a public employee was not entitled to leave under the Family Medical Leave Act ("FMLA") based on a request made prior to reinstatement. Walls v. Central Contra Costa Transit Authority, 2010 U.S. Dist. LEXIS 40596 (N.D. Cal., Apr. 26, 2010). Instead, the Court held the employee possessed a protected property interest in his continued employment. In doing so, the Ninth Circuit reversed in part the trial court's summary judgment ruling.
Kerry Walls ("Walls") worked as a bus driver for the Central Contra Costa Transit Authority ("CCCTA") until his termination on January 26, 2006. Walls filed a grievance based on his termination with his union. Following the grievance process, CCCTA reinstated Walls subject to a Last Chance Agreement. When Walls violated the attendance requirement of his Last Chance Agreement, CCCTA terminated his employment again on March 6, 2006. Walls subsequently claimed his discharge violated the FMLA and his due process right to a pre-termination hearing under the U.S. and California Constitutions. The trial court initially granted summary judgment to CCCTA on all of Walls' claims; however, the Ninth Circuit reversed the trial court's ruling on Walls' due process claim.
In line with the trial court, the Ninth Circuit held that Walls' discharge on March 6th did not violate the FMLA. Walls argued that his discharge, which was based on his absence on March 3rd, interfered with his FMLA rights because he made a verbal request for leave during a meeting on March 1st. The parties agreed that Walls had not been reinstated to his position until March 2nd – when he signed and executed the Last Chance Agreement. Therefore, CCCTA had not reinstated him when he made his request for leave on March 1st. The trial court held (and the Ninth Circuit agreed) that because Walls was not an "employee" under the FMLA when he made his request for leave he was not protected by the FMLA.
The Ninth Circuit reversed the trial court's decision regarding Walls' due process rights. As a public employee, under California law, CCCTA could dismiss Walls for cause only because he possessed a property interest in his continued employment. As a preliminary matter, the Ninth Circuit first had to determine whether Walls' Last Chance Agreement modified or somehow altered this property interest. The Ninth Circuit, however, determined that the language contained within the Last Chance Agreement was not strong enough to demonstrate Walls had knowingly or voluntarily waived his due process rights.
The Ninth Circuit then examined whether Walls received both pre- and post-employment safeguards. The court found that CCCTA denied Walls due process because he did not have an opportunity to respond prior to his termination. Further, even though the Last Chance Agreement stated that Walls could not participate in the post-termination procedures of arbitration or file a grievance, it did not include a waiver of Walls' right to pre-termination procedures. Because Walls did not receive a pre-termination hearing, the Court held that CCCTA denied him due process under both the California and Federal Constitutions. The Court sent the case back to the trial court to determine the appropriate remedy for the denial of due process.
This decision reinforces the need for public employers to closely follow pre- and post-employment procedures. Failure to do so could result in costly litigation as it did here.
*Ami J. Patel practices in all areas of labor and employment law, with a focus on private and public sector labor law. For more information on this case or any other labor or employment issue, contact Ami at 216.696.4441 or ajp@zrlaw.com.
Job Applicants Are Not Protected Under the Fair Labor Standards Act's Anti-Retaliation Provision
by Michele L. Jakubs*The United States Court of Appeals for the Fourth Circuit ("Fourth Circuit") held that the Fair Labor Standard Act's ("FLSA") anti-retaliation provision does not protect prospective employees. Dellinger v. Sci. Applications Int'l Corp., No. 10-1499, 2011 U.S. App. LEXIS 16635 (4th Cir. Aug. 12, 2011). In this case, Natalie Dellinger ("Dellinger"), a job applicant, brought suit against Science Applications when it decided not to hire her shortly after learning she recently filed an FLSA action against her previous employer. The Fourth Circuit, agreeing with the district court, concluded that Dellinger was not an "employee" of Science Applications as defined by the FLSA and that the FLSA's anti-retaliation provision did not cover prospective employees or job applicants.
Dellinger sued her former employer, CACI, Inc., in July 2009 for alleged violations of the FLSA's minimum wage and overtime provisions. Around this same time period, Dellinger applied for a position with Science Applications. Science Applications offered Dellinger a job in late August 2009. The job offer was contingent upon Dellinger passing a drug test, completing specified forms, and verifying and transferring her security clearance. Dellinger accepted the offer and began satisfying the provisions of her offer.
On her security clearance form, Dellinger was required to list any pending noncriminal court actions to which she was a party. Dellinger listed her FLSA lawsuit against CACI, Inc. Several days after Dellinger submitted her security clearance form, Science Applications withdrew its offer of employment. Dellinger then brought an FLSA action against Science Applications claiming that Science Applications violated the FLSA's anti-retaliation provision by refusing to hire her after it learned she had sued her former employer.
Science Applications filed a motion to dismiss Dellinger's complaint, contending that Dellinger did not state a claim for which relief could be granted because the FLSA's anti-retaliation provision protects only employees, not prospective employees or applicants. The district court granted Science Applications' motion to dismiss, and Dellinger appealed to the Fourth Circuit.
The Fourth Circuit upheld the district court's ruling. In doing so, the Fourth Circuit took a plain-meaning approach in examining the text of the FLSA. The FLSA prohibits retaliation "against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter." 29 U.S.C. § 215 (a)(3).
The Fourth Circuit first answered the threshold question of whether an applicant for employment is an "employee" authorized to sue and obtain relief for retaliation under the FLSA as Dellinger had not sued her employer, but rather her prospective employer. While Section 215(a)(3) prohibits retaliation "against any employee" the FLSA defines employee as "any individual employed by an employer" under the FLSA. The Fourth Circuit determined that Congress was referring to the employer-employee relationship in providing protection to those in an employment relationship with their employer. The Fourth Circuit also reasoned that because Dellinger was an applicant for employment with Science Applications and her application had been approved only on a contingent basis, she never began work. The FLSA defines "employ" as to "suffer or permit to work." The Fourth Circuit, therefore, concluded that an applicant who never began or performed any work could not, by the language of the FLSA, be an "employee."
The Fourth Circuit also distinguished the FLSA from other statutes, including the National Labor Relations Act and the Occupational Safety and Health Act, noting the definition of "employee" under those statutes and enabling regulations is broader than its definition under the FLSA. As a result, the Fourth Circuit held that the FLSA allows private civil actions only by employees against employers and that 29 U.S.C. § 215(a)(3) does not authorize prospective employers to bring retaliation claims against prospective employers.
The Fourth Circuit's decision significantly curbs the ability of job applicants to bring any type of FLSA action against prospective employers. Employers should rest a little easier knowing that the FLSA – on its face – provides no protection to individuals who have never actually worked for the employer.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment law, practices in all areas of employment litigation and has extensive experience counseling employers on the FLSA. For more information on this decision or any other FLSA compliance question, please contact Michele at mlj@zrlaw.com or 216.696.4441.
An Employee's Failure to Comply with a Condition of Employment is a Just Cause Discharge for Unemployment Compensation Purposes
by Stefanie L. BakerThe Ohio Supreme Court recently held that a discharged employee was ineligible to receive unemployment benefits when her employer discharged her for failing to obtain a professional license required as a condition of continued employment. Williams v. Ohio Dep't of Job & Family Services, Slip. Op. 2011-Ohio-2897 (June 22, 2011).
Bridgeway, Inc. ("Bridgeway") is a community mental health center that provides a variety of services to the mentally ill, including housing services, employment services, and counseling. Bridgeway hired Mary Williams ("Williams") as a full-time residential social worker. After working for Bridgeway for three months, Bridgeway offered Williams a promotion to residential services program manager. Bridgeway conditioned the promotion on Williams obtaining certification as a Licensed Independent Social Worker ("LISW") within 15 months. When Williams accepted the promotion, she signed a letter which included a statement that her failure to complete the LISW certification by May 2008 "w[ould] make [her] ineligible to keep this position."
Williams scheduled her LISW certification test for April 2008. However, due to health concerns, she rescheduled her test receiving Bridgeway's consent to extend the 15-month deadline. When Williams finally took the exam, she failed. After a failed exam, the exam cannot be retaken for 90 days. As such, Bridgeway terminated Williams employment for failing to obtain her LISW certification within the allotted time.
Williams then applied for unemployment compensation with the Ohio Department of Job & Family Services. The agency denied Williams benefits after it determined she had been discharged for just cause. Several appeals followed and the Unemployment Review Commission ("URC") conducted a hearing. During the hearing before the URC, Williams argued that two other residential program managers did not have the LISW certification. However, the URC affirmed that Bridgeway discharged Williams for just cause. The URC noted that the other residential program managers had been with Bridgeway for a much longer period and that it was not uncommon for an employer to increase the educational pre-requisites for a position.
Williams appealed to Ohio's Eighth District Court of Appeals. The Eighth District Court of Appeals reversed the URC holding. Relying on Shaffer v. Am. Sickle Cell Anemia Ass'n., No. 50127, 1986 Ohio App. LEXIS 7116 (Cuyahoga Ct. App. June 12, 1986), the Eighth District Court of Appeals held that Bridgeway did not fairly apply its LISW certification requirement.
The Ohio Supreme Court accepted Bridgeway's appeal to decide "whether an employee who fails to obtain a license or certification that was a condition of employment, as verified by the letter of appointment signed by the employee at the time of hire, is discharged in connection with work within the meaning of Ohio Revised Code § 4141.29(D)(2)(a)." The Ohio Supreme Court unanimously reversed the Eighth District Court of Appeals. In doing so, the Court emphasized that Williams accepted the promotion knowing that the LISW certification was required. Moreover, Williams also controlled the timing of her certification exam and chose to wait until nearly the end of her 15-month period before taking it. As for the other two program managers who were not LISW-certified, the Court found that they were considerably more experienced and hired several years before Williams; thus, Williams was not "similarly situated" to them.
Ohio employers should take notice that an employee's failure to comply with a condition of employment will likely render him or her ineligible for unemployment compensation benefits.
Court Awards Liquidated Damages Under the Family & Medical Leave Act Despite Prior Arbitration Award
by Patrick M. WattsThe U.S. District Court for the Southern District of Ohio recently held that a former employee may be entitled to liquidated damages and attorneys' fees under the Family & Medical Leave Act ("FMLA") despite already receiving reinstatement and back pay damages through his union arbitration process. Poling v. Core Molding Technologies, No. 10-cv-963 (S.D. Ohio June 22, 2011).
Terry Poling ("Poling") began working for Core Molding Technologies ("Core") in 2006. While working at Core, Poling was a member of the International Association of Machinists and Aerospace Workers, AFL-CIO District Lodge 34, Local Lodge 1471 (the "Union"). As a member of the Union, Poling was subject to a collective bargaining agreement ("CBA"). The CBA included an employee attendance provision which provided a set amount of unpaid days off for unexcused absences and tardiness. If the employee exhausts this set amount of unpaid days off, additional absences result in termination.
Poling had a history of Reflex Sympathetic Dystrophy Syndrome ("RSDS") that required regular treatment. He asked that some of his absences be covered under the FMLA. Core approved and certified Poling's FMLA request.
In September, 2008, Poling missed a period of mandatory overtime. Having exhausted his unpaid days off, as provided under the CBA, Poling submitted evidence that his absence was due to his RSDS. However, after reviewing the evidence, Core determined that his absence was not covered by the FMLA because the evidence did not address why he was unable to work that particular day. Given Core's determination that Poling's absence was not covered by the FMLA and that he had exhausted his unpaid days off, Core terminated Poling's employment.
Poling filed a grievance with the Union based on his discharge. In his grievance, Poling argued that Core did not have "just cause" for terminating his employment. The arbitrator agreed with Poling and ordered reinstatement and a monetary award which covered back pay, benefits, and lost opportunities for overtime. Poling returned to his position until April, 2010 when Core moved his position to Mexico.
After his termination, Poling filed suit against Core alleging that Core violated his rights under the FMLA. If an employer violates the FMLA, an employee is entitled to "any wages, salary, employment benefits, or other compensation denied or lost" as a result of the violation, in addition to liquidated damages. Core filed a motion for summary judgment arguing that Poling's claims for compensatory damages (lost wages, benefits, etc.) equitable relief, liquidated damages, and court costs were void and foreclosed by that fact that Poling recovered all lost wages and benefits in his earlier arbitration process. The Court granted in part and denied in part Core's motion for summary judgment.
The Court granted Core's motion for summary judgment with respect to compensatory damages. Poling conceded that Core had paid all back wages owed to him. The Court determined Poling failed to raise a genuine issue of material fact concerning his back pay. As a result, the Court granted Core's motion for summary judgment regarding compensatory damages.
The Court, however, denied Core's motion for summary judgment on the liquidated damages issue. Poling claimed he was entitled to liquidated damages. Under the FMLA, a plaintiff is entitled to liquidated damages in an amount equal to his or her lost compensation award plus interest (unless the employer can show it acted in good faith). In denying Core's motion for summary judgment on the liquidated damages issue, the Court relied on the United States Court of Appeals for the Tenth Circuit's decision in Jordan v. U.S. Postal Service, 379 F.3d 1196 (10th Cir. 2004).
The Jordan court found that compensation that is "unlawfully denied but restored before trial, but after a significant delay" could be considered "denied or lost wages under the FMLA" for the purposes of calculating damages. Id. at 1201 (internal quotation marks omitted). The Jordan court was also motivated by the fact that an unlawful deprivation of wages for a significant amount of time can result in "damages too obscure and difficult of proof [sic] for estimate other than by liquidated damages." Id. Poling argued that Core unlawfully kept him from working and receiving compensation for fourteen months. The Court agreed determining that Poling was not foreclosed from seeking liquidated damages. The Court also based its decision on the strong presumption in favor of awarding liquidated damages to affected employees in FMLA and Fair Labor Standards Act cases.
As this case demonstrates, it is important for all employers to conduct thorough analyses when employees seek FMLA protection so as to limit their potential exposure to FMLA litigation and damages.
How Much Will the Dukes v. Wal-Mart Decision Impact Wage and Hour Litigation?
by Stephen S. Zashin*The United States Supreme Court recently rejected an attempt by Wal-Mart employees to pursue a nationwide class action on behalf of all female employees. The lawsuit was based on generic accusations that Wal-Mart maintained a company-wide policy of sex discrimination. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011).
To bring any type of class action, a plaintiff must prove "commonality" -- that there is some common issue of law or fact in common among all of the members of the proposed class. In the Dukes decision, the Supreme Court held that for the female plaintiffs to pursue a class action on behalf of employees based upon a supposedly discriminatory company policy, they must establish something in common more than merely "their sex and this lawsuit." Instead, they must offer "significant proof" of a "specific" employment practice that affected everyone in the proposed class and led to sex-based discrimination. In other words, there must be "some glue holding the alleged reasons for all those [nationwide employment] decisions together."
Dukes makes it clear that employees who wish to join together and pursue a class action cannot rely only on extrapolations from statistics, collections of anecdotal evidence, or expert testimony about corporate "culture" to meet Federal Rule of Civil Procedure 23's ("Rule 23") "commonality" requirement. Instead, they most point to a concrete, specific, and identifiable employment policy or practice that truly affected every employee and that gave rise to the discrimination in question. Plaintiffs must prove that they have something else in common apart from their protected status and their desire to sue a common employer.
Not only does the Dukes decision impact sex discrimination cases, it also impacts wage and hour litigation. The standards to bring a class, or collective action under the Fair Labor Standards Act ("FLSA"), are related but different to class action requirements under Rule 23. Under a Rule 23 class action, class members must meet a "commonality" requirement. Under a FLSA collective action, class members must be "similarly situated" to receive conditional certification. Since the FLSA's inception, courts have struggled to define "similarly situated," because the phrase is not defined within the FLSA. However, many courts have looked to interpretations of Rule 23's "commonality" requirement for guidance, which makes the Dukes' discussion of "commonality" extremely important to wage and hour litigation.
The Dukes decision is barely three months old, but several courts around the country have already found themselves grappling with the decision's impact on wage and hour actions. A sampling of cases dealing with issues presented by Dukes includes the following:
Case Name
|
Argument made based on Dukes
|
Outcome
|
| Bouaphakeo, et al. v. Tyson Foods, Inc., No. 5:07-cv-04009-JAJ, 2011 U.S. Dist. LEXIS 95814 (N.D. Iowa Aug. 25, 2011). | Defendant argued for decertification of the plaintiffs’ Rule 23 class action because a single purported common question of law was not enough to bind class together (court had previously certified class on a single common question of law). | Motion for decertification of class denied |
| Spellman, et al. v. American Eagle Express, Inc., 2011 U.S. Dist. LEXIS 53521 (E.D. Pa. May 18, 2011), motion for reconsideration denied by Order dated July 21, 2011. | Defendant argued conditional certification of an FLSA collective action was inappropriate in light of Dukes. | Motion for Reconsideration denied (However, court noted that during the second step of the collective action process, Dukes’ analysis of what constitutes a common question would be persuasive to whether the FLSA action should be certified) |
| MacGregor, et al. v. Farmers International Exchange, No. 2:10-cv-03088, 2011 U.S. Dist. LEXIS 80361 (D.S.C. July 22, 2011). | Court found that plaintiffs’ allegations were not rooted in a common policy that itself was unlawful, but rather in the enforcement decisions of individual supervisors, which, if true, contradicted company policy. | Court denied conditional certification of FLSA collective action |
| Cruz v. Dollar Tree Stores, No. 3:07-04012-SC, 2011 U.S. Dist. LEXIS 73938 (N.D. Cal. July 8, 2011). | Court originally certified class of former store managers who claimed they were misclassified under the FLSA in 2009. Based upon Dukes, Court decertified finding that letting the case proceed would entail “unmanageable difficulties” in determining whether particular employees spent the majority of their time performing managerial duties; court stated that plaintiffs failed to provide common proof to serve as “glue” that would allow a class-wide determination. | Court decertified class of former store managers because the necessary individual inquiry into each class member’s claims could result in a series of “mini trials” that undermine the efficiency class and collective treatment is meant to provide. |
| Ramos, et al., v. SimplexGrinnell et al., No. 1:07-cv-00981-SMG, 2011 U.S. Dist. LEXIS 65593 (E.D.N.Y. June 21, 2011). | Relying on Dukes, judge upheld class certification for about 600 workers who alleged that the Tyco fire and safety equipment unit violated New York labor law and that they were underpaid. | Granted plaintiff’s motion for class certification |
| Creely v. HCR ManorCare, Inc. et al., No. 3:09-cv-02879-JZ, 2011 U.S. Dist. LEXIS 77170 (N.D. Ohio July 1, 2011). | Defendants filed a motion to file supplemental briefing based upon Dukes. Judge Zouhary wrote in his order: “This Court concludes the concerns expressed in Dukes simply do not exist here.” | Upheld class certification |
| Jasper v. C.R. England et al., No. 2:08-cv-05266-GW-CW, 2009 U.S. Dist. LEXIS 34802 (C.D. Cal. Mar. 30, 2009), motion to vacate Order denied (C.D. Cal. June 30, 2011). | Defendants filed an application to vacate the order on the motion to certify class action and to order re-briefing in light of Dukes. | The court denied defendant’s motion to decertify a class of up to 1,000 truck drivers |
| Ellis v. Costco Wholesale Corp., No. 07-15838, 2011 U.S. App. LEXIS 19060 (9th Cir. Sept. 16, 2011). | In 2007, the district court certified a class of current and former female employees who claimed Costco denied them promotion based upon their sex. Costco filed a motion to vacate the class certification. The 9th circuit remanded the case for the district court to consider whether the claims for various forms of monetary relief will require individual determinations and are therefore only appropriate for a Rule 23(b)(3) class. The 9th circuit also held the district court failed to conduct a vigorous analysis of “commonality” and “typicality” requirements under Rule 23. Thus, the court vacated the district court’s certification of the class under Rule 23(b)(2). | Affirmed in part, vacated in part and remanded to district court |
In light of the number of cases that have already relied upon Dukes, it is clear that the decision has and will continue to have major ramifications on wage and hour litigation. Dukes requires courts to pay attention to the disparities that exist in collective action cases (e.g., differences in supervisors, departments, facilities, divisions and regions). The "dissimilarities," not the common questions raised, have the most potential to determine whether class-wide resolution of a matter is permissible. Dukes should lead courts to narrowly interpret the "similarly situated" requirement under the FLSA.
The extent to which Dukes will impact collective actions is unclear. Some predict Dukes will have more of an impact in other nationwide discrimination class actions including pending cases against Toshiba Corp., Goldman Sachs Group, Inc., Cigna Corp. and Bayer. Dukes also played a major role in the Ninth Circuit's recent ruling in a Costco disparate impact case (discussed above). Nevertheless, it is clear that Dukes alters the landscape of class or collective actions in dramatic ways.
While Dukes is an employer-friendly decision, the best defense to class discrimination claims and collective wage and hour claims are strong company policies prohibiting discrimination and wage and hour violations and vigilant compliance efforts.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor & Employment law, has extensive experience defending class and collective actions. Stephen represents employers in all aspects of labor & employment. For more information on class or collective litigation, please contact Stephen at ssz@zrlaw.com or 216.696.4441.
Z&R Shorts
UPCOMING SEMINARS48th Annual Midwest Labor and Employment Law Seminar
October 13-14, 2011
Hilton, Easton Town Center, Columbus, Ohio
Stephen Zashin will co-present "Emerging FMLA Case Law: Effective Employee Notice and Avoiding Employer Interference" and George Crisci will present "SERB and Public Sector Issues." To register go to www.ohiobar.org.
Temple Emanu El non-partisan State Issues Program
October 27, 2011 – 8 PM
4545 Brainard Road (at Emery), Orange Village, Ohio 44022
Jon Dileno will explain and present opposing views regarding Issue 2 (Senate Bill 5), as well as other current Ohio voter issues.
Bucking the Trends and Curving the Costs, How to Stay on top in Today's Health Care Market
November 1, 2011 – 8:30 AM
The Bertram Inn, Aurora, Ohio
Patrick Hoban will present an update on PPACA developments. To register contact Shawna Altman at 440.893.9882 x6.
Congratulations to George Crisci!
George S. Crisci has been appointed to a three-year term as the Management Co-Chair of the American Bar Association's Labor & Employment Law Section Committee on State and Local Government Bargaining and Employment Law. George was also named one of the "Best Lawyers in America" for 2012.
EEOC Claims on the Rise
After dropping slightly in 2009, claims filed with the Equal Employment Opportunity Commission ("EEOC") hit record highs in 2010. The EEOC received 99,922 complaints in 2010, up over 6,000 from the previous year. The most common complaints were for retaliation and race discrimination. All indications point to the EEOC receiving more than 100,000 complaints in 2011. As the economy continues to struggle and complaints continue to rise, employers must remain vigilant in understanding and complying with employment laws.
Tuesday, September 13, 2011
National Labor Relations Board Employee Rights Notice Posters Now Available
*By Patrick J. Hoban
As Zashin & Rich Co., L.P.A (“Z&R”) notified you in its August 26, 2011 employment law alert, the National Labor Relations Board (“NLRB”) issued a new rule requiring employers – for the first time ever – to post a notice of employee rights under the National Labor Relations Act (“NLRA”). Employers may now obtain posters from NLRB regional offices or by downloading and printing from the NLRB’s website:
As explained in the prior alert, as of November 14, 2011, most private sector employers will be required to post the notice. The notice must measure 11-by-17 inches and be posted in a conspicuous place where the employer posts other notifications of workplace rights and employer rules. In addition, if other personnel policies or workplace notices are on an internal or external website, the employer must also post the notice on those websites. Additionally, if 20% of an employer’s workforce is not proficient in English, the employer must post the notice in the language of those employees. Translated versions of the poster can be obtained from NLRB regional offices.
Not surprisingly, an employer group has already taken legal action against the NLRB for implementing the posting requirement. The National Association of Manufacturers filed a lawsuit in the U.S. District Court for the District of Columbia on September 8, 2011 to stop the NLRB from enforcing the rule. The lawsuit alleges that the NLRB exceeded its statutory authority in promulgating the posting rule and requests that it be rescinded. Z&R will follow this and other legal developments regarding the posting rule and provide updates as necessary.
Unless and until the federal courts invalidate the posting rule, if you are a private-sector employer covered by the NLRA - whether your employees are unionized or not - you must obtain and post the required NLRB notice by November 14, 2011.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, appears before the Natio
As Zashin & Rich Co., L.P.A (“Z&R”) notified you in its August 26, 2011 employment law alert, the National Labor Relations Board (“NLRB”) issued a new rule requiring employers – for the first time ever – to post a notice of employee rights under the National Labor Relations Act (“NLRA”). Employers may now obtain posters from NLRB regional offices or by downloading and printing from the NLRB’s website:
As explained in the prior alert, as of November 14, 2011, most private sector employers will be required to post the notice. The notice must measure 11-by-17 inches and be posted in a conspicuous place where the employer posts other notifications of workplace rights and employer rules. In addition, if other personnel policies or workplace notices are on an internal or external website, the employer must also post the notice on those websites. Additionally, if 20% of an employer’s workforce is not proficient in English, the employer must post the notice in the language of those employees. Translated versions of the poster can be obtained from NLRB regional offices.
Not surprisingly, an employer group has already taken legal action against the NLRB for implementing the posting requirement. The National Association of Manufacturers filed a lawsuit in the U.S. District Court for the District of Columbia on September 8, 2011 to stop the NLRB from enforcing the rule. The lawsuit alleges that the NLRB exceeded its statutory authority in promulgating the posting rule and requests that it be rescinded. Z&R will follow this and other legal developments regarding the posting rule and provide updates as necessary.
Unless and until the federal courts invalidate the posting rule, if you are a private-sector employer covered by the NLRA - whether your employees are unionized or not - you must obtain and post the required NLRB notice by November 14, 2011.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, appears before the Natio
Thursday, September 8, 2011
Unions Three, Employees and Employers Zero – The National Labor Relations Board Issues a Triad of Decisions Curbing Employer Rights and Overturning Decades of Board Precedent
*By Patrick J. Hoban
On National Labor Relations Board (“NLRB”) Chairman Wilma Liebman’s last day before retirement, the NLRB issued three decisions overturning years of Board precedent concerning bargaining unit composition and employee rights to vote to decertify their union representatives. Each decision expands the power of unions while restricting employee and employer rights under the National Labor Relations Act (“NLRA”). Together with the recently published NLRA rights posting rule and the soon expected fast-track union election rules, the NLRB has taken clear steps to tilt drastically the playing field in favor of unions. For the first time, the NLRB is aggressively changing the rules to make it easier for unions to organize employees and to keep them organized.
With the defeat of the Employer Free Choice Act (“EFCA”) in the U.S. Congress in 2009 and 2010, the NLRB has unleashed an aggressive administrative effort to provide unions with many of the advantages contained in EFCA without congressional ratification. Every employer must recognize the pro-union changes the NLRB has made to ensure readiness to respond to the future union organizing efforts that these decisions encourage.
In Specialty Healthcare, the Board established a new standard for determining whether an employer may add to or challenge a petitioned-for-unit of employees. Specialty Healthcare involved appropriate bargaining units in nursing home facilities. The employer argued that the union-proposed unit should include maintenance and food service employees as well as certified nurse assistants.
The Board rejected its own longstanding precedent and established a new standard for determining whether unions may propose a unit comprised of only a small group of employees over an employer’s objection that other employees share a “community of interest” with the proposed group.
Under the Board’s new standard, a union-proposed bargaining unit is presumptively appropriate and employers must prove that the excluded employees share an “overwhelming community of interest” with the employees included in the union-proposed unit. The NLRB’s requirement for an “overwhelming community of interest” will make it more difficult for an employer to succeed in changing the composition of a union-proposed unit. This means that employers will be unable to insist upon a truly representative union election and will be faced with the prospect of multiple smaller bargaining units and multiple negotiations and labor contracts in cases where a union is certified.
In UGL-UNICCO Service Company, the NLRB overturned precedent to protect an incumbent union from facing a vote of its members after a corporate merger.
An employer who purchases the assets of another employer must recognize and bargain with an incumbent union when there is “substantial continuity” between the two business operations and a majority of the purchasing employer’s employees were employed by the predecessor employer under a union contract. Under prior NLRB precedent, employees of the purchasing employer had the right to seek an election to determine whether to decertify the incumbent union or select a new union after the asset sale.
In UGL-UNICCO Service Company, the Board majority eliminated the employees’ right to challenge an incumbent union and created “a conclusive presumption of majority support for a defined period of time, preventing any challenges to the [incumbent] union’s status.” This decision drastically limits employee choice with respect to representation by prohibiting employees from challenging an incumbent union’s status for a minimum of six months and up to one year after a change in employer due to an asset purchase or merger.
In Lamons Gasket, the NLRB expressly overruled its four-year old decision in Dana Corp., 351 NLRB 424 (2007). In Dana Corp., the NLRB allowed employees or a rival union to challenge the majority status of a union after an employer voluntarily recognized it as the representative of its employees (typically through a card check procedure). “Voluntary recognition” is a process by which an employer agrees to recognize a union as the exclusive representative of a group of its employees without an NLRB-conducted secret ballot election. Under Dana Corp., the employer could post a notice following voluntary recognition advising its employees that they had up to 45 days to challenge the union’s majority status through an NLRB-conducted election. The Dana Corp. rule was designed to give employees the option of voting on a union before a contract was negotiated. The NLRB’s “contract bar” rule prohibits representation elections during the term of a labor contract for up to three years. The NLRB’s decision in Dana Corp. was designed to allow employees an opportunity to change or get rid of their union representative before entering the contract bar period when they would be prohibited from doing so.
The Lamons Gasket decision overturned Dana Corp. andre-imposed a complete “voluntary recognition bar” that blocks any challenge to the union’s majority status for a minimum of six months and for as long as one year prior to the negotiation of a contract.
If your employees are not unionized, you should anticipate an increased potential for union organizing activity. Employers should ensure that their management and supervisory personnel keep abreast of employee sentiment and address employee issues directly. Importantly, employers may not threaten, conduct surveillance of, or interrogate employees concerning union activities – or promise benefits in exchange for rejecting a union. However, ensuring good management/employee communication and keeping your finger on the pulse of your employees by regularly discussing work place issues is lawful. Employers may also notify their employees of their opinion of unions and the drawbacks of unionization in language that is not disparaging or threatening toward employees. Employers should also review their workplace solicitation, distribution and posting rules to ensure that they are consistent with the decisions of the NLRB and that they are consistently enforced. Finally, to have a fighting chance against a union organizing campaign, employers must be prepared to launch a campaign at a moment’s notice.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, regularly appears before the National Labor Relations Board and practices in all areas of labor relations. For more information about these decisions or labor law, please contact Pat at 216.696.4441 or pjh@zrlaw.com.
On National Labor Relations Board (“NLRB”) Chairman Wilma Liebman’s last day before retirement, the NLRB issued three decisions overturning years of Board precedent concerning bargaining unit composition and employee rights to vote to decertify their union representatives. Each decision expands the power of unions while restricting employee and employer rights under the National Labor Relations Act (“NLRA”). Together with the recently published NLRA rights posting rule and the soon expected fast-track union election rules, the NLRB has taken clear steps to tilt drastically the playing field in favor of unions. For the first time, the NLRB is aggressively changing the rules to make it easier for unions to organize employees and to keep them organized.
With the defeat of the Employer Free Choice Act (“EFCA”) in the U.S. Congress in 2009 and 2010, the NLRB has unleashed an aggressive administrative effort to provide unions with many of the advantages contained in EFCA without congressional ratification. Every employer must recognize the pro-union changes the NLRB has made to ensure readiness to respond to the future union organizing efforts that these decisions encourage.
Specialty Healthcare, 357 NLRB N0. 83 (August 26, 2011)
The NLRB gives a preference to union-proposed bargaining units.In Specialty Healthcare, the Board established a new standard for determining whether an employer may add to or challenge a petitioned-for-unit of employees. Specialty Healthcare involved appropriate bargaining units in nursing home facilities. The employer argued that the union-proposed unit should include maintenance and food service employees as well as certified nurse assistants.
The Board rejected its own longstanding precedent and established a new standard for determining whether unions may propose a unit comprised of only a small group of employees over an employer’s objection that other employees share a “community of interest” with the proposed group.
Under the Board’s new standard, a union-proposed bargaining unit is presumptively appropriate and employers must prove that the excluded employees share an “overwhelming community of interest” with the employees included in the union-proposed unit. The NLRB’s requirement for an “overwhelming community of interest” will make it more difficult for an employer to succeed in changing the composition of a union-proposed unit. This means that employers will be unable to insist upon a truly representative union election and will be faced with the prospect of multiple smaller bargaining units and multiple negotiations and labor contracts in cases where a union is certified.
UGL-UNICCO Service Company, 357 NLRB No. 76 (August 26, 2011).
Unions protected from employee challenges following a merger or acquisition.In UGL-UNICCO Service Company, the NLRB overturned precedent to protect an incumbent union from facing a vote of its members after a corporate merger.
An employer who purchases the assets of another employer must recognize and bargain with an incumbent union when there is “substantial continuity” between the two business operations and a majority of the purchasing employer’s employees were employed by the predecessor employer under a union contract. Under prior NLRB precedent, employees of the purchasing employer had the right to seek an election to determine whether to decertify the incumbent union or select a new union after the asset sale.
In UGL-UNICCO Service Company, the Board majority eliminated the employees’ right to challenge an incumbent union and created “a conclusive presumption of majority support for a defined period of time, preventing any challenges to the [incumbent] union’s status.” This decision drastically limits employee choice with respect to representation by prohibiting employees from challenging an incumbent union’s status for a minimum of six months and up to one year after a change in employer due to an asset purchase or merger.
Lamons Gasket, 357 NLRB No. 72 (August 26, 2011).
Voluntary recognition bars decertification for up to one year.In Lamons Gasket, the NLRB expressly overruled its four-year old decision in Dana Corp., 351 NLRB 424 (2007). In Dana Corp., the NLRB allowed employees or a rival union to challenge the majority status of a union after an employer voluntarily recognized it as the representative of its employees (typically through a card check procedure). “Voluntary recognition” is a process by which an employer agrees to recognize a union as the exclusive representative of a group of its employees without an NLRB-conducted secret ballot election. Under Dana Corp., the employer could post a notice following voluntary recognition advising its employees that they had up to 45 days to challenge the union’s majority status through an NLRB-conducted election. The Dana Corp. rule was designed to give employees the option of voting on a union before a contract was negotiated. The NLRB’s “contract bar” rule prohibits representation elections during the term of a labor contract for up to three years. The NLRB’s decision in Dana Corp. was designed to allow employees an opportunity to change or get rid of their union representative before entering the contract bar period when they would be prohibited from doing so.
The Lamons Gasket decision overturned Dana Corp. andre-imposed a complete “voluntary recognition bar” that blocks any challenge to the union’s majority status for a minimum of six months and for as long as one year prior to the negotiation of a contract.
What Should Employers Do?
In addition to these three decisions, the NLRB is expected to issue new regulations requiring that all representation elections take place within two to three weeks of the date a union files a petition. This will reduce the period during which an employer can legally make the case against unionization by more than half. With the decision in Specialty Healthcare, employers’ ability to challenge the composition of a union-proposed bargaining unit is also limited. In the end, employers will have less time to oppose a union organizing campaign and fewer options available to do so. Although there are reports that the U.S. Congress plans on taking action to stop the NLRB from implementing its accelerated election rules, until those plans become law, employers must be prepared.If your employees are not unionized, you should anticipate an increased potential for union organizing activity. Employers should ensure that their management and supervisory personnel keep abreast of employee sentiment and address employee issues directly. Importantly, employers may not threaten, conduct surveillance of, or interrogate employees concerning union activities – or promise benefits in exchange for rejecting a union. However, ensuring good management/employee communication and keeping your finger on the pulse of your employees by regularly discussing work place issues is lawful. Employers may also notify their employees of their opinion of unions and the drawbacks of unionization in language that is not disparaging or threatening toward employees. Employers should also review their workplace solicitation, distribution and posting rules to ensure that they are consistent with the decisions of the NLRB and that they are consistently enforced. Finally, to have a fighting chance against a union organizing campaign, employers must be prepared to launch a campaign at a moment’s notice.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, regularly appears before the National Labor Relations Board and practices in all areas of labor relations. For more information about these decisions or labor law, please contact Pat at 216.696.4441 or pjh@zrlaw.com.
Friday, August 26, 2011
Employers Need to See the Writing on the Wall – National Labor Relations Board Publishes Final Rule on Posting Requirements
*By Patrick J. Hoban
On August 25, 2011, the National Labor Relations Board (“NLRB”) released its final rule - designated as 29 CFR 104 in the Federal Code of Regulations - requiring, for the first time ever, that employers post a notice of employee rights under the National Labor Relations Act (“NLRA”). The rule takes effect on November 14, 2011 and requires most private-sector employers to post a specific notice provided by the NLRB. The rule exempts public employers, employers subject to the Railway Labor Act (e.g., transportation industry employers), and very small employers (generally, those with an annual business volume of less than $50,000.00). Employers subject to the rule must post the required notice whether their workforce is unionized or not.
Employers must post the notice where other workplace notices are typically posted – in “conspicuous places in the workplace.” Additionally, employers who customarily communicate policies to employees electronically or via a website must also post the notice that way in addition to the physical posting in the workplace. Importantly, if 20% or more of an employer’s workforce is not “proficient in English,” the employer must post or otherwise provide a version of the notice in the language those employees speak. Beginning November 1, copies of the notice will be available from NLRB regional offices or employers may download them from the NLRB website (www.nlrb.gov) free of charge. The NLRB will also provide versions of the notice in languages other than English through its regional offices and online.
The notice identifies employee rights under the NLRA to act together to improve wages and working conditions; to form, join, and assist a union; to bargain collectively with their employer; and to refrain from any of these activities. However, the notice also tells employees how to file an unfair labor practice charge and/or contact the NLRB to initiate an investigation of a possible unfair labor practice. The rule does not impose reporting or recordkeeping requirements on employers.
The NLRB will treat any failure to post the required notice as an unfair labor practice. While, in most cases, a failure to post will result in a cease and desist order, the rule provides that it may also serve as proof of unlawful employer motive relevant to other unfair labor practice charges. The rule reserves to the NLRB the right to impose additional remedies for violations consistent with its statutory authority.
If you are a private-sector employer covered by the NLRA - whether your employees are unionized or not - you must obtain and post the required NLRB notice by November 14, 2011. If you have any questions about the rule or the NLRB, contact Pat Hoban.
*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 labor relations. For more information about the Final Rule or labor law, please contact Pat at 216.696.4441 or pjh@zrlaw.com.
On August 25, 2011, the National Labor Relations Board (“NLRB”) released its final rule - designated as 29 CFR 104 in the Federal Code of Regulations - requiring, for the first time ever, that employers post a notice of employee rights under the National Labor Relations Act (“NLRA”). The rule takes effect on November 14, 2011 and requires most private-sector employers to post a specific notice provided by the NLRB. The rule exempts public employers, employers subject to the Railway Labor Act (e.g., transportation industry employers), and very small employers (generally, those with an annual business volume of less than $50,000.00). Employers subject to the rule must post the required notice whether their workforce is unionized or not.
Employers must post the notice where other workplace notices are typically posted – in “conspicuous places in the workplace.” Additionally, employers who customarily communicate policies to employees electronically or via a website must also post the notice that way in addition to the physical posting in the workplace. Importantly, if 20% or more of an employer’s workforce is not “proficient in English,” the employer must post or otherwise provide a version of the notice in the language those employees speak. Beginning November 1, copies of the notice will be available from NLRB regional offices or employers may download them from the NLRB website (www.nlrb.gov) free of charge. The NLRB will also provide versions of the notice in languages other than English through its regional offices and online.
The notice identifies employee rights under the NLRA to act together to improve wages and working conditions; to form, join, and assist a union; to bargain collectively with their employer; and to refrain from any of these activities. However, the notice also tells employees how to file an unfair labor practice charge and/or contact the NLRB to initiate an investigation of a possible unfair labor practice. The rule does not impose reporting or recordkeeping requirements on employers.
The NLRB will treat any failure to post the required notice as an unfair labor practice. While, in most cases, a failure to post will result in a cease and desist order, the rule provides that it may also serve as proof of unlawful employer motive relevant to other unfair labor practice charges. The rule reserves to the NLRB the right to impose additional remedies for violations consistent with its statutory authority.
If you are a private-sector employer covered by the NLRA - whether your employees are unionized or not - you must obtain and post the required NLRB notice by November 14, 2011. If you have any questions about the rule or the NLRB, contact Pat Hoban.
*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 labor relations. For more information about the Final Rule or labor law, please contact Pat at 216.696.4441 or pjh@zrlaw.com.
Monday, August 15, 2011
Does At-Will Mean You Can Change An Employee’s Pay At Any Time?
By Stefanie L. Baker
An Ohio Court of Appeals recently recognized that employers are not always free to change their employees’ compensation, even when those employees are employees at will.
The case is Pate v. Quick Solutions, Inc., 2011-Ohio-3925. The employee in the Pate case was an employee at will who had, at one time, signed a written contract with his employer. That contract provided that a “Bonus Calculation Model” would determine certain salary increases and cash bonuses throughout his employment.
In 2004 the parties attempted to reach an agreement on a new bonus plan, but were never able to agree. The President of the company then chose to simply change Pate’s bonus to a purely discretionary bonus, reasoning that he could do so because Pate was an employee at will. However, the company presented no evidence that it actually informed Pate it was making this change: it simply implemented the change.
When the company eventually fired Pate, Pate filed a lawsuit, claiming (among other things) that he was owed unpaid bonuses under the “Bonus Calculation Model.” The trial court initially threw out Pate’s bonus claim, but the Court of Appeals reversed, agreeing with Pate that he might be owed bonus money. The Court of Appeals recognized that the company, as an employer of at-will employees, was free to change the compensation of its employees at its whim, and the employees would be deemed to have accepted this change if they continued to show up and work for the employer after the change was announced. But the Court of Appeals found that there was no evidence presented regarding whether or not the company had ever announced to Pate that it was changing the manner in which his bonus was calculated. If, in fact, the company never notified Pate of the change, Pate never had the opportunity to accept it (by continuing to work) or reject it (by quitting). If that were the case, there was never a valid change, and the “Bonus Calculation Model” would still apply. The Court of Appeals remanded the case back to the trial court to determine whether Pate received notice or otherwise knew of the alleged change to his cash bonus plan.
The Pate case illustrates that employers of at-will employees cannot simply implement changes to their employees’ compensation and benefits without actually informing employees of the change. Otherwise, courts might find the employer on the hook for benefits that the employer thought it replaced long-ago.
An Ohio Court of Appeals recently recognized that employers are not always free to change their employees’ compensation, even when those employees are employees at will.
The case is Pate v. Quick Solutions, Inc., 2011-Ohio-3925. The employee in the Pate case was an employee at will who had, at one time, signed a written contract with his employer. That contract provided that a “Bonus Calculation Model” would determine certain salary increases and cash bonuses throughout his employment.
In 2004 the parties attempted to reach an agreement on a new bonus plan, but were never able to agree. The President of the company then chose to simply change Pate’s bonus to a purely discretionary bonus, reasoning that he could do so because Pate was an employee at will. However, the company presented no evidence that it actually informed Pate it was making this change: it simply implemented the change.
When the company eventually fired Pate, Pate filed a lawsuit, claiming (among other things) that he was owed unpaid bonuses under the “Bonus Calculation Model.” The trial court initially threw out Pate’s bonus claim, but the Court of Appeals reversed, agreeing with Pate that he might be owed bonus money. The Court of Appeals recognized that the company, as an employer of at-will employees, was free to change the compensation of its employees at its whim, and the employees would be deemed to have accepted this change if they continued to show up and work for the employer after the change was announced. But the Court of Appeals found that there was no evidence presented regarding whether or not the company had ever announced to Pate that it was changing the manner in which his bonus was calculated. If, in fact, the company never notified Pate of the change, Pate never had the opportunity to accept it (by continuing to work) or reject it (by quitting). If that were the case, there was never a valid change, and the “Bonus Calculation Model” would still apply. The Court of Appeals remanded the case back to the trial court to determine whether Pate received notice or otherwise knew of the alleged change to his cash bonus plan.
The Pate case illustrates that employers of at-will employees cannot simply implement changes to their employees’ compensation and benefits without actually informing employees of the change. Otherwise, courts might find the employer on the hook for benefits that the employer thought it replaced long-ago.
Wednesday, July 6, 2011
Sixth Circuit Court of Appeals Finds "Individual Mandate" Requirement of Federal Health Care Law within Commerce Clause Powers – For Now.
*By Pat Hoban
On June 29, 2011, a three-judge panel of the Sixth Circuit Court of Appeals held that the Patient Protection and Affordable Care Act’s (“PPACA”) requirement that every individual have minimum health insurance coverage or pay a fine was within congressional power under the Commerce Clause of the U.S. Constitution. The Federal Government contends that the “individual mandate” is a necessary part of PPACA’s overall attempt to reduce health insurance costs and increase affordable coverage.
The mandate’s cost-control mechanisms are founded on the premise that by requiring every individual to pay for health insurance, insurers will increase premium collections without an associated increase in payouts for benefits. Additionally, the Federal Government contends that a significant driver of health insurance cost increases is the provision of benefits to uncovered individuals. Thus, mandating health insurance coverage for all individuals (with only limited exceptions) is an essential element of PPACA’s expansion of health insurance coverage through a combination of government subsidies and private insurance. Notably, other provisions of PPACA – guaranteed coverage, prohibition of pre-existing condition exclusions and significant restrictions on an insurer’s ability to rescind coverage - increase the incentive for individuals to wait to obtain health insurance coverage until they develop a medical condition.
In Thomas More Law Center v. Obama, 2011 U.S. App. LEXIS 13265 (June 29, 2011), a public interest law firm and three individual plaintiffs contended that the individual mandate “facially” violated the limited powers of the U.S. Congress set forth in the Commerce Clause. A statute may be deemed facially unconstitutional if there are no set of circumstances under which it may be enforced in accordance with the Constitution. Plaintiffs argued that the requirement impermissibly regulated economic “inactivity” by penalizing an individual’s decision not to obtain health insurance. Two of the three judges on the panel disagreed and upheld the district court’s determination that the provision was within Congress’ Commerce Clause powers. However, although two of the three judges found the provision constitutional, they relied on significantly different rationales.
Judge Martin concluded that because every individual will seek medical care at some point, a decision not to obtain health insurance is essentially a decision to “self-insure.” As a result, because the Federal Government already regulates health insurance and PPACA establishes a comprehensive scheme to further regulate access to affordable health care and minimum insurance benefits, a decision to self-insure was economic activity subject to congressional regulation. By contrast, Judge Sutton, although he also affirmed the district court’s decision, relied on U.S. Supreme Court precedent to conclude that while the individual mandate was not “facially” unconstitutional, there may be circumstances under which its application would violate the Commerce Clause. Judge Sutton specifically noted that lower court judges were not freed from “the duty to respect the language and direction of the [Supreme] Court’s precedents, particularly in view of the reality that this law has the purpose and effect of regulating commerce and in view of the save-before-destroy imperatives of reviewing facial challenges.” Judge Graham, the third member of the panel, in dissent, concluded that by regulating a decision not to engage in economic activity, PPACA’s individual mandate violated the commerce clause. Notably, each judge rejected the Government’s argument that the individual mandate “fine” was a tax and that the provision was a constitutional exercise of congressional taxing power.
The decision is the first by a federal appellate court to rule on the issue of whether the individual mandate passes constitutional muster. The provision’s constitutionality has been challenged in numerous lawsuits across the country. In February 2011, the District Court for the Circuit Court of Appeals for the District of Columbia Circuit granted the Federal Government’s motion to dismiss a similar action challenging the individual mandate under PPACA (Mead v. Holder, 2011 U.S. Dist. LEXIS 18592 (February 22, 2011). However, district courts in both the Fourth and Eleventh Circuits have found the provision in violation of the Commerce Clause (Commonwealth of Virginia v. Sebelius, 728 F.Supp. 2d 768 (E.D. VA, December 13, 2010) (State of Florida v. U.S. Dept. of Health and Human Services, 2011 U.S. Dist. LEXIS 22464 (N.D. FL March 3, 2011). The Fourth and Eleventh Circuits are expected to rule on appeals from these two decisions over the summer.
Notwithstanding the Sixth Circuit’s decision last week, it is clear that the final determination as to the constitutionality of the individual mandate will be determined by the U.S. Supreme Court, perhaps as early as next year. Based upon the Federal Government’s repeated contentions that PPACA’s overall regulatory scheme cannot succeed without the provision, PPACA’s ultimate fate may rest with the Supreme Court’s decision on this specific issue.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, represents clients in labor and employment matters including preparation for and compliance with PPACA. For more information about PPACA or recent court decisions concerning it, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
On June 29, 2011, a three-judge panel of the Sixth Circuit Court of Appeals held that the Patient Protection and Affordable Care Act’s (“PPACA”) requirement that every individual have minimum health insurance coverage or pay a fine was within congressional power under the Commerce Clause of the U.S. Constitution. The Federal Government contends that the “individual mandate” is a necessary part of PPACA’s overall attempt to reduce health insurance costs and increase affordable coverage.
The mandate’s cost-control mechanisms are founded on the premise that by requiring every individual to pay for health insurance, insurers will increase premium collections without an associated increase in payouts for benefits. Additionally, the Federal Government contends that a significant driver of health insurance cost increases is the provision of benefits to uncovered individuals. Thus, mandating health insurance coverage for all individuals (with only limited exceptions) is an essential element of PPACA’s expansion of health insurance coverage through a combination of government subsidies and private insurance. Notably, other provisions of PPACA – guaranteed coverage, prohibition of pre-existing condition exclusions and significant restrictions on an insurer’s ability to rescind coverage - increase the incentive for individuals to wait to obtain health insurance coverage until they develop a medical condition.
In Thomas More Law Center v. Obama, 2011 U.S. App. LEXIS 13265 (June 29, 2011), a public interest law firm and three individual plaintiffs contended that the individual mandate “facially” violated the limited powers of the U.S. Congress set forth in the Commerce Clause. A statute may be deemed facially unconstitutional if there are no set of circumstances under which it may be enforced in accordance with the Constitution. Plaintiffs argued that the requirement impermissibly regulated economic “inactivity” by penalizing an individual’s decision not to obtain health insurance. Two of the three judges on the panel disagreed and upheld the district court’s determination that the provision was within Congress’ Commerce Clause powers. However, although two of the three judges found the provision constitutional, they relied on significantly different rationales.
Judge Martin concluded that because every individual will seek medical care at some point, a decision not to obtain health insurance is essentially a decision to “self-insure.” As a result, because the Federal Government already regulates health insurance and PPACA establishes a comprehensive scheme to further regulate access to affordable health care and minimum insurance benefits, a decision to self-insure was economic activity subject to congressional regulation. By contrast, Judge Sutton, although he also affirmed the district court’s decision, relied on U.S. Supreme Court precedent to conclude that while the individual mandate was not “facially” unconstitutional, there may be circumstances under which its application would violate the Commerce Clause. Judge Sutton specifically noted that lower court judges were not freed from “the duty to respect the language and direction of the [Supreme] Court’s precedents, particularly in view of the reality that this law has the purpose and effect of regulating commerce and in view of the save-before-destroy imperatives of reviewing facial challenges.” Judge Graham, the third member of the panel, in dissent, concluded that by regulating a decision not to engage in economic activity, PPACA’s individual mandate violated the commerce clause. Notably, each judge rejected the Government’s argument that the individual mandate “fine” was a tax and that the provision was a constitutional exercise of congressional taxing power.
The decision is the first by a federal appellate court to rule on the issue of whether the individual mandate passes constitutional muster. The provision’s constitutionality has been challenged in numerous lawsuits across the country. In February 2011, the District Court for the Circuit Court of Appeals for the District of Columbia Circuit granted the Federal Government’s motion to dismiss a similar action challenging the individual mandate under PPACA (Mead v. Holder, 2011 U.S. Dist. LEXIS 18592 (February 22, 2011). However, district courts in both the Fourth and Eleventh Circuits have found the provision in violation of the Commerce Clause (Commonwealth of Virginia v. Sebelius, 728 F.Supp. 2d 768 (E.D. VA, December 13, 2010) (State of Florida v. U.S. Dept. of Health and Human Services, 2011 U.S. Dist. LEXIS 22464 (N.D. FL March 3, 2011). The Fourth and Eleventh Circuits are expected to rule on appeals from these two decisions over the summer.
Notwithstanding the Sixth Circuit’s decision last week, it is clear that the final determination as to the constitutionality of the individual mandate will be determined by the U.S. Supreme Court, perhaps as early as next year. Based upon the Federal Government’s repeated contentions that PPACA’s overall regulatory scheme cannot succeed without the provision, PPACA’s ultimate fate may rest with the Supreme Court’s decision on this specific issue.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, represents clients in labor and employment matters including preparation for and compliance with PPACA. For more information about PPACA or recent court decisions concerning it, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Tuesday, June 28, 2011
EMPLOYMENT LAW QUARTERLY | Summer 2011, Volume XIII, Issue ii
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Recent trends show the number of wage and hour lawsuits increased from 2007 to 2010. However, the settlement values for these cases have seen a sharp decline. The National Economic Research Associates, Inc. (NERA) discovered the recent trends by collecting data on 187 wage and hour cases. The collected cases include a number of allegations, such as off-the-clock work; unpaid overtime; missed, short, or late meal periods and rest breaks; employee misclassification; unpaid termination wages; failure to pay minimum wage; time shaving and improper tip pooling.
Not all the cases had a reported settlement value, but the 139 cases that did included settlements totaling $1.77 billion for an average settlement of $12.8 million per case and a median settlement of $4.3 million. During the three year period, the average settlement value declined in recent years from more than $20 million in 2007-2008, to approximately $10 million in 2009, to $7.6 million in 2010. The average per-plaintiff settlement also fell from about $8,000 in 2007 to just over $5,000 in 2010.
It is difficult to explain, for certain, the recent decrease in settlement values. One possible explanation are case-specific factors, such as the size of the potential class, the duration of the alleged class period, the number and type of allegations made in each case, and the jurisdiction involved. The number of class members participating and the duration of the class period have the greatest impact on settlement value, as settlement values increase significantly when there are a greater number of plaintiffs and/or longer class periods.
As the number of wage and hour lawsuits increase, employers must remain vigilant with their compliance efforts. If your company has any wage and hour concerns, please contact us.
* Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment Law, is licensed to practice law in Ohio and New York. Stephen's practice encompasses all areas of employment and labor law and works extensively in defending class and collective actions. For more information about wage and hour laws or any other employment matter, please contact Stephen at 216.696.4441 or ssz@zrlaw.com.
Many employers now sponsor Wellness programs for their employees. These programs serve employees by encouraging healthy habits and providing early warning of potential health concerns. They also help employers control health insurance costs. Broward County, Florida (the "County") implemented such a program. The program was voluntary, and those who participated filled out a Health Risk Assessment questionnaire and completed a finger-stick blood test to measure blood sugar and cholesterol levels. If the testing revealed certain potential health problems, the County's health insurer then offered the employee an opportunity to participate in "disease management coaching" and obtain free medications.
In 2009, the County began penalizing employees who chose not to participate in the Wellness program by charging them an extra $20 on each of their bi-weekly paychecks. In Seff v. Broward County, a County employee sued the County on behalf of a class of his co-workers, arguing that the $20 charge was a way to compel the employees to submit to the Health Risk Assessment questionnaire process, and thus forced them to undergo a medical-related inquiry in violation of the Americans with Disabilities Act ("ADA").
The ADA makes it unlawful for employers to make "inquiries" about their employees' medical or health conditions, unless the inquiries are job-related and consistent with business necessity. But the ADA contains a "safe harbor" for employers who establish, sponsor or administer "bona fide benefit plan[s] that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law." The employee in the Seff case argued that the $20 charge in essence forced employees to submit to medical inquiries in violation of the ADA, and that the safe harbor should not apply because the County's Wellness program was not truly based on any legitimate underwriting, classification, or administration risks, but instead on the County's desire to improve the health of its employees.
The court rejected these arguments and held that the safe harbor applied. The evidence showed that the County implemented the program "to classify various risks and decide what type of benefits plans will be needed in the future in light of these risks," and thus to determine "what kind of coverage will need to be provided … on a macroscopic level so it may form economically sound benefits plans for the future." In short, the County implemented the program on legitimate "insurance and risk assessment principles," rather than on "some independent desire for a healthy workforce," and thus was entitled to the benefit of the safe harbor.
Employers who sponsor Wellness programs should pay attention to this decision. The Equal Employment Opportunities Commission has taken the position that any coercive element to a Wellness program – such as the $20 charge in the Seff case – renders the program potentially unlawful under the ADA. While the safe harbor in the ADA protects employers who sponsor or administer Wellness programs for bona fide risk assessment reasons, Seff demonstrates that the safe harbor does not protect employers who implement Wellness programs merely out of the altruistic desire for healthy employees.
If you have questions about whether your company's Wellness program might run afoul of the ADA, please let us know.
* Jason Rossiter practices in all areas of employment litigation and is licensed to practice law in Ohio, Pennsylvania, and California. For more information about Wellness programs or any other employment issue, please contact Zashin & Rich at 216.696.4441.
By Stefanie L. Baker
Maryland Governor Martin O'Malley signed Maryland's Job Applicant Fairness Act (the "Act") on April 12, 2011. The Act becomes effective October 1, 2011. Maryland joins Hawaii, Illinois, Oregon and Washington in the nationwide push to ban employer credit checks. Several other states are also considering restricting an employer's use of credit history, including: California, Connecticut, Florida, Georgia, Indiana, Kentucky, Michigan, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Texas and Vermont.
The Act states that an employer may not use an applicant or employee's credit report or credit history in determining whether to:
Under federal law, applicants must consent to a credit check in writing. In addition, if an employer uses a credit report under an exemption, the employer must disclose its use to an applicant or employee in writing. The Act does not prohibit employers from performing other employment-related background checks, including: driving records, criminal history investigations, and educational history investigations. However, employers must ensure these types of background checks do not include credit information.
An employee or job applicant who believes his or her employer or prospective employer violated the Act can file an administrative complaint with the Maryland's Commissioner of Labor and Industry. The Commissioner will attempt to resolve the dispute informally. If informal resolution is unsuccessful, the Commissioner may assess a fine against the employer of up to $500 for the first offense and up to $2,500 for a subsequent violation. Additionally, while the Act itself does not provide for a private cause of action in court, an employee likely could file a suit for wrongful termination or failure-to-hire under Maryland public policy.
Before October 1, 2011, Maryland employers should review their policies to make sure their use of a credit report complies with the Act.
By Michele L. Jakubs*
Maryland's Healthy Retail Employee Act (the "Act") went into effect March 1, 2011. The Act requires Maryland employers with 50 or more retail employees to provide breaks based upon the number of hours an employee works in a shift. Under the Act, a "retail establishment" is a "place of business with the primary purpose of selling goods to a consumer who is present at the place of business at the time of sale" and "retail employees" include those who are "engaged in actual sales, in a store." As such, employees who are not working in a "retail establishment," such as a corporate or other office, or do not sell are not covered by the Act and do not count toward the 50-employee requirement.
For purposes of applying the 50-employee rule, companies must include the total number of retail employees they have throughout Maryland. For example, a retailer that maintains several locations throughout the state must count all retail employees working throughout the state. However, the Act does not apply to employees who work at a single location with five or fewer employees, regardless of the number of employees the employer has throughout the state.
Covered employers must provide breaks as follows:
The Act allows for a "working shift break." For example, if the employee's work prevents the employee from being relieved during one of the employee's breaks, or the employee consumes a paid meal while working, the employee may waive the break. Employees may waive the "working shift break" by entering into a written agreement with their employer.
The Act does not address whether an employer must pay the employee for the required breaks. However, under Maryland law and the FLSA, short breaks of less than 20 minutes constitute compensable work time that must be included in the sum of all hours worked in a week.
If an employee believes their employer is violating the law, the Act provides a process for employees to file a complaint with Maryland's Commissioner of Labor and Industry. Remedies include an order directing compliance with the law and potential civil penalties of $300 to $600 per employee for each instance of non-compliance. Additionally, in limited situations, a covered employee may bring a court action to enforce the Commissioner's order and for recovery of treble damages and reasonable attorneys' fees and costs. In order to avoid civil penalties, retailers in Maryland should review their break policies and employee handbooks to make sure they comply with these new requirements.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of employment litigation and has extensive experience counseling employers on paid break time issues under the FLSA. For more information on Maryland's Healthy Retail Employee Act or any other FLSA compliance question, please contact Michele at 216.696.4441 or mlj@zrlaw.com.
By George S. Crisci*
On April 25, 2011, the U.S. District Court for the Northern District of Ohio ruled that Shari Hutchinson's sexual orientation discrimination claim falls under the equal protection clause of the 14th Amendment of the U.S. Constitution. See Hutchinson v. Cuyahoga County Bd. of County Comm'r, No.1:08-CV-2966, 2011 U.S. Dist. Lexis 46633 (N.D. Ohio 2011). This is a potentially far-reaching decision and could prove to be the spring board for a federal law preventing workplace discrimination based on sexual orientation.
Hutchinson, a lesbian, began working for Cuyahoga County at its Child-Support Enforcement Agency (CSEA) in 2002. In 2008, she filed suit alleging, among other claims, CSEA denied her various promotions in favor of less qualified heterosexuals and that CSEA retaliated against due to her sexual orientation. Hutchinson brought her claims under 42 U.S.C. § 1983 ("Section 1983"), which prohibits the deprivation of federal rights by anyone acting under the color of state law. Hutchinson did not bring a claim under Title VII, which generally prohibits discrimination based on race, color, religion, sex, or national origin.
Cuyahoga County sought dismissal of the case on the basis that sexual orientation discrimination is not an actionable claim under Section 1983. The County based its argument, in large part, on the premise that Section 1983 mirrors Title VII and that since sexual orientation is not a protected class under Title VII it also is not a protected class under Section 1983. As a result, the County argued Hutchinson fails the first prong of her prima facie case in that she is not a member of a protected class. The Court, however, disagreed. While the Court acknowledged its past reliance on Title VII framework when analyzing Section 1983 claims, it ruled that rational basis review applied. The Court held "that an employee who alleges sexual orientation discrimination under § 1983 is not per se precluded from establishing an equal protection claim against her employer."
Public employers should take note of this ruling. While on its face, the ruling does not apply to private employers, they too should be aware of the court's finding. As with same-sex marriage, this case is evidence that the sexual orientation discrimination landscape is ever-changing.
* George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. For more information about employment discrimination or any other labor or employment issue, please contact George at 216.696.4441 or gsc@zrlaw.com.
By David R. Vance*
The Equal Employment Opportunity Commission ("EEOC") released regulations regarding the Americans with Disabilities Amendments Act of 2008 ("ADAAA") on March 25, 2011. The EEOC's regulations took effect May 24, 2011 and apply to all private, state, and local government employers with 15 or more employees. The regulations also apply to employment agencies, unions, and joint labor-management committees.
The ADAAA makes several important changes to the Americans with Disabilities Act ("ADA"). While the ADAAA retains the ADA's basic definition of "disability" as "an impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment," the regulations change the statutory interpretation of disability. Some of the regulation's major changes include the following:
Broad Coverage
It is now much easier for employees seeking the ADA's protection to establish the existence of a disability, as the regulation's interpretation broadens the definition of disability.
"Major Life Activities"
The regulations include two non-exhaustive lists expanding the definition of "major life activities." The first list includes many activities that the EEOC already recognized as major life activities (e.g., walking), as well as activities that the EEOC has not specifically recognized (e.g., reading, bending, communicating). The second list includes major bodily functions (e.g., "functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions"). Since these lists are non-exhaustive, the regulations include nine "rules of construction" to help employers determine if an individual's impairment substantially limits a major life activity.
"Substantially Limits"
The regulations make clear that "substantially limits" is to be construed broadly in favor of expansive coverage. Additionally, the regulation's interpretation of "substantially limits" requires a lower degree of functional limitation as compared to the standard previously applied by the courts. The third "rule of construction" explains that "the primary object of attention in cases brought under the ADA should be whether covered entities have complied with their obligations and whether discrimination has occurred, not whether an individual's impairment substantially limits a major life activity. Accordingly, the threshold issue of whether an impairment 'substantially limits' a major life activity should not demand extensive analysis." As a result, employees can show more easily that they have an impairment substantially limiting one or more major life activities.
Individualized Assessment
The regulations abolish any notion that certain medical conditions will "always" qualify as disabilities.
Episodic Conditions and Ameliorative Effects
The regulations make clear that the current effects of a disability are not the only factors that an employer must consider in determining whether a medical condition is substantially limiting. Impairments that are episodic or in remission – cancer, epilepsy, hypertension, asthma, diabetes, major depressive disorder, bipolar disorder and schizophrenia – also qualify as disabilities if substantially limiting when active.
Reasonable Accommodation
An individual must have an actual disability or record of an actual disability in order to qualify for a reasonable accommodation. Therefore, an individual who claims he or she is "regarded as" disabled will not qualify for a reasonable accommodation.
"Regarded As" Claims
Going forward, most ADA claims will likely be "regarded as" claims. An applicant is "regarded as" disabled if he or she is "subject to an action prohibited by the ADA (e.g., failure to hire or termination) based on an impairment that is not transitory and minor." The ADAAA substantially expands employer liability under the "regarded as" theory by removing the requirement that an employee prove that the perceived impairment substantially limits a major life activity. An employer may still defend a "regarded as" claim by asserting that the impairment at issue, whether actual or perceived, is both transitory and minor.
With the ADAAA and the EEOC's recent regulations, it is significantly more difficult for employers to prove that an employee's medical condition does not qualify as a disability. Therefore, employers should instead focus their ADA compliance efforts on the interactive process and providing a reasonable accommodation.
*David R. Vance has extensive experience with ADA and ADAAA compliance. For more information on the ADA or ADAAA including providing a reasonable accommodation, please contact David at drv@zrlaw.com or 216-696-4441.
The Employment and Labor Group at Zashin & Rich is now tweeting! The law of the workplace can change rapidly, and Zashin & Rich's tweets will keep you up to date concerning the latest developments in employment and labor law.
Follow us on Twitter
https://twitter.com/ZashinRich @ZashinRich
- The Number of Wage and Hour Cases Going Up, Settlement Values Going Down
- Does Your Wellness Program Comply with the ADA?
- Maryland Joins Other States in Restricting Employer Use of Credit History
- Mandatory Breaks Required for Retail Employees in Maryland
- Sexual Orientation: A Protected Class?
- The EEOC Implements Regulations Interpreting the Americans with Disabilities Amendments Act of 2008
- Z&R Shorts
The Number of Wage and Hour Cases Going Up, Settlement Values Going Down
By Stephen S. Zashin*Recent trends show the number of wage and hour lawsuits increased from 2007 to 2010. However, the settlement values for these cases have seen a sharp decline. The National Economic Research Associates, Inc. (NERA) discovered the recent trends by collecting data on 187 wage and hour cases. The collected cases include a number of allegations, such as off-the-clock work; unpaid overtime; missed, short, or late meal periods and rest breaks; employee misclassification; unpaid termination wages; failure to pay minimum wage; time shaving and improper tip pooling.
Not all the cases had a reported settlement value, but the 139 cases that did included settlements totaling $1.77 billion for an average settlement of $12.8 million per case and a median settlement of $4.3 million. During the three year period, the average settlement value declined in recent years from more than $20 million in 2007-2008, to approximately $10 million in 2009, to $7.6 million in 2010. The average per-plaintiff settlement also fell from about $8,000 in 2007 to just over $5,000 in 2010.
It is difficult to explain, for certain, the recent decrease in settlement values. One possible explanation are case-specific factors, such as the size of the potential class, the duration of the alleged class period, the number and type of allegations made in each case, and the jurisdiction involved. The number of class members participating and the duration of the class period have the greatest impact on settlement value, as settlement values increase significantly when there are a greater number of plaintiffs and/or longer class periods.
As the number of wage and hour lawsuits increase, employers must remain vigilant with their compliance efforts. If your company has any wage and hour concerns, please contact us.
* Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment Law, is licensed to practice law in Ohio and New York. Stephen's practice encompasses all areas of employment and labor law and works extensively in defending class and collective actions. For more information about wage and hour laws or any other employment matter, please contact Stephen at 216.696.4441 or ssz@zrlaw.com.
Does Your Wellness Program Comply with the ADA?
By Jason Rossiter*Many employers now sponsor Wellness programs for their employees. These programs serve employees by encouraging healthy habits and providing early warning of potential health concerns. They also help employers control health insurance costs. Broward County, Florida (the "County") implemented such a program. The program was voluntary, and those who participated filled out a Health Risk Assessment questionnaire and completed a finger-stick blood test to measure blood sugar and cholesterol levels. If the testing revealed certain potential health problems, the County's health insurer then offered the employee an opportunity to participate in "disease management coaching" and obtain free medications.
In 2009, the County began penalizing employees who chose not to participate in the Wellness program by charging them an extra $20 on each of their bi-weekly paychecks. In Seff v. Broward County, a County employee sued the County on behalf of a class of his co-workers, arguing that the $20 charge was a way to compel the employees to submit to the Health Risk Assessment questionnaire process, and thus forced them to undergo a medical-related inquiry in violation of the Americans with Disabilities Act ("ADA").
The ADA makes it unlawful for employers to make "inquiries" about their employees' medical or health conditions, unless the inquiries are job-related and consistent with business necessity. But the ADA contains a "safe harbor" for employers who establish, sponsor or administer "bona fide benefit plan[s] that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law." The employee in the Seff case argued that the $20 charge in essence forced employees to submit to medical inquiries in violation of the ADA, and that the safe harbor should not apply because the County's Wellness program was not truly based on any legitimate underwriting, classification, or administration risks, but instead on the County's desire to improve the health of its employees.
The court rejected these arguments and held that the safe harbor applied. The evidence showed that the County implemented the program "to classify various risks and decide what type of benefits plans will be needed in the future in light of these risks," and thus to determine "what kind of coverage will need to be provided … on a macroscopic level so it may form economically sound benefits plans for the future." In short, the County implemented the program on legitimate "insurance and risk assessment principles," rather than on "some independent desire for a healthy workforce," and thus was entitled to the benefit of the safe harbor.
Employers who sponsor Wellness programs should pay attention to this decision. The Equal Employment Opportunities Commission has taken the position that any coercive element to a Wellness program – such as the $20 charge in the Seff case – renders the program potentially unlawful under the ADA. While the safe harbor in the ADA protects employers who sponsor or administer Wellness programs for bona fide risk assessment reasons, Seff demonstrates that the safe harbor does not protect employers who implement Wellness programs merely out of the altruistic desire for healthy employees.
If you have questions about whether your company's Wellness program might run afoul of the ADA, please let us know.
* Jason Rossiter practices in all areas of employment litigation and is licensed to practice law in Ohio, Pennsylvania, and California. For more information about Wellness programs or any other employment issue, please contact Zashin & Rich at 216.696.4441.
Maryland Joins Other States in Restricting Employer Use of Credit History
By Stefanie L. Baker
Maryland Governor Martin O'Malley signed Maryland's Job Applicant Fairness Act (the "Act") on April 12, 2011. The Act becomes effective October 1, 2011. Maryland joins Hawaii, Illinois, Oregon and Washington in the nationwide push to ban employer credit checks. Several other states are also considering restricting an employer's use of credit history, including: California, Connecticut, Florida, Georgia, Indiana, Kentucky, Michigan, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Texas and Vermont.
The Act states that an employer may not use an applicant or employee's credit report or credit history in determining whether to:
- Deny employment to an applicant;
- Discharge an employee; or,
- Determine compensation or the terms, conditions or privileges of employment.
- Positions involving money-handling (authority to issue payments, collect debts, transfer money, or enter into contracts);
- Positions involving access to personal information of a customer, employee, or employer;
- Confidential positions (access to company's trade secrets, intellectual property, personnel files);
- Positions involving a fiduciary responsibility to the employer (authority to issue payments, collect debts, transfer money, or enter into contracts); and,
- Managerial positions that control or direct part of the business.
Under federal law, applicants must consent to a credit check in writing. In addition, if an employer uses a credit report under an exemption, the employer must disclose its use to an applicant or employee in writing. The Act does not prohibit employers from performing other employment-related background checks, including: driving records, criminal history investigations, and educational history investigations. However, employers must ensure these types of background checks do not include credit information.
An employee or job applicant who believes his or her employer or prospective employer violated the Act can file an administrative complaint with the Maryland's Commissioner of Labor and Industry. The Commissioner will attempt to resolve the dispute informally. If informal resolution is unsuccessful, the Commissioner may assess a fine against the employer of up to $500 for the first offense and up to $2,500 for a subsequent violation. Additionally, while the Act itself does not provide for a private cause of action in court, an employee likely could file a suit for wrongful termination or failure-to-hire under Maryland public policy.
Before October 1, 2011, Maryland employers should review their policies to make sure their use of a credit report complies with the Act.
Mandatory Breaks Required for Retail Employees in Maryland
By Michele L. Jakubs*
Maryland's Healthy Retail Employee Act (the "Act") went into effect March 1, 2011. The Act requires Maryland employers with 50 or more retail employees to provide breaks based upon the number of hours an employee works in a shift. Under the Act, a "retail establishment" is a "place of business with the primary purpose of selling goods to a consumer who is present at the place of business at the time of sale" and "retail employees" include those who are "engaged in actual sales, in a store." As such, employees who are not working in a "retail establishment," such as a corporate or other office, or do not sell are not covered by the Act and do not count toward the 50-employee requirement.
For purposes of applying the 50-employee rule, companies must include the total number of retail employees they have throughout Maryland. For example, a retailer that maintains several locations throughout the state must count all retail employees working throughout the state. However, the Act does not apply to employees who work at a single location with five or fewer employees, regardless of the number of employees the employer has throughout the state.
Covered employers must provide breaks as follows:
- A 15-minute break for a shift of four to six consecutive hours;
- At least a 30-minute break for a shift of 6 or more hours (an employer does not have to provide the 15-minute break if the employee is entitled to the 30-minute break); and
- If the employee's shift is 8 or more consecutive hours, an additional 15-minute break for each additional 4 hours worked. For example, if the employee works 12 hours, the employee must get one 30-minute break plus one 15-minute break.
The Act allows for a "working shift break." For example, if the employee's work prevents the employee from being relieved during one of the employee's breaks, or the employee consumes a paid meal while working, the employee may waive the break. Employees may waive the "working shift break" by entering into a written agreement with their employer.
The Act does not address whether an employer must pay the employee for the required breaks. However, under Maryland law and the FLSA, short breaks of less than 20 minutes constitute compensable work time that must be included in the sum of all hours worked in a week.
If an employee believes their employer is violating the law, the Act provides a process for employees to file a complaint with Maryland's Commissioner of Labor and Industry. Remedies include an order directing compliance with the law and potential civil penalties of $300 to $600 per employee for each instance of non-compliance. Additionally, in limited situations, a covered employee may bring a court action to enforce the Commissioner's order and for recovery of treble damages and reasonable attorneys' fees and costs. In order to avoid civil penalties, retailers in Maryland should review their break policies and employee handbooks to make sure they comply with these new requirements.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of employment litigation and has extensive experience counseling employers on paid break time issues under the FLSA. For more information on Maryland's Healthy Retail Employee Act or any other FLSA compliance question, please contact Michele at 216.696.4441 or mlj@zrlaw.com.
Sexual Orientation: A Protected Class?
By George S. Crisci*
On April 25, 2011, the U.S. District Court for the Northern District of Ohio ruled that Shari Hutchinson's sexual orientation discrimination claim falls under the equal protection clause of the 14th Amendment of the U.S. Constitution. See Hutchinson v. Cuyahoga County Bd. of County Comm'r, No.1:08-CV-2966, 2011 U.S. Dist. Lexis 46633 (N.D. Ohio 2011). This is a potentially far-reaching decision and could prove to be the spring board for a federal law preventing workplace discrimination based on sexual orientation.
Hutchinson, a lesbian, began working for Cuyahoga County at its Child-Support Enforcement Agency (CSEA) in 2002. In 2008, she filed suit alleging, among other claims, CSEA denied her various promotions in favor of less qualified heterosexuals and that CSEA retaliated against due to her sexual orientation. Hutchinson brought her claims under 42 U.S.C. § 1983 ("Section 1983"), which prohibits the deprivation of federal rights by anyone acting under the color of state law. Hutchinson did not bring a claim under Title VII, which generally prohibits discrimination based on race, color, religion, sex, or national origin.
Cuyahoga County sought dismissal of the case on the basis that sexual orientation discrimination is not an actionable claim under Section 1983. The County based its argument, in large part, on the premise that Section 1983 mirrors Title VII and that since sexual orientation is not a protected class under Title VII it also is not a protected class under Section 1983. As a result, the County argued Hutchinson fails the first prong of her prima facie case in that she is not a member of a protected class. The Court, however, disagreed. While the Court acknowledged its past reliance on Title VII framework when analyzing Section 1983 claims, it ruled that rational basis review applied. The Court held "that an employee who alleges sexual orientation discrimination under § 1983 is not per se precluded from establishing an equal protection claim against her employer."
Public employers should take note of this ruling. While on its face, the ruling does not apply to private employers, they too should be aware of the court's finding. As with same-sex marriage, this case is evidence that the sexual orientation discrimination landscape is ever-changing.
* George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. For more information about employment discrimination or any other labor or employment issue, please contact George at 216.696.4441 or gsc@zrlaw.com.
The EEOC Implements Regulations Interpreting the Americans with Disabilities Amendments Act of 2008
By David R. Vance*
The Equal Employment Opportunity Commission ("EEOC") released regulations regarding the Americans with Disabilities Amendments Act of 2008 ("ADAAA") on March 25, 2011. The EEOC's regulations took effect May 24, 2011 and apply to all private, state, and local government employers with 15 or more employees. The regulations also apply to employment agencies, unions, and joint labor-management committees.
The ADAAA makes several important changes to the Americans with Disabilities Act ("ADA"). While the ADAAA retains the ADA's basic definition of "disability" as "an impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment," the regulations change the statutory interpretation of disability. Some of the regulation's major changes include the following:
Broad Coverage
It is now much easier for employees seeking the ADA's protection to establish the existence of a disability, as the regulation's interpretation broadens the definition of disability.
"Major Life Activities"
The regulations include two non-exhaustive lists expanding the definition of "major life activities." The first list includes many activities that the EEOC already recognized as major life activities (e.g., walking), as well as activities that the EEOC has not specifically recognized (e.g., reading, bending, communicating). The second list includes major bodily functions (e.g., "functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions"). Since these lists are non-exhaustive, the regulations include nine "rules of construction" to help employers determine if an individual's impairment substantially limits a major life activity.
"Substantially Limits"
The regulations make clear that "substantially limits" is to be construed broadly in favor of expansive coverage. Additionally, the regulation's interpretation of "substantially limits" requires a lower degree of functional limitation as compared to the standard previously applied by the courts. The third "rule of construction" explains that "the primary object of attention in cases brought under the ADA should be whether covered entities have complied with their obligations and whether discrimination has occurred, not whether an individual's impairment substantially limits a major life activity. Accordingly, the threshold issue of whether an impairment 'substantially limits' a major life activity should not demand extensive analysis." As a result, employees can show more easily that they have an impairment substantially limiting one or more major life activities.
Individualized Assessment
The regulations abolish any notion that certain medical conditions will "always" qualify as disabilities.
Episodic Conditions and Ameliorative Effects
The regulations make clear that the current effects of a disability are not the only factors that an employer must consider in determining whether a medical condition is substantially limiting. Impairments that are episodic or in remission – cancer, epilepsy, hypertension, asthma, diabetes, major depressive disorder, bipolar disorder and schizophrenia – also qualify as disabilities if substantially limiting when active.
Reasonable Accommodation
An individual must have an actual disability or record of an actual disability in order to qualify for a reasonable accommodation. Therefore, an individual who claims he or she is "regarded as" disabled will not qualify for a reasonable accommodation.
"Regarded As" Claims
Going forward, most ADA claims will likely be "regarded as" claims. An applicant is "regarded as" disabled if he or she is "subject to an action prohibited by the ADA (e.g., failure to hire or termination) based on an impairment that is not transitory and minor." The ADAAA substantially expands employer liability under the "regarded as" theory by removing the requirement that an employee prove that the perceived impairment substantially limits a major life activity. An employer may still defend a "regarded as" claim by asserting that the impairment at issue, whether actual or perceived, is both transitory and minor.
With the ADAAA and the EEOC's recent regulations, it is significantly more difficult for employers to prove that an employee's medical condition does not qualify as a disability. Therefore, employers should instead focus their ADA compliance efforts on the interactive process and providing a reasonable accommodation.
*David R. Vance has extensive experience with ADA and ADAAA compliance. For more information on the ADA or ADAAA including providing a reasonable accommodation, please contact David at drv@zrlaw.com or 216-696-4441.
Z&R Shorts
The Employment and Labor Group at Zashin & Rich is now tweeting! The law of the workplace can change rapidly, and Zashin & Rich's tweets will keep you up to date concerning the latest developments in employment and labor law.
Follow us on Twitter
https://twitter.com/ZashinRich @ZashinRich
Friday, June 24, 2011
As Long As We're Changing The Rules: National Labor Relations Board Publishes Proposed Rule to Shorten Time for Union Elections
*By Patrick J. Hoban
The National Labor Relations Board (“NLRB”) published a proposed rule June 22, 2011 which will make sweeping changes to the existing rules and regulations governing the conduct of representation elections.
Current Board policy encourages the regional directors to hold representation elections within 45 days following the filing of a representation petition. NLRB election data from 2009-2010 shows that the median time between the filing of petition and election is 38 days, while the average time between the filing of petition and election was 57 days. The proposed amendments, however, would dramatically reduce the time period to hold a representation election. While it is unclear what the timeframe would be, some estimate the proposed rule could shorten the timeframe to between 14 and 23 days.
Under the proposed rule, a pre-election hearing would have to begin no more than seven days following the service of notice of the representation petition. An employer must state its position on any election-related issues that it plans to raise at the hearing. The Administrative Law Judge (“ALJ”) will identify any disputes – but not until after the hearing. A post-election hearing will be scheduled 14 days after the tally of ballots (or as soon thereafter as practicable) to address any objections to the composition of the bargaining unit or voter eligibility issues. The ALJ will only accept evidence at the hearing if he or she determines that there is a genuine issue of material fact.
Unlike the current rules, there will be no pre-election litigation of bargaining unit composition or voter eligibility issues unless a dispute affects at least 20 percent of the proposed bargaining unit. This is a dramatic change from the current form of pre-election litigation which often involves disputes over whether some employees are supervisors and thus ineligible to vote. Parties will be prohibited from requesting a review of these issues until after the election – even where parties challenge the bargaining unit composition prior to the election. The Board will have the discretion to refuse a request to review the regional directors’ unit composition and eligibility determinations, as opposed to the mandatory review under current rules.
Some other changes in the proposed rule include:
The proposed rule will undoubtedly give unions an advantage and already has generated sharp debate. Some argue this is a tactic by the Obama Administration to pursue, via rulemaking, some of the goals of the failed Employee Free Choice Act. The NLRB said its proposed changes aim to “curb unnecessary litigation; streamline procedure before and after elections; and enable the use of electronic communications.” The Board will accept public comments on the proposal for 60 days following the publication in the Federal Register.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, represents clients before the National Labor Relations Board and practices in all areas of labor relations. For more information about the proposed rule, representation elections, or the NLRB, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
The National Labor Relations Board (“NLRB”) published a proposed rule June 22, 2011 which will make sweeping changes to the existing rules and regulations governing the conduct of representation elections.
Current Board policy encourages the regional directors to hold representation elections within 45 days following the filing of a representation petition. NLRB election data from 2009-2010 shows that the median time between the filing of petition and election is 38 days, while the average time between the filing of petition and election was 57 days. The proposed amendments, however, would dramatically reduce the time period to hold a representation election. While it is unclear what the timeframe would be, some estimate the proposed rule could shorten the timeframe to between 14 and 23 days.
Under the proposed rule, a pre-election hearing would have to begin no more than seven days following the service of notice of the representation petition. An employer must state its position on any election-related issues that it plans to raise at the hearing. The Administrative Law Judge (“ALJ”) will identify any disputes – but not until after the hearing. A post-election hearing will be scheduled 14 days after the tally of ballots (or as soon thereafter as practicable) to address any objections to the composition of the bargaining unit or voter eligibility issues. The ALJ will only accept evidence at the hearing if he or she determines that there is a genuine issue of material fact.
Unlike the current rules, there will be no pre-election litigation of bargaining unit composition or voter eligibility issues unless a dispute affects at least 20 percent of the proposed bargaining unit. This is a dramatic change from the current form of pre-election litigation which often involves disputes over whether some employees are supervisors and thus ineligible to vote. Parties will be prohibited from requesting a review of these issues until after the election – even where parties challenge the bargaining unit composition prior to the election. The Board will have the discretion to refuse a request to review the regional directors’ unit composition and eligibility determinations, as opposed to the mandatory review under current rules.
Some other changes in the proposed rule include:
- Employers must provide the union with a final list of eligible voters within two days, drastically shortened from the current seven days
- Eligible voter lists must contain both phone numbers and email addresses which are not currently required; and
- Unions may file election petitions electronically.
The proposed rule will undoubtedly give unions an advantage and already has generated sharp debate. Some argue this is a tactic by the Obama Administration to pursue, via rulemaking, some of the goals of the failed Employee Free Choice Act. The NLRB said its proposed changes aim to “curb unnecessary litigation; streamline procedure before and after elections; and enable the use of electronic communications.” The Board will accept public comments on the proposal for 60 days following the publication in the Federal Register.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, represents clients before the National Labor Relations Board and practices in all areas of labor relations. For more information about the proposed rule, representation elections, or the NLRB, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Tuesday, June 21, 2011
United States Supreme Court Limits First Amendment Rights of Public Employees
*By George S. Crisci
In a decision released yesterday, the United States Supreme Court found that the First Amendment’s Petition Clause does not protect a public employee’s filing of a grievance or other legal proceedings against an employer unless the grievance involves a matter of public concern. See Borough of Duryea, Pennsylvania, et al. v Guarnieri, No. 09-1476, 564 U.S. ___ (2011).
The chief of police, Charles Guarnieri (“Guarnieri”), filed a union grievance challenging his termination. An arbitrator awarded reinstatement. After Guarnieri returned to work, the Borough of Duryea (“Duryea”) implemented several directives instructing him on how to carry out his position. One directive prohibited Guarnieri from working overtime without the council’s “express permission.” Guarnieri believed these directives were too restrictive and he filed a union grievance. The arbitrator ordered Duryea to modify or withdraw some of the directives.
Guarnieri then filed suit against Duryea for violation of his civil rights under 42 U.S.C. § 1983. Guarnieri claimed that he was subject to retaliation when Duryea instituted the directives upon his reinstatement. Guarnieri also added a claim for denial of overtime to his suit.
The district court instructed the jury that the lawsuit and union grievances were “protected activity under the constitution,” and that the jury could find Duryea liable if there was an adequate connection between the protected activity and the alleged retaliation. The jury returned a verdict in favor of Guarnieri, awarding him over $90,000 in both compensatory and punitive damages, along with attorney’s fees.
Duryea appealed the verdict arguing that Guarnieri’s grievances and lawsuit did not address matters of public concern. The Third Circuit Court of Appeals upheld the verdict even though Guarnieri’s petition was solely a matter of private concern.
The United States Supreme Court held that the Third Circuit applied a more generous rule and remanded the case. When a public employee sues a government employer under the First Amendment’s Speech Clause, the employee must show that he or she spoke as a citizen on a matter of public concern. This test, known as the Connick-Pickering test, also involves a balancing of the First Amendment interests of the employee against the interest of the State in promoting efficiency.
While this case involved the Petition Clause, and not the Speech Clause, the Court reasoned that the two are closely related and there was no cause for divergence in this case. Therefore, the lower courts should have applied the Connick-Pickering analysis to Guarnieri’s Petition Clause claims. As a result, when a public employee petitions on a matter solely of private concern, the employee cannot pursue his First Amendment rights.
While this decision garnered far less attention than the Dukes v. Wal-Mart ruling also issued yesterday, Duryea promises to have a significant impact on public employees. A government employer’s allegedly retaliatory actions against an employee do not give rise to liability under the Petition Clause unless the employee’s petition relates to a matter of public concern. The holding requires courts to conduct a Connick-Pickering analysis for future Petition Clause claims brought by public employees.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public employers in negotiations, grievances, arbitrations and practices in all areas of public and private employment and labor relations. For more information about this decision or labor law, please contact George (gsc@zrlaw.com) at 216.696.4441.
In a decision released yesterday, the United States Supreme Court found that the First Amendment’s Petition Clause does not protect a public employee’s filing of a grievance or other legal proceedings against an employer unless the grievance involves a matter of public concern. See Borough of Duryea, Pennsylvania, et al. v Guarnieri, No. 09-1476, 564 U.S. ___ (2011).
The chief of police, Charles Guarnieri (“Guarnieri”), filed a union grievance challenging his termination. An arbitrator awarded reinstatement. After Guarnieri returned to work, the Borough of Duryea (“Duryea”) implemented several directives instructing him on how to carry out his position. One directive prohibited Guarnieri from working overtime without the council’s “express permission.” Guarnieri believed these directives were too restrictive and he filed a union grievance. The arbitrator ordered Duryea to modify or withdraw some of the directives.
Guarnieri then filed suit against Duryea for violation of his civil rights under 42 U.S.C. § 1983. Guarnieri claimed that he was subject to retaliation when Duryea instituted the directives upon his reinstatement. Guarnieri also added a claim for denial of overtime to his suit.
The district court instructed the jury that the lawsuit and union grievances were “protected activity under the constitution,” and that the jury could find Duryea liable if there was an adequate connection between the protected activity and the alleged retaliation. The jury returned a verdict in favor of Guarnieri, awarding him over $90,000 in both compensatory and punitive damages, along with attorney’s fees.
Duryea appealed the verdict arguing that Guarnieri’s grievances and lawsuit did not address matters of public concern. The Third Circuit Court of Appeals upheld the verdict even though Guarnieri’s petition was solely a matter of private concern.
The United States Supreme Court held that the Third Circuit applied a more generous rule and remanded the case. When a public employee sues a government employer under the First Amendment’s Speech Clause, the employee must show that he or she spoke as a citizen on a matter of public concern. This test, known as the Connick-Pickering test, also involves a balancing of the First Amendment interests of the employee against the interest of the State in promoting efficiency.
While this case involved the Petition Clause, and not the Speech Clause, the Court reasoned that the two are closely related and there was no cause for divergence in this case. Therefore, the lower courts should have applied the Connick-Pickering analysis to Guarnieri’s Petition Clause claims. As a result, when a public employee petitions on a matter solely of private concern, the employee cannot pursue his First Amendment rights.
While this decision garnered far less attention than the Dukes v. Wal-Mart ruling also issued yesterday, Duryea promises to have a significant impact on public employees. A government employer’s allegedly retaliatory actions against an employee do not give rise to liability under the Petition Clause unless the employee’s petition relates to a matter of public concern. The holding requires courts to conduct a Connick-Pickering analysis for future Petition Clause claims brought by public employees.
*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, represents public employers in negotiations, grievances, arbitrations and practices in all areas of public and private employment and labor relations. For more information about this decision or labor law, please contact George (gsc@zrlaw.com) at 216.696.4441.
Monday, June 20, 2011
So Long, Farewell: Does the Supreme Court's Decision In Wal-Mart Stores, Inc. V. Dukes Spell the End of Employment Class Actions?
*By B. Jason Rossiter
In a landmark decision, the United States Supreme Court rejected an attempt by a number of Wal-Mart employees to pursue a nationwide class action on behalf of all female Wal-Mart employees, based on generic accusations that Wal-Mart maintained a company-wide policy of sex discrimination.
To bring any type of class action, one of the elements that a plaintiff must prove is – that there is some common issue of law or fact in common among all of the members of the proposed class. In Wal-Mart Stores, Inc. v. Dukes, decided on June 20, 2011, the Supreme Court held that the female plaintiffs had to establish something more than merely "their sex and this lawsuit" in order to pursue a class-action. Instead, they must offer "significant proof" of a "specific" employment practice that affected everyone across the company and led to sex-based discrimination. In other words, there must be "some glue holding the alleged reasons for all those [nationwide employment] decisions together."
In Dukes, the Supreme Court held that the plaintiffs' evidence was not sufficient to show that Wal-Mart used a specific identifiable employment practice on a nationwide basis that resulted in illegal discrimination:
As a result of this decision, are ambiguous, aggregate "nationwide" employee class actions possible after Dukes? Probably not. Dukes makes it clear that employees who wish to join together and pursue a class action cannot rely only on extrapolations from statistics, collections of anecdotal evidence, or expert testimony about corporate "culture" to meet Rule 23's "commonality" requirement. Instead, they must point to concrete, specific, identifiable employment policies or practices that truly affected the purported class and that gave rise to the discrimination in question. In other words, they must prove that they have something else in common apart from their protected status and their desire to sue their common employer.
*B. Jason Rossiter, has extensive experience in all aspects of workplace law, including defending employers in class action suits. For more information about class or collective litigation, please contact Zashin & Rich at 216.696.4441.
In a landmark decision, the United States Supreme Court rejected an attempt by a number of Wal-Mart employees to pursue a nationwide class action on behalf of all female Wal-Mart employees, based on generic accusations that Wal-Mart maintained a company-wide policy of sex discrimination.
To bring any type of class action, one of the elements that a plaintiff must prove is – that there is some common issue of law or fact in common among all of the members of the proposed class. In Wal-Mart Stores, Inc. v. Dukes, decided on June 20, 2011, the Supreme Court held that the female plaintiffs had to establish something more than merely "their sex and this lawsuit" in order to pursue a class-action. Instead, they must offer "significant proof" of a "specific" employment practice that affected everyone across the company and led to sex-based discrimination. In other words, there must be "some glue holding the alleged reasons for all those [nationwide employment] decisions together."
In Dukes, the Supreme Court held that the plaintiffs' evidence was not sufficient to show that Wal-Mart used a specific identifiable employment practice on a nationwide basis that resulted in illegal discrimination:
The plaintiffs offered expert testimony that Wal-Mart supposedly employed discriminatory stereotypes in its decision-making. The Supreme Court held that this testimony was "worlds away" from being "significant proof" of any specific company-wide practice, because the expert admitted he was unable to explain what percentage of Wal-Mart's employment decisions across the country "might be determined by stereotyped thinking... If [the expert] admittedly has no answer to that question, we can safely disregard what he has to say."Lastly, the Supreme Court held that because the plaintiffs sought individualized awards of back pay, it was improper for them to seek class certification without following the procedures of Federal Rule of Civil Procedure 23(b)(3), which requires that each member of the class receive the chance to opt out of the class, requires the plaintiffs to show that their common issues predominate over any individual questions, and also requires the plaintiffs show that the class action mechanism is the superior method of resolving the particular dispute.
The plaintiffs pointed to the fact that Wal-Mart had a policy of giving discretion in pay and promotions decisions to local decision-makers. The Supreme Court said that this was "very common" and "presumptively reasonable." Giving decision-making discretion to local managers "should itself raise no inference of discriminatory conduct," absent proof of "a common mode of exercising discretion that pervades the entire company," and the plaintiffs offered no such proof.
The plaintiffs offered statistical evidence showing disparities in pay between women and men. The Supreme Court rejected this as well because the statistics were offered in a vacuum instead of being linked to a "specific employment practice" that created the alleged disparity.
Lastly, the plaintiffs offered anecdotal evidence of discrimination - individual examples of allegedly discriminatory events and statements. The Supreme Court held that this evidence was also irrelevant because it was divorced from a single unifying employment practice, and was also "too weak to raise any inference that all the individual, discretionary personnel decisions are discriminatory."
As a result of this decision, are ambiguous, aggregate "nationwide" employee class actions possible after Dukes? Probably not. Dukes makes it clear that employees who wish to join together and pursue a class action cannot rely only on extrapolations from statistics, collections of anecdotal evidence, or expert testimony about corporate "culture" to meet Rule 23's "commonality" requirement. Instead, they must point to concrete, specific, identifiable employment policies or practices that truly affected the purported class and that gave rise to the discrimination in question. In other words, they must prove that they have something else in common apart from their protected status and their desire to sue their common employer.
*B. Jason Rossiter, has extensive experience in all aspects of workplace law, including defending employers in class action suits. For more information about class or collective litigation, please contact Zashin & Rich at 216.696.4441.
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