*By Andrew Cleves
On December 19, 2016, Governor John Kasich signed Senate Bill 331 into law, which prohibits local governments from setting a minimum wage rate higher than the state rate. In effect, this law nullifies the upcoming Cleveland minimum wage increase ballot initiative. Cleveland voters are set to vote on a minimum wage increase on May 2, 2017. Under that proposal, the minimum wage rate in Cleveland would increase from $8.10 per hour to $12.00 per hour in January 2018. Then, the rate would increase another $1 per hour for three years, until it reached $15.00 per hour. Therefore, at least for now, this legislation likely ends attempts to raise the minimum wage rate in Cleveland.
*Andrew Cleves practices in all areas of employment and labor law. If you have questions about Senate Bill 331, Cleveland’s minimum wage increase ballot initiative, or Ohio’s wage and hour laws, please contact Andrew (ajc@zrlaw.com) at 216.696.4441.
Thursday, December 22, 2016
Wednesday, November 23, 2016
Texas Court Strikes Again – Halts the Implementation of the DOL’s Revised Overtime Regulations
By Michele L. Jakubs*
On November 22, 2016, the Court in State of Nevada, et al. v. U.S. Dept. of Labor, granted a nationwide preliminary injunction halting implementation of the Department of Labor’s rule increasing the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” overtime exemptions. The rule was set to take effect on December 1, 2016 and would have increased the minimum salary threshold from $23,660 per year to $47,476 per year. For the time being, the salary threshold for the “white collar” exemptions remains $23,660 per year ($455 per week).
As the Court’s ruling is only a preliminary injunction, subject to future modification, we will continue to monitor this case as it proceeds forward and will advise of any additional rulings.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience defending employers in FLSA actions and is well versed in the nuances of the law. If you have questions about the DOL’s final rule or the FLSA more generally, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
On November 22, 2016, the Court in State of Nevada, et al. v. U.S. Dept. of Labor, granted a nationwide preliminary injunction halting implementation of the Department of Labor’s rule increasing the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” overtime exemptions. The rule was set to take effect on December 1, 2016 and would have increased the minimum salary threshold from $23,660 per year to $47,476 per year. For the time being, the salary threshold for the “white collar” exemptions remains $23,660 per year ($455 per week).
As the Court’s ruling is only a preliminary injunction, subject to future modification, we will continue to monitor this case as it proceeds forward and will advise of any additional rulings.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience defending employers in FLSA actions and is well versed in the nuances of the law. If you have questions about the DOL’s final rule or the FLSA more generally, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
Thursday, November 17, 2016
TRUMPED: Texas Federal Court Permanently Enjoins the DOL’s “Persuader Rule” – Will the DOL Changes to the FLSA Exemptions Thresholds Face the Same Fate?
By Patrick J. Hoban*
Yesterday, the Federal District Court for the Northern District of Texas made permanent the preliminary injunction it issued earlier this year to prevent the U.S. Department of Labor (“DOL”) from enforcing its controversial “persuader” rule (“Persuader Rule”). Judge Sam R. Cummings announced the decision on Wednesday in a concise two-page opinion, in which he concluded that the Persuader Rule violated the federal Administrative Procedure Act, 5 U.S.C. § 706 (“APA”) and is unenforceable. The case, National Federation of Independent Businesses v. Perez, No. 5:16-cv-00066-C (N.D. Texas, November 16, 2016), effectively converts the preliminary injunction granted by the same court on June 27, 2016 into a permanent injunction with nationwide effect.
The Persuader Rule, which took effect on April 25, 2016, dramatically expanded the reporting requirements imposed on employers and their labor relations consultants under the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”). Under the LMRDA, employers and their labor relations consultants are required to disclose agreements to engage in activities to persuade employees regarding their rights to unionize and collectively bargain. These onerous disclosure reports required that employers, attorneys and consultants provide details about the nature and cost of the services consultants provide. Although the reporting requirements were subject to certain exemptions, including an exemption related to the provision of “advice,” the DOL’s guidance on the Persuader Rule made clear that it would decide what services qualified as advice on a case-by-case basis.
Historically, the DOL has interpreted the “advice” exemption to exclude from the reporting requirements an employer’s engagement of consultants, including attorneys, to assist in responding to a unionizing campaign, where: (1) the consultant or attorney had no direct contact with the employees; and (2) the employer retained discretion to reject the recommendations of the consultant or attorney. The DOL’s new Persuader Rule upended this long-standing interpretation by requiring employers and labor relations consultants to report their agreements even in the absence of direct contact between the consultants and the employees.
U.S. Secretary of Labor Thomas E. Perez defended the Persuader Rule from withering criticism, describing the changes as a “matter of basic fairness” to ensure that workers have “the information they need to make informed choices about how they pursue their rights to organize and bargain collectively.” Employers, labor relations consultants, and attorneys opposed the changes. Of particular concern was the extent to which the Persuader Rule would have compelled employers and law firms to disclose information protected by the attorney-client privilege. Absent the Court’s June injunction, enforcement of the Persuader Rule and its new reporting requirements would have begun on July 1, 2016.
Yesterday, Judge Cummings granted summary judgment to those challenging the Persuader Rule and reiterated his previous conclusions that it was “defective to its core,” “arbitrary and capricious,” “violated free speech and association rights,” and was “unconstitutionally vague.” Additionally, Judge Cummings affirmed that the Persuader Rule violated the Administrative Procedures Act and that the DOL did not have authority to issue it. On these grounds, the Court issued a nationwide permanent injunction prohibiting enforcement of the Persuader Rule.
The DOL previously appealed Judge Cumming’s decision granting the preliminary injunction of its Persuader Rule to the U.S. Fifth Circuit Court of Appeals, but that appeal was rendered moot by Wednesday’s summary judgment ruling. However, in June 2016, a federal district court in Minnesota refused to enjoin the Persuader rule.
The Persuader Rule is one among several hotly-contested Obama administration changes to employment and labor relations law. Those changes have caused significant disruption and include the National Labor Relations Board (“NLRB”)’s “ambush” election rules, the NLRB’s Specialty Healthcare decision that opened the floodgates for “micro” union organizing, and the DOL’s changes to the salary threshold for exempt status under the Fair Labor Standards Act (“FLSA”) (which likely takes effect on December 1, 2016).
Like the Persuader Rule, the DOL changes to FLSA exemptions were also challenged in federal court in Texas by twenty-one states and multiple business entities – including challenges under the Administrative Procedures Act. Although the new FLSA exemptions rule takes effect on December 1, the judge in that case announced yesterday that on November 22 he will issue a decision on whether DOL will be prohibited from enforcing the new rule. As a result, we will soon see if the Eastern District of Texas reaches the same conclusion with regard to the changes to the FLSA exemptions as Judge Cummings did for the Persuader Rule.
Yesterday’s decision is subject to appeal. However, as President-Elect Donald Trump will take office in January, there is reason to believe the Trump DOL will not seek review. The Court’s ruling on the Persuader Rule provides employers with relief from reporting requirements and potential liability. As we look to the future, it is anticipated that Trump administration appointments at DOL and the NLRB may offer employers a more level playing field.
*Patrick Hoban, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about the DOL’s persuader rule or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Yesterday, the Federal District Court for the Northern District of Texas made permanent the preliminary injunction it issued earlier this year to prevent the U.S. Department of Labor (“DOL”) from enforcing its controversial “persuader” rule (“Persuader Rule”). Judge Sam R. Cummings announced the decision on Wednesday in a concise two-page opinion, in which he concluded that the Persuader Rule violated the federal Administrative Procedure Act, 5 U.S.C. § 706 (“APA”) and is unenforceable. The case, National Federation of Independent Businesses v. Perez, No. 5:16-cv-00066-C (N.D. Texas, November 16, 2016), effectively converts the preliminary injunction granted by the same court on June 27, 2016 into a permanent injunction with nationwide effect.
The Persuader Rule, which took effect on April 25, 2016, dramatically expanded the reporting requirements imposed on employers and their labor relations consultants under the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”). Under the LMRDA, employers and their labor relations consultants are required to disclose agreements to engage in activities to persuade employees regarding their rights to unionize and collectively bargain. These onerous disclosure reports required that employers, attorneys and consultants provide details about the nature and cost of the services consultants provide. Although the reporting requirements were subject to certain exemptions, including an exemption related to the provision of “advice,” the DOL’s guidance on the Persuader Rule made clear that it would decide what services qualified as advice on a case-by-case basis.
Historically, the DOL has interpreted the “advice” exemption to exclude from the reporting requirements an employer’s engagement of consultants, including attorneys, to assist in responding to a unionizing campaign, where: (1) the consultant or attorney had no direct contact with the employees; and (2) the employer retained discretion to reject the recommendations of the consultant or attorney. The DOL’s new Persuader Rule upended this long-standing interpretation by requiring employers and labor relations consultants to report their agreements even in the absence of direct contact between the consultants and the employees.
U.S. Secretary of Labor Thomas E. Perez defended the Persuader Rule from withering criticism, describing the changes as a “matter of basic fairness” to ensure that workers have “the information they need to make informed choices about how they pursue their rights to organize and bargain collectively.” Employers, labor relations consultants, and attorneys opposed the changes. Of particular concern was the extent to which the Persuader Rule would have compelled employers and law firms to disclose information protected by the attorney-client privilege. Absent the Court’s June injunction, enforcement of the Persuader Rule and its new reporting requirements would have begun on July 1, 2016.
Yesterday, Judge Cummings granted summary judgment to those challenging the Persuader Rule and reiterated his previous conclusions that it was “defective to its core,” “arbitrary and capricious,” “violated free speech and association rights,” and was “unconstitutionally vague.” Additionally, Judge Cummings affirmed that the Persuader Rule violated the Administrative Procedures Act and that the DOL did not have authority to issue it. On these grounds, the Court issued a nationwide permanent injunction prohibiting enforcement of the Persuader Rule.
The DOL previously appealed Judge Cumming’s decision granting the preliminary injunction of its Persuader Rule to the U.S. Fifth Circuit Court of Appeals, but that appeal was rendered moot by Wednesday’s summary judgment ruling. However, in June 2016, a federal district court in Minnesota refused to enjoin the Persuader rule.
The Persuader Rule is one among several hotly-contested Obama administration changes to employment and labor relations law. Those changes have caused significant disruption and include the National Labor Relations Board (“NLRB”)’s “ambush” election rules, the NLRB’s Specialty Healthcare decision that opened the floodgates for “micro” union organizing, and the DOL’s changes to the salary threshold for exempt status under the Fair Labor Standards Act (“FLSA”) (which likely takes effect on December 1, 2016).
Like the Persuader Rule, the DOL changes to FLSA exemptions were also challenged in federal court in Texas by twenty-one states and multiple business entities – including challenges under the Administrative Procedures Act. Although the new FLSA exemptions rule takes effect on December 1, the judge in that case announced yesterday that on November 22 he will issue a decision on whether DOL will be prohibited from enforcing the new rule. As a result, we will soon see if the Eastern District of Texas reaches the same conclusion with regard to the changes to the FLSA exemptions as Judge Cummings did for the Persuader Rule.
Yesterday’s decision is subject to appeal. However, as President-Elect Donald Trump will take office in January, there is reason to believe the Trump DOL will not seek review. The Court’s ruling on the Persuader Rule provides employers with relief from reporting requirements and potential liability. As we look to the future, it is anticipated that Trump administration appointments at DOL and the NLRB may offer employers a more level playing field.
*Patrick Hoban, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about the DOL’s persuader rule or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Friday, November 11, 2016
Specialty Healthcare Five Years Later – Despite Assurances to the Contrary, Micro-Union Organizing Proliferates
By Andrew J. Cleves*
Five years ago, the National Labor Relations Board (“NLRB”) altered the union organizing landscape by changing its analysis of union-proposed bargaining units. In Specialty Healthcare and Rehabilitation Center of Mobile, 357 NLRB 934 (2011) (“Specialty Healthcare”), the NLRB established a new standard for determining whether unions may propose a unit comprised of only a small group of employees (a “micro-unit”) over an employer’s objection.
Under the Specialty Healthcare 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.
Justifiably, the NLRB’s Specialty Healthcare decision concerned employers. It allows unions to cherry pick “micro” bargaining units comprised almost exclusively of union-supportive employees. This offers unions a strategic foothold even in businesses where a majority of workers do not support unionization. Furthermore, the NLRB’s new requirement for an “overwhelming community of interest” makes it more difficult for employers to effectively challenge a union-proposed unit.
Anticipating criticism, the NLRB went to great lengths to assure employers of Specialty Healthcare’s limited change and impact when it announced the decision. The NLRB claimed that it merely “clarified” the criteria used in instances “where a party argues that a proposed bargaining unit is inappropriate.” The NLRB also insisted the Specialty Healthcare decision “did not create new criteria for determining appropriate bargaining units outside of healthcare facilities.”
However, those assurances have rung hollow as employers across numerous industries have experienced an uptick in union organizing activities targeted at small fragments of their workforces. As the U.S. Chamber of Commerce highlighted in its Trouble With The Truth: Specialty Healthcare and the Spread of Micro-Union Report, released on October 31, 2016, the following industries have felt the sting of the NLRB’s approval of “micro” bargaining units:
Employers are likely to face the reverberating effects of Specialty Healthcare for years to come. To date, federal courts of appeals have upheld Specialty Healthcare’s “overwhelming community of interest” test and legislative proposals to overturn the decision have proven unsuccessful.
Furthermore, recent NLRB changes have compounded the effects of Specialty Healthcare and more changes may be on the horizon. As Zashin & Rich reported in March 2015, the NLRB’s “ambush” election rules have made it significantly more difficult for employers to run an effective campaign against unionization. In addition, the NLRB may address the following topics before the end of the current presidential administration: regulatory actions related to joint-employment; “captive audience” meetings; and the definition of independent contractors, further hampering employer’s efforts to remain union-free.
Employers who oppose unionization should consider regular communication about the perils of union representation with employees prior to any sign of a union organizing effort. Additionally, upon receiving notice that a union has filed a representation petition, no matter how small or fragmented the proposed unit may be, employers should immediately contact counsel to manage the risk of a union gaining a foothold among their workforce.
*Andrew J. Cleves practices in all areas of labor and employment law. For more information about “micro” bargaining unit organizing, the NLRB, or its regulatory decisions, please contact Andrew (ajc@zrlaw.com) at 216.696.4441.
Five years ago, the National Labor Relations Board (“NLRB”) altered the union organizing landscape by changing its analysis of union-proposed bargaining units. In Specialty Healthcare and Rehabilitation Center of Mobile, 357 NLRB 934 (2011) (“Specialty Healthcare”), the NLRB established a new standard for determining whether unions may propose a unit comprised of only a small group of employees (a “micro-unit”) over an employer’s objection.
Under the Specialty Healthcare 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.
Justifiably, the NLRB’s Specialty Healthcare decision concerned employers. It allows unions to cherry pick “micro” bargaining units comprised almost exclusively of union-supportive employees. This offers unions a strategic foothold even in businesses where a majority of workers do not support unionization. Furthermore, the NLRB’s new requirement for an “overwhelming community of interest” makes it more difficult for employers to effectively challenge a union-proposed unit.
Anticipating criticism, the NLRB went to great lengths to assure employers of Specialty Healthcare’s limited change and impact when it announced the decision. The NLRB claimed that it merely “clarified” the criteria used in instances “where a party argues that a proposed bargaining unit is inappropriate.” The NLRB also insisted the Specialty Healthcare decision “did not create new criteria for determining appropriate bargaining units outside of healthcare facilities.”
However, those assurances have rung hollow as employers across numerous industries have experienced an uptick in union organizing activities targeted at small fragments of their workforces. As the U.S. Chamber of Commerce highlighted in its Trouble With The Truth: Specialty Healthcare and the Spread of Micro-Union Report, released on October 31, 2016, the following industries have felt the sting of the NLRB’s approval of “micro” bargaining units:
- General Aviation Service: The proposed unit included only 34 “line service” employees in a general aviation service business with 110 employees overall.
- Telecommunications: The petitioned-for bargaining unit included 16 T-Mobile field and switch technicians who worked in Long Island, NY but excluded employees who worked in New York City’s boroughs and both Long Island counties.
- Rental Car Facility: All 109 employees did not share an overwhelming community of interest with 31 rental service agents and lead rental service agents.
- Retail Department Store: In a Macy’s department store of 150 employees, including 120 sales associates, the approved bargaining unit included only 41 cosmetics and fragrance sales representatives.
- Fast-Casual Dining: The NLRB approved a bargaining unit which included 17 out of 43 bakers working at six out of 17 Panera Bread cafés.
- Automobile Manufacturing: The NLRB approved a micro-unit of 152 maintenance workers at a Volkswagen plant despite the fact that the union disregarded the company’s shop structure and essentially “invented” a new maintenance department.
Employers are likely to face the reverberating effects of Specialty Healthcare for years to come. To date, federal courts of appeals have upheld Specialty Healthcare’s “overwhelming community of interest” test and legislative proposals to overturn the decision have proven unsuccessful.
Furthermore, recent NLRB changes have compounded the effects of Specialty Healthcare and more changes may be on the horizon. As Zashin & Rich reported in March 2015, the NLRB’s “ambush” election rules have made it significantly more difficult for employers to run an effective campaign against unionization. In addition, the NLRB may address the following topics before the end of the current presidential administration: regulatory actions related to joint-employment; “captive audience” meetings; and the definition of independent contractors, further hampering employer’s efforts to remain union-free.
Employers who oppose unionization should consider regular communication about the perils of union representation with employees prior to any sign of a union organizing effort. Additionally, upon receiving notice that a union has filed a representation petition, no matter how small or fragmented the proposed unit may be, employers should immediately contact counsel to manage the risk of a union gaining a foothold among their workforce.
*Andrew J. Cleves practices in all areas of labor and employment law. For more information about “micro” bargaining unit organizing, the NLRB, or its regulatory decisions, please contact Andrew (ajc@zrlaw.com) at 216.696.4441.
Thursday, November 10, 2016
Will Trump Dump The New DOL Rule Regarding Exempt Status?
By Michele L. Jakubs*
Will President-Elect Donald Trump provide employers with a reprieve from the Department of Labor’s (“DOL”) new rule regarding overtime? We will all have to wait and see.
On May 18, 2016, the DOL announced its final rule increasing the salary thresholds for exemptions under the Fair Labor Standards Act (“FLSA”). To meet an exemption from overtime under the new rule, employees must meet both the duties test and the increased salary requirement. The final rule sets the new salary threshold for “white collar” exemptions at $47,476 annually. For the highly-compensated employee exemption, the new salary threshold is set at $134,004 annually. The final rule (including the new salary thresholds) goes into effect on December 1, 2016.
The FLSA generally requires employers to pay employees for any time worked in excess of forty hours per work week at a rate of one-and-a-half times the employee’s regular rate. The FLSA exempts “white collar” employees from the overtime requirement, provided the employees meet specific criteria: (1) the employees receive a fixed salary; (2) the salary meets the minimum threshold requirement (currently $455 per week, or $23,660 per year) which increases to $913 per week, or $47,476 per year on December 1; and, (3) the employees’ responsibilities primarily involve executive, administrative, or professional duties (the “duties test”). Highly-compensated employees who regularly perform one or more exempt duties also are exempt.
In September, 21 states, including Ohio, filed a lawsuit, State of Nevada, et al. v. U.S. Dept. of Labor, et al., in federal court, challenging the final rule. The Court consolidated this case with a similar case filed by various business associations and Chambers of Commerce. The States seek a declaratory judgment from the Court holding that, among other things: (1) the final rule is unlawful under the Constitution; (2) the final rule’s automatic indexing of the salary-basis test every three years is without Constitutional authority and violates the Administrative Procedure Act; and, (3) the final rule is unconstitutional as applied to the States. The States also have asked the Court to issue an injunction enjoining the final rule from having any legal effect. The Court has not yet ruled and briefing is not yet complete.
Employers should continue to prepare for the December 1, 2016 implementation of the final rule. At this point, it remains unclear whether President-Elect Trump will take action to repeal or modify the new rule once he takes office in January 2017. It also remains possible that the Court hearing the case from the States and business Plaintiffs may issue an order staying the effective date of the final rule pending resolution of the legal challenges. Absent an action by the government or the Court, the new rule will take effect on December 1, 2016. Z&R will continue to monitor the status of the new rule and will issue further client alerts as information becomes available.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience defending employers in FLSA actions and is well versed in the nuances of the law. If you have questions about the DOL’s final rule or the FLSA more generally, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
Will President-Elect Donald Trump provide employers with a reprieve from the Department of Labor’s (“DOL”) new rule regarding overtime? We will all have to wait and see.
On May 18, 2016, the DOL announced its final rule increasing the salary thresholds for exemptions under the Fair Labor Standards Act (“FLSA”). To meet an exemption from overtime under the new rule, employees must meet both the duties test and the increased salary requirement. The final rule sets the new salary threshold for “white collar” exemptions at $47,476 annually. For the highly-compensated employee exemption, the new salary threshold is set at $134,004 annually. The final rule (including the new salary thresholds) goes into effect on December 1, 2016.
The FLSA generally requires employers to pay employees for any time worked in excess of forty hours per work week at a rate of one-and-a-half times the employee’s regular rate. The FLSA exempts “white collar” employees from the overtime requirement, provided the employees meet specific criteria: (1) the employees receive a fixed salary; (2) the salary meets the minimum threshold requirement (currently $455 per week, or $23,660 per year) which increases to $913 per week, or $47,476 per year on December 1; and, (3) the employees’ responsibilities primarily involve executive, administrative, or professional duties (the “duties test”). Highly-compensated employees who regularly perform one or more exempt duties also are exempt.
In September, 21 states, including Ohio, filed a lawsuit, State of Nevada, et al. v. U.S. Dept. of Labor, et al., in federal court, challenging the final rule. The Court consolidated this case with a similar case filed by various business associations and Chambers of Commerce. The States seek a declaratory judgment from the Court holding that, among other things: (1) the final rule is unlawful under the Constitution; (2) the final rule’s automatic indexing of the salary-basis test every three years is without Constitutional authority and violates the Administrative Procedure Act; and, (3) the final rule is unconstitutional as applied to the States. The States also have asked the Court to issue an injunction enjoining the final rule from having any legal effect. The Court has not yet ruled and briefing is not yet complete.
Employers should continue to prepare for the December 1, 2016 implementation of the final rule. At this point, it remains unclear whether President-Elect Trump will take action to repeal or modify the new rule once he takes office in January 2017. It also remains possible that the Court hearing the case from the States and business Plaintiffs may issue an order staying the effective date of the final rule pending resolution of the legal challenges. Absent an action by the government or the Court, the new rule will take effect on December 1, 2016. Z&R will continue to monitor the status of the new rule and will issue further client alerts as information becomes available.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience defending employers in FLSA actions and is well versed in the nuances of the law. If you have questions about the DOL’s final rule or the FLSA more generally, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
Wednesday, November 2, 2016
EMPLOYMENT LAW QUARTERLY | Volume XVIII, Issue iii
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More specifically, Ohio has a statute limiting an employer’s influence over how employees vote on Election Day. Ohio Revised Code 3599.05 makes it illegal for an employer or his agent or a corporation to:
A violation of this statute is punishable by a fine of $500 - $1,000.
In 2011, the owner of a fast food restaurant violated R.C. 3599.05 when, in the month preceding the election, the employer enclosed a letter containing the company’s logo on it with each employee’s pay check that stated:
The letter then listed the candidates the owner believed would help the business move forward.
At least one employee filed a complaint against the owner with local prosecutors. The Ohio Secretary of State investigated the claim and recommended charges against the owner. Ultimately, the owner pled no contest to a violation of R.C. 3599.05 and agreed to pay a $1,000 fine.
Accordingly, Ohio employers must understand that there are limits to the amount of influence they can exert over their employees’ choices at the ballot box. If an employer wishes to publish political opinions to their employees, they should consult counsel to help avoid violating the law.
*Brad S. Meyer practices in all areas of public and private labor and employment law. For more information on political speech in the workplace or other labor and employment questions, please contact Brad at bsm@zrlaw.com or 216.696.4441.
The following table summarizes the key aspects of state voting laws:
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In addition to the state laws summarized above, employers also should know about any local ordinances relating to employee time off for voting. With Election Day fast approaching, employers should understand the validity of an employee request for time off to vote and prepare for the impact of any voting-related absences upon business operations.
*Brad E. Bennett practices in all areas of public and private labor and employment law. For more information on employee leave or other labor and employment questions, please contact Brad at beb@zrlaw.com or 614.224.4411.
Generally, the ADA prohibits employers with 15 or more employees from discriminating against individuals on the basis of a disability. To prevent such discrimination, the ADA restricts employers with respect to obtaining medical information from employees and applicants. Notwithstanding the general restriction, however, the ADA permits employers to make certain inquiries of employees regarding their health and to conduct medical exams of employees when such requests are part of voluntary EHPs.
Voluntary EHPs encompass health promotion and disease prevention programs and activities offered to employees as part of an employer sponsored health plan or as a benefit of employment. The EEOC promulgated the new rules to guide employers who may offer incentives to employees to participate in wellness programs that require them to answer disability-related inquiries or undergo a medical examination.
Under the ADA, participation in an EHP must be voluntary. An EHP is voluntary if: (1) it does not require employees to participate; (2) it does not deny coverage under any of its group health plans or limit the extent of benefits (with some limited exceptions) due to non-participation; (3) it does not result in any adverse employment action or retaliation against any employees; and (4) it provides notice to employees regarding the use of their health information.
The new rules issued by the EEOC provide employers further guidance on the fourth prong of the voluntary test - the notice requirement. While the EEOC provides a Sample Notice for Employee-Sponsored Wellness Programs, employers are not required to use the EEOC sample. Under the new rules, an employer is required to provide employees with notice that: “(A) is written so that the employee from whom medical information is being obtained is reasonably likely to understand it; (B) describes the type of medical information that will be obtained and the specific purposes for which the medial information will be used; and (C) describes the restrictions on the disclosure of the employee’s medical information, the employer representatives or other parties with whom the information will be shared, and the methods that the covered entity will use to ensure that medical information is not improperly disclosed (including whether it complies with the measures set forth in the HIPAA regulations).”
After much debate, the EEOC declined to include a requirement that employees participating in EHPs provide prior written and knowing confirmation that their participation is voluntary. In making its determination, the EEOC sought to ensure that no employee unwittingly authorized the dissemination of confidential and protected information, while refusing to place unwieldy burdens on an employer. In order to balance those competing interests, the EEOC ruled that “a covered entity may not require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information, or to waive confidentially protections available under the ADA as a condition for participating in a wellness program or receiving a wellness program incentive.”
The EEOC rules go into effect on the first day of the first plan year for benefits beginning on or after January 1, 2017. With open enrollments quickly approaching, it is important for employers to make sure they are familiar with the new EEOC rules. Employers can expect the EEOC and employee groups to enforce compliance with the new notice rules through litigation.
Employers also must understand that this is just one of the rules that govern EHPs. Implementation of these programs requires compliance with a host of laws and regulations, including but not limited to: HIPAA, Title II of GINA (also enforced by the EEOC), the Affordable Care Act and others.
*Patrick J. Hoban practices in all areas of employment and labor law. If you have questions about employee health programs or other employment and labor law issues, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Title VII of the Civil Rights Act of 1964 (“Title VII”) forbids religious discrimination. Specifically, the statute’s “disparate treatment” provision prohibits employers from failing/refusing to hire, discharging, or otherwise discriminating against an applicant/employee “because of” the applicant’s/employee’s religion. Title VII defines religion to include all aspects of religious observance, practice, and belief.
Religious disparate treatment claims often arise in the form of “failure to accommodate” allegations. Generally, to succeed on a failure to accommodate claim, the applicant/employee initially must prove that: (1) he/she holds a sincere religious belief that conflicts with a job requirement; (2) he/she informed the employer about the conflict; and (3) the employer discharged or disciplined the applicant/employee for failing to comply with the conflicting job requirement.
Title VII defines religious belief broadly. For example, one court acknowledged that Title VII provides atheists with the same protections as members of other religions and found a plaintiff’s atheistic beliefs sincere. See Mathis v. Christian Heating and Air Conditioning, Inc., 158 F. Supp. 3d 317 (E.D. Pa. 2016). There, the plaintiff’s atheistic beliefs conflicted with a job requirement to wear an I.D. badge that included a religious mission statement.
The United States Supreme Court recently relieved applicants/employees from demonstrating, in some cases, that the applicant/employee informed the employer of a conflict between the job requirement and religious belief. In EEOC v. Abercrombie & Fitch Stores, Inc., 135 S. Ct. 2028 (2015), the Court held the employer does not need specific knowledge of the applicant’s/employee’s religion or need for accommodation in intentional religious discrimination cases. Rather, an employer who acts with the motive to avoid an applicant’s/employee’s religious practice or need for religious accommodation – even if based on nothing more than an unsubstantiated suspicion – may violate Title VII. An applicant’s/employee’s religion cannot be a “motivating factor” in the employer’s decision.
If an applicant/employee establishes a prima facie failure to accommodate claim, the employer must show that accommodating the employee would impose an undue hardship on the employer. Undue hardship means more than a de minimis cost. Historically, courts have considered accommodations that result in the following undue hardships: requiring an employer to pay overtime; requiring an employer to hire replacement employees; requiring an employer to make additional contributions to insurance and pension funds; requiring an employer to take action that compromises schedule or seniority systems; and requiring an employer to risk regulatory or criminal sanctions.
In addition, Title VII mandates that an employee cooperate with the employer’s attempts to provide a religious accommodation. Courts may be more likely to find undue hardship where the employee refuses to compromise. For example, a FedEx employee insisted that she keep her operations manager position and get all Saturdays off. The company showed such arrangement would have created a safety risk because the company needed all managers available every day during peak season to assist in loading and launching aircraft. The court found that allowing the employee not to work during peak season imposed an undue hardship. See Burdette v. Federal Express Corp., 367 Fed. App’x 628 (6th Cir. 2010).
Employers should address claims of religious discrimination and requests for accommodation carefully and on an individualized basis. In its Abercrombie & Fitch decision, the United States Supreme Court concluded Title VII does not demand mere neutrality with regard to religious practices. Rather, “it gives [employees seeking religious accommodations] favored treatment.” When evaluating accommodation requests, employers should evaluate carefully the costs of an accommodation, work with the employee to find a solution, and contact employment counsel with questions.
*Drew C. Piersall practices in all areas of employment and labor law. If you have questions about religious discrimination, accommodations, or the EEOC’s enforcement efforts, please contact Drew (dcp@zrlaw.com) at 614.224.4411.
Scott DeHart’s practice will focus on all areas of private and public sector labor and employment law and litigation. Scott graduated summa cum laude from New York Law School, where he focused his studies on labor and employment law. As a law student, Scott was selected as Champion of the NKU Grosse Moot Court Competition. Prior to joining Zashin & Rich, Scott pursued a career as a Human Resources practitioner, most recently as a Director of Human Resources at Columbia University. In that capacity, Scott ensured the effective design and administration of a broad range of HR programs and served on the university’s collective bargaining team.
Monday, November 7, 2016
George S. Crisci presents “The National Labor Relations Board – Obligations and Compliance” and “Other Employment Laws You Need to Know” at the National Business Institute’s Seminar on Human Resource Law from Start to Finish at the CMBA Conference Center, One Cleveland Center, 1375 E 9th St, Cleveland, Ohio 44114.
Friday, November 18, 2016
Jonathan J. Downes presents “FLSA – New Rules and Practical Solutions” at the CAAO Winter Conference during the 9:00 am – 10:30 am session. The conference takes place at the Embassy Suites Dublin, 5100 Upper Metro Place, Dublin, 43017.
Thursday, December 8, 2016
George S. Crisci will participate, as the Management Panelist, in the presentation “A View from the Chair of the National Labor Relations Board.” The featured panelist will be NLRB Chairman Mark G. Pearce. Patrick J. Hoban will participate, as the Management Panelist, in the presentation “Applying the NLRA to Employer Handbooks and Other Employer Policies.” The presentations will occur at 12:30 p.m. and 1:45 p.m., as part of the Ohio State Bar Association’s “National Labor Relations Board Update: Times and Laws are Changing” seminar, which will be held at the Ohio State Bar Association headquarters, 1700 Lake Shore Drive, Columbus, Ohio 43204.
For more information regarding this seminar, please contact Linda Morris – CLE Program Coordinator for the Ohio State Bar Association at 614-487-4408 or email at lmorris@ohiobar.org.
- Not So Fast (Food): Ohio Employer Goes Too Far With Supersized Influence Over His Employees’ Voting Decisions
- Elections and the Workplace: Employee Time Off for Voting
- EEOC Changes the Notice Employers are Required to Provide Employees Participating in an Employee Health Program
- Religious Discrimination on the Horizon: EEOC Targets Enforcement
- Z&R SHORTS
Not So Fast (Food): Ohio Employer Goes Too Far With Supersized Influence Over His Employees’ Voting Decisions
With a hotly debated election season upon us, everyone seems to have an opinion on the candidates and significant ballot issues. While political discussions are common in the workplace, Ohio employers cannot influence their employees’ votes.More specifically, Ohio has a statute limiting an employer’s influence over how employees vote on Election Day. Ohio Revised Code 3599.05 makes it illegal for an employer or his agent or a corporation to:
print or authorize to be printed upon any pay envelopes any statements intended or calculated to influence the political action of his or its employees; or post or exhibit in the establishment or anywhere in or about the establishment any posters, placards, or hand bills containing any threat, notice, or information that if any particular candidate is elected or defeated work in the establishment will cease in whole or in part, or other threats expressed or implied, intended to influence the political opinions or votes of his or its employees.
A violation of this statute is punishable by a fine of $500 - $1,000.
In 2011, the owner of a fast food restaurant violated R.C. 3599.05 when, in the month preceding the election, the employer enclosed a letter containing the company’s logo on it with each employee’s pay check that stated:
As the election season is here we wanted you to know which candidates will help our business grow in the future. As you know, the better our business does it enables us to invest in our people and our restaurants. If the right people are elected we will be able to continue with raises and benefits at or above our present levels. If others are elected we will not. As always who you vote for is completely your personal decision and many factors go into your decision.
The letter then listed the candidates the owner believed would help the business move forward.
At least one employee filed a complaint against the owner with local prosecutors. The Ohio Secretary of State investigated the claim and recommended charges against the owner. Ultimately, the owner pled no contest to a violation of R.C. 3599.05 and agreed to pay a $1,000 fine.
Accordingly, Ohio employers must understand that there are limits to the amount of influence they can exert over their employees’ choices at the ballot box. If an employer wishes to publish political opinions to their employees, they should consult counsel to help avoid violating the law.
*Brad S. Meyer practices in all areas of public and private labor and employment law. For more information on political speech in the workplace or other labor and employment questions, please contact Brad at bsm@zrlaw.com or 216.696.4441.
Elections and the Workplace: Employee Time Off for Voting
As Election Day approaches, employers will receive requests from employees for time off from work to go vote. As there is no federal law governing time off for voting, numerous states have enacted laws governing employee leave for voting. In the 29 states that currently have laws providing for voting leave, the requirements vary. For example, 21 of those states require employers to provide paid time off to employees to vote.The following table summarizes the key aspects of state voting laws:
DOWNLOAD PDF OF TABLE
In addition to the state laws summarized above, employers also should know about any local ordinances relating to employee time off for voting. With Election Day fast approaching, employers should understand the validity of an employee request for time off to vote and prepare for the impact of any voting-related absences upon business operations.
*Brad E. Bennett practices in all areas of public and private labor and employment law. For more information on employee leave or other labor and employment questions, please contact Brad at beb@zrlaw.com or 614.224.4411.
EEOC Changes the Notice Employers are Required to Provide Employees Participating in an Employee Health Program
The Equal Employment Opportunity Commission (“EEOC”) recently published final rules under the Americans with Disabilities Act (“ADA”) for employers who offer certain wellness programs that collect employee health information. Specifically, the EEOC detailed what type of notice employers must provide regarding the use of employee health information. According to the EEOC, the new rules ensure that Employee Health Programs (“EHPs”) “are reasonably designed to promote health and prevent disease, that they are voluntary, and that employee medical information is kept confidential.”Generally, the ADA prohibits employers with 15 or more employees from discriminating against individuals on the basis of a disability. To prevent such discrimination, the ADA restricts employers with respect to obtaining medical information from employees and applicants. Notwithstanding the general restriction, however, the ADA permits employers to make certain inquiries of employees regarding their health and to conduct medical exams of employees when such requests are part of voluntary EHPs.
Voluntary EHPs encompass health promotion and disease prevention programs and activities offered to employees as part of an employer sponsored health plan or as a benefit of employment. The EEOC promulgated the new rules to guide employers who may offer incentives to employees to participate in wellness programs that require them to answer disability-related inquiries or undergo a medical examination.
Under the ADA, participation in an EHP must be voluntary. An EHP is voluntary if: (1) it does not require employees to participate; (2) it does not deny coverage under any of its group health plans or limit the extent of benefits (with some limited exceptions) due to non-participation; (3) it does not result in any adverse employment action or retaliation against any employees; and (4) it provides notice to employees regarding the use of their health information.
The new rules issued by the EEOC provide employers further guidance on the fourth prong of the voluntary test - the notice requirement. While the EEOC provides a Sample Notice for Employee-Sponsored Wellness Programs, employers are not required to use the EEOC sample. Under the new rules, an employer is required to provide employees with notice that: “(A) is written so that the employee from whom medical information is being obtained is reasonably likely to understand it; (B) describes the type of medical information that will be obtained and the specific purposes for which the medial information will be used; and (C) describes the restrictions on the disclosure of the employee’s medical information, the employer representatives or other parties with whom the information will be shared, and the methods that the covered entity will use to ensure that medical information is not improperly disclosed (including whether it complies with the measures set forth in the HIPAA regulations).”
After much debate, the EEOC declined to include a requirement that employees participating in EHPs provide prior written and knowing confirmation that their participation is voluntary. In making its determination, the EEOC sought to ensure that no employee unwittingly authorized the dissemination of confidential and protected information, while refusing to place unwieldy burdens on an employer. In order to balance those competing interests, the EEOC ruled that “a covered entity may not require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information, or to waive confidentially protections available under the ADA as a condition for participating in a wellness program or receiving a wellness program incentive.”
The EEOC rules go into effect on the first day of the first plan year for benefits beginning on or after January 1, 2017. With open enrollments quickly approaching, it is important for employers to make sure they are familiar with the new EEOC rules. Employers can expect the EEOC and employee groups to enforce compliance with the new notice rules through litigation.
Employers also must understand that this is just one of the rules that govern EHPs. Implementation of these programs requires compliance with a host of laws and regulations, including but not limited to: HIPAA, Title II of GINA (also enforced by the EEOC), the Affordable Care Act and others.
*Patrick J. Hoban practices in all areas of employment and labor law. If you have questions about employee health programs or other employment and labor law issues, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Religious Discrimination on the Horizon: EEOC Targets Enforcement
In a series of moves, the Equal Employment Opportunity Commission (“EEOC”) recently demonstrated its intent to pursue religious discrimination claims more actively. In July, the EEOC released a fact sheet “designed to help younger workers understand their rights and responsibilities” under anti-discrimination laws. The EEOC also announced its improved coordination with the Department of Labor (“DOL”) to prevent religious discrimination among federal contractors and subcontractors.Title VII of the Civil Rights Act of 1964 (“Title VII”) forbids religious discrimination. Specifically, the statute’s “disparate treatment” provision prohibits employers from failing/refusing to hire, discharging, or otherwise discriminating against an applicant/employee “because of” the applicant’s/employee’s religion. Title VII defines religion to include all aspects of religious observance, practice, and belief.
Religious disparate treatment claims often arise in the form of “failure to accommodate” allegations. Generally, to succeed on a failure to accommodate claim, the applicant/employee initially must prove that: (1) he/she holds a sincere religious belief that conflicts with a job requirement; (2) he/she informed the employer about the conflict; and (3) the employer discharged or disciplined the applicant/employee for failing to comply with the conflicting job requirement.
Title VII defines religious belief broadly. For example, one court acknowledged that Title VII provides atheists with the same protections as members of other religions and found a plaintiff’s atheistic beliefs sincere. See Mathis v. Christian Heating and Air Conditioning, Inc., 158 F. Supp. 3d 317 (E.D. Pa. 2016). There, the plaintiff’s atheistic beliefs conflicted with a job requirement to wear an I.D. badge that included a religious mission statement.
The United States Supreme Court recently relieved applicants/employees from demonstrating, in some cases, that the applicant/employee informed the employer of a conflict between the job requirement and religious belief. In EEOC v. Abercrombie & Fitch Stores, Inc., 135 S. Ct. 2028 (2015), the Court held the employer does not need specific knowledge of the applicant’s/employee’s religion or need for accommodation in intentional religious discrimination cases. Rather, an employer who acts with the motive to avoid an applicant’s/employee’s religious practice or need for religious accommodation – even if based on nothing more than an unsubstantiated suspicion – may violate Title VII. An applicant’s/employee’s religion cannot be a “motivating factor” in the employer’s decision.
If an applicant/employee establishes a prima facie failure to accommodate claim, the employer must show that accommodating the employee would impose an undue hardship on the employer. Undue hardship means more than a de minimis cost. Historically, courts have considered accommodations that result in the following undue hardships: requiring an employer to pay overtime; requiring an employer to hire replacement employees; requiring an employer to make additional contributions to insurance and pension funds; requiring an employer to take action that compromises schedule or seniority systems; and requiring an employer to risk regulatory or criminal sanctions.
In addition, Title VII mandates that an employee cooperate with the employer’s attempts to provide a religious accommodation. Courts may be more likely to find undue hardship where the employee refuses to compromise. For example, a FedEx employee insisted that she keep her operations manager position and get all Saturdays off. The company showed such arrangement would have created a safety risk because the company needed all managers available every day during peak season to assist in loading and launching aircraft. The court found that allowing the employee not to work during peak season imposed an undue hardship. See Burdette v. Federal Express Corp., 367 Fed. App’x 628 (6th Cir. 2010).
Employers should address claims of religious discrimination and requests for accommodation carefully and on an individualized basis. In its Abercrombie & Fitch decision, the United States Supreme Court concluded Title VII does not demand mere neutrality with regard to religious practices. Rather, “it gives [employees seeking religious accommodations] favored treatment.” When evaluating accommodation requests, employers should evaluate carefully the costs of an accommodation, work with the employee to find a solution, and contact employment counsel with questions.
*Drew C. Piersall practices in all areas of employment and labor law. If you have questions about religious discrimination, accommodations, or the EEOC’s enforcement efforts, please contact Drew (dcp@zrlaw.com) at 614.224.4411.
Z&R SHORTS
Please join Z&R in welcoming Scott DeHart to its Employment and Labor Groups
Scott DeHart’s practice will focus on all areas of private and public sector labor and employment law and litigation. Scott graduated summa cum laude from New York Law School, where he focused his studies on labor and employment law. As a law student, Scott was selected as Champion of the NKU Grosse Moot Court Competition. Prior to joining Zashin & Rich, Scott pursued a career as a Human Resources practitioner, most recently as a Director of Human Resources at Columbia University. In that capacity, Scott ensured the effective design and administration of a broad range of HR programs and served on the university’s collective bargaining team.
Upcoming Speaking Engagements
Monday, November 7, 2016
George S. Crisci presents “The National Labor Relations Board – Obligations and Compliance” and “Other Employment Laws You Need to Know” at the National Business Institute’s Seminar on Human Resource Law from Start to Finish at the CMBA Conference Center, One Cleveland Center, 1375 E 9th St, Cleveland, Ohio 44114.
Friday, November 18, 2016
Jonathan J. Downes presents “FLSA – New Rules and Practical Solutions” at the CAAO Winter Conference during the 9:00 am – 10:30 am session. The conference takes place at the Embassy Suites Dublin, 5100 Upper Metro Place, Dublin, 43017.
Thursday, December 8, 2016
George S. Crisci will participate, as the Management Panelist, in the presentation “A View from the Chair of the National Labor Relations Board.” The featured panelist will be NLRB Chairman Mark G. Pearce. Patrick J. Hoban will participate, as the Management Panelist, in the presentation “Applying the NLRA to Employer Handbooks and Other Employer Policies.” The presentations will occur at 12:30 p.m. and 1:45 p.m., as part of the Ohio State Bar Association’s “National Labor Relations Board Update: Times and Laws are Changing” seminar, which will be held at the Ohio State Bar Association headquarters, 1700 Lake Shore Drive, Columbus, Ohio 43204.
For more information regarding this seminar, please contact Linda Morris – CLE Program Coordinator for the Ohio State Bar Association at 614-487-4408 or email at lmorris@ohiobar.org.
Monday, September 26, 2016
21 States, Including Ohio, File Lawsuit Challenging the DOL’s Final Rule Increasing the Minimum Salary Threshold Under the FLSA
By Michele L. Jakubs*
On September 20, 2016, 21 states, including Ohio, filed a lawsuit, State of Nevada, et al. v. U.S. Dept. of Labor, et al., 1:16-cv-00407 (E.D., Texas 2016), in federal court, challenging the final rule recently implemented by the Department of Labor (DOL) increasing the minimum salary threshold required to qualify for the Fair Labor Standards Act's (“FLSA”) “white collar” overtime exemptions. The rule is set to take effect on December 1, 2016 and will increase the minimum salary threshold from $23,660 per year to $47,476 per year. Z&R previously reported on the scope of the changes.
The States seek a declaratory judgment from the Court holding that, among other things: (1) the final rule is unlawful under the Constitution; (2) the final rule’s automatic indexing of the salary-basis test every three years is without Constitutional authority and violates the Administrative Procedure Act; and, (3) the final rule is unconstitutional as applied to the States. The States also have asked the Court to issue an injunction enjoining the final rule from having any legal effect.
While employers should continue to prepare for the December 1, 2016 implementation of the final rule, it is possible that the Court may issue an order staying the effective date of the final rule pending resolution of the legal challenges advanced by the 21 states. Z&R will continue to monitor this case and will issue further client alerts as the case advances.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience defending employers in FLSA actions and is well versed in the nuances of the law. If you have questions about the DOL’s final rule or the FLSA more generally, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
On September 20, 2016, 21 states, including Ohio, filed a lawsuit, State of Nevada, et al. v. U.S. Dept. of Labor, et al., 1:16-cv-00407 (E.D., Texas 2016), in federal court, challenging the final rule recently implemented by the Department of Labor (DOL) increasing the minimum salary threshold required to qualify for the Fair Labor Standards Act's (“FLSA”) “white collar” overtime exemptions. The rule is set to take effect on December 1, 2016 and will increase the minimum salary threshold from $23,660 per year to $47,476 per year. Z&R previously reported on the scope of the changes.
The States seek a declaratory judgment from the Court holding that, among other things: (1) the final rule is unlawful under the Constitution; (2) the final rule’s automatic indexing of the salary-basis test every three years is without Constitutional authority and violates the Administrative Procedure Act; and, (3) the final rule is unconstitutional as applied to the States. The States also have asked the Court to issue an injunction enjoining the final rule from having any legal effect.
While employers should continue to prepare for the December 1, 2016 implementation of the final rule, it is possible that the Court may issue an order staying the effective date of the final rule pending resolution of the legal challenges advanced by the 21 states. Z&R will continue to monitor this case and will issue further client alerts as the case advances.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience defending employers in FLSA actions and is well versed in the nuances of the law. If you have questions about the DOL’s final rule or the FLSA more generally, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
Monday, August 1, 2016
EMPLOYMENT LAW QUARTERLY | Volume XVIII, Issue ii
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Ohio recently became the 25th state to legalize medical marijuana. Effective September 8, 2016, doctors may prescribe medical marijuana to individuals diagnosed with HIV/AIDS, Alzheimer’s, cancer, epilepsy, glaucoma, and other specified qualifying medical conditions or diseases.
Ohio’s legalization of medical marijuana comes with restrictions. Under the law, House Bill 523, the Department of Commerce and State Board of Pharmacy will administer a medical marijuana control program. Collectively, these agencies will regulate retail dispensaries, medical marijuana growers, and doctor registration.
In addition, the law provides a number of specific protections for employers to enable them to maintain safe workplaces and enforce reasonable human resource policies, including:
The law prohibits applicants or employees from bringing a cause of action against an employer based on the employer’s failure to hire, discharge, discipline, discrimination, retaliation, or taking an adverse action against the applicant or employee for reasons related to his or her medical marijuana use. Nonetheless, employee use of medical marijuana likely will raise questions and complicate employment decisions under state and federal disability discrimination laws. For example, an employee’s use of medical marijuana may signal that the employee has a disability, which may require an employer to engage in the interactive process with the employee or to provide some form of reasonable accommodation. In addition, employees suffering or recovering from cancer (or other allowed conditions) who are disciplined for medical marijuana use still could raise a legal claim (e.g., retaliation or disability discrimination).
With the law’s effective date fast approaching, employers should determine how to best manage employee medical marijuana use. Considerations will vary based on the nature of the employer and positions affected. Employers with policies referencing drug use should review and consider amending those policies to include provisions specific to Ohio’s new law in order to expressly address medical marijuana use.
*Brad E. Bennett, an OSBA Certified Specialist in Employment and Labor Law, works in the Columbus office. If you have any questions about Ohio’s legalization of medical marijuana, please contact Brad (beb@zrlaw.com) at 614.224.4441.
Paid family and sick leave is a hotly contested issue, with employee rights advocates pushing for financial security for employees who need such leave and employers voicing concerns over costs and leave abuse. In April 2016, New York became the latest state to enact a law providing eligible employees with paid leave to care for family members and newborn children. The New York law is somewhat unique, as the leave payments are funded through an insurance-style system in which the funds are generated from $1 weekly deductions from employee paychecks. Ostensibly, this approach is aimed at appeasing employer qualms over the expense of having to pay their employees while on family and medical leave.
Under the New York law, employees who have been employed for more than 26 weeks are entitled to partially paid leave under certain circumstances. Such circumstances include providing care for a family member with a serious health condition as defined in the federal Family and Medical Leave Act (“FMLA”), a qualifying exigency relating to a family member’s active duty in the Armed Forces as set forth in the FMLA, or time to care for and bond with a child during the first 12 months after birth, adoption, or foster care placement. Funds generated through the $1 weekly deductions from employee pay will compensate employees on leave with a percentage of their wages. The payment percentages and amount of leave entitlement are set to increase over time. When the law is fully implemented in 2021, eligible employees will receive 12 weeks of leave and receive 67% of their average weekly wage (capped at 67% of the state-wide weekly average for wages).
Ohio does not have a law providing for paid family and medical leave. In April, Democrats in the Ohio House of Representatives sponsored House Bill 511, which, if enacted, would create a state-administered, insurance-based paid family and medical leave program somewhat similar to the New York law. Under the bill, premiums would be withheld from employee wages, and eligible employees would be entitled to leave payments based upon their income level. The bill also prohibits retaliation by employers and provides employees with a private cause of action against employers.
On a local level, the Village of Newburg Heights, Ohio recently made national news when it enacted an ordinance providing employees of the Village with maternity/paternity leave. Under the ordinance, full-time Village employees can receive up to six months of maternity/paternity leave with full pay.
As public attention increases and more legislatures focus on paid family and medical leave, employers may find themselves dealing with laws, regulations, expenses, and litigation beyond those associated with the FMLA. The newer, insurance-style approach takes some of the financial burden off employers, as the benefits are funded through employee payroll deductions. However, employers still will incur costs associated with compliance and administration, leave abuse, workforce management to cover for employees on leave, and potential litigation.
New York employers should take action to comply with the new statute. Ohio employers should recognize that paid family and medical leave is on the horizon.
*Drew C. Piersall, an OSBA Certified Specialist in Employment and Labor Law, practices in all areas of employment and labor law. If you have questions about laws relating to family and medical leave, please contact Drew (dcp@zrlaw.com) at 614.224.4441.
As Zashin & Rich first reported, the Ohio Supreme Court recently expanded the application of Ohio’s Sunshine Laws by broadening its interpretation of the Open Meetings Act. In White v. King, the Ohio Supreme Court held that Ohio Revised Code 121.22 “prohibits any private prearranged discussion of public business by a majority of the members of a public body regardless of whether the discussion occurs face to face, telephonically, by video conference, or electronically by e-mail, text, tweet, or other form of communication.” 2016-Ohio-2770.
Generally, R.C. 121.22 requires that public officials take official action and conduct deliberations upon official business in meetings open to the public. The Act defines meetings to include “any prearranged discussions” by a majority of a public body’s members concerning pubic business. All of a public body’s meetings are considered public meetings and open to the public at all times.
However, R.C. 121.22 contains exceptions to these open meetings requirements. Public bodies may hold executive sessions for specific purposes. Those include, but are not limited to: (1) “the appointment, employment, dismissal, discipline, promotion, demotion... or the investigation of charges or complaints against a public employee;” (2) considering the purchase or sale of public property; (3) conferences with an attorney regarding pending or imminent court action; and (4) “preparing for, conducting, or reviewing negotiations or bargaining sessions with public employees.”
The dispute in White v. King centered on a school board’s actions. After the school board changed its internal communications policy, a newspaper praised the lone board member who opposed the change. In a series of email exchanges, the other board members and school board staff drafted a response to the article. The school board president submitted the response to the newspaper with the consent of the other board members (excluding the member who the article praised), and the school board later ratified its response. The lone board member filed a lawsuit, claiming the school board’s actions violated Ohio’s Sunshine Laws.
The school board asserted two primary arguments in defense: (1) the law does not apply to emails because the Act does not mention electronic communications; and (2) the school board’s discussions did not involve public business because only private deliberations on a pending rule or resolution can violate R.C. 121.22. The Ohio Supreme Court rejected both arguments. Construing the statute liberally, the Court determined that the difference between in-person and email communications “is a distinction without a difference.” The Court emphasized that discussions of public bodies are to be conducted in a public forum. Further, the Court found that the school board’s ratification of its prior action (the response) constituted “public business” under the statute. As such, the email discussion qualified as a discussion of public business by the school board and the school board violated Ohio’s Sunshine Laws.
Given the widespread use of electronic communications among public sector legislators, this decision requires a reassessment of how legislators can and should use email or other means of electronic communications. Absent an amendment by Ohio’s General Assembly, legislators should restrict significantly electronic communications. Further, all public agencies should examine their communications policies and contact counsel with questions.
*Jonathan J. Downes, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, has over 30 years of experience advising public sector clients regarding the requirements under Ohio’s Sunshine Laws. He represents cities, townships, counties, school districts, and public officials throughout the State of Ohio. If you have any questions about Ohio’s Sunshine Laws or their application, please contact Jonathan (jjd@zrlaw.com), in the Columbus office, at 614.224.4441.
**George S. Crisci, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, likewise has over 30 years of experience in practicing labor and employment law. In addition, George has extensive knowledge of Ohio’s Sunshine Laws. If you have any questions about Ohio’s Sunshine Laws or their application, please contact George (gsc@zrlaw.com), in the Cleveland office, at 216.696.4441.
What Do Background Checks Have To Do With ‘Fair Credit Reporting’?!
By Helena Oroz*
The Fair Credit Reporting Act, or FCRA (15 U.S.C. § 1681 et seq.), is a federal law that governs the collection, assembly, and use of information about people – “consumers” in statutory talk.
FCRA is funny: it doesn’t sound like an employment law, because it’s not; it sounds like an arcane consumer protection law (which it is). It applies to employers, but it’s not written for employers. Its name is confusing because it uses the term “credit reporting” while the law itself is all about “consumer reports,” both of which feed misperceptions about what the law covers.
And those misperceptions abound:
Okay, full disclosure: these are not real quotes. But they do represent real misunderstandings and confusion about employer obligations under FCRA.
Quick and dirty: FCRA history.
FCRA has been around since 1970, but its look has changed over the years. The law was originally enacted for objectively good reasons: to prevent misuse of consumer information, to improve the accuracy of consumer reports, and to promote the efficiency of the nation’s banking and consumer credit systems.
In enacting FCRA, Congress found that consumer reporting agencies, or CRAs – the companies that compile the information into a “consumer report” and sell it – had “assumed a vital role in assembling and evaluating consumer credit and other information on consumers.” 15 U.S.C. §1681(a)(3). As a result, CRAs have been on the government’s hot seat for years, first under the enforcement authority of the Federal Trade Commission (“FTC”) and since 2010 under the joint enforcement authority of the FTC and Consumer Financial Protection Bureau (“CFPB”).
In 1996, things got interesting for employers that used consumer reports for employment purposes. Up to that point, employers had limited responsibilities as users of consumer reports. FCRA’s 1996 amendments upped the ante, adding the employer disclosure, authorization, and pre-adverse action requirements that we all (should) know about these days.
Why employers are on their own when it comes to FCRA compliance.
These days, FCRA – the actual statute – seems deceptively simple. Even using the statutorily-required notices may not be enough. Those notices still may not be technically compliant if, for example, they contain extraneous language, like a release of liability, or too much information.
But – says who? Explanatory regulations? Model forms? The FTC or CFPB? That would be nice, but the first two don’t exist, and the second two are mute. The only existing interpretive guidance consists of stale FTC Informal Staff Opinion Letters that do not have the force of law.
The CFPB has been the primary agency responsible for interpreting FCRA for more than five years, yet it has not issued a single piece of guidance regarding employer FCRA obligations during that time. I actually tried to hit the CFPB up for some information via email, and most recently, on Twitter, to no avail. As for recent FTC activity, if this blog post is any indication, don’t look to government agencies to fill the guidance vacuum anytime soon.
Instead, that vacuum is being filled, slowly but surely, with court decisions from the deluge of recent FCRA class actions across the country. From Whole Foods to Michaels Stores to Amazon, to recently Sprint, even the giants are getting hit for alleged FCRA violations. In Sprint’s case (and many others just like it), a job applicant claims the company’s “Authorization for Background Investigation” violates FCRA because “it contains extraneous information,” including third party authorizations, state specific information, and other statements. Rodriguez v. Sprint/United Mgmt. Co., N.D. Illinois No. 1:15-cv-10641. The plaintiff claims that FCRA’s “unambiguous language” and that old FTC guidance provide support for his claims.
Even if that’s true, think about this: if the CFPB simply issued a model Disclosure and Authorization Form, use of which would constitute compliance with FCRA, this entire conversation would be moot.
Quick and dirty: FCRA requirements.
In the meantime, we have to work with what we have. Knowing even a little about FCRA may help clients or others who don’t. (P.S.: Some special rules, not discussed here, apply to the transportation industry).
1. If an employer uses a third party to obtain virtually any kind of background information, FCRA applies. If an employer requests any information about an applicant (or current employee) from a third party in order to make an employment decision, the employer has requested a “consumer report” and must comply with FCRA’s disclosure, authorization, and adverse action notice requirements. If an employer uses its own employees to vet its applicants, for example, FCRA would not apply.
2. For all intents and purposes, “background check” means the same thing as “consumer report.” Common “consumer reports” that employers use to vet applicants include criminal history reports, education records, employment history, and credit history.
3. An employer must provide a disclosure and obtain authorization before requesting a background check. Before requesting a consumer report, an employer always must do two things: (a) make a clear, conspicuous written disclosure to each applicant/employee that a consumer report may be obtained about them for employment purposes; and (b) obtain each applicant’s/employee’s written authorization to obtain a consumer report.
4. The disclosure and authorization must be FCRA-compliant. Both items may be combined into one document, but the document cannot contain any other information. Currently, this is an area of great controversy. FCRA says only that the disclosure must be made “in a document that consists solely of the disclosure,” although the authorization may appear on the same document. 15 U.S.C. §1681b(b)(2)(A). According to that old FTC guidance, this means that a disclosure and authorization may include only minor additional items and cannot be part of an employment application.
5. Employers taking “adverse action” against an applicant/employee based on information in a consumer report must follow a two-step process. This process is intended to give the person an opportunity to review the information and dispute it with the CRA reporting it if the information is incorrect (which can and does happen). “Adverse action” means any decision that adversely affects a current or prospective employee, including not hiring or firing someone, but also disciplinary action, denial of a promotion, or the like.
First, before taking adverse action, the employer must provide the applicant/employee with a copy of the report at issue and a summary of their FCRA rights (available on the CFPB website). Most employers provide this “pre-adverse action notice” in the form of a letter (not technically required by statute, but makes sense) that includes these required enclosures.
Second, after taking adverse action, the employer must provide the applicant/employee with notice of the adverse action that also includes: contact information for the CRA that provided the report; a statement that the CRA did not make the decision to take the adverse action; notice of the applicant’s/employee’s right to obtain a free copy of the consumer report from the CRA within 60 days; and notice of the applicant’s/employee’s right to dispute the accuracy or completeness of any information in the report. Again, most employers provide this “post-adverse action notice” in the form of a letter.
FCRA is silent on how much time should elapse between these two steps, but that old FTC guidance says five business days might be reasonable, depending on the circumstances.
Employers can take a number of steps in the right direction toward FCRA compliance, even in this murky landscape:
So what does FCRA have to do with employer background checks? Everything!
*Helena Oroz, an OSBA Certified Specialist in Employment and Labor Law, practices in all areas of employment law, including FCRA and state fair credit reporting and background check law compliance. If you have any questions about the FCRA, please contact Helena (hot@zrlaw.com) at 216.696.4441. This article originally was published in the Cleveland Metropolitan Bar Journal.
Please join Z&R in welcoming Brad Meyer to its Employment and Labor Groups.
Brad S. Meyer’s practice focuses on all areas of private and public sector labor and employment law and litigation. Brad has worked with public and private employers on issues of contract interpretation, collective bargaining and discipline issues. Prior to joining Zashin & Rich, Brad represented the State of Ohio and Cuyahoga County for over ten years at both the trial and appellate court level. He also was involved in community outreach efforts throughout Cuyahoga County. As a law student at The Penn State – Dickinson School of Law, Brad focused his studies on labor and employment law. He led the school’s Wagner National Labor and Employment Moot Court team to competition in New York City.
Upcoming Speaking Engagements
Monday, August 15, 2016
George S. Crisci presents “Conducting an Effective Internal Investigation” and “National Labor Relations Board Decisions Affecting Unionized and Non-Unionized Workplaces” at the National Business Institute’s Seminar on Advanced Employment Law at the Hilton Akron Fairlawn in Akron, Ohio.
Thursday, September 22, 2016
Stephen S. Zashin presents “Best Hiring Practices” at the 2016 Summit on Making Ohio Communities Safer to be held at the Word Church in Warrensville Heights, Ohio.
Monday, November 7, 2016
George S. Crisci presents “Other Employment Laws You Need to Know” and “The National Labor Relations Board – Obligations and Compliance” at the National Business Institute’s Seminar on Human Resources from Start to Finish in Cleveland, Ohio.
- Medical Marijuana Soon To Be Allowed in Ohio
- Are Insurance-Style Programs the Future of Paid Family and Sick Leave?
- Public Sector Alert: Sunshine Laws May Now Cover Your Email Communications
- What Do Background Checks Have To Do With ‘Fair Credit Reporting’?!
- Z&R SHORTS
Medical Marijuana Soon To Be Allowed in Ohio
By Brad E. Bennett*Ohio recently became the 25th state to legalize medical marijuana. Effective September 8, 2016, doctors may prescribe medical marijuana to individuals diagnosed with HIV/AIDS, Alzheimer’s, cancer, epilepsy, glaucoma, and other specified qualifying medical conditions or diseases.
Ohio’s legalization of medical marijuana comes with restrictions. Under the law, House Bill 523, the Department of Commerce and State Board of Pharmacy will administer a medical marijuana control program. Collectively, these agencies will regulate retail dispensaries, medical marijuana growers, and doctor registration.
In addition, the law provides a number of specific protections for employers to enable them to maintain safe workplaces and enforce reasonable human resource policies, including:
- Employers do not have to permit or accommodate an employee’s use, possession, or distribution of medical marijuana;
- Employers may refuse to hire or may discharge, discipline, or otherwise take an adverse action against an applicant or employee because of that person’s use, possession, or distribution of medical marijuana;
- Employers may establish and enforce drug testing policies, drug-free workplace policies, or zero-tolerance drug policies;
- Employees discharged for violating formal drug-free programs or policies are considered discharged for just cause under Ohio’s unemployment compensation laws (rendering those employees ineligible for unemployment compensation);
- Employee use of medical marijuana cannot interfere with any federal restrictions on employment (e.g., CDL license regulations); and
- Employers still may defend against workers’ compensation claims on the basis that marijuana use contributed to or resulted in an injury.
The law prohibits applicants or employees from bringing a cause of action against an employer based on the employer’s failure to hire, discharge, discipline, discrimination, retaliation, or taking an adverse action against the applicant or employee for reasons related to his or her medical marijuana use. Nonetheless, employee use of medical marijuana likely will raise questions and complicate employment decisions under state and federal disability discrimination laws. For example, an employee’s use of medical marijuana may signal that the employee has a disability, which may require an employer to engage in the interactive process with the employee or to provide some form of reasonable accommodation. In addition, employees suffering or recovering from cancer (or other allowed conditions) who are disciplined for medical marijuana use still could raise a legal claim (e.g., retaliation or disability discrimination).
With the law’s effective date fast approaching, employers should determine how to best manage employee medical marijuana use. Considerations will vary based on the nature of the employer and positions affected. Employers with policies referencing drug use should review and consider amending those policies to include provisions specific to Ohio’s new law in order to expressly address medical marijuana use.
*Brad E. Bennett, an OSBA Certified Specialist in Employment and Labor Law, works in the Columbus office. If you have any questions about Ohio’s legalization of medical marijuana, please contact Brad (beb@zrlaw.com) at 614.224.4441.
Are Insurance-Style Programs the Future of Paid Family and Sick Leave?
By Drew C. Piersall*Paid family and sick leave is a hotly contested issue, with employee rights advocates pushing for financial security for employees who need such leave and employers voicing concerns over costs and leave abuse. In April 2016, New York became the latest state to enact a law providing eligible employees with paid leave to care for family members and newborn children. The New York law is somewhat unique, as the leave payments are funded through an insurance-style system in which the funds are generated from $1 weekly deductions from employee paychecks. Ostensibly, this approach is aimed at appeasing employer qualms over the expense of having to pay their employees while on family and medical leave.
Under the New York law, employees who have been employed for more than 26 weeks are entitled to partially paid leave under certain circumstances. Such circumstances include providing care for a family member with a serious health condition as defined in the federal Family and Medical Leave Act (“FMLA”), a qualifying exigency relating to a family member’s active duty in the Armed Forces as set forth in the FMLA, or time to care for and bond with a child during the first 12 months after birth, adoption, or foster care placement. Funds generated through the $1 weekly deductions from employee pay will compensate employees on leave with a percentage of their wages. The payment percentages and amount of leave entitlement are set to increase over time. When the law is fully implemented in 2021, eligible employees will receive 12 weeks of leave and receive 67% of their average weekly wage (capped at 67% of the state-wide weekly average for wages).
Ohio does not have a law providing for paid family and medical leave. In April, Democrats in the Ohio House of Representatives sponsored House Bill 511, which, if enacted, would create a state-administered, insurance-based paid family and medical leave program somewhat similar to the New York law. Under the bill, premiums would be withheld from employee wages, and eligible employees would be entitled to leave payments based upon their income level. The bill also prohibits retaliation by employers and provides employees with a private cause of action against employers.
On a local level, the Village of Newburg Heights, Ohio recently made national news when it enacted an ordinance providing employees of the Village with maternity/paternity leave. Under the ordinance, full-time Village employees can receive up to six months of maternity/paternity leave with full pay.
As public attention increases and more legislatures focus on paid family and medical leave, employers may find themselves dealing with laws, regulations, expenses, and litigation beyond those associated with the FMLA. The newer, insurance-style approach takes some of the financial burden off employers, as the benefits are funded through employee payroll deductions. However, employers still will incur costs associated with compliance and administration, leave abuse, workforce management to cover for employees on leave, and potential litigation.
New York employers should take action to comply with the new statute. Ohio employers should recognize that paid family and medical leave is on the horizon.
*Drew C. Piersall, an OSBA Certified Specialist in Employment and Labor Law, practices in all areas of employment and labor law. If you have questions about laws relating to family and medical leave, please contact Drew (dcp@zrlaw.com) at 614.224.4441.
Public Sector Alert: Sunshine Laws May Now Cover Your Email Communications
By Jonathan J. Downes* and George S. Crisci**As Zashin & Rich first reported, the Ohio Supreme Court recently expanded the application of Ohio’s Sunshine Laws by broadening its interpretation of the Open Meetings Act. In White v. King, the Ohio Supreme Court held that Ohio Revised Code 121.22 “prohibits any private prearranged discussion of public business by a majority of the members of a public body regardless of whether the discussion occurs face to face, telephonically, by video conference, or electronically by e-mail, text, tweet, or other form of communication.” 2016-Ohio-2770.
Generally, R.C. 121.22 requires that public officials take official action and conduct deliberations upon official business in meetings open to the public. The Act defines meetings to include “any prearranged discussions” by a majority of a public body’s members concerning pubic business. All of a public body’s meetings are considered public meetings and open to the public at all times.
However, R.C. 121.22 contains exceptions to these open meetings requirements. Public bodies may hold executive sessions for specific purposes. Those include, but are not limited to: (1) “the appointment, employment, dismissal, discipline, promotion, demotion... or the investigation of charges or complaints against a public employee;” (2) considering the purchase or sale of public property; (3) conferences with an attorney regarding pending or imminent court action; and (4) “preparing for, conducting, or reviewing negotiations or bargaining sessions with public employees.”
The dispute in White v. King centered on a school board’s actions. After the school board changed its internal communications policy, a newspaper praised the lone board member who opposed the change. In a series of email exchanges, the other board members and school board staff drafted a response to the article. The school board president submitted the response to the newspaper with the consent of the other board members (excluding the member who the article praised), and the school board later ratified its response. The lone board member filed a lawsuit, claiming the school board’s actions violated Ohio’s Sunshine Laws.
The school board asserted two primary arguments in defense: (1) the law does not apply to emails because the Act does not mention electronic communications; and (2) the school board’s discussions did not involve public business because only private deliberations on a pending rule or resolution can violate R.C. 121.22. The Ohio Supreme Court rejected both arguments. Construing the statute liberally, the Court determined that the difference between in-person and email communications “is a distinction without a difference.” The Court emphasized that discussions of public bodies are to be conducted in a public forum. Further, the Court found that the school board’s ratification of its prior action (the response) constituted “public business” under the statute. As such, the email discussion qualified as a discussion of public business by the school board and the school board violated Ohio’s Sunshine Laws.
Given the widespread use of electronic communications among public sector legislators, this decision requires a reassessment of how legislators can and should use email or other means of electronic communications. Absent an amendment by Ohio’s General Assembly, legislators should restrict significantly electronic communications. Further, all public agencies should examine their communications policies and contact counsel with questions.
*Jonathan J. Downes, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, has over 30 years of experience advising public sector clients regarding the requirements under Ohio’s Sunshine Laws. He represents cities, townships, counties, school districts, and public officials throughout the State of Ohio. If you have any questions about Ohio’s Sunshine Laws or their application, please contact Jonathan (jjd@zrlaw.com), in the Columbus office, at 614.224.4441.
**George S. Crisci, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, likewise has over 30 years of experience in practicing labor and employment law. In addition, George has extensive knowledge of Ohio’s Sunshine Laws. If you have any questions about Ohio’s Sunshine Laws or their application, please contact George (gsc@zrlaw.com), in the Cleveland office, at 216.696.4441.
What Do Background Checks Have To Do With ‘Fair Credit Reporting’?!
And Other Burning Questions About the Un-employment Law That has Employers on Edge
By Helena Oroz*The Fair Credit Reporting Act, or FCRA (15 U.S.C. § 1681 et seq.), is a federal law that governs the collection, assembly, and use of information about people – “consumers” in statutory talk.
FCRA is funny: it doesn’t sound like an employment law, because it’s not; it sounds like an arcane consumer protection law (which it is). It applies to employers, but it’s not written for employers. Its name is confusing because it uses the term “credit reporting” while the law itself is all about “consumer reports,” both of which feed misperceptions about what the law covers.
And those misperceptions abound:
- “FCRA is about credit reports. We don’t care if our job applicants have bad credit. We just don’t want any criminals around the office. So we’re good, right?”
- “We don’t really deal with ‘consumer’ reports. Just applicant reports. And then sometimes employee reports. So that’s different.”
- “Of course we disclose to applicants that we’re requesting consumer reports. Just read our employment application.”
- “I already know all about this FCRA stuff. Our 10-page packet includes everything we’re supposed to have, plus our release of liability, permission for third parties to disclose information to us, state-specific information...”
- “Adverse action notices? Two of them? Is that a new thing?”
- “This guy’s background check was hilarious. Public intox and indecency?! I can’t believe he applied here. And that’s exactly what I told him when he called asking about the status of his application.”
- “My background check company handles all of my company’s FCRA compliance. I can count on them.”
Okay, full disclosure: these are not real quotes. But they do represent real misunderstandings and confusion about employer obligations under FCRA.
Quick and dirty: FCRA history.
FCRA has been around since 1970, but its look has changed over the years. The law was originally enacted for objectively good reasons: to prevent misuse of consumer information, to improve the accuracy of consumer reports, and to promote the efficiency of the nation’s banking and consumer credit systems.
In enacting FCRA, Congress found that consumer reporting agencies, or CRAs – the companies that compile the information into a “consumer report” and sell it – had “assumed a vital role in assembling and evaluating consumer credit and other information on consumers.” 15 U.S.C. §1681(a)(3). As a result, CRAs have been on the government’s hot seat for years, first under the enforcement authority of the Federal Trade Commission (“FTC”) and since 2010 under the joint enforcement authority of the FTC and Consumer Financial Protection Bureau (“CFPB”).
In 1996, things got interesting for employers that used consumer reports for employment purposes. Up to that point, employers had limited responsibilities as users of consumer reports. FCRA’s 1996 amendments upped the ante, adding the employer disclosure, authorization, and pre-adverse action requirements that we all (should) know about these days.
Why employers are on their own when it comes to FCRA compliance.
These days, FCRA – the actual statute – seems deceptively simple. Even using the statutorily-required notices may not be enough. Those notices still may not be technically compliant if, for example, they contain extraneous language, like a release of liability, or too much information.
But – says who? Explanatory regulations? Model forms? The FTC or CFPB? That would be nice, but the first two don’t exist, and the second two are mute. The only existing interpretive guidance consists of stale FTC Informal Staff Opinion Letters that do not have the force of law.
The CFPB has been the primary agency responsible for interpreting FCRA for more than five years, yet it has not issued a single piece of guidance regarding employer FCRA obligations during that time. I actually tried to hit the CFPB up for some information via email, and most recently, on Twitter, to no avail. As for recent FTC activity, if this blog post is any indication, don’t look to government agencies to fill the guidance vacuum anytime soon.
Instead, that vacuum is being filled, slowly but surely, with court decisions from the deluge of recent FCRA class actions across the country. From Whole Foods to Michaels Stores to Amazon, to recently Sprint, even the giants are getting hit for alleged FCRA violations. In Sprint’s case (and many others just like it), a job applicant claims the company’s “Authorization for Background Investigation” violates FCRA because “it contains extraneous information,” including third party authorizations, state specific information, and other statements. Rodriguez v. Sprint/United Mgmt. Co., N.D. Illinois No. 1:15-cv-10641. The plaintiff claims that FCRA’s “unambiguous language” and that old FTC guidance provide support for his claims.
Even if that’s true, think about this: if the CFPB simply issued a model Disclosure and Authorization Form, use of which would constitute compliance with FCRA, this entire conversation would be moot.
Quick and dirty: FCRA requirements.
In the meantime, we have to work with what we have. Knowing even a little about FCRA may help clients or others who don’t. (P.S.: Some special rules, not discussed here, apply to the transportation industry).
1. If an employer uses a third party to obtain virtually any kind of background information, FCRA applies. If an employer requests any information about an applicant (or current employee) from a third party in order to make an employment decision, the employer has requested a “consumer report” and must comply with FCRA’s disclosure, authorization, and adverse action notice requirements. If an employer uses its own employees to vet its applicants, for example, FCRA would not apply.
2. For all intents and purposes, “background check” means the same thing as “consumer report.” Common “consumer reports” that employers use to vet applicants include criminal history reports, education records, employment history, and credit history.
3. An employer must provide a disclosure and obtain authorization before requesting a background check. Before requesting a consumer report, an employer always must do two things: (a) make a clear, conspicuous written disclosure to each applicant/employee that a consumer report may be obtained about them for employment purposes; and (b) obtain each applicant’s/employee’s written authorization to obtain a consumer report.
4. The disclosure and authorization must be FCRA-compliant. Both items may be combined into one document, but the document cannot contain any other information. Currently, this is an area of great controversy. FCRA says only that the disclosure must be made “in a document that consists solely of the disclosure,” although the authorization may appear on the same document. 15 U.S.C. §1681b(b)(2)(A). According to that old FTC guidance, this means that a disclosure and authorization may include only minor additional items and cannot be part of an employment application.
5. Employers taking “adverse action” against an applicant/employee based on information in a consumer report must follow a two-step process. This process is intended to give the person an opportunity to review the information and dispute it with the CRA reporting it if the information is incorrect (which can and does happen). “Adverse action” means any decision that adversely affects a current or prospective employee, including not hiring or firing someone, but also disciplinary action, denial of a promotion, or the like.
First, before taking adverse action, the employer must provide the applicant/employee with a copy of the report at issue and a summary of their FCRA rights (available on the CFPB website). Most employers provide this “pre-adverse action notice” in the form of a letter (not technically required by statute, but makes sense) that includes these required enclosures.
Second, after taking adverse action, the employer must provide the applicant/employee with notice of the adverse action that also includes: contact information for the CRA that provided the report; a statement that the CRA did not make the decision to take the adverse action; notice of the applicant’s/employee’s right to obtain a free copy of the consumer report from the CRA within 60 days; and notice of the applicant’s/employee’s right to dispute the accuracy or completeness of any information in the report. Again, most employers provide this “post-adverse action notice” in the form of a letter.
FCRA is silent on how much time should elapse between these two steps, but that old FTC guidance says five business days might be reasonable, depending on the circumstances.
Employers can take a number of steps in the right direction toward FCRA compliance, even in this murky landscape:
- Employers who use third parties for background checks should ensure that they are using FCRA-compliant disclosures and authorizations and completing the two-step adverse action process.
- Employers who think they are already FCRA-compliant should review their disclosures, authorizations, and adverse action notices. Including extra information in a disclosure, particularly release language, could jeopardize their compliance efforts. Additionally, employers who use “investigative reports" (reports based on personal interviews concerning a person's character, general reputation, personal characteristics, and lifestyle) have additional obligations under FCRA.
- Employers who operate in more than one state should be aware that a number of states have “mini-FCRAs” with separate disclosure, authorization, and/or adverse action requirements.
- Finally, employers should not rely exclusively on background check providers for FCRA compliance. They may offer 100% compliance, but the employer retains ultimate responsibility for FCRA violations. Chances are the provider’s service contract specifically denies any liability for such violations. Employers should ask questions and ensure they understand what is being done on their behalf.
So what does FCRA have to do with employer background checks? Everything!
*Helena Oroz, an OSBA Certified Specialist in Employment and Labor Law, practices in all areas of employment law, including FCRA and state fair credit reporting and background check law compliance. If you have any questions about the FCRA, please contact Helena (hot@zrlaw.com) at 216.696.4441. This article originally was published in the Cleveland Metropolitan Bar Journal.
Z&R Shorts
Please join Z&R in welcoming Brad Meyer to its Employment and Labor Groups.
Brad S. Meyer’s practice focuses on all areas of private and public sector labor and employment law and litigation. Brad has worked with public and private employers on issues of contract interpretation, collective bargaining and discipline issues. Prior to joining Zashin & Rich, Brad represented the State of Ohio and Cuyahoga County for over ten years at both the trial and appellate court level. He also was involved in community outreach efforts throughout Cuyahoga County. As a law student at The Penn State – Dickinson School of Law, Brad focused his studies on labor and employment law. He led the school’s Wagner National Labor and Employment Moot Court team to competition in New York City.
Upcoming Speaking Engagements
Monday, August 15, 2016
George S. Crisci presents “Conducting an Effective Internal Investigation” and “National Labor Relations Board Decisions Affecting Unionized and Non-Unionized Workplaces” at the National Business Institute’s Seminar on Advanced Employment Law at the Hilton Akron Fairlawn in Akron, Ohio.
Thursday, September 22, 2016
Stephen S. Zashin presents “Best Hiring Practices” at the 2016 Summit on Making Ohio Communities Safer to be held at the Word Church in Warrensville Heights, Ohio.
Monday, November 7, 2016
George S. Crisci presents “Other Employment Laws You Need to Know” and “The National Labor Relations Board – Obligations and Compliance” at the National Business Institute’s Seminar on Human Resources from Start to Finish in Cleveland, Ohio.
Wednesday, July 27, 2016
Ohio Supreme Court Recognizes Workers’ Compensation Retaliation Claims Even Absent Non-Compensable Injuries
*By Scott Coghlan
On July 21, 2016, the Ohio Supreme Court held that an employee can assert a viable workers’ compensation retaliation claim in the absence of proof of an actual workplace injury. Onderko v. Sierra Lobo, Inc., 2016-Ohio-5027. The decision resolved a split among Ohio’s appellate courts and conclusively establishes that Ohio employers may be liable for retaliation under the workers’ compensation law even in cases where the underlying workers’ compensation claim is denied.
The plaintiff in Onderko left work early after experiencing pain in his knee. On the way home, the plaintiff’s knee gave out as he stepped off a curb at a gas station. Upon seeking medical attention, the plaintiff only informed his doctor about the gas station incident and not the pain he felt while at work. Plaintiff alleged he did not mention the pain at work due to concerns he would be fired by his employer. The plaintiff subsequently filed a claim with the Ohio Bureau of Workers’ Compensation (“BWC”), claiming he injured his knee at work. Eventually, a hearing officer denied the claim and the plaintiff did not appeal the denial. Shortly thereafter, the employer fired the plaintiff “for his ‘deceptive’ attempt to obtain workers’ compensation benefits for a non‑work-related injury.” The plaintiff filed suit against the employer, asserting a claim under Ohio Revised Code 4123.90, which prohibits employers from terminating or taking punitive action against employees for filing claims with the BWC “for an injury or occupational disease which occurred in the course of and arising out of [the employee’s] employment with that employer.”
Seeking to have the claim dismissed, the employer in Onderko argued that, to state a viable claim under R.C. 4123.90, the plaintiff must prove that the underlying BWC claim involved an actual work-related injury. The employer also argued the plaintiff could not relitigate the issue of whether he suffered a workplace injury, based upon the un-appealed decision of the hearing officer denying his BWC claim. The trial court agreed with the employer, but the Sixth District Court of Appeals reversed.
On appeal, the Ohio Supreme Court held “the elements of a prima facie case of retaliatory discharge under the statute do not require the plaintiff to prove that the injury occurred on the job.” Furthermore, “[b]ecause proof of a work-related injury is not an element of a prima facie case of retaliatory discharge, failure to appeal the denial of a workers’ compensation claim does not foreclose a claim for retaliatory discharge.” The Court explained that the “language of the statute hinges on the employer’s response to the plaintiff’s pursuit of benefits, not the award of benefits.” Conditioning a retaliation claim upon the successful assertion of a BWC claim would miss “the point of the statute, which is to enable employees to freely exercise their rights without fear of retribution from employers.”
The Court also addressed employer concerns relating to fraudulent BWC claims. The Court noted that filing a false claim or making misleading statements to secure workers’ compensation is a crime and grounds for termination. However, the Court “resist[ed] interpreting the antiretaliation statute in such a way that would vest employers with the discretion to label any unsuccessful claim as deceptive and then terminate the employee.”
Accordingly, Ohio employers should be aware that they may be subject to a retaliation claim for taking adverse action against an employee who has filed a workers’ compensation claim, even if that claim is disallowed. If an employer believes an employee has filed a fraudulent BWC claim, they should contact counsel and conduct a thorough investigation prior to taking any adverse action that is premised upon the filing of a BWC claim.
*Scott Coghlan chairs the firm’s Workers’ Compensation Group. For more information about this decision, or workers’ compensation law in general, please contact Scott (sc@zrlaw.com) at 216.696.4441.
On July 21, 2016, the Ohio Supreme Court held that an employee can assert a viable workers’ compensation retaliation claim in the absence of proof of an actual workplace injury. Onderko v. Sierra Lobo, Inc., 2016-Ohio-5027. The decision resolved a split among Ohio’s appellate courts and conclusively establishes that Ohio employers may be liable for retaliation under the workers’ compensation law even in cases where the underlying workers’ compensation claim is denied.
The plaintiff in Onderko left work early after experiencing pain in his knee. On the way home, the plaintiff’s knee gave out as he stepped off a curb at a gas station. Upon seeking medical attention, the plaintiff only informed his doctor about the gas station incident and not the pain he felt while at work. Plaintiff alleged he did not mention the pain at work due to concerns he would be fired by his employer. The plaintiff subsequently filed a claim with the Ohio Bureau of Workers’ Compensation (“BWC”), claiming he injured his knee at work. Eventually, a hearing officer denied the claim and the plaintiff did not appeal the denial. Shortly thereafter, the employer fired the plaintiff “for his ‘deceptive’ attempt to obtain workers’ compensation benefits for a non‑work-related injury.” The plaintiff filed suit against the employer, asserting a claim under Ohio Revised Code 4123.90, which prohibits employers from terminating or taking punitive action against employees for filing claims with the BWC “for an injury or occupational disease which occurred in the course of and arising out of [the employee’s] employment with that employer.”
Seeking to have the claim dismissed, the employer in Onderko argued that, to state a viable claim under R.C. 4123.90, the plaintiff must prove that the underlying BWC claim involved an actual work-related injury. The employer also argued the plaintiff could not relitigate the issue of whether he suffered a workplace injury, based upon the un-appealed decision of the hearing officer denying his BWC claim. The trial court agreed with the employer, but the Sixth District Court of Appeals reversed.
On appeal, the Ohio Supreme Court held “the elements of a prima facie case of retaliatory discharge under the statute do not require the plaintiff to prove that the injury occurred on the job.” Furthermore, “[b]ecause proof of a work-related injury is not an element of a prima facie case of retaliatory discharge, failure to appeal the denial of a workers’ compensation claim does not foreclose a claim for retaliatory discharge.” The Court explained that the “language of the statute hinges on the employer’s response to the plaintiff’s pursuit of benefits, not the award of benefits.” Conditioning a retaliation claim upon the successful assertion of a BWC claim would miss “the point of the statute, which is to enable employees to freely exercise their rights without fear of retribution from employers.”
The Court also addressed employer concerns relating to fraudulent BWC claims. The Court noted that filing a false claim or making misleading statements to secure workers’ compensation is a crime and grounds for termination. However, the Court “resist[ed] interpreting the antiretaliation statute in such a way that would vest employers with the discretion to label any unsuccessful claim as deceptive and then terminate the employee.”
Accordingly, Ohio employers should be aware that they may be subject to a retaliation claim for taking adverse action against an employee who has filed a workers’ compensation claim, even if that claim is disallowed. If an employer believes an employee has filed a fraudulent BWC claim, they should contact counsel and conduct a thorough investigation prior to taking any adverse action that is premised upon the filing of a BWC claim.
*Scott Coghlan chairs the firm’s Workers’ Compensation Group. For more information about this decision, or workers’ compensation law in general, please contact Scott (sc@zrlaw.com) at 216.696.4441.
Wednesday, June 29, 2016
Not So Persuasive: Texas Court Enjoins DOL From Enforcing Persuader Rule
By Patrick J. Hoban & David P. Frantz*
On June 27, 2016, a federal court in Texas issued a preliminary injunction barring the U.S. Department of Labor (“DOL”) from implementing its “persuader” rule (“Persuader Rule”), which dramatically expands the scope of the reporting requirements under the Labor-Management Reporting and Disclosure Act (“LMRDA”). This ruling comes as a relief to employers, labor relations consultants, and attorneys alike, as the Persuader Rule requirements would have gone into effect on July 1st absent an injunction. The injunction order follows on the heels of a Minnesota federal court’s decision not to enjoin the DOL from implementing the rule. A similar action also is pending before a federal court in Arkansas.
Under the LMRDA, employers and their labor relations consultants are required to report agreements to engage in activities to persuade employees regarding their rights to unionize and collectively bargain. Reports must include the nature of the services consultants provide and the costs of those services. These reporting requirements are subject to certain exemptions, including an exemption when the nature of the service is to provide the employer with “advice.”
Historically, the DOL interpreted the advice exemption to exclude from the reporting requirements an employer’s engagement of consultants, including attorneys, to assist in responding to a unionizing campaign, where: (1) the consultant or attorney had no direct contact with the employees; and (2) the employer retained discretion to reject the recommendations of the consultant or attorney. The DOL’s newly promulgated Persuader Rule turns this long-standing interpretation on its head by opening up activities to reporting even in the absence of direct contact with employees. This change created great uncertainty as to the types of previously-exempt activities, including attorney-client communications, that potentially could be subject to reporting under the new rule.
In ordering the preliminary injunction, the Texas federal court took issue with the Persuader Rule as it effectively obliterates the LMRDA’s advice exemption. The court noted, “despite a very lengthy Final Rule, [the DOL] never adequately explains why it is abandoning the prior, longstanding Advice Exemption now.” The court held, among other things, that the DOL’s rule likely violates employers’ First Amendment rights, is unconstitutionally vague, and would cause attorneys to violate their professional conduct obligations. Finally, the court held the injunction applies nationally, as the plaintiffs allege the Persuader Rule is facially invalid and the injury resulting from its enforcement will be national in scope.
The Persuader Rule became effective on April 25, 2016 and “will be applicable to arrangements and agreements as well as payments (including reimbursed expenses) made on or after July 1, 2016.” However, in the proceeding before the federal court in Arkansas, the DOL clarified that it would “not apply the Rule to arrangements or agreements entered into prior to July 1, 2016, or payments made pursuant to such arrangements or agreements.” Accordingly, employers who obtain indirect persuader services under an agreement or engagement entered into prior to July 1, 2016 should not be subject to the Persuader Rule’s expanded reporting requirements.
Thanks to the Texas federal court’s injunction order, the Persuader Rule’s implementation will be delayed beyond July 1st. While it is possible that the Persuader Rule ultimately will be ruled unenforceable, that outcome is far from certain. Accordingly, employers should consider entering into engagement agreements with consultants/attorneys prior to July 1, 2016 to avoid the Persuader Rule’s expanded reporting requirements.
*Patrick Hoban, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about the DOL’s persuader rule or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
*David Frantz practices in all areas of labor and employment law. For more information about the DOL’s persuader rule or labor & employment law, please contact David (dpf@zrlaw.com) at 216.696.4441.
On June 27, 2016, a federal court in Texas issued a preliminary injunction barring the U.S. Department of Labor (“DOL”) from implementing its “persuader” rule (“Persuader Rule”), which dramatically expands the scope of the reporting requirements under the Labor-Management Reporting and Disclosure Act (“LMRDA”). This ruling comes as a relief to employers, labor relations consultants, and attorneys alike, as the Persuader Rule requirements would have gone into effect on July 1st absent an injunction. The injunction order follows on the heels of a Minnesota federal court’s decision not to enjoin the DOL from implementing the rule. A similar action also is pending before a federal court in Arkansas.
Under the LMRDA, employers and their labor relations consultants are required to report agreements to engage in activities to persuade employees regarding their rights to unionize and collectively bargain. Reports must include the nature of the services consultants provide and the costs of those services. These reporting requirements are subject to certain exemptions, including an exemption when the nature of the service is to provide the employer with “advice.”
Historically, the DOL interpreted the advice exemption to exclude from the reporting requirements an employer’s engagement of consultants, including attorneys, to assist in responding to a unionizing campaign, where: (1) the consultant or attorney had no direct contact with the employees; and (2) the employer retained discretion to reject the recommendations of the consultant or attorney. The DOL’s newly promulgated Persuader Rule turns this long-standing interpretation on its head by opening up activities to reporting even in the absence of direct contact with employees. This change created great uncertainty as to the types of previously-exempt activities, including attorney-client communications, that potentially could be subject to reporting under the new rule.
In ordering the preliminary injunction, the Texas federal court took issue with the Persuader Rule as it effectively obliterates the LMRDA’s advice exemption. The court noted, “despite a very lengthy Final Rule, [the DOL] never adequately explains why it is abandoning the prior, longstanding Advice Exemption now.” The court held, among other things, that the DOL’s rule likely violates employers’ First Amendment rights, is unconstitutionally vague, and would cause attorneys to violate their professional conduct obligations. Finally, the court held the injunction applies nationally, as the plaintiffs allege the Persuader Rule is facially invalid and the injury resulting from its enforcement will be national in scope.
The Persuader Rule became effective on April 25, 2016 and “will be applicable to arrangements and agreements as well as payments (including reimbursed expenses) made on or after July 1, 2016.” However, in the proceeding before the federal court in Arkansas, the DOL clarified that it would “not apply the Rule to arrangements or agreements entered into prior to July 1, 2016, or payments made pursuant to such arrangements or agreements.” Accordingly, employers who obtain indirect persuader services under an agreement or engagement entered into prior to July 1, 2016 should not be subject to the Persuader Rule’s expanded reporting requirements.
Thanks to the Texas federal court’s injunction order, the Persuader Rule’s implementation will be delayed beyond July 1st. While it is possible that the Persuader Rule ultimately will be ruled unenforceable, that outcome is far from certain. Accordingly, employers should consider entering into engagement agreements with consultants/attorneys prior to July 1, 2016 to avoid the Persuader Rule’s expanded reporting requirements.
*Patrick Hoban, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about the DOL’s persuader rule or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
*David Frantz practices in all areas of labor and employment law. For more information about the DOL’s persuader rule or labor & employment law, please contact David (dpf@zrlaw.com) at 216.696.4441.
Wednesday, May 18, 2016
Department of Labor Issues Final Rule on Overtime Exemptions
By Michele L. Jakubs*
On May 18, 2016, the United States Department of Labor (“DOL”) announced it will publish its final rule increasing the salary thresholds for exemptions under the Fair Labor Standards Act (“FLSA”). The final rule sets the new salary threshold for “white collar” exemptions at $47,476 annually. For the highly-compensated employee exemption, the new salary threshold is set at $134,004 annually. The final rule (including the new salary thresholds) goes into effect on December 1, 2016. The changes will have a major impact on employers, as an estimated 4.2 million formerly-exempt employees will become eligible for overtime.
The FLSA generally requires employers to pay employees for any time worked in excess of forty hours per work week at a rate of one-and-a-half times the employee’s regular rate. The FLSA exempts “white collar” and highly-compensated employees from the overtime requirement, provided the employees meet specific criteria.
Employees qualify for an exemption by meeting three criteria: (1) the employee receives a fixed salary; (2) the salary meets the minimum threshold requirement (currently $455 per week, or $23,660 per year); and, (3) the employee’s responsibilities primarily involve executive, administrative, or professional duties. Highly-compensated employees who regularly perform one or more exempt duties also are exempt.
Under the final rule, the salary threshold for an exemption is set at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region. When the rule goes into effect on December 1, 2016, the salary threshold will increase to $913 per week, or $47,476 per year, more than twice the current threshold. Employers may, for the first time, use non-discretionary bonuses and incentive payments to satisfy up 10% of the new salary threshold. For the highly-compensated employee exemption, the new salary threshold is set at the 90th percentile of full-time salaried workers nationally, and will increase from $100,000 to $134,004 on December 1, 2016. These salary thresholds will be updated automatically every three years to maintain salary levels at the referenced percentiles.
The final rule does not make any changes to the existing job duty requirements for the “white collar” and highly-compensated employee exemptions.
In light of the dramatic increases in the salary thresholds, employers should consult with counsel to develop a course of action to ensure compliance with both the salary and duties tests. This change in the law presents an opportunity for employers to review whether employees classified as exempt truly meet the duties test, and the new salary threshold, under the FLSA and make any necessary corrections. The implications of misclassifying employees are widespread and costly and may result in litigation or an investigation by the DOL. With just over six months to prepare and implement a plan, employers should begin the process as soon as possible.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law and is particularly adept at handling wage and hour issues. If you have questions about how the Department of Labor’s final rule may impact your company, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
On May 18, 2016, the United States Department of Labor (“DOL”) announced it will publish its final rule increasing the salary thresholds for exemptions under the Fair Labor Standards Act (“FLSA”). The final rule sets the new salary threshold for “white collar” exemptions at $47,476 annually. For the highly-compensated employee exemption, the new salary threshold is set at $134,004 annually. The final rule (including the new salary thresholds) goes into effect on December 1, 2016. The changes will have a major impact on employers, as an estimated 4.2 million formerly-exempt employees will become eligible for overtime.
The FLSA generally requires employers to pay employees for any time worked in excess of forty hours per work week at a rate of one-and-a-half times the employee’s regular rate. The FLSA exempts “white collar” and highly-compensated employees from the overtime requirement, provided the employees meet specific criteria.
Employees qualify for an exemption by meeting three criteria: (1) the employee receives a fixed salary; (2) the salary meets the minimum threshold requirement (currently $455 per week, or $23,660 per year); and, (3) the employee’s responsibilities primarily involve executive, administrative, or professional duties. Highly-compensated employees who regularly perform one or more exempt duties also are exempt.
Under the final rule, the salary threshold for an exemption is set at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region. When the rule goes into effect on December 1, 2016, the salary threshold will increase to $913 per week, or $47,476 per year, more than twice the current threshold. Employers may, for the first time, use non-discretionary bonuses and incentive payments to satisfy up 10% of the new salary threshold. For the highly-compensated employee exemption, the new salary threshold is set at the 90th percentile of full-time salaried workers nationally, and will increase from $100,000 to $134,004 on December 1, 2016. These salary thresholds will be updated automatically every three years to maintain salary levels at the referenced percentiles.
The final rule does not make any changes to the existing job duty requirements for the “white collar” and highly-compensated employee exemptions.
In light of the dramatic increases in the salary thresholds, employers should consult with counsel to develop a course of action to ensure compliance with both the salary and duties tests. This change in the law presents an opportunity for employers to review whether employees classified as exempt truly meet the duties test, and the new salary threshold, under the FLSA and make any necessary corrections. The implications of misclassifying employees are widespread and costly and may result in litigation or an investigation by the DOL. With just over six months to prepare and implement a plan, employers should begin the process as soon as possible.
*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law and is particularly adept at handling wage and hour issues. If you have questions about how the Department of Labor’s final rule may impact your company, please contact Michele (mlj@zrlaw.com) at 216.696.4441.
Thursday, May 12, 2016
What’s a Trade Secret? Soon, Federal Courts Will Decide That Question
By: Brad E. Bennett* and Ami J. Patel**
Yesterday, President Obama signed into law the Defend Trade Secrets Act of 2016 (“DTSA”). As the law’s name suggests, the DTSA will have a major impact upon any business that seeks to protect its confidential information from inappropriate use, disclosure, and theft.
DTSA now provides access into the federal court system for anyone desiring to bring suit on most trade secrets violations. Since trade secret violation claims are commonly paired with claims for breach of non-competition and non-solicitation agreements, those latter claims now also will land in federal court far more often. DTSA will also require all employers to rewrite their non-disclosure agreements and employee handbooks, or else they will forfeit some of the DTSA’s key protections, such as the ability to recover exemplary damages and attorneys’ fees in certain situations.
Among the DTSA’s more interesting provisions:
Whistleblower / Anti-Retaliation Immunity: DTSA provides immunity to individuals who disclose trade secrets to government officials in the course of reporting suspected violations of the law. Furthermore, individuals who file a lawsuit against their employer for retaliation (which could include discrimination/harassment) may disclose trade secrets to their attorney and the court. This right might be construed broadly enough to encompass more than mere whistleblowing, but also to include ordinary retaliation claims under the discrimination laws to the extent that they are premised upon “opposition.”
Immunity Disclosure Requirements: Employers must disclose DTSA’s immunity provision to employees in any contract or agreement that governs the use of trade secrets or other confidential information (e.g., non-solicitation, confidentiality agreements). DTSA prevents employers who fail to comply with this notice requirement from obtaining exemplary damages or attorneys’ fees. This compliance item will require employers to revise any handbook provisions on confidentiality, as well as all employee non-disclosure agreements.
Inevitable Disclosure: DTSA specifically prohibits an employer from obtaining an injunction to prevent someone from entering into an employment relationship on the basis of the information that person knows. This provision effectively nullifies the “inevitable disclosure” doctrine that some courts had developed, under which an employer could seek to enjoin a former employee from working in a job that would inevitably result in the use of trade secrets, even if no evidence of actual disclosure existed.
Definitions: DTSA specifically excludes “reverse engineering” and “independent derivation” from the definition of what it means to acquire a trade secret by improper means.
Federal Seizure Remedy: In “extraordinary circumstances,” a federal court may authorize the ex-parte seizure (without notice to the other party) of property to prevent dissemination of trade secrets. This remedy is available in extremely limited circumstances, and the employer must meet a high burden to obtain this remedy. For example, the employer must demonstrate, via a verified complaint, that a temporary restraining order would be insufficient and that the wrongful holder of the trade secrets may destroy the trade secrets if given advance notice. DTSA also creates a cause of action for damages resulting from wrongful seizures. The employer also cannot have any involvement in the seizure itself—i.e., the service of papers on the person subject to the seizure, as well as everything associated with the seizure itself, must be done by federal marshals, who “may” be assisted by local law enforcement. There are also restrictions on publicizing anything associated with the seizure, a bond mandate, and provisions for requesting encryption of anything seized.
Statute of Limitations: DTSA provides for a three-year statute of limitations, which begins to run when the party discovers, or should have discovered based on reasonable diligence, the misappropriation.
Remedies: Available remedies include injunctions, damages (potentially even “reasonable royalties”), and attorneys’ fees. Exemplary damages equaling twice actual damages may be awarded “if the trade secret is willfully and maliciously misappropriated.” Attorneys’ fees may be awarded if a claim is made in bad faith, a motion to terminate an injunction is made or opposed in bad faith, or if a trade secret is willfully and maliciously misappropriated. A reasonable royalty can be recovered “in exceptional circumstances” if a mere injunction would be “inequitable.” A reasonable royalty can also be recovered “in lieu of” damages.
Relation to State Law: DTSA specifically does not preempt state law dealing with trade secrets, and injunctions issued under DTSA cannot “conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business.” Therefore, a plaintiff could potentially avoid federal court by pleading a case solely under state law.
In light of DTSA’s requirements, updating the language of existing contracts and policy documents is necessary for businesses that wish to derive all of DTSA’s benefits.
The lawyers of Zashin & Rich have decades of combined experience in drafting non-disclosure agreements, workplace confidentiality policies, and similar documents. If you have questions about DTSA, trade secrets, or other employment policy concerns, please contact either Ami J. Patel (ajp@zrlaw.com) in Z&R’s Cleveland office (216.696.4441), or Brad E. Bennett (beb@zrlaw.com) in Z&R’s Columbus office (614-224-4411).
*Brad E. Bennett, an OSBA Certified Specialist in Labor and Employment Law, practices at the firm’s Columbus office. He is well versed in all areas of labor and employment law including trade secrets misappropriation and enforcement of post-employment restrictive covenants.
**Ami J. Patel practices in all areas of labor and employment law. She has extensive experience counseling employers on trade secrets misappropriation and enforcement of post-employment restrictive covenants.
Yesterday, President Obama signed into law the Defend Trade Secrets Act of 2016 (“DTSA”). As the law’s name suggests, the DTSA will have a major impact upon any business that seeks to protect its confidential information from inappropriate use, disclosure, and theft.
DTSA now provides access into the federal court system for anyone desiring to bring suit on most trade secrets violations. Since trade secret violation claims are commonly paired with claims for breach of non-competition and non-solicitation agreements, those latter claims now also will land in federal court far more often. DTSA will also require all employers to rewrite their non-disclosure agreements and employee handbooks, or else they will forfeit some of the DTSA’s key protections, such as the ability to recover exemplary damages and attorneys’ fees in certain situations.
Among the DTSA’s more interesting provisions:
Whistleblower / Anti-Retaliation Immunity: DTSA provides immunity to individuals who disclose trade secrets to government officials in the course of reporting suspected violations of the law. Furthermore, individuals who file a lawsuit against their employer for retaliation (which could include discrimination/harassment) may disclose trade secrets to their attorney and the court. This right might be construed broadly enough to encompass more than mere whistleblowing, but also to include ordinary retaliation claims under the discrimination laws to the extent that they are premised upon “opposition.”
Immunity Disclosure Requirements: Employers must disclose DTSA’s immunity provision to employees in any contract or agreement that governs the use of trade secrets or other confidential information (e.g., non-solicitation, confidentiality agreements). DTSA prevents employers who fail to comply with this notice requirement from obtaining exemplary damages or attorneys’ fees. This compliance item will require employers to revise any handbook provisions on confidentiality, as well as all employee non-disclosure agreements.
Inevitable Disclosure: DTSA specifically prohibits an employer from obtaining an injunction to prevent someone from entering into an employment relationship on the basis of the information that person knows. This provision effectively nullifies the “inevitable disclosure” doctrine that some courts had developed, under which an employer could seek to enjoin a former employee from working in a job that would inevitably result in the use of trade secrets, even if no evidence of actual disclosure existed.
Definitions: DTSA specifically excludes “reverse engineering” and “independent derivation” from the definition of what it means to acquire a trade secret by improper means.
Federal Seizure Remedy: In “extraordinary circumstances,” a federal court may authorize the ex-parte seizure (without notice to the other party) of property to prevent dissemination of trade secrets. This remedy is available in extremely limited circumstances, and the employer must meet a high burden to obtain this remedy. For example, the employer must demonstrate, via a verified complaint, that a temporary restraining order would be insufficient and that the wrongful holder of the trade secrets may destroy the trade secrets if given advance notice. DTSA also creates a cause of action for damages resulting from wrongful seizures. The employer also cannot have any involvement in the seizure itself—i.e., the service of papers on the person subject to the seizure, as well as everything associated with the seizure itself, must be done by federal marshals, who “may” be assisted by local law enforcement. There are also restrictions on publicizing anything associated with the seizure, a bond mandate, and provisions for requesting encryption of anything seized.
Statute of Limitations: DTSA provides for a three-year statute of limitations, which begins to run when the party discovers, or should have discovered based on reasonable diligence, the misappropriation.
Remedies: Available remedies include injunctions, damages (potentially even “reasonable royalties”), and attorneys’ fees. Exemplary damages equaling twice actual damages may be awarded “if the trade secret is willfully and maliciously misappropriated.” Attorneys’ fees may be awarded if a claim is made in bad faith, a motion to terminate an injunction is made or opposed in bad faith, or if a trade secret is willfully and maliciously misappropriated. A reasonable royalty can be recovered “in exceptional circumstances” if a mere injunction would be “inequitable.” A reasonable royalty can also be recovered “in lieu of” damages.
Relation to State Law: DTSA specifically does not preempt state law dealing with trade secrets, and injunctions issued under DTSA cannot “conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business.” Therefore, a plaintiff could potentially avoid federal court by pleading a case solely under state law.
In light of DTSA’s requirements, updating the language of existing contracts and policy documents is necessary for businesses that wish to derive all of DTSA’s benefits.
The lawyers of Zashin & Rich have decades of combined experience in drafting non-disclosure agreements, workplace confidentiality policies, and similar documents. If you have questions about DTSA, trade secrets, or other employment policy concerns, please contact either Ami J. Patel (ajp@zrlaw.com) in Z&R’s Cleveland office (216.696.4441), or Brad E. Bennett (beb@zrlaw.com) in Z&R’s Columbus office (614-224-4411).
*Brad E. Bennett, an OSBA Certified Specialist in Labor and Employment Law, practices at the firm’s Columbus office. He is well versed in all areas of labor and employment law including trade secrets misappropriation and enforcement of post-employment restrictive covenants.
**Ami J. Patel practices in all areas of labor and employment law. She has extensive experience counseling employers on trade secrets misappropriation and enforcement of post-employment restrictive covenants.
Tuesday, May 3, 2016
Ohio Supreme Court Extends Sunshine Law Restrictions to E-mail Communications Among Legislators
By Jonathan J. Downes* and George S. Crisci**
This morning, the Ohio Supreme Court decided (5-2) that Ohio’s Sunshine Law (R.C. 121.22) prohibits any private prearranged discussion of public business by a majority of the members of a public body regardless of whether the discussion occurs face-to-face, telephonically, by video conference, or electronically by e-mail, text, tweet or other form of communication. The dispute arose over e-mail exchanges among four school board members and school district employees that discussed responding to a newspaper editorial criticizing the school board’s policy change that required all communications between board members and staff first pass through the Superintendent or Treasurer. The policy change responded to the effort of the fifth board member to investigate improper expenditures by two athletic directors, which resulted in one resigning and both being required to reimburse the school district. One of the four board members participating in the e-mail exchanges drafted a response that the other three participating board members accepted. The board president then submitted the response to the newspaper, which published the response.
The case presents a classic exercise of how to interpret statutory language that does not specifically address the subject. The majority concluded that the definition of “meeting” under the Sunshine Law does not exclude electronic communications, while the dissent argued that the language does not include electronic communications within the statutory definition and that any revisions should be left to the General Assembly.
Given the widespread use of electronic communications among public sector legislators, this decision requires a reassessment of how e-mail can be used and probably significantly restricts such communications unless the General Assembly amends the law.
Zashin and Rich attorneys previously have cautioned the use of emails and are now assessing the immediate impact of the Ohio Supreme Court decision. We will be issuing within the next few days a more detailed analysis of the decision and its impact on communications and suggested language for electronic communications. All public agencies are advised to examine their policy regarding the use of emails and other electronic communications.
In the meantime, direct questions to George Crisci (gsc@zrlaw.com) in the Cleveland office (216-696-4441) and to Jonathan Downes (jjd@zrlaw.com) and Drew Piersall (dcp@zrlaw.com) in the Columbus office (614-224-4411).
*Jonathan J. Downes, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, has over 30 years of experience in practicing labor and employment law in Ohio and advising public sector clients regarding the requirements under Ohio’s open meetings (“Sunshine”) and public records laws. He represents cities, townships, counties, school districts, and public officials throughout the State of Ohio.
**George S. Crisci, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, likewise has over 30 years of experience in practicing labor and employment law in Ohio and has extensive knowledge of Ohio’s open meetings (“Sunshine”) and public records laws.
This morning, the Ohio Supreme Court decided (5-2) that Ohio’s Sunshine Law (R.C. 121.22) prohibits any private prearranged discussion of public business by a majority of the members of a public body regardless of whether the discussion occurs face-to-face, telephonically, by video conference, or electronically by e-mail, text, tweet or other form of communication. The dispute arose over e-mail exchanges among four school board members and school district employees that discussed responding to a newspaper editorial criticizing the school board’s policy change that required all communications between board members and staff first pass through the Superintendent or Treasurer. The policy change responded to the effort of the fifth board member to investigate improper expenditures by two athletic directors, which resulted in one resigning and both being required to reimburse the school district. One of the four board members participating in the e-mail exchanges drafted a response that the other three participating board members accepted. The board president then submitted the response to the newspaper, which published the response.
The case presents a classic exercise of how to interpret statutory language that does not specifically address the subject. The majority concluded that the definition of “meeting” under the Sunshine Law does not exclude electronic communications, while the dissent argued that the language does not include electronic communications within the statutory definition and that any revisions should be left to the General Assembly.
Given the widespread use of electronic communications among public sector legislators, this decision requires a reassessment of how e-mail can be used and probably significantly restricts such communications unless the General Assembly amends the law.
Zashin and Rich attorneys previously have cautioned the use of emails and are now assessing the immediate impact of the Ohio Supreme Court decision. We will be issuing within the next few days a more detailed analysis of the decision and its impact on communications and suggested language for electronic communications. All public agencies are advised to examine their policy regarding the use of emails and other electronic communications.
In the meantime, direct questions to George Crisci (gsc@zrlaw.com) in the Cleveland office (216-696-4441) and to Jonathan Downes (jjd@zrlaw.com) and Drew Piersall (dcp@zrlaw.com) in the Columbus office (614-224-4411).
*Jonathan J. Downes, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, has over 30 years of experience in practicing labor and employment law in Ohio and advising public sector clients regarding the requirements under Ohio’s open meetings (“Sunshine”) and public records laws. He represents cities, townships, counties, school districts, and public officials throughout the State of Ohio.
**George S. Crisci, an OSBA Certified Specialist in Employment and Labor Law and a Best Lawyer in America, likewise has over 30 years of experience in practicing labor and employment law in Ohio and has extensive knowledge of Ohio’s open meetings (“Sunshine”) and public records laws.
Monday, March 28, 2016
EMPLOYMENT LAW QUARTERLY | Volume XVIII, Issue i
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By Stephen S. Zashin*
In December 2015, Steve Sarkisian, former University of Southern California (“USC”) head football coach, sued USC for wrongful termination. Sarkisian alleged that USC discharged him based on a disability in violation of the law. In particular, Sarkisian claimed: he suffered from alcoholism; he sought professional help; he requested time off from USC to get help; USC placed him on indefinite leave; and USC fired him while he traveled to a rehabilitation program. According to Sarkisian, instead of supporting his disability, USC “kicked him to the curb.”
Under federal law, the Americans with Disabilities Act (“ADA”) prohibits employers from discriminating against qualified employees on the basis of a disability. Qualified employees are those who, with or without reasonable accommodation, can perform the essential functions of the job.
Alcoholics are not automatically excluded from the ADA’s coverage, as alcoholism can constitute a disability. However, current alcohol abuse does not give employees license to act with impunity. Rather, employers may hold alcoholics to the same performance and behavior standards as other employees. An employer may still discharge alcoholic employees based on misconduct (e.g., drinking on the job, driving a company vehicle drunk, etc.).
Sarkisian may struggle to establish his status as a qualified employee on two grounds. Reports suggest that Sarkisian was intoxicated during football games, practices, and while on team flights. Sarkisian attempted to explain away these incidents in his complaint. For example, he claims that during the Salute to Troy (pep rally), two light beers and anxiety medication (not inebriation) caused him to slur his words and use an expletive during his speech.
Sarkisian also may struggle to establish whether he could perform the essential functions of the head coach job with or without a reasonable accommodation. Under the ADA, an employee bears the initial burden of proposing an accommodation and showing that the accommodation is objectively reasonable. An employer does not have to provide accommodations where the employer can demonstrate the accommodation would impose an undue burden on its business operations.
In his complaint, Sarkisian alleged that he requested a reasonable accommodation which would not unduly burden USC - time off to get the help he needed. Sarkisian claimed his request for leave did not place an undue burden on USC because the University already appointed an interim head coach, the interim head coach called plays the entire season, and the interim head coach successfully led USC to a PAC-12 South Championship and bowl game. In contrast, USC likely will argue substantial time off would have been unreasonable and prevented Sarkisian from performing his essential job functions. For example, while on leave Sarkisian could not recruit coveted high school football players or spend time with boosters and alums to fundraise.
This high profile litigation provides useful lessons for employers. Employers may maintain their performance and behavior standards for current abusers of alcohol. This case demonstrates the difference between current alcohol abuse and those who seek treatment for alcoholism. Current alcohol abusers are not protected by the ADA relative to their conduct. However, those who seek treatment for alcohol abuse are entitled to reasonable accommodation by their employers. Any employer faced with a similar situation to Sarkisian should contact legal counsel to better understand their rights.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment law and the head of the firm’s Labor, Employment and Sports Law Groups, has extensive experience counseling employers on the Americans with Disabilities Act, reasonable accommodations, and sports related issues. For more information about the ADA or your labor, employment or sports law needs, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
By Ami J. Patel*
The Equal Employment Opportunity Commission (“EEOC”) recently released guidance concerning the Americans with Disabilities Act’s (“ADA”) protections of HIV-positive employees. The EEOC plays a self-proclaimed “critical role in eradicating employment discrimination against those living with HIV/AIDS.” In 2014, the EEOC settled 197 HIV-related Charges of Discrimination against employers for $825,674.
Employers should address employee-related HIV issues with care. Employers may only inquire about the HIV status of an employee under limited circumstances. Generally, employers cannot ask HIV-related questions before making a job offer. However, an employer may ask medical questions in the following circumstances:
Employers also should determine whether an employee’s HIV-positive status qualifies as a disability. The ADA defines disability as a physical or mental impairment that substantially limits one or more major activities. The EEOC contends HIV-positive employees “easily” qualify under the ADA’s definition, since HIV substantially limits the immune system’s functions in the absence of medical treatment. However, at least one court found that a former employee’s HIV-positive status did not limit any major life activities where: HIV did not impact his job performance; he was “super energetic;” he had “well controlled” and “well treated” HIV; and he did not take HIV medication. Rodriguez v. HSBC Bank USA, N.A., No. 8:14-cv-945-T-30TGW, 2015 U.S. Dist. LEXIS 157883 (M.D. Fla. Nov. 23, 2015). Therefore, HIV-positive status alone may not qualify an employee as disabled under the ADA.
Assuming an employee’s HIV renders the employee “disabled,” the employee receives certain ADA protections. Employers may not discriminate against or harass an employee simply because the employee is HIV positive. In addition, the employee may be entitled to a reasonable accommodation if HIV negatively affects the employee’s job performance. This could occur from the HIV infection, side effects of HIV medication, or other medical conditions caused by HIV. Examples of reasonable accommodations include altered break or work schedules, changes in supervisory methods, and time off. Once an employee requests an accommodation, the employer should engage in an interactive process to determine what, if any, accommodation will enable the employee to perform the essential functions of the job. The employer does not have to remove the job’s fundamental duties (i.e., essential functions), let the employee do less work for the same pay, or tolerate lower-quality work through an accommodation.
Under limited circumstances, an employer may consider health or safety when deciding whether to hire or retain an HIV-positive employee. Employers do not have to retain employees who are unable to perform their job or who pose a direct threat (significant risk of substantial harm) to the health or safety of the employee or others. However, the employer must first establish it cannot reduce or eliminate that harm through a reasonable accommodation. In addition, the employer must have objective evidence (typically a medical expert) that the employee cannot perform the job or that the employer cannot eliminate the safety risk.
Ultimately, given the EEOC’s focus on the treatment of employees infected with HIV, employers should address HIV-related concerns carefully and contact counsel with questions.
*Ami J. Patel practices in all areas of labor and employment law. If you have questions about the ADA and HIV in your workplace, please contact Ami at (ajp@zrlaw.com) or 216.696.4441.
By Brad E. Bennett*
On March 17, 2016, the Ohio Supreme Court issued its much anticipated ruling in Haight v. Minchak, 2016-Ohio-1053. Haight involved a challenge to Ohio’s minimum wage statute by two outside sales representatives of the Cheap Escape Company. The two alleged that outside sales representatives were “employees,” as defined under the 2006 Fair Minimum Wage Amendment to Ohio’s Constitution (“Amendment”), and, as a result, were entitled to minimum wage. The employees argued that Ohio’s minimum wage statute, which was enacted after passage of the Amendment, was unconstitutional since it adopted the exemptions to the definition of “employee” under federal law.
In November 2006, Ohio voters approved the Amendment, which established the Ohio minimum wage and provided for annual adjustments. The Amendment defines an “employee” as having the same meanings as under the federal Fair Labor Standards Act (“FLSA”) and states that the Ohio General Assembly shall pass no laws that “restrict any provision of the law.” The employees focused on this language of the Amendment to attack the later enacted minimum wage statute.
After voter approval of the Amendment, the Ohio General Assembly immediately enacted the minimum wage statute clarifying that “employee,” as defined under Ohio law, “does not mean individuals who are excluded from the definition of ‘employee’ under [the FLSA].” Cheap Escape argued that since the FLSA specifically exempts outside salespeople (and others) from the minimum wage requirements, the same exclusions should apply under Ohio law.
The employees, on the other hand, argued that the definition of “employee” as contained in the Amendment did not expressly exclude employees who are exempt from minimum wage requirements under the FLSA. They argued that Ohio’s statute, by excluding outside sales representatives from minimum wage protection, was unconstitutional since it impermissibly restricted the definition of employee as laid out in the Amendment.
The trial court sided with Cheap Escape. However, the Court of Appeals reversed course determining that even if individuals such as outside salespeople are exempt from the FLSA’s minimum wage provisions, they still remain “employees” as that term is defined by the FLSA. According to the Court of Appeals, since the definition of “employee” includes outside salespeople, the Ohio legislature impermissibly narrowed the definition of employee in the statute when it excluded outside salespeople. The employer promptly appealed to the Ohio Supreme Court.
The Ohio Supreme Court reversed the Court of Appeals. In doing so, it focused on the fact that the Amendment states that “employee” shall have the same “meanings” as in the FLSA. The Supreme Court rationalized that the Amendment’s use of the plural indicated that “more than one definition applies, which then necessarily includes both exclusions and exemptions.” Based upon this interpretation, the Ohio Supreme Court concluded that Ohio’s minimum wage statute simply captured all of the “meanings” of employee under the FLSA and was constitutional.
This is a welcome decision for Ohio Employers as it maintains the status-quo. Had the Supreme Court allowed the Court of Appeals' decision to stand, Ohio employers would have faced serious exposure to minimum wage claims, as they would have been unable to rely upon the federal minimum wage exclusions. Employers also would have been required to apply competing federal and state standards with varying levels of recordkeeping and reporting requirements.
*Brad E. Bennett, an OSBA Certified Specialist in Labor and Employment law, regularly counsels public and private employers on wage and hours issues. For more information about this recent ruling or your wage and hour law needs, please contact Brad (beb@zrlaw.com) at 614.224.4411.
By Patrick M. Watts*
Last November, many Ohio employers exhaled a sigh of relief after voters just said no to Issue 3, which would have amended the State Constitution to legalize recreational and medical marijuana. Although the prospect of recreational marijuana legalization no longer seems imminent, medical marijuana is a different story. In the wake of Issue 3, there has been an increased focus in Ohio on medical marijuana by proponents and politicians alike. The Ohio House of Representatives created a bipartisan taskforce to explore the possibility of legalizing medical marijuana. The Ohio Senate recently held a string of public hearings regarding medical marijuana. During an appearance on the Late Show, Governor John Kasich voiced an openness to the idea stating, “when it comes to medical marijuana, if the experts come back and say we need this for people who have seizures, I’m for that.” Ohio employers should be prepared for the possibility of dealing with the implications of medical marijuana in the not-too-distant future.
Currently, 23 states and Washington D.C. have legalized medical or recreational marijuana. Under the federal Controlled Substances Act, however, marijuana remains classified as a Schedule I illegal substance. A recent SHRM survey of employers in states that have legalized marijuana found 94% of respondents maintained written substance abuse policies. Employer drug policies in these states have led to litigation, including claims under the Americans with Disabilities Act and similar state laws by employees with medical marijuana prescriptions for disabilities. Fortunately for employers, the federal prohibition on marijuana has been a successful defense to such claims.
For example, a federal district court in Washington dismissed disability discrimination and retaliation claims brought by an employee who was terminated after he tested positive for marijuana, despite having a valid state medical marijuana prescription. See Swaw v. Safeway, Inc., No. C15-939 MJP, 2015 U.S. Dist. LEXIS 159761 (W.D. Wash. Nov. 20, 2015). In Swaw, the employer’s drug-free workplace policy prohibited testing positive for any drugs or substances “listed in any controlled substances acts or regulations applicable under federal, state, or local law.” The plaintiff tested positive for marijuana after an on-the-job injury, resulting in his termination. Subsequently, he brought a lawsuit alleging disability discrimination claiming: (1) he had a valid prescription to use marijuana outside of work to treat his disabilities; and (2) his employer disciplined him more harshly than other employees that were found to be intoxicated with alcohol at work.
In rejecting the plaintiff’s discrimination claim, the court first noted that Washington’s marijuana law “does not require employers to accommodate the use of medical marijuana where they have a drug-free workplace, even if medical marijuana is being used off site to treat an employee’s disabilities, and the use of marijuana for medical purposes remains unlawful under federal law.” With respect to the plaintiff’s disparate discipline argument, the court stated “[m]arijuana is a Schedule I controlled substance and is illegal under federal law; alcohol is not.” Therefore, employers have no obligation to treat medical marijuana users the same as employees intoxicated with alcohol.
The Swaw decision lines up with other court decisions that refuse to find actionable claims based upon medical marijuana use. See, e.g., Coats v. Dish Network, LLC, 350 P.3d 849 (Colo. Sup. Ct. 2015) (“[E]mployees who engage in an activity such as medical marijuana use that is permitted by state law but unlawful under federal law are not protected.”). Accordingly, as long as marijuana remains illegal under federal law, employers will have a strong defense to employee claims premised upon marijuana use. In anticipation of the possible legalization of medical marijuana, employers should consider revising or instituting drug-free workplace policies to ensure that they have clearly communicated prohibitions and expectations regarding the use of marijuana and other drugs in the workplace.
*Patrick M. Watts, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. If you have questions about the implications of marijuana legalization in your workplace, please contact Patrick at (pmw@zrlaw.com) or 216.696.4441.
Jeffrey J. Wedel has extensive trial experience, having tried more than 100 cases to verdict. Jeff regularly defends employers and insurers in all forms of employment discrimination, retaliation, wrongful discharge, whistleblower, and ADA public accommodation cases. He has defended employers throughout the country and has tried cases in Ohio, Michigan, Illinois, Georgia, Mississippi, Tennessee, North and South Carolina, Virginia, and Connecticut. Jeff also defends employers and manufacturers involving intentional torts, chemical exposure, and other toxic tort claims. He represents employers in ERISA and employee benefits litigation, enforcement and defense of confidentiality agreements, covenants not to compete, and trade secret cases. Jeff is a member of the Ohio State Bar Association Labor and Employment Law Section Council. He also is recognized as a leading lawyer in his field, having been listed in Ohio Super Lawyers since 2010 and in The Best Lawyers in America each year since 2006.
Emilie M. Carver has experience in all aspects of defending private and public sector employers in employment law cases. Emilie has defended clients against claims involving the ADA, Title VII of the Civil Rights Act, covenants not to compete, contract issues, and other related claims. Emilie also has represented employers before the Equal Employment Opportunity Commission. Prior to entering private practice, Emilie served as a law clerk for the Honorable Judge John R. Adams at the U.S. District Court for the Northern District of Ohio. There, Emilie managed and advised Judge Adams on a variety of civil cases from the complaint to completion of the case, including issues involving the FLSA, ERISA, ADA, Fair Debt Collection Practices Act, Title VII of the Civil Rights Act, labor disputes, civil rights claims, and personal injury lawsuits. Emilie also clerked for the Honorable Carla Moore at the Ohio Ninth District Court of Appeals. At the Ninth District, she assisted in drafting more than 200 appellate opinions on topics including evidentiary issues, public policy, and administrative appeals from local administrative agencies.
Zashin & Rich is pleased to announce that Jonathan J. Downes received the Ohio Public Employers Labor Relations Association’s (“OHPELRA”) 2015 Award of Excellence. The OHPELRA Award of Excellence represents the highest acknowledgment OHPELRA can bestow on an individual for their dedication and achievement in the development of labor-management relations. This award is a testament to Jonathan’s outstanding contributions to management in the field of public sector labor relations.
Zashin & Rich also is pleased to announce that the Ohio State Bar Association has certified Drew C. Piersall as a specialist in Labor and Employment Law. The rigorous OSBA certification process requires attorneys to take and pass a written examination in their specialty field, demonstrate a high level of substantial involvement in their specialty area, fulfill ongoing education requirements, and be favorably evaluated by other attorneys or judges familiar with their work.
Congratulations to Jonathan and Drew on their outstanding achievements!
- College Football, Alcoholism, and the Americans with Disabilities Act
- Myths and Stereotypes – HIV and the Workplace
- Ohio Supreme Court Finds Ohio’s Minimum-Wage Law Constitutional
- Joint Employers: Dealing with Marijuana Legalization
- Z&R SHORTS
College Football, Alcoholism, and the Americans with Disabilities Act
By Stephen S. Zashin*
In December 2015, Steve Sarkisian, former University of Southern California (“USC”) head football coach, sued USC for wrongful termination. Sarkisian alleged that USC discharged him based on a disability in violation of the law. In particular, Sarkisian claimed: he suffered from alcoholism; he sought professional help; he requested time off from USC to get help; USC placed him on indefinite leave; and USC fired him while he traveled to a rehabilitation program. According to Sarkisian, instead of supporting his disability, USC “kicked him to the curb.”
Under federal law, the Americans with Disabilities Act (“ADA”) prohibits employers from discriminating against qualified employees on the basis of a disability. Qualified employees are those who, with or without reasonable accommodation, can perform the essential functions of the job.
Alcoholics are not automatically excluded from the ADA’s coverage, as alcoholism can constitute a disability. However, current alcohol abuse does not give employees license to act with impunity. Rather, employers may hold alcoholics to the same performance and behavior standards as other employees. An employer may still discharge alcoholic employees based on misconduct (e.g., drinking on the job, driving a company vehicle drunk, etc.).
Sarkisian may struggle to establish his status as a qualified employee on two grounds. Reports suggest that Sarkisian was intoxicated during football games, practices, and while on team flights. Sarkisian attempted to explain away these incidents in his complaint. For example, he claims that during the Salute to Troy (pep rally), two light beers and anxiety medication (not inebriation) caused him to slur his words and use an expletive during his speech.
Sarkisian also may struggle to establish whether he could perform the essential functions of the head coach job with or without a reasonable accommodation. Under the ADA, an employee bears the initial burden of proposing an accommodation and showing that the accommodation is objectively reasonable. An employer does not have to provide accommodations where the employer can demonstrate the accommodation would impose an undue burden on its business operations.
In his complaint, Sarkisian alleged that he requested a reasonable accommodation which would not unduly burden USC - time off to get the help he needed. Sarkisian claimed his request for leave did not place an undue burden on USC because the University already appointed an interim head coach, the interim head coach called plays the entire season, and the interim head coach successfully led USC to a PAC-12 South Championship and bowl game. In contrast, USC likely will argue substantial time off would have been unreasonable and prevented Sarkisian from performing his essential job functions. For example, while on leave Sarkisian could not recruit coveted high school football players or spend time with boosters and alums to fundraise.
This high profile litigation provides useful lessons for employers. Employers may maintain their performance and behavior standards for current abusers of alcohol. This case demonstrates the difference between current alcohol abuse and those who seek treatment for alcoholism. Current alcohol abusers are not protected by the ADA relative to their conduct. However, those who seek treatment for alcohol abuse are entitled to reasonable accommodation by their employers. Any employer faced with a similar situation to Sarkisian should contact legal counsel to better understand their rights.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment law and the head of the firm’s Labor, Employment and Sports Law Groups, has extensive experience counseling employers on the Americans with Disabilities Act, reasonable accommodations, and sports related issues. For more information about the ADA or your labor, employment or sports law needs, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
Myths and Stereotypes – HIV and the Workplace
By Ami J. Patel*
The Equal Employment Opportunity Commission (“EEOC”) recently released guidance concerning the Americans with Disabilities Act’s (“ADA”) protections of HIV-positive employees. The EEOC plays a self-proclaimed “critical role in eradicating employment discrimination against those living with HIV/AIDS.” In 2014, the EEOC settled 197 HIV-related Charges of Discrimination against employers for $825,674.
Employers should address employee-related HIV issues with care. Employers may only inquire about the HIV status of an employee under limited circumstances. Generally, employers cannot ask HIV-related questions before making a job offer. However, an employer may ask medical questions in the following circumstances:
- The employer asks the question(s) for affirmative action purposes and any employee response is voluntary;
- An employee requests a reasonable accommodation;
- The question occurs post-job offer and pre-employment, and the employer asks the same question of everyone entering the same job category; or
- On the job, where the employer has objective evidence that the employee may be unable to do the job or may pose a significant safety risk because of his/her medical condition.
Employers also should determine whether an employee’s HIV-positive status qualifies as a disability. The ADA defines disability as a physical or mental impairment that substantially limits one or more major activities. The EEOC contends HIV-positive employees “easily” qualify under the ADA’s definition, since HIV substantially limits the immune system’s functions in the absence of medical treatment. However, at least one court found that a former employee’s HIV-positive status did not limit any major life activities where: HIV did not impact his job performance; he was “super energetic;” he had “well controlled” and “well treated” HIV; and he did not take HIV medication. Rodriguez v. HSBC Bank USA, N.A., No. 8:14-cv-945-T-30TGW, 2015 U.S. Dist. LEXIS 157883 (M.D. Fla. Nov. 23, 2015). Therefore, HIV-positive status alone may not qualify an employee as disabled under the ADA.
Assuming an employee’s HIV renders the employee “disabled,” the employee receives certain ADA protections. Employers may not discriminate against or harass an employee simply because the employee is HIV positive. In addition, the employee may be entitled to a reasonable accommodation if HIV negatively affects the employee’s job performance. This could occur from the HIV infection, side effects of HIV medication, or other medical conditions caused by HIV. Examples of reasonable accommodations include altered break or work schedules, changes in supervisory methods, and time off. Once an employee requests an accommodation, the employer should engage in an interactive process to determine what, if any, accommodation will enable the employee to perform the essential functions of the job. The employer does not have to remove the job’s fundamental duties (i.e., essential functions), let the employee do less work for the same pay, or tolerate lower-quality work through an accommodation.
Under limited circumstances, an employer may consider health or safety when deciding whether to hire or retain an HIV-positive employee. Employers do not have to retain employees who are unable to perform their job or who pose a direct threat (significant risk of substantial harm) to the health or safety of the employee or others. However, the employer must first establish it cannot reduce or eliminate that harm through a reasonable accommodation. In addition, the employer must have objective evidence (typically a medical expert) that the employee cannot perform the job or that the employer cannot eliminate the safety risk.
Ultimately, given the EEOC’s focus on the treatment of employees infected with HIV, employers should address HIV-related concerns carefully and contact counsel with questions.
*Ami J. Patel practices in all areas of labor and employment law. If you have questions about the ADA and HIV in your workplace, please contact Ami at (ajp@zrlaw.com) or 216.696.4441.
Ohio Supreme Court Finds Ohio’s Minimum-Wage Law Constitutional
By Brad E. Bennett*
On March 17, 2016, the Ohio Supreme Court issued its much anticipated ruling in Haight v. Minchak, 2016-Ohio-1053. Haight involved a challenge to Ohio’s minimum wage statute by two outside sales representatives of the Cheap Escape Company. The two alleged that outside sales representatives were “employees,” as defined under the 2006 Fair Minimum Wage Amendment to Ohio’s Constitution (“Amendment”), and, as a result, were entitled to minimum wage. The employees argued that Ohio’s minimum wage statute, which was enacted after passage of the Amendment, was unconstitutional since it adopted the exemptions to the definition of “employee” under federal law.
In November 2006, Ohio voters approved the Amendment, which established the Ohio minimum wage and provided for annual adjustments. The Amendment defines an “employee” as having the same meanings as under the federal Fair Labor Standards Act (“FLSA”) and states that the Ohio General Assembly shall pass no laws that “restrict any provision of the law.” The employees focused on this language of the Amendment to attack the later enacted minimum wage statute.
After voter approval of the Amendment, the Ohio General Assembly immediately enacted the minimum wage statute clarifying that “employee,” as defined under Ohio law, “does not mean individuals who are excluded from the definition of ‘employee’ under [the FLSA].” Cheap Escape argued that since the FLSA specifically exempts outside salespeople (and others) from the minimum wage requirements, the same exclusions should apply under Ohio law.
The employees, on the other hand, argued that the definition of “employee” as contained in the Amendment did not expressly exclude employees who are exempt from minimum wage requirements under the FLSA. They argued that Ohio’s statute, by excluding outside sales representatives from minimum wage protection, was unconstitutional since it impermissibly restricted the definition of employee as laid out in the Amendment.
The trial court sided with Cheap Escape. However, the Court of Appeals reversed course determining that even if individuals such as outside salespeople are exempt from the FLSA’s minimum wage provisions, they still remain “employees” as that term is defined by the FLSA. According to the Court of Appeals, since the definition of “employee” includes outside salespeople, the Ohio legislature impermissibly narrowed the definition of employee in the statute when it excluded outside salespeople. The employer promptly appealed to the Ohio Supreme Court.
The Ohio Supreme Court reversed the Court of Appeals. In doing so, it focused on the fact that the Amendment states that “employee” shall have the same “meanings” as in the FLSA. The Supreme Court rationalized that the Amendment’s use of the plural indicated that “more than one definition applies, which then necessarily includes both exclusions and exemptions.” Based upon this interpretation, the Ohio Supreme Court concluded that Ohio’s minimum wage statute simply captured all of the “meanings” of employee under the FLSA and was constitutional.
This is a welcome decision for Ohio Employers as it maintains the status-quo. Had the Supreme Court allowed the Court of Appeals' decision to stand, Ohio employers would have faced serious exposure to minimum wage claims, as they would have been unable to rely upon the federal minimum wage exclusions. Employers also would have been required to apply competing federal and state standards with varying levels of recordkeeping and reporting requirements.
*Brad E. Bennett, an OSBA Certified Specialist in Labor and Employment law, regularly counsels public and private employers on wage and hours issues. For more information about this recent ruling or your wage and hour law needs, please contact Brad (beb@zrlaw.com) at 614.224.4411.
Joint Employers: Dealing with Marijuana Legalization
By Patrick M. Watts*
Last November, many Ohio employers exhaled a sigh of relief after voters just said no to Issue 3, which would have amended the State Constitution to legalize recreational and medical marijuana. Although the prospect of recreational marijuana legalization no longer seems imminent, medical marijuana is a different story. In the wake of Issue 3, there has been an increased focus in Ohio on medical marijuana by proponents and politicians alike. The Ohio House of Representatives created a bipartisan taskforce to explore the possibility of legalizing medical marijuana. The Ohio Senate recently held a string of public hearings regarding medical marijuana. During an appearance on the Late Show, Governor John Kasich voiced an openness to the idea stating, “when it comes to medical marijuana, if the experts come back and say we need this for people who have seizures, I’m for that.” Ohio employers should be prepared for the possibility of dealing with the implications of medical marijuana in the not-too-distant future.
Currently, 23 states and Washington D.C. have legalized medical or recreational marijuana. Under the federal Controlled Substances Act, however, marijuana remains classified as a Schedule I illegal substance. A recent SHRM survey of employers in states that have legalized marijuana found 94% of respondents maintained written substance abuse policies. Employer drug policies in these states have led to litigation, including claims under the Americans with Disabilities Act and similar state laws by employees with medical marijuana prescriptions for disabilities. Fortunately for employers, the federal prohibition on marijuana has been a successful defense to such claims.
For example, a federal district court in Washington dismissed disability discrimination and retaliation claims brought by an employee who was terminated after he tested positive for marijuana, despite having a valid state medical marijuana prescription. See Swaw v. Safeway, Inc., No. C15-939 MJP, 2015 U.S. Dist. LEXIS 159761 (W.D. Wash. Nov. 20, 2015). In Swaw, the employer’s drug-free workplace policy prohibited testing positive for any drugs or substances “listed in any controlled substances acts or regulations applicable under federal, state, or local law.” The plaintiff tested positive for marijuana after an on-the-job injury, resulting in his termination. Subsequently, he brought a lawsuit alleging disability discrimination claiming: (1) he had a valid prescription to use marijuana outside of work to treat his disabilities; and (2) his employer disciplined him more harshly than other employees that were found to be intoxicated with alcohol at work.
In rejecting the plaintiff’s discrimination claim, the court first noted that Washington’s marijuana law “does not require employers to accommodate the use of medical marijuana where they have a drug-free workplace, even if medical marijuana is being used off site to treat an employee’s disabilities, and the use of marijuana for medical purposes remains unlawful under federal law.” With respect to the plaintiff’s disparate discipline argument, the court stated “[m]arijuana is a Schedule I controlled substance and is illegal under federal law; alcohol is not.” Therefore, employers have no obligation to treat medical marijuana users the same as employees intoxicated with alcohol.
The Swaw decision lines up with other court decisions that refuse to find actionable claims based upon medical marijuana use. See, e.g., Coats v. Dish Network, LLC, 350 P.3d 849 (Colo. Sup. Ct. 2015) (“[E]mployees who engage in an activity such as medical marijuana use that is permitted by state law but unlawful under federal law are not protected.”). Accordingly, as long as marijuana remains illegal under federal law, employers will have a strong defense to employee claims premised upon marijuana use. In anticipation of the possible legalization of medical marijuana, employers should consider revising or instituting drug-free workplace policies to ensure that they have clearly communicated prohibitions and expectations regarding the use of marijuana and other drugs in the workplace.
*Patrick M. Watts, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. If you have questions about the implications of marijuana legalization in your workplace, please contact Patrick at (pmw@zrlaw.com) or 216.696.4441.
Z&R SHORTS
Please join Z&R in welcoming two new attorneys to its Employment and Labor Groups.
Jeffrey J. Wedel has extensive trial experience, having tried more than 100 cases to verdict. Jeff regularly defends employers and insurers in all forms of employment discrimination, retaliation, wrongful discharge, whistleblower, and ADA public accommodation cases. He has defended employers throughout the country and has tried cases in Ohio, Michigan, Illinois, Georgia, Mississippi, Tennessee, North and South Carolina, Virginia, and Connecticut. Jeff also defends employers and manufacturers involving intentional torts, chemical exposure, and other toxic tort claims. He represents employers in ERISA and employee benefits litigation, enforcement and defense of confidentiality agreements, covenants not to compete, and trade secret cases. Jeff is a member of the Ohio State Bar Association Labor and Employment Law Section Council. He also is recognized as a leading lawyer in his field, having been listed in Ohio Super Lawyers since 2010 and in The Best Lawyers in America each year since 2006.
Emilie M. Carver has experience in all aspects of defending private and public sector employers in employment law cases. Emilie has defended clients against claims involving the ADA, Title VII of the Civil Rights Act, covenants not to compete, contract issues, and other related claims. Emilie also has represented employers before the Equal Employment Opportunity Commission. Prior to entering private practice, Emilie served as a law clerk for the Honorable Judge John R. Adams at the U.S. District Court for the Northern District of Ohio. There, Emilie managed and advised Judge Adams on a variety of civil cases from the complaint to completion of the case, including issues involving the FLSA, ERISA, ADA, Fair Debt Collection Practices Act, Title VII of the Civil Rights Act, labor disputes, civil rights claims, and personal injury lawsuits. Emilie also clerked for the Honorable Carla Moore at the Ohio Ninth District Court of Appeals. At the Ninth District, she assisted in drafting more than 200 appellate opinions on topics including evidentiary issues, public policy, and administrative appeals from local administrative agencies.Congratulations to Attorneys in Z&R’s Columbus, Ohio Office!
Zashin & Rich is pleased to announce that Jonathan J. Downes received the Ohio Public Employers Labor Relations Association’s (“OHPELRA”) 2015 Award of Excellence. The OHPELRA Award of Excellence represents the highest acknowledgment OHPELRA can bestow on an individual for their dedication and achievement in the development of labor-management relations. This award is a testament to Jonathan’s outstanding contributions to management in the field of public sector labor relations.
Zashin & Rich also is pleased to announce that the Ohio State Bar Association has certified Drew C. Piersall as a specialist in Labor and Employment Law. The rigorous OSBA certification process requires attorneys to take and pass a written examination in their specialty field, demonstrate a high level of substantial involvement in their specialty area, fulfill ongoing education requirements, and be favorably evaluated by other attorneys or judges familiar with their work.Congratulations to Jonathan and Drew on their outstanding achievements!
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