Tuesday, November 6, 2018

EMPLOYMENT LAW QUARTERLY | Volume XX, Issue iii

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Opioid Crisis: Drug Addiction and a Tight Labor Market

By Ami J. Patel*

Following years of consecutive job growth, the unemployment rate dropped to 3.7% in September. Despite the decreasing unemployment rate, labor market participation remains low. Men ages 25 to 54 currently have an 88.4% labor participation rate. According to a recent report, of those males not participating, one in five is out of the workforce because of drug addiction. Drug abuse coupled with the current economy has made the tight labor market even tighter. According to the Ohio Chamber of Commerce, one-half of Ohio businesses report suffering consequences from substance abuse.

Ohio ranks among the hardest hit states in the ongoing battle against opiate addiction. The increased use of opiates and other more-accepted drugs like marijuana combined with a tight labor market has left many employers reevaluating their hiring and drug procedures.

Ohio is taking direct action to help employers struggling with drug-use issues. Ohio’s Chamber of Commerce created an Opiate Toolkit (available here) to help employers to manage risk, prevent drug abuse, and respond to issues affecting the workplace. The toolkit contains several modules to educate employers about workplace drug policy, employee drug testing, and responding to employee drug use. The toolkit also contains an hour-long employee education course designed to help foster understanding of prescription drug abuse.

Employers understandably wish to avoid or reduce the impacts of drug abuse on their workplaces. Drug abuse affects employers by causing increased liability, productivity problems, and financial loss. In seeking to protect their interests, however, employers must ensure that their policies and practices do not conflict with the Americans with Disabilities Act (“ADA”) or related state laws.

The ADA protects qualified individuals with disabilities. The ADA’s definition of “qualified individual with a disability” specifically excludes employees and applicants who are currently engaging in the illegal use of drugs. However, the ADA does not exclude from its protection: (a) successfully rehabilitated individuals who no longer engage in the illegal use of drugs; (b) those who are currently participating in a rehabilitation program and no longer engage in the illegal use of drugs; and (c) those who are regarded by an employer, erroneously, as illegal drug users. Accordingly, employers who discriminate against these groups of individuals may face liability under the ADA and similar state laws.

For example, the Equal Employment Opportunity Commission (“EEOC”) recently filed suit against an employer that fired a recovering opioid addict who was on a methadone treatment program. According to the EEOC, on the employee’s first day of work, he took a drug test and proceeded to work the rest of the week. The next week, he learned that his test came back “positive” as a result of his prescribed methadone treatment. After the employee provided the testing laboratory with verifying information regarding his treatment, the laboratory cleared him to work. Nonetheless, the employer refused to return the employee to his position, even after he provided a letter from his doctor regarding his treatment. Based upon the employer’s refusal, the EEOC is seeking a permanent injunction barring the employer from engaging in any future disability discrimination and compensatory and punitive damages on behalf of the employee.

In the midst of the opioid crisis, employers continue to face the practical and legal impacts of drug addiction. In addition to its effect on the labor market, this crisis also has important legal implications on employers’ management of their workforces, including employees and applicants who are in recovery from opioid addiction. Employers should proceed cautiously in addressing these complicated issues and contact counsel with questions.

*Ami J. Patel, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. For more information about workplace issues relating to opioids, the ADA, or any other employment-law questions, please contact Ami at ajp@zrlaw.com or 216.696.4441.


ICE Raids: Cold Shouldering Employees, Employers, and Local Law Enforcement

By Lauren M. Drabic*

The Trump administration has taken a hard stance against undocumented workers. The impact of this stance is far-reaching, especially in Ohio, which recently was called the “Ground Zero” for Immigration and Customs Enforcement (“ICE”) workplace raids. Two of the country’s largest raids occurred in Ohio over the summer and resulted in over 250 arrests.

The administration’s efforts regarding undocumented and foreign labor are two-pronged – arresting and deporting undocumented workers and prosecuting violating employers. Regarding the latter, the Department of Justice (“DOJ”) recently settled claims with a landscaping company for its alleged discriminatory practices in hiring foreign workers under the H-2B visa program. The DOJ claimed that the company favored foreign labor and improperly failed to make its job postings visible to those applying in the U.S. Under the settlement agreement, the company is required to pay over $100,000 in back pay and penalties, must engage in recruitment activities to attract U.S. workers, and is subject to three years of DOJ monitoring.

Employee Work Authorization

Most employers know they cannot hire workers without proper work authorization. Employers are responsible for ensuring completion of Form I-9, the Employment Eligibility Verification form used by U.S. Citizenship and Immigration Services (“USCIS”). This is true even with respect to employees who are citizens and, therefore, are automatically eligible for employment. Employers must retain each employee’s completed I-9 for three years after the date of hire or for one year after termination of employment, whichever occurs later. Employers should correct mistakes on an I-9 form to ensure they are compliant. However, employers may only edit sections two and three of the I-9 form. Only the employee may correct mistakes made in section one.

While citizenship is not a requirement for employment, employees must have the necessary work authorization. USCIS requires that the worker be a member of one of four classes: U.S. citizens; noncitizen nationals; lawful permanent residents; and aliens authorized to work. An alien is any foreign citizen living in the U.S. An employer also can petition for a nonimmigrant worker to receive work authorization on a temporary basis by completing an I-129 form. Upon approval of the I-129 form, the worker must apply for admission to the U.S.

Employers must ensure they are hiring foreign workers properly without discriminating based on protected class, such as citizenship, immigration status, or national origin. Treating individuals differently based on their membership in a protected class could violate the Immigration and Nationality Act or Title VII of the Civil Rights Act, among other laws. Similarly, according to USCIS, it may be discriminatory for employers to consider future expiration dates on visas and employment authorization documents.

An employer unable to fill open positions may seek a Foreign Labor Certification from the Department of Labor. The process can take months and involves several government agencies. Several different visas and programs exist to fill persistent employment vacancies. However, the employer must verify that the open position meets the criteria set by the Department of Labor.

Criminal and Civil Penalties

Under the Immigration and Nationality Act, it is illegal for any person or entity to knowingly hire an undocumented or illegal alien. “Knowing” includes constructive knowledge, i.e., knowledge which may fairly be inferred through notice of certain facts and circumstances that would lead a person, through the exercise of reasonable care, to know that an alien is unauthorized. Simply not checking for authorization is not a valid means to avoid this requirement. Anyone who employs or contracts with an illegal alien without verifying his or her work authorization commits a misdemeanor offense.

ICE is authorized to conduct investigations to determine whether employers knowingly employed unauthorized aliens or failed to properly complete and retain I-9 forms for newly-hired individuals. The Director of ICE has noted plans to dramatically increase the number of I-9 audits and workplace raids ICE conducts.

Employers who violate these laws can face substantial fines and criminal prosecution. Those who knowingly hire and employ workers without work authorization may be penalized from $375 to $16,000 per violation, whereas substantive and technical violations, such as failing to produce the I-9 form, can range from $110 to $1,100 per violation.

While ICE and Customs and Border Patrol cannot commandeer local law enforcement, many local agencies opt to work with the federal agencies by sharing information, conducting joint investigations, and contracting to detain arrested aliens. Immigration officers and police must have a valid warrant or an employer’s consent to enter their facilities.

Employers must take care not only to follow the various federal and state laws as they pertain to hiring foreign labor, but also must not discriminate against U.S. citizens when seeking out foreign labor. Likewise, employers must not discriminate based upon an employee’s protected class, including citizenship, immigration status, or national origin. Employers should contact counsel if they have any questions or are unsure how to navigate the complex legal landscape relating to foreign workers.

*Lauren Drabic recently joined Z&R’s Cleveland office and practices in all areas of employment law. If you have questions regarding I-9 form compliance or any other employment-related matter, please contact Lauren at lmd@zrlaw.com or 216.696.4441.


By the Book: Ohio Courts Look to Employee Handbooks to Determine Terminated Employees’ Entitlement to Payment for Unused PTO

By Christopher D. Caspary*

Does an employer have to pay an employee’s accrued paid time off when it discharges the employee? As one Ohio court recently explained, it depends on the terms of the employer’s policies. See Richardson v. MYCAP, 7th Dist. Mahoning No. 17 MA 0021, 2018-Ohio-2776. In MYCAP, the court granted summary judgment in favor of a group of laid-off employees, awarding them payment for accrued paid time off (“PTO”). This is the latest decision in a string of Ohio cases that look to the terms of employer policies when determining an employee’s entitlement to a payout of accrued PTO at the time of the employee’s discharge.

The MYCAP Decision

In MCYAP, the employer provided its employees with handbooks informing them of its employment practices and policies. The handbook stated “at the end of employment with MYCAP, unused PTO balance hours will be paid” in accordance with a payment schedule set forth in the handbook. After the employer laid off a number of employees, it did not pay them their accrued, unused PTO in accordance with the terms of the handbook. The employees then filed suit seeking payment of their PTO.

Finding in favor of the employees, the MYCAP Court citied to existing Ohio case law, which states “[a]lthough employee handbooks and policy manuals are not in and of themselves contracts of employment, they may define the terms and conditions of an at-will employment relationship if the employer and employee manifest an intention to be bound by them.” Accordingly, the MYCAP Court held that the employees were entitled to the PTO payments under the plain language of the handbook and that it would be unjust for the employer to retain those payments.

What Does This Mean For Employers?

Ohio courts’ continuing deference to the terms of employee handbooks and employer policies is favorable for employers with carefully drafted policies. Effectively written handbooks and policies protect employers from liability. For example, one Ohio court found that the following policy language - “All unused [PTO] will be forfeited upon an employee’s resignation or termination” – was clear and unambiguous and did not require the employer to pay out the employee’s PTO. See Majecic v. Universal Dev. Mgt. Corp., 11th Dist. Trumbull No. 2010-T-0119, 2011-Ohio-3752, ¶ 10. Likewise, another Ohio court determined that the plaintiffs were not entitled to PTO, because the employer’s policy clearly precluded its employees from collecting any payment for PTO upon discharge. See Sexton v. Oak Ridge Treatment Ctr. Acquisition Corp., 167 Ohio App. 3d 593, 856 N.E.2d 280, 2006-Ohio-3852, ¶ 13 (4th Dist.).
Accordingly, employers should address the payment of PTO upon discharge directly in their employee handbooks and policy manuals. The following is a list of tips for employers to consider when drafting or revising employee handbooks and policies addressing PTO:

1. Do Not Remain Silent

It is better for an employer to have a written PTO policy than to remain silent. As some Ohio courts have held, an employee may be entitled to unused PTO if the employer’s policies do not state otherwise. The rationale behind this is that such payments are not merely gratuitous but are deferred payments of earned benefits. Therefore, it is better to have a defined policy than nothing addressing this topic.

2. Say What You Mean

In MYCAP and other recent Ohio cases, the courts adhered to the language set forth in the applicable handbooks and policies. Ohio employers are not required by law to provide their employees with PTO. However, if an employer decides to provide this benefit and wishes to restrict it in any way, then the employer should do so explicitly and clearly in its written policies.

3. Follow the Policy

The employer should abide by its policies. Failure to do so may suggest that the employer’s actual practice is different than what it has set forth in writing, or that it may be treating some employees more favorably than others.

Employee handbooks and employer policies are important tools for employers, and the terms set forth therein have legal implications. Employers should consult with counsel to assess whether their handbooks and policies clearly state their intentions and to ensure they are taking the proper steps to abide by them.

*Christopher Caspary works in Z&R’s Cleveland office and practices in all areas of employment law. For more information about developing employee handbooks and policies or any other employment-related matter, please contact Chris at cdc@zrlaw.com or 216.696.4441.


Rolled up and Rolled Out: An Update on Ohio’s Medical Marijuana Law

By Patrick M. Watts*

Although marijuana remains a Schedule I controlled substance under federal law, numerous states have legalized the use of marijuana for medical and, in eight states and the District of Columbia, recreational purposes. As Z&R previously reported, Ohio (puff, puff) passed its medical marijuana law in 2016 and set the basic framework for Ohio’s Medical Marijuana Control Program (“MMCP”). Following delays in the MMCP’s implementation process, approved cultivators have now begun growing their first crop of state-sanctioned marijuana. Based upon growing and production timeframes, estimates suggest that patients may purchase medical marijuana in Ohio as early as the end of this year.

As the smoke clears, many Ohio employers are rightfully concerned and confused about the MMCP and its potential implications for their businesses and workforces. In an apparent attempt to put employers at ease, Ohio’s General Assembly included a number of pro-employer provisions in the MMCP. Specifically, the MMCP (which is codified at Ohio Revised Code Chapter 3796) provides that:
  • Employers are not required to permit or accommodate an employee’s use, possession, or distribution of medical marijuana;
  • Employers are not prohibited from refusing to hire, discharging, disciplining, etc., a person because of that person’s use, possession, or distribution of medical marijuana;
  • Employers are not prohibited from establishing and enforcing a drug testing policy, drug-free workplace policy, or zero-tolerance drug policy;
  • The MMCP does not interfere with any federal restrictions on employment, e.g., Department of Transportation regulations; and
  • The MMCP does not permit a person to pursue a lawsuit against an employer “for refusing to hire, discharging, disciplining, discriminating, retaliating, or otherwise taking an adverse employment action against a person with respect to hire, tenure, terms, conditions, or privileges of employment related to medical marijuana.”

See Ohio Revised Code 3796.28(a)(1)-(5). Furthermore, Ohio’s unemployment compensation law considers a person discharged for using marijuana “in violation of an employer’s drug-free workplace policy, zero-tolerance policy, or other formal program or policy regulating the use of medical marijuana” as discharged for “just cause.” See Ohio Revised Code 3796.28(b).

Nevertheless, even with these pro-employer provisions, Ohio employers still may face the prospect of litigation arising out of employees’ use of medical marijuana. For example, it is possible that employees may attempt to bring a disability discrimination claim under Ohio’s anti-discrimination law (Ohio Revised Code Chapter 4112), which the MMCP does not expressly reference, claiming that their rights under Ohio’s anti-discrimination law are unaffected by, and independent of, the MMCP’s pro-employer provisions.

Given the nascency of the MMCP, there currently are no court decisions addressing Ohio’s medical marijuana law in the employment context. However, courts in other states have addressed employees’ marijuana-related claims. It is important to note that medical marijuana laws vary by state and, depending on the state, may provide greater protection to employees than Ohio’s law. Still, these cases provide some insight as to how courts are addressing the issue of medical marijuana in the employment context. For example, as Z&R reported last year, the Massachusetts Supreme Judicial Court reversed the dismissal of an employee’s claim and held the employee could pursue a disability discrimination claim under Massachusetts law after her employer discharged her for testing positive for medical marijuana. See Barbuto v. Advantage Sales and Marketing, LLC, 78 N.E.3d 37 (Mass. Jul. 17, 2017).

Similarly, in September, a Federal court in Connecticut addressed a case where a nursing home rescinded a job offer to an applicant who tested positive for marijuana during a pre-employment drug screen. See Noffsinger v. SSC Niantic Operating Co., LLC, d/b/a Bride Brook Health & Rehab. Ctr., No. 3:16-cv-01938, 2018 U.S. Dist. LEXIS 150453 (D. Conn. Sept. 5, 2018). The applicant accepted an offer for a position, which was conditioned upon her completion of a drug screen. Prior to the drug screening, the applicant explained that she used medical marijuana to treat her post-traumatic stress disorder. Upon obtaining the drug screen results, the nursing home decided not to hire the applicant. The applicant filed a complaint, alleging a violation of Connecticut’s medical marijuana law, which provides, “[n]o employer may refuse to hire a person or may discharge, penalize or threaten an employee solely on the basis of such person’s or employee’s status as a qualifying patient.” In addressing the applicant’s claims, the court held she was entitled to judgment, as a matter of law, on her claim of employment discrimination under the state medical marijuana law. Notably, the court rejected the employer’s arguments that it was required by federal laws (i.e., the Drug Free Workplace Act and the False Claims Act) to rescind the applicant’s job offer.

In sum, the legal landscape regarding medical marijuana in the employment context is evolving. Ohio’s medical marijuana law provides a number of important protections for employers regarding employment-related actions based on employees’ use, possession, or distribution of medical marijuana. With medical marijuana available in potentially as little as a couple of months, employers need to get prepared. This includes establishing policies that expressly address the employer’s stance on medical marijuana and determining how the employer intends to handle medical marijuana use in all aspects of its business, including hiring, drug testing, and discharge. Employers should contact counsel with any questions relating to the MMCP or its impact on their practices and workforces.

*Patrick M. Watts, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience advising employers regarding medical marijuana and related issues. For more information about Ohio’s medical marijuana law or any other employment-related matters, please contact Patrick at pmw@zrlaw.com or 216.696.4441.


Z&R SHORTS

Please join Z&R in welcoming Lauren Drabic to its Employment and Labor Groups


Lauren Drabic's practice encompasses all areas of labor and employment law. Prior to joining Zashin & Rich, Lauren practiced employment law in Washington, D.C., where she litigated cases in federal court and before administrative agencies that arose under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Whistleblower Protection Act, and other federal employment statutes. Lauren graduated from Allegheny College and received her law degree cum laude from the American University Washington College of Law. While at American, she served on the senior editorial board of the American University Law Review.

Upcoming Speaking Engagements


November 14, 2018
Brad E. Bennett presents “Epic Fails! Top Supervisor Errors in the Workplace” at the Ohio Recorders’ Association Winter Conference to be held at the Polaris Hilton in Columbus, Ohio.

December 4, 2018
George S. Crisci presents “Murphy Oil/Epic Systems” at the Ohio State Bar Association’s Back to the Future? NLRB Update seminar in Columbus, Ohio.

December 10, 2018
George S. Crisci presents “NLRB Rules and Decisions” at the National Business Institute’s Ohio Employment Law seminar in Independence, Ohio.

Monday, October 8, 2018

More Protection for Employers: Ohio Supreme Court limits Temporary Total Disability Benefits

*By Scott Coghlan

On September 27, 2018, the Ohio Supreme Court limited Temporary Total Disability (“TTD”) benefits for injured workers. See State ex rel. Klein v. Precision Excavating & Grading Co., Slip Opinion No. 2018-Ohio-3890. The purpose of TTD is to compensate an injured worker for lost wages on the account of a workplace injury. Despite TTD’s purpose, the Court has muddied the waters regarding TTD eligibility over the past three decades. According to Klein, the Court is now holding claimants responsible for their own voluntary conduct and limiting benefits for employees who voluntarily abandon employment for reasons unrelated to their injury.

Prior to Klein, the Court held that claimants could never voluntarily abandon their employment if they were physically unable to perform their job. As a result, claimants could engage in conduct that resulted in the termination of their employment yet remain eligible to receive TTD benefits. Rather than focus solely on a worker’s physical capacity, the Court now focuses on whether an injured worker’s voluntary abandonment of employment is the cause of the lost wages as opposed to the alleged injury.

In the recognizing its past mistakes, the Court’s concurring opinion in Klein relied on Bilaver. In Bilaver, the attorneys of Zashin & Rich Co., L.P.A. successfully represented an employer in defeating a TTD claim. State ex rel. Bilaver v. Indus. Comm., 126 Ohio St.3d 1560, 2010-Ohio-4221, 933 N.E.2d 269. The plaintiff in Bilaver requested a seven week leave of absence to travel to Croatia. His employer denied the request and Bilaver gave a verbal two week notice of resignation. The employer promptly noted his resignation in his personnel file. Before his last day, Bilaver suffered a workplace injury. However, he still traveled to Croatia and then sought TTD compensation. In ruling in favor of the employer, the Court explained that Bilaver voluntarily abandoned his employment in the truest sense – he quit – and therefore was not entitled to TTD compensation.

Like Bilaver, Klein notified his employer several days before his work related injury that he was moving to Florida and inquired about proper procedures to quit his job. There was also evidence that prior to his injury, he told co-workers that was resigning and moving to Florida. The Court denied his request for TTD benefits after he moved to Florida, finding that his lost wages were due to his voluntary abandonment of his employment which was unrelated to his workplace injury.

Employers should be aware of this change in the law, that is, if an employee voluntarily removes himself from employment for reasons unrelated to a workplace injury, the employee is no longer eligible for TTD. Likewise, employers should immediately document any acts of voluntary abandonment. If, at any point, an employee expresses intent to resign from employment or violates a work rule, the employer should be quick to record the employee’s actions in writing to limit their liability. It may also be beneficial to accept an employee’s voluntary resignation on the spot, thank the employee for his service and pay him his next week’s salary. If the employers in Bilaver and Klein did that, the work-related injuries would have been avoided altogether.

*Scott Coghlan chairs the firm’s workers’ compensation group. He has over 20 years of experience defending workers’ compensation claims and representing employers in administrative proceedings and appeals to courts. For more information about temporary total disability or workers’ compensation issues, please contact Scott (sc@zrlaw.com) at 216.696.4441

Tuesday, September 18, 2018

A (small, but for once incredibly easy) FCRA UPDATE THAT REQUIRES YOUR IMMEDIATE ATTENTION, EMPLOYERS

By Helena Oroz*

This might be the shortest alert you read all year, but following this simple advice will be the easiest step you take towards Fair Credit Reporting Act (FCRA) compliance all year.

Here’s the scoop:

There is a form notice called “A Summary of Your Rights Under the Fair Credit Reporting Act.” If you are an employer that uses a third party to run background checks on applicants and employees, you should know exactly what this is. (If you do not know what this is, you should probably call me.)

I advise employers to provide this form to applicants and employees up front, with their FCRA Disclosure and Authorization, as well as with any pre-adverse action notice that may go out later. Did you know this form notice is also available in Spanish?

As of this Friday, September 21, 2018, employers must use a new version of this form notice. Employers may choose to continue using the old form in conjunction with a separate page that includes the new language, but why add paper to this process? Just use the new form notice (and/or ensure that your background check company is using the new version).

The Bureau of Consumer Financial Protection (BCFP) issued the new version to (1) add a notice about the consumer’s right to a security freeze and (2) update contact information listed for certain FCRA enforcement agencies.

These changes do not impact in any way how you, as an employer, conduct background checks. You just have to use a new form notice. (I told you this was easy.)

You can find the new version of “A Summary of Your Rights Under the Fair Credit Reporting Act” here:
https://files.consumerfinance.gov/f/documents/bcfp_consumer-rights-summary_2018-09.docx.

Does this mean more (hopefully meaningful) FCRA updates to come from the BCFP?
Stay Tuned.

*Helena Oroz is an associate with the firm’s Employment Group and frequently advises clients on FCRA compliance issues. If you have questions about FCRA or just want to chat about this development, please contact Helena at 216-696-4441 or hot@zrlaw.com.

Friday, June 29, 2018

EMPLOYMENT LAW QUARTERLY | Volume XX, Issue ii

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Supreme Court Rules “Fair Share” Fees Are No Longer Fair

By Jonathan J. Downes, George S. Crisci, and Scott H. DeHart*

On Wednesday, June 27, 2018, the U.S. Supreme Court handed down its highly-anticipated and historic ruling in Janus v. AFSCME Council 31. In a 5-to-4 decision, the closely-divided Court held that public employee collective bargaining agreements (“CBA”) that require non-union member employees to pay involuntary “fair share” fees are unconstitutional. Specifically, the mandatory withholding of these “fair share” fees violates the First Amendment rights of non-members of the union by compelling them to subsidize private speech on matters of substantial public concern.

Union Dues and “Fair Share” Fees.

When a majority of employees in a “bargaining unit” vote to be represented by a union, that union becomes the exclusive representative of all employees in that bargaining unit – including employees who choose not to join the union as dues-paying members.

While non-members are not required to pay union dues, the Supreme Court previously held, in Abood v. Detroit Board of Education, 431 U.S. 209 (1977), non-members could be required to pay an “agency fee” or “fair share” fee instead. Fair share fees were typically a reduced percentage of the full union dues, and subsidized the activities that the union performed on behalf of non-members (such as collective bargaining and grievance handling). Under Abood, public employee unions were required to subtract from the fair share fees any “non-chargeable” expenses – i.e., any costs associated with union political and ideological projects – as a safeguard for employee First Amendment rights.

In the four decades since Abood, fair share fees became a common feature of public employee CBAs. Ohio was one of twenty-two states in the U.S. that allowed the mandatory deduction of fair share fees as a condition of continued employment. See Ohio Revised Code Section 4117.09(C).

However, in recent years the Supreme Court began to sharply criticize Abood as an anomaly among other First Amendment cases dealing with compelled speech. In 2015, the Supreme Court agreed to hear oral arguments in Friedrichs v. California Teachers Association, in which public employees challenged the deduction of “fair share” fees as a form of compelled subsidy of speech that violated their First Amendment rights. The Supreme Court was widely-expected to overrule Abood in Friedrichs and to strike down fair share fees as unconstitutional. Justice Antonin Scalia’s unexpected death in February 2016 left the Court evenly-divided in Friedrichs. The question of fair share fees was left for another day.

The Janus Decision.

Following President Trump’s nomination (and the Senate’s confirmation) of new Associate Justice Neil Gorsuch, that day arrived. The Supreme Court granted review in Janus v. AFSCME Council 31, a case that closely mirrored Friedrichs. Plaintiff Mark Janus, an Illinois state employee, challenged the state’s deduction of “fair share” fees as a violation of his First Amendment rights. Janus argued that he disagreed with many positions taken by his union, and that everything a public employee union does is inherently political. Specifically, Janus argued that union wage and benefits demands were damaging to Illinois’ finances.

In the ruling announced on June 27, 2018, the Court’s majority agreed with Janus. Justice Alito wrote the Court’s opinion, in which he explained the majority’s rationale for overruling Abood and concluded that deducting compulsory “fair share” fees to pay for union collective bargaining activities necessarily compels public employees to subsidize private political speech, a clear violation of the employees’ First Amendment rights.

The Court also explained that an employee’s authorization to pay union dues or fair share fees is a waiver of his or her First Amendment rights, and such a waiver must be freely given. Without an employee’s clear and affirmative consent, it is unconstitutional for employers to automatically deduct dues or fair share fees and to require employees to ‘opt out.’ Rather, under Janus an employee must affirmatively ‘opt in’ before any such payments could be withheld by the employer.

The Court’s decision will have an immediate and lasting effect on public employee collective bargaining across the U.S. Twenty-two states, including Ohio, permitted the deduction of public sector “fair share” fees. In Ohio, the mandatory fair share provisions in R.C. 4117.09(C) are now unconstitutional because of Janus. Many public employee CBAs also contain fair share language that the Janus decision has rendered unenforceable. Employers should closely review the “fair share” and “severability” provisions in their CBAs, cease involuntary fair share fee deductions, and assess any obligations they have to meet and discuss with unions regarding Janus.

Several public-sector unions have indicated that they will propose new CBA language to automatically reinstate “fair share” fees in the event the Supreme Court ever reverses Janus. Others have explored the possibility of charging non-members a fee for certain services actually rendered by the union (i.e., grievance handling). State legislatures also may revisit the statutory responsibilities of unions to represent employees who choose not to become dues-paying members. The long-term impact of Janus on labor-management relations, union membership, and collective bargaining remains to be seen.

Employers should collaborate closely with labor counsel to address the short- and long-term impact of Janus. Public agencies should act promptly – but cautiously – as they halt “fair share” payroll deductions for non-union employees. Employers should also carefully manage their communications with employees to avoid committing unfair labor practices.

*Jonathan J. Downes, George S. Crisci, and Scott H. DeHart practice in Zashin & Rich’s labor and employment groups. For more information about the Janus decision or for your other labor and employment needs, please contact Jonathan (jjd@zrlaw.com) and Scott (shd@zrlaw.com) at the firm’s Columbus office at 614.224.4411 or George (gsc@zrlaw.com) at the firm’s Cleveland office at 216.696.4441.



Whistle While You Work: Supreme Court Adopts Narrow Definition of “Whistleblower” Under The Dodd-Frank Act

By Scott Coghlan*

The U.S. Supreme Court recently held that employees protected from retaliation by employers under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) must provide information or make reports of potential security-law violations directly to the Securities Exchange Commission (“SEC”). See Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767 (2018). In so holding, the Court narrowed the scope of potential plaintiffs under Dodd-Frank, excluding the broader category of individuals who report security-law concerns internally within their company but not to the SEC. While publicly-traded companies may welcome the decision as one that reduces the number of potential lawsuits, the decision also may have the effect of incentivizing employees not to raise security-law concerns internally and, instead, to go directly to the SEC to ensure protection under Dodd-Frank.

In the wake of the 2008 financial crisis, Congress enacted Dodd-Frank as a measure to “improv[e] accountability and transparency in the financial system.” Under Dodd-Frank, employers are prohibited from retaliating against “whistleblowers,” defined as individuals who provide “information relating to a violation of the securities laws to the [SEC].” See 15 U.S.C. §78u-6(a)(6). Whistleblowers who prevail on their claims are entitled to double backpay with interest and additional damages, including litigation costs and attorneys’ fees.

In Digital Realty, the plaintiff worked as a vice president for a real estate investment trust. The plaintiff alleged his employer discharged him shortly after he notified senior management that he believed the company had violated securities laws. He did not, however, report any suspected violations to the SEC. After his discharge, the plaintiff filed suit alleging a whistleblower claim under Dodd-Frank. In response, the company moved for dismissal on the grounds that the plaintiff did not qualify as a whistleblower because he did not make a report to the SEC. The court denied the motion, and the employer appealed that decision to the U.S. Court of Appeals for the Ninth Circuit.

On appeal, the Ninth Circuit affirmed the lower court’s decision. In doing so, the court acknowledged that the language of Dodd-Frank defined a “whistleblower” as someone who provides information to the SEC. Nonetheless, the Ninth Circuit concluded it would be absurd to protect employees who make internal complaints only if they also reported to the SEC, as the court believed this dual reporting would be rare. The Ninth Circuit’s decision only added to the uncertainty regarding the scope of Dodd-Frank’s anti-retaliation protection, as the Fifth and Second Circuits previously interpreted Dodd-Frank differently. The Supreme Court granted certiorari in Digital Realty to resolve the split between the Circuit Courts.

In Digital Realty, the Supreme Court justices unanimously agreed that, in order to qualify for Dodd-Frank's anti-retaliation protections, purported whistleblowers must actually provide information or reports of suspected security-law violations to the SEC. In reaching its conclusion, the Supreme Court noted that the statute was “unequivocal” in limiting the definition of whistleblower to those individuals who provide information to the SEC. In addition, the Court noted that this narrow definition of whistleblower was consistent with Congress’ purpose and design in enacting Dodd-Frank. Specifically, the “core objective” of Dodd-Frank’s whistleblower provisions was “to motivate people who know of securities law violations to tell the SEC.” The Court also noted that whistleblowers, who raise concerns internally but not to the SEC, may pursue retaliation claims under the Sarbanes Oxley Act of 2002 (“SOX”), provided that they file an administrative complaint within SOX’s 180-day deadline.

In sum, employees of publicly-traded companies who raise concerns of potential security-law violations internally, but not to the SEC, will not receive whistleblower protections under Dodd-Frank. While the Digital Realty decision limits the scope of potential plaintiffs under Dodd-Frank, publicly-traded employers should still note that whistleblowers may have recourse under SOX and state laws. Furthermore, the Digital Realty decision may have the undesirable consequence of persuading employees to go directly to the SEC to gain protection under Dodd-Frank, as opposed to taking advantage of internal reporting mechanisms set up by their employers.

*Scott Coghlan routinely advises and defends employers in whistleblower cases, including those brought under Dodd-Frank and SOX. For more information about the Digital Realty decision or other labor and employment issues, please contact Scott (sc@zrlaw.com) at 216.696.4441.



Return to Form: DOL Resurrects and Issues Wage and Hour Opinion Letters

By Jessi L. Ziska*

On January 8, 2018, the U.S. Department of Labor (“DOL”) reissued 17 advisory opinion letters that provide guidance on a wide range of issues under the Fair Labor Standards Act (“FLSA”). The DOL’s Wage and Hour Division (“WHD”) originally issued these opinion letters in January 2009 during the final days of the Bush administration by the former acting WHD Administrator. In March 2009, however, the WHD withdrew them after former President Barack Obama took office. Subsequently, the Obama administration stopped issuing opinion letters altogether. Under the Trump administration, the DOL announced it will return to the practice of issuing guidance for employers by way of opinion letters. In addition to reissuing the previously-withdrawn letters, on April 12, 2018, the DOL issued its first new opinion letters in nearly a decade.

An opinion letter is an official guidance document addressing how a particular law applies in specific circumstances. For instance, an opinion letter would allow the DOL to formally address an employer’s specific compliance concern pertaining to the FLSA. These letters also serve as important guidance for other employers faced with similar circumstances and compliance concerns.

The 17 reissued letters cover a wide variety of FLSA topics and provide clarity to the DOL's current position on numerous issues. Eleven of the reissued opinion letters relate to Section 13(a)(1) of the FLSA, a provision that exempts any worker employed in a bona fide administrative capacity from the FLSA’s minimum wage and overtime requirements. For example, the letters address questions about the exempt status of the following jobs positions:
  • Project superintendents employed by a commercial construction company (FLSA2018-4);
  • Community members who coach athletic teams for public schools (FLSA2018-6);
  • Client service managers of an insurance company (FLSA2018-8); and
  • Consultants, clinical coordinators, and business development mangers of a healthcare placement company (FLSA2018-12).
Two of the opinion letters relating to FLSA Section 13(a)(1) — FLSA2018-7 and FLSA2018-14 — respond to employers’ questions about the “salary basis” test to determine exempt status. Other topics addressed include ambulance personnel on-call time and hours worked (FLSA2018-1), regular rate calculation for fire fighters and alarm operators (FLSA2018-15), and job bonuses relating to FLSA Section 7(e) (FLSA2018-9 and FLSA2018-11).

The two new FLSA-related opinion letters address the compensability of travel time and rest breaks. In one letter (FLSA2018-18), the DOL addressed whether required travel on weekends or to various job sites constitutes compensable “worktime” under various circumstances. In the second letter (FLSA2018-19), the DOL discussed whether 15-minute rest breaks required every hour by an employee’s serious health condition can be considered unpaid leave under the Family Medical Leave Act (in short, yes). The DOL issued a third letter (CCPA2018-1NA) addressing wage garnishment in relation to the Consumer Credit Protection Act. In addition to the letters, the DOL also issued a “fact sheet” regarding overtime for workers in higher education.

DOL opinion letters are a useful tool for employers seeking to avoid liability. The Portal-to-Portal Act of 1947 amended the FLSA to provide an employer with an affirmative defense that protects it from liability when the employer takes a certain action in reliance upon any written regulation, ruling, or interpretation by the WHD – even if the interpretation later turned out to be wrong. However, for an employer to be protected by this “good-faith reliance” defense, it must have acted in good faith and in conformity with the opinion letter.

Employers should be particularly cautious with the “conformity” prong of this defense. Recently, in November 2017, the U.S. Court of Appeals for the Sixth Circuit, which covers Ohio, Michigan, Tennessee, and Kentucky, decided that an employer could not avail itself of the good-faith reliance defense because the facts underlying the employer’s case were not in conformity with the facts in the opinion letter the employer relied upon. See Perry v. Randstad Gen. Partner (US) LLC, 876 F.3d 191 (6th Cir. 2017). The Sixth Circuit stated that the opinion letter did not provide "a clear answer to the particular situation" and, therefore, the employer did not receive protection by the affirmative defense.

The DOL’s return to issuing opinion letters is good news for employers, as the letters are valuable resources and provide much needed guidance. However, it is important for employers relying on opinion letters to pay close attention to the particular facts and circumstances at issue in the letter in comparison to their own. If an employer wishes to rely on an opinion letter and is at all concerned whether it applies to their circumstances, it should consult counsel.

*Jessi L. Ziska works in Z&R’s Cleveland office and practices in all areas of labor and employment law. For more information about the DOL’s Wage and Hour Opinion Letters or other labor and employment issues, please contact Jessi (jlz@zrlaw.com) at 216.696.4441.



Effectively Addressing Workplace Sexual Harassment

By David R. Vance*

In the wake of the numerous workplace harassment scandals receiving national attention, employers are reminded of the importance of implementing effective workplace sexual harassment policies. Beyond establishing an appropriate sexual harassment policy, employers must train managers and supervisors how to appropriately handle these issues. Employers also must implement a reporting mechanism for informing the employer of any instances of sexual harassment.

Sometimes employees are afraid to report instances of sexual harassment and managers and supervisors ineffectively investigate those claims that are made. Accordingly, managers and supervisors must understand how to properly receive and investigate reports of workplace sexual harassment. Finally, employers must take an appropriate course of action based upon the findings of the investigation.

1. Develop a Policy and Train Managers and Supervisors Regarding the Policy and Reporting Mechanism


Employers should take action to prevent sexual harassment in the workplace before it occurs. To this end, the employer must have a sexual harassment policy. The policy should be written in a way that all employees can understand, include clear definitions of harassment, and provide specific examples of prohibited behaviors. The employer also must advise employees how to report instances of workplace sexual harassment. Enabling third parties to report harassment or act to prevent workplace harassment is particularly effective in limiting harassment. Studies have shown that reporting of sexual harassment is more complete and frequent when there is a “zero-tolerance” policy. Therefore, creating the appropriate workplace sexual harassment policy, including a reporting mechanism, is the foundation necessary for effectively addressing workplace sexual harassment.

Following creation of the policy and the reporting mechanism, employers should implement training programs for managers and supervisors so that they can understand how to prevent workplace harassment and respond to allegations. According to research, the most effective training is in person, interactive, and led by a trainer who is positive, encouraging, and engaging. The training should be tailored to the particular workplace and is most effective when performed by a supervisor or an external expert, such as an attorney or other outside professional trainer.

2. Implement a Comprehensive Reporting Mechanism


An employer should provide every employee with a copy of the policy and an explanation of the reporting mechanism and redistribute this information periodically. Other measures to ensure effective dissemination of the policy and complaint procedure include posting them in central locations, incorporating them into employee handbooks, and holding periodic question and answer sessions.

Historically, employees have reported instances of workplace sexual harassment by informally meeting with the human resources department. However, employees may feel intimidated or confused by this process. To address these concerns, mobile platforms have developed, such as Red Flag, AllVoices, or Kendr, which enable employees to report instances of workplace harassment and to engage the human resources department. These platforms specifically permit anonymous reporting. Even in the absence of an anonymous reporting mechanism, employees must understand how to report workplace sexual harassment and must feel comfortable doing so.

3. Investigate Reported Sexual Harassment


When an employee submits a harassment complaint, the employer must choose whether to investigate the complaint internally, or whether to engage a third-party investigator. To make this decision, the employer should consider the seriousness of the allegations. For example, if the allegations are complicated, egregious, and, if true, would expose the company to legal liability, then the employer should consult an attorney to determine the best form of investigation.

When deciding how to address an employee’s complaint, an employer also should consider the identity of the alleged harasser. If the employee accuses a lower-level employee, the company’s human resources department may be an appropriate choice for handling the matter. On the other hand, if the employee points to an executive or supervisor, employers should consider whether to hire a third party to investigate.

Regardless of the approach taken, any report of workplace sexual harassment must be taken seriously and effectively investigated.

4. Undertake an Appropriate Course of Action


In many instances, an employer can avoid liability for workplace sexual harassment if it takes reasonable care to prevent and remedy workplace sexual harassment. This defense, known as the Faragher/Ellerth defense, was comprehensively discussed by the United States Supreme Court in Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Indus. v. Ellerth, 524 U.S. 742 (1998). A successful Faragher/Ellerth defense involves exercising reasonable care to prevent and promptly correct workplace sexual harassment. Generally, proving an employer took such reasonable care requires establishing, disseminating, and enforcing an anti-harassment policy and reporting mechanism.

If the investigation proves that harassment has indeed occurred, the employer should take immediate corrective action. Further, the employer may choose to take remedial measures even if no harassment occurred (e.g., conduct training; reissue the company’s harassment policy). In any event, taking action following the conclusion of the investigation is essential for an effective workplace sexual harassment policy and to avoid potential liability.

Conclusion


Regardless of whether the national media remains focused on workplace sexual harassment, employers must appropriately address any report of workplace sexual harassment. The above tips are a great start for successfully handling such reports. If an employer faces reports of sexual harassment or simply wishes to implement a proactive sexual harassment policy and procedure, then the employer should consider consulting with experienced employment counsel.

*David R. Vance, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience helping employers investigate and resolve sexual harassment claims. For more information about the tips above or any other employment-related matters, please contact David at drv@zrlaw.com or 216.696.4441.




Z&R SHORTS
Upcoming Speaking Engagements


July 17, 2018

Scott H. DeHart and Brad E. Bennett present “Hiring and Onboarding Legal Skills You Must Know” and “Easy I-9 and Immigration Compliance Methods That Protect Your Employer” at The National Business Institute Seminar at the Quest Conference Center in Columbus, Ohio.

July 26, 2018

Brad E. Bennett presents “Likes, Tweets, and Texts! Social Media and Technology in the Workplace” at the Ohio Municipal Attorneys Association 2018 Municipal Law Institute at the Marriot Northwest in Dublin, Ohio.

July 27, 2018

Drew C. Piersall presents “Attorney Conduct – Sexual Harassment” at the Ohio Municipal Attorneys Association 2018 Municipal Law Institute at the Marriot Northwest in Dublin, Ohio.

August 17, 2018

Jonathan J. Downes presents “Texts, Tweets & Likes: The Intersection of Social Media & Employment Law” at the 2018 Ohio Municipal League Regional Training Meetings at The Hancock Hotel in Findlay, Ohio.

Thursday, May 24, 2018

U.S. Supreme Court Rejects NLRB’s “Triple Bank Shot” Attack on Mandatory Arbitration Agreement Class Waivers

By Patrick J. Hoban*


On May 21, 2018, the U.S. Supreme Court held that mandatory employment arbitration agreements that require employees to waive the right to class litigation do not violate the National Labor Relations Act (“NLRA”). See Epic Systems Corp. v. Lewis, Nos. 16-285, 16-300, 16-307, 2018 U.S. LEXIS 3086 (May 21, 2018). The Supreme Court’s decision rejected the National Labor Relation Board’s (“NLRB”) strenuous, six-year fight to establish that class litigation is protected, concerted activity under Section 7 of the NLRA and that its limitation in the employment context is unlawful. Because of the Court’s decision, employers are now free to require that employees waive the right to engage in class litigation as part of a mandatory arbitration agreement.

In 2012, after eight decades of peaceful coexistence between the Federal Arbitration Act (“FAA”) and the NLRA, the NLRB took the position that employment arbitration agreements that require waiver of class litigation rights are unlawful. See D.R. Horton, Inc., 357 NLRB 2277 (2012). Specifically, the NLRB found such agreements violated Section 7 of the NLRA, which protects, among other things, employees’ “concerted activities for purpose of . . . other mutual aid or protection.” 29 U. S. C. §157. The NLRB’s position in D.R. Horton was contrary to its own policy, established as recently as 2010. The NLRB based its change in direction on its interpretation that Section 7 protected all collective activity, including class litigation, whether related to union organizing or not. The NLRB’s position also was based on its interpretation that the FAA’s “savings clause” rendered employment arbitration agreements that included class waivers unenforceable. The U.S. Court of Appeals for the Fifth Circuit rejected the NLRB’s D.R. Horton position and refused to enforce it. See D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013).

Despite this rebuke in the Fifth Circuit, the NLRB maintained its position that class litigation waivers in mandatory employment arbitration agreements violated Section 7. See Murphy Oil USA, Inc., 361 NLRB 771 (2014). On appeal, the Fifth Circuit again rejected the NLRB and noted that nothing had changed since its decision in D.R. Horton, just two years before. Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015). Nonetheless, in the years that followed, the NLRB relied on its D.R. Horton and Murphy Oil analysis to strike down dozens of mandatory arbitration agreements all over the country. In many cases, federal courts refused to enforce the NLRB’s decisions. However, the NLRB’s position was successfully advanced in the Seventh and Ninth Circuits. See Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016) and Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2015). The Sixth Circuit also sided with the NLRB in NLRB v. Alternative Entertainment, Inc., 858 F.3d 393 (6th Cir. 2017). Contrary to the Fifth Circuit’s prior holdings, the Seventh and Ninth Circuits held that class litigation is a “concerted activity” protected by Section 7 and adopted the NLRB’s interpretation of the FAA. With a split among the circuit courts, the Supreme Court granted certiorari and consolidated the appeals of Epic Systems, Ernst & Young, and Murphy Oil. In each of those cases, the employee-plaintiffs had attempted to bring collective/class actions alleging, among other things, wage and hour claims under the Fair Labor Standards Act (“FLSA”).

In Epic, the Supreme Court rejected the NLRB’s argument regarding the FAA and held that it did not invalidate arbitration agreements because they required or prohibited arbitration of class claims. The Court also rejected the argument that the NLRA trumps the FAA in all matters ostensibly related to collective employee activity – such as employment-based class actions. Instead, the Supreme Court instructed that class or collective actions were largely unknown when Section 7 was enacted in 1934, noting specifically that even the FLSA’s collective action provisions were enacted several years after Section 7.

In a key section of its decision, the Supreme Court examined Section 7 and concluded that its protection of “concerted activities for purpose of . . . other mutual aid or protection” could not reasonably include class litigation as the NLRA’s broader provisions address organization and collective bargaining but make no mention of arbitration or collective litigation. The Court further explained that Congress had expressly prohibited arbitration of statutory claims under other federal statutes and its failure to do so in the 84-year history of the NLRA meant it did not intend to place arbitration within Section 7’s reach.

Dissecting the NLRB’s argument that its prohibition of class arbitration waivers aided enforcement of the FLSA, the Supreme Court questioned why the FLSA itself did not prohibit such waivers. Dismissing the NLRB’s argument that the NLRA controls claims under the FLSA and overrides the FAA, the Court described this logic as “a sort of interpretive triple bank shot, and just stating the theory is enough to raise a judicial eyebrow.”

Finally, the Supreme Court held that no deference is due the NLRB’s position. The Court noted that, as recently as 2010, the NLRB’s General Counsel had taken a position opposite to the NLRB’s position in D.R. Horton in 2012. The NLRB provided no rationale for the change. The Court further explained that it owed no deference to the NLRB’s interpretation of the FAA, noting that it has “never deferred to the [NLRB’s] remedial preferences where such preferences potentially trench upon federal statutes and policies unrelated to the NLRA.”

Four justices joined in a dissent authored by Justice Ginsburg. The dissent argued that the FAA does not “permit employers to insist that their employees, whenever seeking redress for commonly experienced wage loss, go at it alone.”

In sum, the Supreme Court’s decision in Epic rejected the NLRB’s argument that NLRA-protected rights trumped the provisions of the FAA and the national policy favoring arbitration of employment disputes. The Supreme Court further announced that the NLRB’s authority does not extend to interpretation or enforcement of other federal statutes. Finally, the Court hints that the NLRA’s “bread and butter” focus is union organizing and collective bargaining and that the NLRB strains its authority when it reaches beyond that core jurisdiction.

After Epic, employers may include class litigation waivers in mandatory arbitration agreements without fear of attacks based on the NLRA, unless Congress passes legislation in the future limiting that right. However, employers must continue to ensure that arbitration agreements do not bar employees from accessing administrative agency procedures and the right to file charges with the NLRB or EEOC, as current jurisprudence prohibits such restrictions. Employers may continue to require employees to agree that they are limited to arbitration remedies and waive any remedy available through administrative agencies.

*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, regularly represents employers before the National Labor Relations Board and practices in all areas of labor relations. For more information about the Supreme Court’s decision in Epic or any other labor or employment matter, please contact Pat at pjh@zrlaw.com or 216.696.4441.

Monday, April 30, 2018

SHOW ME THE MONEY: IRS Issues First FAQs on Employer Tax Credit for Paid Family and Medical Leave

*By Stephen S. Zashin


The recently enacted Tax Cuts and Jobs Act of 2017 (the “Act”) created an employer tax credit for paid family and medical leave provided to employees. Specifically, Internal Revenue Code section 45S provides a general business tax credit to employers that voluntarily offer paid family and/or medical leave to their employees. On April 9, 2018, the Internal Revenue Service (“IRS”) issued a set of frequently asked questions (“FAQs”) that provides guidance to employers planning to take advantage of the tax credit.

The FAQs provide an informative overview of the tax credit and clarify several definitions. For instance, the FAQs provide that for purposes of the credit, “paid family and medical leave” includes time off for the following:
  • Birth of an employee’s child and to care for the child;
  • Placement of a child with the employee for adoption or foster care;
  • To care for the employee’s spouse, child, or parent who has a serious health condition;
  • A serious health condition that makes the employee unable to perform the functions of his or her position;
  • Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty (or having been notified of an impending call or order to covered active duty) in the Armed Forces; and
  • To care for a service member who is the employee’s spouse, child, parent, or next of kin.
The FAQs note that an employer cannot claim the credit for any paid leave provided by the employer to comply with a state or local law or for leave paid by a state or local government. Additionally, if an employer provides paid vacation leave, personal leave, or medical or sick leave, that paid leave is not considered “family and medical leave” and is not eligible for the credit.

Other FAQs address the effective dates of the credit, how the tax credit is calculated, and how to adjust the deduction for wages if an employer elects the credit. Notably, unless extended by Congress, the credit only applies to tax years 2018 and 2019.

The IRS expects to provide additional information on the following:
  • When the written policy must be in place?
  • How paid “family and medical leave” relates to an employer’s other paid leave?
  • How to determine whether an employee has been employed for “one year or more?”
  • How state and local leave requirements will impact the credit?
  • How members of a controlled group of corporations and businesses under common control are treated as a single taxpayer in determining the credit?
Z&R will continue to monitor additional IRS guidance on the paid family and medical leave tax credit and report any significant developments. Until additional guidance is issued, employers should contact counsel to determine if they can take advantage of this tax credit.

*Stephen S. Zashin is an OSBA Certified Specialist in Labor and Employment Law and the head of Zashin & Rich’s Labor, Employment and Sports Law Groups. Stephen regularly litigates FMLA cases and provides employers with FMLA guidance. For more information about the paid family and medical leave tax credit, please contact Stephen at ssz@zrlaw.com or 216.696.4441.

Tuesday, April 10, 2018

Salary History is No Defense to an “Equal Pay Act” Violation, Says Ninth Circuit

By Scott H. DeHart*


On April 9, 2018, the U.S. Court of Appeals for the Ninth Circuit – which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington – held that, under the Equal Pay Act of 1963 (“EPA”), employers can no longer rely on an employee’s prior salary to justify different wages paid to male and female employees. The case is Rizo v. Yovino, No. 1:14-cv-00423-MJS, slip op. (9th Cir. April 9, 2018). The Court’s decision came on the eve of “Equal Pay Day,” a symbolic date chosen each year to illustrate how far into the new year women in the U.S. must work to ‘catch up’ to men’s earnings from the prior year.

The female plaintiff, Aileen Rizo, was a math consultant hired by the Fresno County Office of Education. She previously worked as a middle and high-school math teacher. To determine her salary, Fresno County followed its policy of taking Rizo’s prior salary, adding 5%, and placing her in the appropriate “Step” on a 10-step hiring salary schedule. Several years later, Rizo learned that the County placed male colleagues who had been hired after her at higher salary steps. Rizo filed a lawsuit claiming, among other things, that her employer had violated the EPA.

Congress passed the EPA to prohibit sex-based wage discrimination in employment. The core principle of the EPA is that men and women should receive equal pay for doing equal work, regardless of their sex. The EPA contains several exceptions to this anti-discrimination principle, including a catch-all for a wage “differential based on any other factor other than sex.” 29 U.S.C. § 206(d)(1) (emphasis added).

The question before the Ninth Circuit in Rizo was whether an employee’s prior salary was a “factor other than sex” on which an employer could rely to defend different salaries between male and female employees. A three-judge panel of the Ninth Circuit initially answered yes to this question, and held that prior salary was a permissible “factor other than sex” under the EPA, relying on the Ninth Circuit’s 1982 decision in Kouba v. Allstate Insurance Co., 691 F.2d 873 (9th Cir. 1982). In Kouba, the Ninth Circuit had upheld a salary system that calculated employee salaries based on prior salary, along with ability, education, and experience.

After the three-judge panel’s decision, the Ninth Circuit agreed to rehear the case en banc (i.e., all the judges of the court hear the case, not just three). The full Ninth Circuit disagreed with the three-judge panel’s decision and overturned Kouba. The Ninth Circuit held that prior salary (alone, or in combination with other factors) cannot justify a wage differential. The Court explained that allowing employers to defend an EPA lawsuit based on ‘prior salary’ gives employers the ability to “capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum.” That would be contrary to the text and history of the Equal Pay Act, and would undermine the basic principle for which the EPA was passed.

Although the decision is only binding law in the states covered by the Ninth Circuit and not in Ohio, the Rizo decision may have far-reaching impact. In the era of #metoo and #timesup, employers are facing increased scrutiny of policies and practices that negatively impact women in the workforce. Other courts may soon be persuaded by the Ninth Circuit’s reasoning in Rizo and issue similar decisions limiting or prohibiting employer reliance on “prior salary” to justify different salaries for men and women who perform equal work.

Employers should work closely with legal counsel to ensure that their existing wages and compensation policies are consistent with the requirements of the EPA and other federal and state laws.

*Scott H. DeHart is a member of the firm’s Labor and Employment Group and practices out of the firm’s Columbus, Ohio office. Scott has experience defending against equal pay claims. If you have questions about employee pay or any other labor or employment issues, please contact Scott at shd@zrlaw.com or (614) 224-4411.

Monday, February 12, 2018

EMPLOYMENT LAW QUARTERLY | Winter 2018, Volume XX, Issue i

Download PDF


Out with the Old, in with the New: A Look Forward and Back to Start the New Year

By Stephen S. Zashin*

Heading into 2018, Zashin & Rich has created a checklist for employers:

Policy Review:

☐ Review discrimination, harassment and retaliation policies;
☐ Review policies concerning Family and Medical Leave and disability accommodation issues;
☐ Review policies concerning pay for time worked (including reviews of pre and post shift work and meal and rest breaks);
☐ Review social media policies to ensure that they comply with recent guidance from the National Labor Relations Board (even if the company is a non-union employer);
☐ Review wage deduction policies to ensure that only proper deductions are made from employee pay; and,
☐ Update confidentiality, non-solicitation and non-compete agreements to take advantage of the Defend Trade Secrets Act.

Applications:
☐ Revise employment applications to comport with "ban the box" rules governing questions about convictions; and,
☐ Review employment application procedures to ensure that all third party background checks comply with the Fair Credit Reporting Act.

Training:
☐ Train employees, managers and supervisors about discrimination, harassment and retaliation; and,
☐ Train managers and supervisors about FMLA and ADA leaves of absences and accommodations.

Audit:
☐ Ensure that employees are properly classified as exempt or non-exempt under the Fair Labor Standards Act;
☐ Review pay practices to ensure that minorities are not statistically disadvantaged in compensation;
☐ Review workforce composition information to ensure that minorities are not statistically disadvantaged in management;
☐ Analyze health care enrollment to ensure that only eligible participants are on the company's medical plan; and,
☐ Review independent contractor classifications to ensure that those working under such arrangements are actually independent contractors.

Be sure to follow Zashin & Rich's Employment Law Quarterly to stay updated on labor and employment law developments in 2018.

*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment Law, is the founder of the firm's Labor and Employment Groups and has extensive experience with all aspects of labor and employment law. If you have questions regarding the above checklist or any other labor or employment issues, please contact Stephen at ssz@zrlaw.com or (216) 696-4441.




How the Tables Have Turned: NLRB Shifts Course Under Trump Administration

By Patrick J. Hoban*

During the Obama administration, the National Labor Relations Board ("NLRB") was a thorn in the side of many employers - overturning long-standing precedent and broadly construing the National Labor Relations Act ("NLRA") to protect employee activities and prohibit employer enforcement of commonplace employment policies. Now, under the Trump administration, the NLRB has shifted in a more employer-friendly direction. The Republican-appointed NLRB majority recently issued two decisions that dramatically altered the framework for analyzing work rules and joint employer status. Also, the NLRB's General Counsel issued a memorandum to NLRB regional directors highlighting priorities going forward, including a focus on legal issues raised "in cases of the last eight years that overruled precedent."

A New Standard for Evaluating Work Rules


In recent years, many employers were frustrated and confounded by a seemingly endless string of NLRB decisions rendering work rules unlawful, including those commonly set forth in employee handbooks. In analyzing these rules, the NLRB used a standard (referred to as the Lutheran Heritage standard) that asked, in part, whether an employee would "reasonably construe" the work rule to prohibit NLRA-protected activity. The NLRB's application of this standard led to inconsistent and arbitrary results. For example, the NLRB found rules prohibiting "loud, abusive, or foul language" and an "inability or unwillingness to work harmoniously" to be unlawful, yet approved of rules prohibiting "abusive or threatening language" and "conduct that does not support the . . . [employer's] goals and objectives." The NLRB's application of the Lutheran Heritage standard "produced rampant confusion for employers" and allowed the NLRB to find neutral and innocuous work rules unlawful, without giving due consideration to legitimate business justifications underlying the rules.

Fortunately for employers, in December 2017, the NLRB overturned the Lutheran Heritage standard and adopted a new framework for analyzing work rules. See The Boeing Company, 365 NLRB No. 154 (Dec. 14, 2017). Under this new standard, the NLRB evaluates: (1) the nature and extent of the work rule's potential impact on employees' protected rights under the NLRA; and (2) the legitimate justifications associated with the work rule. In Boeing, the NLRB applied this new framework to a "no-camera rule" implemented by Boeing that restricted employee use of cell phones and other camera-enabled devices on company property. Initially, an Administrative Law Judge ("ALJ") found Boeing's no-camera rule unlawful under the Lutheran Heritage standard. Reversing the ALJ, the NLRB emphasized the "fundamental problems with the . . . application of Lutheran Heritage when evaluating the maintenance of work rules, policies and employee handbook provisions." These problems included the NLRB's failure to take into consideration legitimate justifications associated with the work rules, the false premise that employees are better served by no work rules as opposed to ones that may have some overlap with NLRA coverage, and the failure of the standard to allow the NLRB to differentiate among industries and work settings.

Applying its new standard to Boeing's no-camera rule, the NLRB held that any potential impact on Boeing's employees' exercise of protected rights under the NLRA was outweighed by the substantial and important justifications underlying the rule. These justifications included Boeing's need to maintain its security protocols, protect against the disclosure of sensitive and proprietary information (including employee personal information), and (as an aircraft manufacturer and military defense contractor) limit the risk of becoming the target of a terrorist attack.

A Return to a Prior Standard for Evaluating Joint Employer Status


In another December 2017 decision, the NLRB announced it was returning to its prior standard for evaluating whether two entities should be deemed a joint employer, and therefore, subjected to joint and several liability under the NLRA. See Hy-Brand Industrial Contractors, 365 NLRB No. 156 (Dec. 14, 2017). In 2015, the NLRB held that two entities are joint employers based on the mere existence of reserved joint control (i.e., a contractual right to exercise control), or based on "indirect" or "limited and routine" control. The NLRB could have deemed two entities joint employers even if they never actually exercised joint control over essential terms and conditions of an employee's employment. Under this broad standard, a parent company or even a client could face liability on legal obligations under the NLRA, even without exercising any control over a subsidiary's or vendor's employees.

In Hy-Brand, the NLRB rejected this standard in favor of the pre-existing joint employer test, under which "the essential element in . . . [the] analysis is whether a putative joint employer's control over employment matters is direct and immediate." In conducting this analysis, the NLRB will now focus, as it did in the past, on "whether an alleged joint employer 'meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction.'" Accordingly, the mere existence of reserved control, which has not been exercised, or indirect or limited and routine control is no longer sufficient to give rise to joint employer status and joint and several liability under the NLRA.

The NLRB's General Counsel's Memorandum


Also in December 2017, the NLRB's newly-appointed General Counsel issued a memorandum to the leadership of the NLRB's regional offices, which set forth guidelines and priorities going forward. These priorities include special attention to "[s]ignificant legal issues includ[ing] cases over the last eight years that overruled precedent and involved one or more dissents." The General Counsel enumerated a number of areas of focus, including employee access to employer email to engage in union-related and other protected activity under the NLRA, off-duty employee access to employer property, work rules, and joint employer status. The NLRB has already issued decisions regarding work rules and the joint employer standard. Additional decisions from the NLRB are likely forthcoming that further revise Obama-era policies.

As demonstrated by the Boeing and Hy-Brand cases, which were decided shortly after the General Counsel issued the memorandum, a dramatic shift appears to be underway at the NLRB. Zashin & Rich will continue to report on developments from the NLRB.

*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, regularly practices before the NLRB and counsels employers regarding work rules and protected activity. If you have questions about recent developments at the NLRB, please contact Pat at pjh@zrlaw.com or (216) 696-4441




Father Trucker: The Sixth Circuit Addresses a Truck Driver’s Discrimination Claim Premised Upon His Status as a Single Parent

By Jessi L. Ziska*

Most employers are familiar with prohibitions on discrimination based on an employee's race, color, religion, sex, national origin, age, and disability. As demonstrated in a recent decision by the U.S. Court of Appeals for the Sixth Circuit, however, employers also should beware of employment decisions based on other factors, including marital and familial status. See Reedy v. Rich Transp., LLC, No. 17-1085, 2017 U.S. App. LEXIS 22031 (6th Cir. Nov. 1, 2017). Although the Sixth Circuit ultimately found in favor of the employer, the Reedy decision serves as a warning to employers about actions and statements about an employee's family that could give rise to a lawsuit.

In Reedy, the plaintiff, who was married but separated from his wife, had custody of their five children. During one of his shifts as a truck driver, the plaintiff left his truck at a truck stop and went home early due to a snowstorm. When his supervisor ordered him to retrieve the truck the following day, the plaintiff refused because he could not find a babysitter. His supervisor responded: "I don't give a f*** about your kids. Get your f***ing ass in that truck because that's where we need to have you." Subsequently, another one of the plaintiff's supervisors told him that, if he had known the plaintiff was a single parent, he would not have hired him. A few days later, the employer terminated the plaintiff, citing issues with his performance including his refusal to retrieve the truck as ordered.

The plaintiff then filed a lawsuit alleging his employer discriminated against him based on his status as a single parent in violation of Michigan's antidiscrimination law, which specifically prohibits discrimination based on "marital status." After the district court dismissed his discrimination claim, the plaintiff appealed to the Sixth Circuit. On appeal, the Sixth Circuit assumed the plaintiff qualified for protected status, noting that the Michigan Supreme Court has never addressed whether the State's antidiscrimination law "covers single or separated parents (or the perception of single with children while still married)."

In support of his discrimination claim, the plaintiff relied solely on his supervisors' statements. Affirming the dismissal of his claim, the Sixth Circuit held that "[t]otal reliance on statements about [the plaintiff's] status as a single parent is not sufficient evidence of motivation to terminate his employment." The court noted that the supervisors' statements, although close in time to the plaintiff's termination, were not directly linked to the decision to terminate his employment. Furthermore, the plaintiff failed to present any additional evidence to call into question the legitimacy of the employer's stated reasons for his termination, including his failure to retrieve the truck as directed.

The Sixth Circuit also found that the plaintiff failed to present evidence that the employer treated him differently on the basis of his marital status. Specifically, the plaintiff was unable to point to anyone outside his protected class who enjoyed better treatment from the employer.

While the Sixth Circuit affirmed the dismissal of the plaintiff's discrimination claim, one of the judges felt his claim should have survived. In a dissenting opinion, Judge White stated that the supervisors' troubling statements "certainly . . . [gave] rise to an inference of unlawful discrimination."

Unlike Michigan's antidiscrimination law, Title VII of the Civil Rights Act of 1964 and Ohio's antidiscrimination law do not specifically prohibit discrimination based upon "marital status" in the employment context. Nevertheless, employers in Ohio and elsewhere still should be cautious of making employment decisions based upon employee or applicant marital or familial status as local ordinances may prohibit such conduct. Also, even in the absence of a law specifically prohibiting these types of discrimination, employees may be able to bring suit against their employers for sex-based discrimination arising out of comments or actions tied to their marital or familial status. For example, an employer could give rise to a discrimination claim by asking only female job applicants whether they are married or have young children.

In sum, employees' familial obligations can present challenges for employees and their employers alike. Although the Sixth Circuit in Reedy found the comments insufficient to prove discrimination, employers should be cautious of actions and comments based on or relating to their employees' marital or familial status.

*Jessi L. Ziska recently joined Zashin & Rich in their Cleveland office and practices in all areas of labor and employment law. If you have questions regarding the Reedy decision, please contact Jessi at jlz@zrlaw.com or (216) 696-4441.




EMS Captains and Lieutenants Are Supervisors, Not “Public Employees,” Under Ohio Collective Bargaining Law

By George S. Crisci*

In a recent directive, the State Employment Relations Board ("SERB") provided further clarification on the types of job responsibilities that will exempt employees from collective bargaining under Ohio law. Specifically, SERB held that EMS captains and lieutenants qualified under the "supervisor" exemption of Ohio's collective bargaining law. See In re Athens County EMS Association, Case No. 2017-REP-04-0053 (Nov. 17, 2017). This latest directive follows closely on the heels of another SERB decision (which Zashin & Rich reported on here) holding that captains in a fire department fell within the "confidential" and "management" employee exemptions.

Ohio Revised Code Section 4117.01 sets forth a number of exclusions from the definition of "public employee" under Ohio's collective bargaining law. If a public employee falls within one of these exclusions, then the employee is not entitled to collective bargaining rights. One such exclusion applies to "supervisors," which are defined, in part, as individuals who have the authority to "to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other public employees; to responsibly direct them; to adjust their grievances; or to effectively recommend such action, if the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment." R.C. 4117.01(F).

In April 2017, a union filed a request to represent, for collective bargaining purposes, all EMTs, paramedics, lieutenants, and captains in the Athens County EMS Department. After the County Commissioners objected to this request, SERB directed the matter to its Office of General Counsel for an inquiry. SERB asked the General Counsel to determine whether the EMS captains and lieutenants were exempt from the definition of "public employees" under Ohio Revised Code Chapter 4117. On November 7, 2017, SERB's General Counsel issued findings of fact and conclusions of law, finding the captains and lieutenants qualified under the "supervisor" exemption. Subsequently, SERB adopted the General Counsel's conclusions, granted the Athens County Commissioners' objection, and denied the union's request to represent the EMS captains and lieutenants.

The Athens County EMS Department was comprised of the chief, assistant chief, five captains, two lieutenants, and 38 EMT/paramedics. Among various other duties, the captains and lieutenants were involved in hiring employees, including participating in candidate interviews and making hiring recommendations. Likewise, both the captains and lieutenants disciplined employees, including issuing verbal and written reprimands without prior approval, and developed and conducted annual performance evaluations.

In analyzing these responsibilities under R.C. 4117.01, SERB noted the captains and lieutenants did perform "duties that are routine and ministerial in nature: however, there are duties that require judgment to initiate action and utilize discretion without further review." Pointing specifically to the captains' and lieutenants' responsibilities with respect to employee performance evaluations and employee discipline through written and verbal reprimands, SERB found that the captains and lieutenants met the "supervisor" criteria as set forth in R.C. 4117.01(F). Therefore, they were exempted from the definition of "public employee" and were not entitled to collective bargaining rights under Ohio law.

As the operations of safety forces continue to develop, management must consider the structural application of their organizations. Petitions to amend existing bargaining units can be filed at SERB. Careful application of the standards and the procedural steps must be taken. These cases are fact specific, and public employers looking to amend a bargaining unit should contact counsel to evaluate the merits of doing so.

*George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience representing employers before SERB. If you have questions regarding this SERB decision or other collective bargaining issues, contact George at gsc@zrlaw.com or (216) 696-4441.




Z&R SHORTS


Please join Z&R in welcoming two new attorneys to its Employment and Labor Groups


Jessi L. Ziska earned her law degree, as well as certificates in both Litigation and Alternative Dispute Resolution and Health Law, from The University of Akron School of Law. Jessi was a member of the Moot Court Honor Society ("MCHS") and Trial Team. As a member of the MCHS, Jessi competed in the 2016 American Bar Association National Appellate Advocacy Competition in Boston, Massachusetts. Jessi was later elected to serve as the President of the MCHS. After her performance in Akron Law's Summer Trial Academy, Jessi was selected to join Akron Law's nationally-known Trial Team, which gave her the opportunity to compete in the 2016 Ohio Attorney General's Public Service Mock Trial Competition in Columbus. As part of Akron Law's Health Law program, Jessi completed an externship in the health law practice group of a well-established, Northeast Ohio firm. During her externship, she reviewed and revised employment agreements between physicians and hospitals, formed various corporate and non-profit entities, and ensured corporate compliance with federal and state laws.

Christopher D. Caspary's practice focuses on employment litigation and corporate employment counseling. Chris previously practiced in the areas of civil litigation and insurance defense, and appeared in courts throughout Ohio and in federal court. Chris's experience also includes taking and defending depositions, drafting pretrial motions and pleadings, and advising clients on complex legal issues. Following law school, Chris clerked for the Honorable Nancy A. Fuerst in the Cuyahoga County Court of Common Pleas, where he drafted opinions and rulings, conducted certain hearings and conferences, and provided legal recommendations to the Judge. While in law school, Chris specialized in labor and employment law, worked in the Employment Law Clinic, and externed with the Federal Trade Commission. Chris is the Vice-Chair and incoming Chair of the Cleveland Metropolitan Bar Association's Litigation Section. Chris is a member of the Cleveland Metropolitan Bar Association's Bar Admissions Committee and is a member of the William K. Thomas Inn of Court. Chris was also a delegate to the 8th Judicial District Conference in May 2015 and October 2016.

Upcoming Speaking Engagements


March 2, 2018
Jonathan J. Downes and Drew C. Piersall present "Beyond Sexual Harassment and Other Claims of Discrimination - Legal and Practical Realities" at the Ohio Municipal Attorneys Association's 2018 Spring Municipal Civil and Criminal Law Seminar at the Westin in Columbus, Ohio.

March 2, 2018
Stephen S. Zashin presents "Hearing Employment Law Cases" at The Supreme Court of Ohio Judicial College Webinar.

March 14, 2018
Patrick M. Watts presents "Conducting Harassment Investigations" at the Greater Ashtabula Chamber of Commerce in Ashtabula, Ohio.

March 19, 2018
Jonathan J. Downes presents "Legal Minefields to Avoid" at the Ohio Association of Chiefs of Police - New Chiefs' Workshop at the Crowne Plaza in Dublin, Ohio.

Tuesday, January 2, 2018

The “Tax” of Silence – Tax Reform’s Impact on Settling Sexual Harassment Claims

By Stephen S. Zashin*

On December 22, 2017, President Trump signed the “Tax Cuts and Jobs Act,” which is a sweeping tax reform law the size of which the United States has not seen in decades. As a significant part of this new law, employers can no longer deduct sexual harassment settlements and associated legal fees as a business expense, when the settlement is contingent upon a nondisclosure agreement. In this context, a nondisclosure agreement typically would prohibit the parties from disclosing the terms of the settlement or the alleged facts supporting the sexual harassment claim. The recent barrage of sexual misconduct allegations against celebrities, such as Harvey Weinstein, Matt Lauer, Bill O’Reilly, and Al Franken — and confidential settlements arising from these types of accusations — prompted this change to the tax law.

The “Harvey Weinstein Tax,” as some are calling it, is not a tax. Rather, the provision prohibits tax deductions. Prior to this law, sexual harassment settlements and related attorneys’ fees were deductible business expenses. However, the new law prohibits such deductions for amounts paid or incurred pursuant to a confidential settlement. To illustrate, under the new law, if a company paid a $1 million sexual harassment settlement, it is prohibited from deducting that amount if the settlement contained a nondisclosure agreement. However, in the absence of a nondisclosure agreement, and assuming a 21% corporate tax rate, the company may deduct the $1 million settlement for a tax savings of $210,000.

In the example above, the company would need to determine whether a tax savings of $210,000 is worth a nondisclosure agreement (i.e., prohibiting the employee from discussing the terms of the settlement and the underlying circumstances and allegations). This tax provision has both legal and tax consequences. Employers settling sexual harassment claims should discuss with counsel, chief financial officers and potentially their tax consultants, this new tax provision and its implications on settling any sexual harassment claim.

*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 litigating and resolving sexual harassment claims. For more information about settling sexual harassment claims, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.