Public Sector Alert: Ohio “Bans the Box” – Public Employers Cannot Ask About Felony Convictions on Job Applications

By Brad E. Bennett*

On December 9, 2015, House Bill 56, known as the “ban the box” bill, passed both the Senate and the House. The bill becomes effective within ninety (90) days of Governor Kasich’s approval. This bill prevents all public employers, including counties, townships, and municipal corporations, from asking about previous criminal convictions on their job applications. The bill also modifies Ohio’s civil service law, making it clear that classified employees who are convicted of a felony “while employed in the civil service” may be removed under R.C. 124.34(A). Further, if an unclassified employee loses their position because they are convicted of a felony “while employed in the civil service,” the employee forfeits their right to resume a position in the classified service under R.C. 124.11(D)(3)(a).

The bill does not prohibit a public employer from including in a job application a statement, notifying applicants about potential disqualification, if they have a particular criminal history. The bill also does not prohibit public employers from inquiring about felony convictions later in the hiring process. The inquiry is only “banned” from the job application itself.

Public employers should also remain mindful of the EEOC’s 2012 Enforcement Guidelines. The EEOC has taken the position that employers cannot refuse to hire applicants simply because they have a felony conviction. Instead, the EEOC requires employers to demonstrate that the refusal to hire based upon a conviction is “job related and consistent with business necessity.” This will typically require the employer to weigh various factors including the nature of the job, the type of conviction, and the amount of time that has passed since the conviction occurred.

What actions should public employers take now? Public employers should immediately review and revise their job applications to ensure that they comply with House Bill 56. They should also provide training to managers involved in the hiring process to ensure compliance with House Bill 56 and the EEOC’s 2012 Enforcement Guidelines.

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 assisting public sector employers with establishing lawful hiring guidelines. If you have questions about the H.B. 56 or your hiring process, please contact: Brad E. Bennett | beb@zrlaw.com | 614.224.4411

Z&R ANNOUNCES ITS 2016 SUPER LAWYERS AND RISING STARS

Zashin & Rich is pleased to congratulate the following 2016 Super Lawyers:

Brad E. Bennett, George S. Crisci, Jon M. Dileno, Jonathan J. Downes, Michele L. Jakubs, and Stephen S. Zashin were named Super Lawyers. Helena Oroz, Ami J. Patel, and David R. Vance were named Rising Stars.

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process includes independent research, peer nominations and peer evaluations.

Super Lawyers Magazine features the list and profiles of selected attorneys and is distributed to attorneys in the state or region and the ABA-accredited law school libraries. Super Lawyers is also published as a special section in leading city and regional magazines across the country.

About Zashin & Rich Co., L.P.A.
With offices in Cleveland and Columbus Ohio, Z&R represents employers in all aspects of employment, labor, and workers' compensation law. The firm represents private and publicly traded companies as well as public sector employers throughout Ohio and the United States. Z&R defends employers in all aspects of private and public sector traditional labor law, employment litigation, and workers' compensation matters. The firm also counsels employers on a variety of daily workplace issues including, but not limited to, employee handbooks, non-compete agreements, social media, workplace injuries, investigations, disciplinary actions, and terminations.

FOOL’S GOLD: When HR Policies Are Not Enough

By Lisa A. Kainec*

Every HR professional knows that solid policies are essential to protect a company against legal claims and liabilities. Unfortunately, even the best policies cannot provide the best protections. Ask yourself a few “what if” scenarios about your key employees, your monetary investment in those employees, the information they have at their fingertips, and what would happen to your business if that information made its way to your competition? If your answers to those questions raise concerns, let’s talk about getting your best protections in place now and hope you’ll never need to use them.

Consider the following policies:

• Confidential Information: Most employee handbooks clearly set forth the employer’s policies on protecting the proprietary and confidential nature of information available to the employees. Those policies certainly provide the basis for corrective action up to and including termination of the employment relationship. But do those handbook policies adequately protect the employer if the employee takes confidential information – in paper or electronic form – prior to leaving the company?
• Relocation Benefits: Does your company provide relocation benefits to new employees? Many employers have great relocation packages that afford new employees payment for numerous relocating expenses. However, does your company only have a relocation policy that explains the benefits, but no contractual agreement that permits you to recoup those expenses if the employee leaves employment after a short time?
• Non-Compete and Non-Solicitation: What if the employee leaves and solicits his or her existing accounts to work with his or her new company? What if the employee solicits co-workers to join his or her new company? What happens when an employee leaves and attempts to compete with the prior employer? Is the employer protected from losing its customers and employees?

So why isn’t an employee handbook enough to protect you? In virtually every instance, a company’s employee handbook is not a contract of employment and the employer can amend, change, or modify the handbook at any time. In light of such rights, the statements made in an employee handbook are not contractual. The same also holds largely true for offer letters, codes of conduct, and other employer communications. In virtually all of these documents, the employer correctly advises employees that the policies are not contracts and that either the employer or the employer can terminate the relationship at any time.

While those disclaimers protect an employer from certain contractual claims, many employers are left vulnerable and unprotected. The above examples (among others) are instances where an employer’s best protection is a simple written agreement with the employee that specifies their obligations during and after employment. That is why a separate written agreement is essential for certain employees and situations. It also is critically important that a company work with labor and employment lawyers to ensure that their policies will hold up when challenged and are otherwise lawful.

*Lisa A. Kainec, former Vice President of Human Resources and Senior Employment Counsel for Jo-Ann Stores, recently joined the firm’s labor and employment group in its Cleveland office. Lisa represents employers in all areas of labor and employment law including policy review and compliance. If you have questions about employer policy or contract drafting, please contact Lisa A. Kainec | lak@zrlaw.com | 216.696.4441

DOL PRESSES PAUSE: Delays Implementation of its Proposed Changes to the FLSA

By Brad E. Bennett*

Have you prepared to comply with the Department of Labor’s (“DOL”) proposed rule amendment to the Fair Labor Standards Act’s "white collar" exemption tests for executive, administrative, and professional employees? You know, the proposed rule that will increase the salary basis test from $455 per week to $970 per week ($50,440 annually) beginning in 2016? As Z&R previously explained, the proposed rule will cause many employees that are currently exempt to lose their exemption and will dramatically increase the number of U.S. workers who are eligible for overtime pay.

Many have anticipated that the DOL would implement its pending final rule by the end of this year or in early 2016. According to a recent Wall Street Journal article, however, the rule will not appear until the end of 2016. Why the delay? Solicitor of Labor Patricia Smith recently stated that the DOL needed more time to draft the final regulations due to the sheer volume of comments it received during the comment period. The DOL received 270,000 comments from individuals and organizations during the comment period – more than three times what it anticipated.

While this is certainly good news for employers, employers should utilize this period to ensure compliance with existing employee classifications and plan for the implementation of the proposed FLSA rule amendment.

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 FLSA compliance. If you have questions about the DOL’s proposed regulations, please contact: Brad E. Bennett | beb@zrlaw.com | 614.224.4411

Fifth Circuit Re-Rebukes the National Labor Relations Board on the Validity of Class and Collective Action Waivers

By David P. Frantz

On October 26, 2015, the U.S. Court of Appeals for the Fifth Circuit once again butted heads with the National Labor Relations Board (“NLRB”) over the issue of class and collective action waivers in employment dispute arbitration agreements. See Murphy Oil USA, Inc. v. NLRB, No. 14-60800 (5th Cir. Oct. 26, 2015). In Murphy Oil, the Fifth Circuit rejected the NLRB’s decision that arbitration agreements with class/collective action waivers violate employees’ rights to engage in protected concerted activity under Section 7 of the National Labor Relations Act (“NLRA”). The Fifth Circuit’s December 2013 decision in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013) (which Z&R discussed here) reached the same conclusion.

In D.R. Horton, the Fifth Circuit previously held that the NLRA does not prohibit mandatory arbitration agreements with class/collective action waivers. The court explained that class or collective action procedures are not substantive legal rights; they are merely procedural devices. Thus, the NLRA’s protection of employees’ substantive rights does not extend to filing class or collective actions. However, the Fifth Circuit also held that the language of the arbitration agreement at issue reasonably could be construed to prohibit employees from filing unfair labor practice charges (“ULP”) with the NLRB. Such prohibitions violate the NLRA.

When issuing its underlying decision in Murphy Oil, the NLRB engaged in “Board nonacquiescense” and disregarded the Fifth Circuit’s D.R. Horton holding. Murphy Oil involved four employees who filed a federal wage and hour collective action after signing arbitration agreements with class/collective action waivers. Murphy Oil moved to dismiss and compel arbitration, and the federal court stayed the collective action proceeding pending arbitration (which never was initiated). While the motion to dismiss was pending, one of the employees filed a ULP with the NLRB, alleging the arbitration agreement violated her rights under the NLRA.

In October 2014, ten months after the Fifth Circuit’s ruling in D.R. Horton, the NLRB issued its decision in Murphy Oil, holding that the arbitration agreement violated the employees’ substantive rights under the NLRA and reasonably could be construed to prohibit employees from filing ULPs. The NLRB also found that Murphy Oil’s motion to dismiss and compel arbitration in the wage and hour lawsuit was a separate violation of the NLRA. The NLRB determined that Murphy Oil “acted with an illegal objective in seeking to enforce an unlawful contract provision.”

On appeal before the Fifth Circuit, the court reaffirmed its analysis in D.R. Horton, stating: “Our decision was issued not quite two years ago; we will not repeat its analysis here.” Murphy Oil asked that the court hold the NLRB in contempt for its “defiance” of the D.R. Horton decision. The court declined to do so because the NLRB’s Murphy Oil decision could have been appealed in a number of jurisdictions outside the Fifth Circuit, and the NLRB may not have known which circuit’s law would apply. The court stated, “[w]e do not celebrate the Board’s failure to follow our D.R. Horton reasoning, but neither do we condemn its nonacquiescence.”

The Fifth Circuit also addressed whether Murphy Oil’s arbitration agreements reasonably could be construed to prohibit the filing of ULPs. The court examined two versions of the arbitration agreements: one in effect for employees hired before March 2012, and a revised version for employees hired thereafter. The pre-March 2012 version included language that “any and all disputes or claims” must be resolved through arbitration. The Fifth Circuit held that this broad “any claims” language, without any qualification, can create the reasonable impression that the employee is waiving both trial rights and administrative rights. Employee-employer agreements that limit the NLRB’s ability to prevent unfair labor practices violate the NLRA. As waivers of administrative rights would have such an effect, they are illegal.

The Fifth Circuit did not hold that the arbitration agreement must expressly state that the employee may file ULPs with the NLRB; however, “[s]uch a provision would assist, though, if incompatible or confusing language appears in the contract.” Murphy Oil’s revised arbitration agreement included such language, stating that it does not preclude employees from participating in ULP proceedings. Based on this language, the Fifth Circuit held that the revised agreement was valid.

Finally, the Fifth Circuit rejected the NLRB’s conclusion that Murphy Oil violated the NLRA by moving to dismiss and compel arbitration in the wage and hour suit filed by its employees. Based in part on its D.R. Horton decision, the court held Murphy Oil’s motion was not a baseless attempt at discouraging employees from exercising their rights under the NLRA.

The Murphy Oil decision reassures employers that, at least in the Fifth Circuit, arbitration agreements with class and collective action waivers are enforceable. Likewise, the Second, Eighth, Ninth, and Eleventh Circuits have reached the same conclusion or indicated that they would. However, employers should ensure that their arbitration agreements and class/collective action waivers cannot be construed to prohibit employees from pursing administrative claims, including ULPs.

*David P. Frantz practices in all areas of labor and employment law. If you have questions about the Murphy Oil decision, arbitration agreements, or class and collective action waivers, please contact: David P. Frantz | dpf@zrlaw.com | 216.696.4441

DOES YOUR COMPANY CONDUCT THIRD-PARTY BACKGROUND CHECKS… AND COMPLY WITH FCRA? The frightful law you may not fear, but you should.

By Helena Oroz*

In honor of the scariest, spookiest month of the year, here are the scariest things we are hearing these days about using background reports and complying with the law that governs use of that information:

• “I think FCRA is that law about credit reports. But we don’t check credit for our job applicants. So we’re good, right?”
• “Do we disclose to applicants that we’re requesting consumer reports? We inform them of a lot of stuff. I think it’s in our employment application somewhere.”
• “Adverse action letters? Two of them? Is that a new thing?
• “My background check company handles all those forms. So we’re good, right?”
• “I’m pretty sure we’re doing most of that stuff right some of the time. But don’t quote me on that.”

Okay, full disclosure: these are not real quotes. But they do represent real misunderstandings and confusion about employer obligations under the Fair Credit Reporting Act (“FCRA”).

If these questions and statements sound reasonable, the FCRA class action bar is looking for your company. Here is a small sampling of large companies that settled FCRA class actions in 2015:

• Fernandez v. Home Depot – $3 million
• Brown v. Delhaize America (owns Food Lion grocery stores) – $2.99 million
• Marcum v. DolgenCorp (owns Dollar General stores) – $4.08 million

But it doesn’t matter if you are small or large, local or national – you are just their type.

Third-party background check reports are “consumer reports.” In simplest terms, the Fair Credit Reporting Act, or FCRA, is a federal law that governs the collection, assembly, and use of information about consumers. The first thing you need to understand about FCRA is that it applies to employers, but also lots of other entities, so it’s not written for employers. Its name is confusing and so is the term “consumer reports,” both which feed misperceptions about what the law covers.

So know this: if your company requests any information about an applicant (or current employee) from a third party and then uses it to make an employment decision, your company has requested a “consumer report” and must comply with FCRA’s disclosure, authorization, and adverse action notice requirements. Common “consumer reports” that employers use to vet applicants include criminal history reports, driving records, education records, employment history, and yes, credit history.

Employers are on their own when it comes to FCRA compliance. This is the second thing you need to understand about FCRA: it is a hyper-technical statute with little to no guidance to lead you to compliance. Even if you have the right notices in place, they still may not be technically compliant if, for example, they contain extraneous language or too much information.

Explanatory regulations? Model forms? FCRA is no FMLA, people. Don’t look to government agencies to fill that guidance vacuum anytime soon. The Consumer Financial Protection Bureau has been the primary agency responsible for interpreting FCRA for more than five years, yet it has not issued a single piece of useful guidance regarding employer FCRA obligations during that time. As for the Federal Trade Commission, if this blog post is any indication, no one is at the wheel there anymore (if they ever were).

Instead, that vacuum is being filled, slowly but surely, with court decisions and an absolute deluge of recent FCRA class actions across the county. According to a recent report from WebRecon, FCRA lawsuits increased 83% in August 2015 from the same period in 2014. From Whole Foods to Michaels Stores to Amazon, even the giants are getting hit for FCRA violations.

What should employers do? Don’t let FCRA scare the living daylights out of you. First, review your hiring practices to ensure that your company is at least doing the following:

(1) making a clear, conspicuous written disclosure to each applicant that consumer reports may be obtained about them for employment purposes;

(2) obtaining each applicant’s written authorization to obtain consumer reports;

(3) when your company decides not to hire an applicant based on information in a consumer report, providing the applicant a copy of the report at issue and a summary of their FCRA rights before taking the action (commonly referred to as pre-adverse action notice); and,

(4) after taking the action, providing the applicant with notice of the adverse action, contact information for the agency that provided the report, and other information (commonly referred to as post-adverse action notice).

Second, if you think your company is FCRA-compliant because it does complete each of the above steps, review your disclosure, authorization, and adverse action notices. Extra information or confusing language in those documents could jeopardize your company’s compliance efforts. Additionally, if your company uses “investigative reports" – reports based on personal interviews concerning a person's character, general reputation, personal characteristics, and lifestyle – your company has additional obligations under FCRA.

Third, if your company operates in more than one state, be aware that a number of states (a number which is growing) have their own “mini-FCRAs” with separate disclosure, authorization, and/or adverse action requirements. Many states also severely restrict use of credit information and/or criminal background information for employment purposes.

Finally, DO NOT rely on your background check provider for FCRA compliance. Ask questions and make sure you know exactly what your background check company is doing on your behalf. Do not forget that FCRA compliance is ultimately your company’s responsibility, not your provider’s.

*Helena Oroz practices in all areas of employment law compliance and often assists Z&R’s clients with FCRA and state fair credit reporting and background check laws. For more information or assistance with your company’s FCRA compliance, please contact Helena | hot@zrlaw.com | 216.696.4441

THE NFL AND TOM BRADY: How does Roger Goodell’s discipline affect my workplace?

By Stephen S. Zashin*

In a highly anticipated decision, a federal court judge vacated NFL Commissioner Roger Goodell’s (“Goodell”) four-game suspension of New England Patriots quarterback Tom Brady (“Brady”). On May 11, 2015, the NFL suspended Brady for his role in the Patriots use of under-inflated footballs in the 2014 AFC Championship Game and Brady’s subsequent failure to cooperate with the NFL’s investigation.

The NFL suspended Brady under the applicable collective bargaining agreement (“CBA”). CBAs generally contain processes, which culminate in binding arbitration, for employees to appeal discipline. Once the arbitrator renders a decision, that decision is virtually untouchable. However, parties may appeal arbitration awards to the courts under the Federal Arbitration Act (“FAA”). The FAA provides very limited grounds upon which a court may vacate an arbitration decision. Such instances include when arbitrators refuse to hear “evidence pertinent and material to the controversy” or are not impartial.

In this case, Brady first challenged his suspension though the arbitration process which Commissioner Goodell, acting as the arbitrator, denied. However, Brady had better luck in the court system. A federal court vacated Brady’s discipline because the NFL gave Brady a) inadequate notice of potential discipline, b) inadequate opportunity to examine one of two lead investigators, and c) inadequate access to evidence during his arbitration proceeding.

The court first held that the NFL gave Brady inadequate notice of his potential discipline. In reviewing arbitration rulings, courts consider whether the arbitrator’s decision arises from the CBA. The arbitrator must interpret the CBA in accordance with the “industrial common law,” which entails providing advance notice of prohibited conduct and potential discipline. Here, the NFL gave Brady inadequate notice on four bases. First, NFL policy did not give Brady notice that he could receive a four-game suspension for general awareness of tampering or failing to cooperate with an investigation. Second, no NFL policy or precedent provided notice that a player could receive discipline for general awareness of another person’s alleged misconduct. The NFL based its discipline on the independent investigatory report (“Wells Report”), which concluded Brady was “generally aware” of the alleged tampering. Third, Brady did not have notice that he could receive a suspension, as opposed to a fine. The NFL suspended him under the Competitive Integrity Policy, which only provided notice to owners, executives, and head coaches. Finally, Goodell improperly relied on the CBA’s broad “conduct detrimental” policy to discipline Brady instead of specific Player Policies. Since Goodell did not provide sufficient notice, the court concluded he “dispense[d] his own brand of industrial justice.”

In addition, the court concluded the NFL violated the FAA by refusing to afford Brady the opportunity to confront one of the lead investigators. Jeff Pash, an NFL Executive Vice-President and General Counsel, served as co-lead on the Deflategate investigation (“Pash/Wells Investigation”) and reviewed/edited the Wells Report prior to its release. However, the NFL refused Brady’s request to cross-examine Pash at the arbitration proceeding. The court concluded this was “fundamentally unfair” and prejudiced Brady because 1) it foreclosed Brady from exploring whether the Pash/Wells Investigation was truly “independent” and how/why the NFL’s General Counsel could edit an independent report, and 2) no other witness was competent to address the substantive core of Brady’s claim (that the NFL shaped the “independent” investigation). Therefore, the court determined that Brady’s inadequate opportunity to present evidence and arguments warranted vacating the arbitration decision under the FAA.

Finally, the court concluded Commissioner Goodell improperly denied Brady equal access to investigative files during the arbitration process. Prior to the arbitration hearing, Commissioner Goodell rejected Brady’s request to review the documents and notes which served as the basis for the Wells Report. The court concluded this decision was fundamentally unfair and prejudiced Brady in violation of the FAA. The court noted the NFL’s counsel had greater access to “valuable impressions, insights, and other investigative information” because its role changed from independent investigator to arbitration hearing counsel. Brady’s inability to access the investigative files prejudiced him on multiple grounds: he did not have access to the interview notes (the basis for the Wells Report); and, he did not have the chance to examine and challenge materials (which likely led to the investigation and facilitated the NFL’s cross-examination of Brady). Therefore, Goodell failed to ensure each party had full and timely access to the same relevant documentary evidence.

Whether your workplace is unionized or not, there are several takeaways from this decision:

• Employers should ensure that employees have sufficient notice of potential disciplinary consequences for certain types of conduct;
• Employers should discipline employees on specific policies, not general guidance or principles;
• In an arbitration proceeding, employers should not withhold evidence requested by the employee if that is the evidence the employer will rely on during the hearing; and,
• When utilizing an independent investigation, employers should not attempt to alter the findings of that investigator.

*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 labor relations, employee discipline, the Federal Arbitration Act and sports related issues. For more information about the Deflategate decision or your labor, employment or sports law needs, please contact Stephen Zashin | ssz@zrlaw.com | 216.696.4441