*By Helena Oroz
U.S. Citizenship and Immigration Services (USCIS) recently issued a Form I-9 Employee Information Sheet. The Information Sheet is intended as an employee reference for common Form I-9 questions, such as “Which documents do I need to show my employer?” and “Can I get in trouble if I lie on the form?”
The Information Sheet is available here in English and Spanish.
Compared to the instructions on the actual Form I-9 (also an
improvement over the old Form I-9), the Information Sheet communicates
directly to the employee through a conversational question-and-answer
format.
Federal law requires every employer to complete a Form I-9,
Employment Eligibility Verification, for each new employee to verify
his or her identity and authorization to work in the United States.
(Reminder: all employers should be using only the newest edition of Form I-9, issued March 8, 2013.)
Additional guidance from USCIS for both employees and
employers is available on its “I-9 Central” web site. This guidance
seems clearer, more concise, and more user-friendly as compared to
previous years, and even includes instructional I-9 video vignettes
that employers can show to new employees.
While employers are not obligated to provide employees with
the Information Sheet or any information apart from the Form I-9
itself, doing so may help both employers and employees by saving time
and avoiding misunderstandings with respect to common I-9 questions.
The chances of employees reading this one-pager over a nine-page Form
I-9 are, mathematically speaking, quite good. It may not answer every
question or lead to perfect communication in the workplace, but we
think it’s a good start and a good idea.
*Helena Oroz
practices in all areas of employment law and has extensive experience
with Form I-9 compliance and auditing. For more information about the
Form I-9 Information Sheet or other I-9 questions, please contact Helena
at hot@zrlaw.com or 216.696.4441.
Tuesday, March 18, 2014
Monday, March 17, 2014
Employer Alert: Government Agencies Refocus On Background Checks
*By Stephen S. Zashin
On March 10, 2014, the U.S. Equal Employment Opportunity Commission (“EEOC”) and the Federal Trade Commission (“FTC”) issued joint guidance for employers and employees regarding background checks. The EEOC enforces federal employment discrimination laws, while the FTC enforces, among other things, the Fair Credit Reporting Act. The guidance documents, Background Checks: What Employers Need to Know and Background Checks: What Job Applicants and Employees Should Know, present a refresher on prior guidance from each agency. However, the joint effort suggests that each agency may increase its respective enforcement efforts with respect to employer use of background checks.
The employer guidance gives each agency’s tips on each of the following topics:
With respect to using background check information, the EEOC’s directives to employers focus on consistent application of standards to all applicants or employees. The guidance also cautions employers to “[t]ake special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older.”
The FTC’s contribution to the employer guidance focuses on notice obligations to applicants and employees regarding background checks, receipt of written permission from the applicant or employee prior to conducting any background check, and permitting applicants or employees an opportunity to review and explain any negative information in a background report prior to taking any adverse employment action.
Employers can expect the EEOC and FTC to coordinate their efforts in enforcing employer compliance moving forward. Employers should take this opportunity to review their existing background check procedures, particularly their use of an applicant’s or employee’s criminal and/or credit history.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about background checks or labor & employment law, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
On March 10, 2014, the U.S. Equal Employment Opportunity Commission (“EEOC”) and the Federal Trade Commission (“FTC”) issued joint guidance for employers and employees regarding background checks. The EEOC enforces federal employment discrimination laws, while the FTC enforces, among other things, the Fair Credit Reporting Act. The guidance documents, Background Checks: What Employers Need to Know and Background Checks: What Job Applicants and Employees Should Know, present a refresher on prior guidance from each agency. However, the joint effort suggests that each agency may increase its respective enforcement efforts with respect to employer use of background checks.
The employer guidance gives each agency’s tips on each of the following topics:
- “Before You Get Background Information”;
- “Using Background Information”;
- “Disposing of Background Information”; and
- “Further Information”.
With respect to using background check information, the EEOC’s directives to employers focus on consistent application of standards to all applicants or employees. The guidance also cautions employers to “[t]ake special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older.”
The FTC’s contribution to the employer guidance focuses on notice obligations to applicants and employees regarding background checks, receipt of written permission from the applicant or employee prior to conducting any background check, and permitting applicants or employees an opportunity to review and explain any negative information in a background report prior to taking any adverse employment action.
Employers can expect the EEOC and FTC to coordinate their efforts in enforcing employer compliance moving forward. Employers should take this opportunity to review their existing background check procedures, particularly their use of an applicant’s or employee’s criminal and/or credit history.
*Stephen S. Zashin, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about background checks or labor & employment law, please contact Stephen (ssz@zrlaw.com) at 216.696.4441.
Friday, March 7, 2014
EMPLOYMENT LAW QUARTERLY | Winter 2014, Volume XVI, Issue i
Download PDF
For those of us who remember the television show Seinfeld, it is hard to forget the episode where George dips his chip, takes a bite, and then dips the same chip again. Just as George broke acceptable community standards, taxpayers often feel public employees do the same when they retire and then get rehired by their same employers. In doing so, the employee receives pay and benefits in addition to retirement benefits for performing the same or similar duties. The process, known as “double dipping,” has a long history in Ohio’s public sector. Public employers like retired rehires, or “double dippers,” because they get the same experience at a generally lower personnel cost. Retired rehires like the practice because of the obvious financial benefits. The benefits of “double dipping” are not as readily apparent to the general public, and paying someone twice for the same job is not a common practice in the private sector.
In response to growing public concern, some public agencies have attempted to prohibit “double dipping.” Ohio’s Tenth District Court of Appeals recently weighed in on the matter in Warden v. Ohio Department of Natural Resources, 2014-Ohio-35 (10th Dist. Ct. App. January 9, 2014).
In Warden, the Court found that the policy prohibiting “double dipping” did not constitute a direct cause of action for age discrimination. In addition, and although the Court held that Warden failed to properly plead or litigate a disparate impact claim, the Court addressed whether the employee established that the “anti-double dipping” policy had an adverse effect on older workers. That is, while the policy was facially neutral, did it have an adverse effect on workers aged forty and older. While the Court concluded that no statistical significance existed because the sample size was too small, the Court made it clear that an employee could establish such a claim if the employee could demonstrate sufficient statistical disparities. It is noteworthy that the Ohio Supreme Court has not yet addressed whether such policies could have a disparate impact on older workers. As a result, public sector employers should carefully consider these recent developments if they are considering implementing such a policy.
*Todd M. Ellsworth practices in all areas of labor and employment law. He has extensive experience counseling public sector employers on state and federal discrimination claims.
Recently, a movement has spread across the country to “Ban the Box” on job applications. The “Box” refers to a square that, when marked, indicates an individual has a criminal background. A growing number of cities and states have prohibited this question on job applications. Proponents argue such inquiries often automatically disqualify applicants and increase chances of recidivism. For employers, “Ban the Box” laws pose an increased burden on the job application and screening process.
Hawaii became the first state to “Ban the Box” in 1998. Currently, ten states (California, Colorado, Connecticut, Hawaii, Illinois, Massachusetts, Maryland, Minnesota, New Mexico, and Rhode Island) have some form of a “Ban the Box” law. Of those, five (California, Illinois, Maryland, Minnesota, and Rhode Island) passed “Ban the Box” laws or regulations in 2013 and four more have made these changes since 2009. On a more local scale, over fifty cities, including Chicago, Cleveland, and Cincinnati, have adopted some form of “Ban the Box” practices. In addition, the EEOC recommended banning the box on job applications as a best practice in a 2012 enforcement guidance. Some private employers, like Target, have removed such questions from job applications.
While many states and local governments have these measures in place, the laws or regulations and their subsequent effect on employers vary significantly. For many states, such as Connecticut and Maryland, the “Ban the Box” prohibition only applies to state employees. However, in places like Minnesota, the law applies to public and private employers alike. Even where these laws affect private employers, exceptions exist and the restrictions may be lifted at some point in the application process. Often, employers may inquire into an applicant’s criminal background after 1) the applicant was selected for an initial interview, 2) the applicant had an initial interview, or 3) the employer made a conditional job offer. In some instances, if an employer learns of an applicant’s criminal background and does not make a job offer, the employer must show the background was not tied to the employment decision.
Though “Ban the Box” efforts have grown, Ohio does not have such a law. In July 2013, Ohio legislators introduced House Bill 235 that would prohibit public and private employers from asking whether “the applicant has been convicted of or plead guilty to a felony.” However, as of January 2014, the bill had not moved past the Commerce, Labor and Technology Committee. While there is no statewide law, Lucas and Stark Counties and Cleveland, Cincinnati and Canton have “Ban the Box” measures in place. These measures only apply to public employers.
Employers need to understand what, if any, “Ban the Box” restrictions apply in the states, cities, and counties they do business. Employers also should carefully watch for “Ban the Box” developments.
*Andrew J. Cleves practices in all areas of labor and employment law. If you have questions about state or local “Ban the Box” laws and regulations or other hiring concerns, please contact Andrew (ajc@zrlaw.com) at 216.696.4441.
Criminal convictions impact much more than the sentence and possible fines associated with the underlying offense. Convictions or guilty pleas may automatically bar individuals from consideration for certain jobs. For example, Ohio Revised Code 173.38(C)(3) and (F) prevent applicants convicted of certain crimes from working in a direct-care position with a community based, long-term-care provider. The Ohio legislature recently addressed the secondary impact of a criminal conviction, dubbed a collateral sanction, when Ohio Revised Code 2953.25 went into effect in September 2012. The law created Certificates of Qualification for Employment (CQE). CQEs lift the automatic bar(s) of the collateral sanction(s) and essentially give the qualifying individual a stamp of rehabilitation. The law then directs employers to consider these applicants on a case-by-case basis.
Though CQEs may sound daunting for employers, the Ohio legislature created a rigorous application process and granted employers certain protections. To apply, an individual must first wait either six months (misdemeanors) or one year (felonies) after the individual has been released from all sanctions related to the offense. Then, the individual must submit a detailed application to the Division of Parole and Community Services. Next, the local court of common pleas may take sixty days to review, gather additional information, and approve or deny the application. To grant an application, the court must find a) the CQE would materially help the individual find a job, b) the individual substantially needs the CQE to stay out of trouble, and c) granting the CQE would not pose a safety risk. Even then, the law prohibits courts from granting CQEs in some circumstances. For example, courts cannot grant CQEs to remove license denials or suspensions for health care professionals convicted of sexual battery or improper distribution of controlled substances.
Furthermore, the law grants substantive protections to employers who hire CQE holders. For general negligence lawsuits, the employer may submit the CQE as evidence that the employer took due care in hiring or retaining the CQE holder. For negligent hiring lawsuits, Ohio Revised Code 2953.25 grants the employer immunity. The employer may invoke these protections if the employer knew the individual held the CQE at the time of hire.
Employers should be wary of retaining CQE-holders who commit additional crimes after obtaining employment though. The law limits employer protection where a CQE holder is a) hired, b) “subsequently demonstrates dangerousness or is convicted of or pleads guilty to a felony,” and c) thereafter retains employment. In those cases, the employer may be liable for retaining the employee. The party bringing the claim must prove that a decision-maker knew of the transgression and willfully retained the employee. Furthermore, once someone obtains a CQE, the law presumptively revokes it if the person later commits or pleads guilty to a felony.
Despite the fact that county courts began accepting CQE applications in March 2013, only 40 had been filed in Cuyahoga County as of mid-December 2013. Of those 40, the courts granted 17 applications, rejected three, and have not made decisions on the remaining 20. As CQEs become more prevalent, it is likely your organization may soon receive an application with one. Given their infancy, to the extent you have questions about CQEs, you should contact your legal counsel.
*David P. Frantz practices in all areas of employment law. If you have questions about CQEs or hiring policies, please contact David (dpf@zrlaw.com) at 216.696.4441.
As if there was not enough controversy surrounding the rollout of the Patient Protection and Affordable Care Act (ACA), many employees who smoke or are overweight may discover that their healthcare costs will increase. Consistent with a growing trend among employers to incentivize (or punish depending on your point of view) employees to live healthier lifestyles, ACA contains provisions allowing employers to charge employees who smoke or are overweight higher health insurance premiums.
ACA encourages employers to utilize “participatory wellness programs.” Examples of these programs include reimbursements for employee gym memberships and rewarding employees for attending health seminars or for completing health risk assessments. In addition to these participatory programs, employers can also implement “health-contingent wellness programs,” which reward employees who are able to meet specified goals or health-related requirements. These programs fall into two categories: (i) “activity-only” programs that reward employees who participate in specific activities (e.g., an exercise or diet plan); and (ii) “outcome-based” programs for employees who maintain healthy choices or goals (e.g., not smoking).
The “reward” for employees who utilize the health-contingent wellness programs can be up to 30 percent of the cost of health coverage for non-tobacco use related programs and up to 50 percent of the cost of health coverage for programs aimed at tobacco use prevention and cessation. Alternatively, employees who fail to participate in these health-contingent wellness programs can get charged up to 30 to 50 percent more for their health insurance premiums than their healthier, non-smoking coworkers.
Independent of the provisions of ACA, some employers have implemented policies under which they will not hire smokers. For example, employers have adopted non-smoking policies for new hires and require job applicants to take a urine test to detect the presence of nicotine in their systems. If an applicant tests positive for nicotine, he or she will not be hired but may re-apply after a 90-day waiting period. Employers considering a similar policy for new hires must beware as all states do not permit these policies. The following states and the District of Columbia prohibit employers from making hiring decisions or employment decisions, including demotions, suspensions, and terminations, based on whether the applicable individual smokes: California, Connecticut, Illinois, Indiana (excludes religious employers), Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, Virginia (applies to state employees only), West Virginia, Wisconsin, and Wyoming. States with similar laws that do not apply to hiring decisions but prevent employers from terminating employees for tobacco use during non-work hours include: Colorado, South Dakota, and Tennessee.
With the advent of ACA and as society continues to become more health conscious in general, many employers may find themselves having to make healthcare related decisions that they have not faced in the past. ACA encourages employers to implement wellness programs that can serve both as a carrot and a stick to incentivize employees to make healthier lifestyle choices. However, employers must ensure that these wellness programs - like all employer policies and programs - are not discriminatory and do not violate laws like the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act, and corresponding state laws.
*Patrick J. Hoban practices in all areas of labor and employment law. He has extensive experience counseling employers on employee wellness programs and ACA. For more information about these topics or any other labor and employment needs, please contact Patrick (pjh@zrlaw.com) at 216.696.4441.
An otherwise run-of-the-mill Family and Medical Leave Act (FMLA) violation claim made to the Department of Labor’s (DOL) Wage and Hour Division by a restaurant employee recently snowballed into a full-blown DOL investigation into the restaurant chain’s employee handbook. Pursuant to an agreement with the DOL, the restaurant must change its leave policy to comply with the FMLA and pay back wages owed to the individual employee. As a result of the publicity of the investigation and agreement, the restaurant chain could face increased exposure to claims by employees alleging FMLA violations under the company’s old policies. This crackdown should serve as a lesson and warning to employers using out-of-date handbooks that a single claim can lead to a major headache and unexpected liability.
Employee handbooks implicate a number of employment related laws and can lead to investigations by and proceedings before various federal and state administrative agencies. Employee handbook compliance is complex and requires regular updating. Taking the time to regularly update a handbook is a far better alternative than the potential consequences of using a non-compliant one.
The DOL’s investigation of the restaurant chain’s employee handbook focused on its FMLA policy. Under the FMLA, eligible employees who work for covered employers are entitled to take a maximum of 12 weeks of leave in a 12 month period for specified reasons. Among other things, in order for an employee to be eligible for FMLA leave, the employee must have worked for the employer for at least 12 months. However, contrary to what the subject handbook stated, those 12 months of employment do not need to be consecutive. The policy also did not include information on the FMLA’s family military leave provisions or intermittent and reduced-schedule leave.
Employee handbooks should aid employers in avoiding or prevailing in litigation. In order to maintain an employee handbook’s usefulness and minimize liability, employers need to ensure that their employee handbooks are up-to-date and compliant with ever-changing laws and regulations. All it takes is one claim by one employee to open a can of worms that can lead to other claims and substantial costs.
*Ami J. Patel practices in all areas of labor and employment law. She has extensive experience counseling employers on FLMA compliance and handbook issues. For more information about these topics or your other labor and employment needs, please contact Ami (ajp@zrlaw.com) at 216.696.4441.
Andrew’s practice focuses on private and public sector labor relations and employment law. Prior to joining Zashin & Rich, Andrew represented public sector labor unions in Cincinnati. Andrew's experience includes advising clients in collective bargaining negotiations, contract arbitrations, and employment litigation. He has represented clients in state and federal court and before the Ohio State Employment Relations Board.
Upcoming Speaking Engagements
March 27, 2014
Stephen Zashin will present “Brainy FMLA: Advanced Instruction for FMLA Whiz Kids” at the “Administering the Family and Medical Leave Act in Ohio” seminar on March 27, 2014 at the Holiday Inn Cleveland South in Independence, Ohio. For more information, go to www.lorman.com/ID393028.
March 31, 2014
Jonathan Downes will discuss mediation at the SERB Academy on March 31, 2014. For more information contact Tammy Johnson at tjohnson@serb.state.oh.us.
April 17, 2014
Jonathan Downes will present “The Nuts and Bolts of Bargaining, Bargaining Strategies, and Media Relations” at the “Collective Bargaining for Public Safety Employees” seminar on April 17, 2014. For more information, go to www.lris.com.
April 29, 2014
Jonathan Downes will present “Update on Employment Law Matters Affecting Law Enforcement” and “Collective Bargaining and Union Issues Update” at the Ohio Association of Chiefs of Police (OACP) Chief’s Annual Conference on April 29, 2014.
April 30, 2014
Jonathan Downes will present “Employment Law Basics for Public Managers” at the Miami Valley Risk Management Association meeting on April 30, 2014, in Dayton, Ohio. For more information, go to www.mvrma.com.
May 2, 2014
Jonathan Downes will present “Legal Update” at the Ohio Association of Public Safety Directors Annual Conference on May 2, 2014, at the CCAO Conference Center in Columbus, Ohio.
May 14, 2014
Jonathan Downes will present “Employee Issues from Social Media” at the Ohio Jobs and Family Services Director’s Association Meeting on May 14, 2014.
May 21, 2014
George Crisci will present “Special Concerns when Dealing with Union Environments” at the National Business Institute’s “Employee Documentation, Discipline and Discharge” program on May 21, 2014, in Akron, Ohio.
May 21, 2014
Jonathan Downes will present “FMLA Issues and Update” and “Workplace Investigations” at the Ohio Jobs and Family Services Director’s Association Meeting on May 21, 2014 at the Hyatt Regency Columbus.
May 22, 2014
Jonathan Downes will present “Discipline of Public Employees” at the Ohio Association of Chiefs of Police (OACP) meeting on May 22, 2014, at the Reynoldsburg Police Department.
- Public Sector Alert: Tenth District Court of Appeals Lays the Groundwork for Disparate Impact Age Discrimination Claims Based On "Anti-Double Dipping" Policies
- Boxed In: What Can Employers Ask on Job Applications?
- Collateral Damage: the Effect of Criminal Convictions on Employment Applications
- Employer Provided Healthcare Insurance Costs Increasing for Smokers and Overweight Employees
- The Department of Labor’s Crackdown on Out-of-Date Employee Handbook is a Costly Reminder to Regularly Update Employee Handbooks
- Z&R Shorts
Public Sector Alert: Tenth District Court of Appeals Lays the Groundwork for Disparate Impact Age Discrimination Claims Based On "Anti-Double Dipping" Policies
By Todd M. Ellsworth*For those of us who remember the television show Seinfeld, it is hard to forget the episode where George dips his chip, takes a bite, and then dips the same chip again. Just as George broke acceptable community standards, taxpayers often feel public employees do the same when they retire and then get rehired by their same employers. In doing so, the employee receives pay and benefits in addition to retirement benefits for performing the same or similar duties. The process, known as “double dipping,” has a long history in Ohio’s public sector. Public employers like retired rehires, or “double dippers,” because they get the same experience at a generally lower personnel cost. Retired rehires like the practice because of the obvious financial benefits. The benefits of “double dipping” are not as readily apparent to the general public, and paying someone twice for the same job is not a common practice in the private sector.
In response to growing public concern, some public agencies have attempted to prohibit “double dipping.” Ohio’s Tenth District Court of Appeals recently weighed in on the matter in Warden v. Ohio Department of Natural Resources, 2014-Ohio-35 (10th Dist. Ct. App. January 9, 2014).
In Warden, the Court found that the policy prohibiting “double dipping” did not constitute a direct cause of action for age discrimination. In addition, and although the Court held that Warden failed to properly plead or litigate a disparate impact claim, the Court addressed whether the employee established that the “anti-double dipping” policy had an adverse effect on older workers. That is, while the policy was facially neutral, did it have an adverse effect on workers aged forty and older. While the Court concluded that no statistical significance existed because the sample size was too small, the Court made it clear that an employee could establish such a claim if the employee could demonstrate sufficient statistical disparities. It is noteworthy that the Ohio Supreme Court has not yet addressed whether such policies could have a disparate impact on older workers. As a result, public sector employers should carefully consider these recent developments if they are considering implementing such a policy.
*Todd M. Ellsworth practices in all areas of labor and employment law. He has extensive experience counseling public sector employers on state and federal discrimination claims.
Boxed In: What Can Employers Ask on Job Applications?
By Andrew J. Cleves*Recently, a movement has spread across the country to “Ban the Box” on job applications. The “Box” refers to a square that, when marked, indicates an individual has a criminal background. A growing number of cities and states have prohibited this question on job applications. Proponents argue such inquiries often automatically disqualify applicants and increase chances of recidivism. For employers, “Ban the Box” laws pose an increased burden on the job application and screening process.
Hawaii became the first state to “Ban the Box” in 1998. Currently, ten states (California, Colorado, Connecticut, Hawaii, Illinois, Massachusetts, Maryland, Minnesota, New Mexico, and Rhode Island) have some form of a “Ban the Box” law. Of those, five (California, Illinois, Maryland, Minnesota, and Rhode Island) passed “Ban the Box” laws or regulations in 2013 and four more have made these changes since 2009. On a more local scale, over fifty cities, including Chicago, Cleveland, and Cincinnati, have adopted some form of “Ban the Box” practices. In addition, the EEOC recommended banning the box on job applications as a best practice in a 2012 enforcement guidance. Some private employers, like Target, have removed such questions from job applications.
While many states and local governments have these measures in place, the laws or regulations and their subsequent effect on employers vary significantly. For many states, such as Connecticut and Maryland, the “Ban the Box” prohibition only applies to state employees. However, in places like Minnesota, the law applies to public and private employers alike. Even where these laws affect private employers, exceptions exist and the restrictions may be lifted at some point in the application process. Often, employers may inquire into an applicant’s criminal background after 1) the applicant was selected for an initial interview, 2) the applicant had an initial interview, or 3) the employer made a conditional job offer. In some instances, if an employer learns of an applicant’s criminal background and does not make a job offer, the employer must show the background was not tied to the employment decision.
Though “Ban the Box” efforts have grown, Ohio does not have such a law. In July 2013, Ohio legislators introduced House Bill 235 that would prohibit public and private employers from asking whether “the applicant has been convicted of or plead guilty to a felony.” However, as of January 2014, the bill had not moved past the Commerce, Labor and Technology Committee. While there is no statewide law, Lucas and Stark Counties and Cleveland, Cincinnati and Canton have “Ban the Box” measures in place. These measures only apply to public employers.
Employers need to understand what, if any, “Ban the Box” restrictions apply in the states, cities, and counties they do business. Employers also should carefully watch for “Ban the Box” developments.
*Andrew J. Cleves practices in all areas of labor and employment law. If you have questions about state or local “Ban the Box” laws and regulations or other hiring concerns, please contact Andrew (ajc@zrlaw.com) at 216.696.4441.
Collateral Damage: the Effect of Criminal Convictions on Employment Applications
By David P. Frantz*Criminal convictions impact much more than the sentence and possible fines associated with the underlying offense. Convictions or guilty pleas may automatically bar individuals from consideration for certain jobs. For example, Ohio Revised Code 173.38(C)(3) and (F) prevent applicants convicted of certain crimes from working in a direct-care position with a community based, long-term-care provider. The Ohio legislature recently addressed the secondary impact of a criminal conviction, dubbed a collateral sanction, when Ohio Revised Code 2953.25 went into effect in September 2012. The law created Certificates of Qualification for Employment (CQE). CQEs lift the automatic bar(s) of the collateral sanction(s) and essentially give the qualifying individual a stamp of rehabilitation. The law then directs employers to consider these applicants on a case-by-case basis.
Though CQEs may sound daunting for employers, the Ohio legislature created a rigorous application process and granted employers certain protections. To apply, an individual must first wait either six months (misdemeanors) or one year (felonies) after the individual has been released from all sanctions related to the offense. Then, the individual must submit a detailed application to the Division of Parole and Community Services. Next, the local court of common pleas may take sixty days to review, gather additional information, and approve or deny the application. To grant an application, the court must find a) the CQE would materially help the individual find a job, b) the individual substantially needs the CQE to stay out of trouble, and c) granting the CQE would not pose a safety risk. Even then, the law prohibits courts from granting CQEs in some circumstances. For example, courts cannot grant CQEs to remove license denials or suspensions for health care professionals convicted of sexual battery or improper distribution of controlled substances.
Furthermore, the law grants substantive protections to employers who hire CQE holders. For general negligence lawsuits, the employer may submit the CQE as evidence that the employer took due care in hiring or retaining the CQE holder. For negligent hiring lawsuits, Ohio Revised Code 2953.25 grants the employer immunity. The employer may invoke these protections if the employer knew the individual held the CQE at the time of hire.
Employers should be wary of retaining CQE-holders who commit additional crimes after obtaining employment though. The law limits employer protection where a CQE holder is a) hired, b) “subsequently demonstrates dangerousness or is convicted of or pleads guilty to a felony,” and c) thereafter retains employment. In those cases, the employer may be liable for retaining the employee. The party bringing the claim must prove that a decision-maker knew of the transgression and willfully retained the employee. Furthermore, once someone obtains a CQE, the law presumptively revokes it if the person later commits or pleads guilty to a felony.
Despite the fact that county courts began accepting CQE applications in March 2013, only 40 had been filed in Cuyahoga County as of mid-December 2013. Of those 40, the courts granted 17 applications, rejected three, and have not made decisions on the remaining 20. As CQEs become more prevalent, it is likely your organization may soon receive an application with one. Given their infancy, to the extent you have questions about CQEs, you should contact your legal counsel.
*David P. Frantz practices in all areas of employment law. If you have questions about CQEs or hiring policies, please contact David (dpf@zrlaw.com) at 216.696.4441.
Employer Provided Healthcare Insurance Costs Increasing for Smokers and Overweight Employees
By Patrick J. Hoban*As if there was not enough controversy surrounding the rollout of the Patient Protection and Affordable Care Act (ACA), many employees who smoke or are overweight may discover that their healthcare costs will increase. Consistent with a growing trend among employers to incentivize (or punish depending on your point of view) employees to live healthier lifestyles, ACA contains provisions allowing employers to charge employees who smoke or are overweight higher health insurance premiums.
ACA encourages employers to utilize “participatory wellness programs.” Examples of these programs include reimbursements for employee gym memberships and rewarding employees for attending health seminars or for completing health risk assessments. In addition to these participatory programs, employers can also implement “health-contingent wellness programs,” which reward employees who are able to meet specified goals or health-related requirements. These programs fall into two categories: (i) “activity-only” programs that reward employees who participate in specific activities (e.g., an exercise or diet plan); and (ii) “outcome-based” programs for employees who maintain healthy choices or goals (e.g., not smoking).
The “reward” for employees who utilize the health-contingent wellness programs can be up to 30 percent of the cost of health coverage for non-tobacco use related programs and up to 50 percent of the cost of health coverage for programs aimed at tobacco use prevention and cessation. Alternatively, employees who fail to participate in these health-contingent wellness programs can get charged up to 30 to 50 percent more for their health insurance premiums than their healthier, non-smoking coworkers.
Independent of the provisions of ACA, some employers have implemented policies under which they will not hire smokers. For example, employers have adopted non-smoking policies for new hires and require job applicants to take a urine test to detect the presence of nicotine in their systems. If an applicant tests positive for nicotine, he or she will not be hired but may re-apply after a 90-day waiting period. Employers considering a similar policy for new hires must beware as all states do not permit these policies. The following states and the District of Columbia prohibit employers from making hiring decisions or employment decisions, including demotions, suspensions, and terminations, based on whether the applicable individual smokes: California, Connecticut, Illinois, Indiana (excludes religious employers), Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, Virginia (applies to state employees only), West Virginia, Wisconsin, and Wyoming. States with similar laws that do not apply to hiring decisions but prevent employers from terminating employees for tobacco use during non-work hours include: Colorado, South Dakota, and Tennessee.
With the advent of ACA and as society continues to become more health conscious in general, many employers may find themselves having to make healthcare related decisions that they have not faced in the past. ACA encourages employers to implement wellness programs that can serve both as a carrot and a stick to incentivize employees to make healthier lifestyle choices. However, employers must ensure that these wellness programs - like all employer policies and programs - are not discriminatory and do not violate laws like the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act, and corresponding state laws.
*Patrick J. Hoban practices in all areas of labor and employment law. He has extensive experience counseling employers on employee wellness programs and ACA. For more information about these topics or any other labor and employment needs, please contact Patrick (pjh@zrlaw.com) at 216.696.4441.
The Department of Labor’s Crackdown on Out-of-Date Employee Handbook is a Costly Reminder to Regularly Update Employee Handbooks
By Ami J. Patel*An otherwise run-of-the-mill Family and Medical Leave Act (FMLA) violation claim made to the Department of Labor’s (DOL) Wage and Hour Division by a restaurant employee recently snowballed into a full-blown DOL investigation into the restaurant chain’s employee handbook. Pursuant to an agreement with the DOL, the restaurant must change its leave policy to comply with the FMLA and pay back wages owed to the individual employee. As a result of the publicity of the investigation and agreement, the restaurant chain could face increased exposure to claims by employees alleging FMLA violations under the company’s old policies. This crackdown should serve as a lesson and warning to employers using out-of-date handbooks that a single claim can lead to a major headache and unexpected liability.
Employee handbooks implicate a number of employment related laws and can lead to investigations by and proceedings before various federal and state administrative agencies. Employee handbook compliance is complex and requires regular updating. Taking the time to regularly update a handbook is a far better alternative than the potential consequences of using a non-compliant one.
The DOL’s investigation of the restaurant chain’s employee handbook focused on its FMLA policy. Under the FMLA, eligible employees who work for covered employers are entitled to take a maximum of 12 weeks of leave in a 12 month period for specified reasons. Among other things, in order for an employee to be eligible for FMLA leave, the employee must have worked for the employer for at least 12 months. However, contrary to what the subject handbook stated, those 12 months of employment do not need to be consecutive. The policy also did not include information on the FMLA’s family military leave provisions or intermittent and reduced-schedule leave.
Employee handbooks should aid employers in avoiding or prevailing in litigation. In order to maintain an employee handbook’s usefulness and minimize liability, employers need to ensure that their employee handbooks are up-to-date and compliant with ever-changing laws and regulations. All it takes is one claim by one employee to open a can of worms that can lead to other claims and substantial costs.
*Ami J. Patel practices in all areas of labor and employment law. She has extensive experience counseling employers on FLMA compliance and handbook issues. For more information about these topics or your other labor and employment needs, please contact Ami (ajp@zrlaw.com) at 216.696.4441.
Z&R Shorts
Zashin & Rich is pleased to announce the addition of Andrew Cleves to the firm’s Employment and Labor Group in its Cleveland office.Andrew’s practice focuses on private and public sector labor relations and employment law. Prior to joining Zashin & Rich, Andrew represented public sector labor unions in Cincinnati. Andrew's experience includes advising clients in collective bargaining negotiations, contract arbitrations, and employment litigation. He has represented clients in state and federal court and before the Ohio State Employment Relations Board.
Upcoming Speaking Engagements
March 27, 2014
Stephen Zashin will present “Brainy FMLA: Advanced Instruction for FMLA Whiz Kids” at the “Administering the Family and Medical Leave Act in Ohio” seminar on March 27, 2014 at the Holiday Inn Cleveland South in Independence, Ohio. For more information, go to www.lorman.com/ID393028.
March 31, 2014
Jonathan Downes will discuss mediation at the SERB Academy on March 31, 2014. For more information contact Tammy Johnson at tjohnson@serb.state.oh.us.
April 17, 2014
Jonathan Downes will present “The Nuts and Bolts of Bargaining, Bargaining Strategies, and Media Relations” at the “Collective Bargaining for Public Safety Employees” seminar on April 17, 2014. For more information, go to www.lris.com.
April 29, 2014
Jonathan Downes will present “Update on Employment Law Matters Affecting Law Enforcement” and “Collective Bargaining and Union Issues Update” at the Ohio Association of Chiefs of Police (OACP) Chief’s Annual Conference on April 29, 2014.
April 30, 2014
Jonathan Downes will present “Employment Law Basics for Public Managers” at the Miami Valley Risk Management Association meeting on April 30, 2014, in Dayton, Ohio. For more information, go to www.mvrma.com.
May 2, 2014
Jonathan Downes will present “Legal Update” at the Ohio Association of Public Safety Directors Annual Conference on May 2, 2014, at the CCAO Conference Center in Columbus, Ohio.
May 14, 2014
Jonathan Downes will present “Employee Issues from Social Media” at the Ohio Jobs and Family Services Director’s Association Meeting on May 14, 2014.
May 21, 2014
George Crisci will present “Special Concerns when Dealing with Union Environments” at the National Business Institute’s “Employee Documentation, Discipline and Discharge” program on May 21, 2014, in Akron, Ohio.
May 21, 2014
Jonathan Downes will present “FMLA Issues and Update” and “Workplace Investigations” at the Ohio Jobs and Family Services Director’s Association Meeting on May 21, 2014 at the Hyatt Regency Columbus.
May 22, 2014
Jonathan Downes will present “Discipline of Public Employees” at the Ohio Association of Chiefs of Police (OACP) meeting on May 22, 2014, at the Reynoldsburg Police Department.
Tuesday, February 18, 2014
Delays, You Can't Just Have One. The Obama Administration Significantly Delays and Revises PPACA's Employer Mandate Again
*By Patrick J. Hoban
On February 10, 2014, the Department of the Treasury (“DOT”) and the Internal Revenue Service (“IRS”) issued final regulations for the Employer Shared Responsibility provisions of the Patient Protection and Affordable Care Act (“PPACA”). These final regulations, effective on January 1, 2015, delay full implementation of the Employer Mandate once again, in addition to clarifying and revising regulations governing enforcement of the Employer Mandate in the future.
As employers have become all too aware, PPACA requires that “applicable large employers” must offer group health insurance coverage to their full-time employees (and their dependents) or potentially face fines. To avoid potential fines, applicable large employers must offer coverage to at least 95% of their full-time employees (and their dependents). PPACA defines applicable large employers as those that employed an average of at least 50 full-time employees (including full-time equivalents) during the preceding calendar year. “Full-time” employment under PPACA is defined as an average of 30 hours of “service” per week (including all paid hours, actually worked and paid time off).
When enacted in March 2010, the Employer Mandate, including the potential for employer fines, was scheduled to take effect on January 1, 2014. As that date approached, employers struggled to evaluate the costs of either offering coverage to previously uncovered employees or paying fines. Several large, national employers announced reductions in employee hours to avoid Employer Mandate fines. As it became clearer that the administrative burdens and potential costs of the Employer Mandate would significantly burden many employers, in July 2013, the Obama Administration effectively suspended enforcement of the Employer Mandate for all applicable large employers until January 1, 2015.
In the face of continued outcry from employers, and after the glitch-plagued rollout of the Healthcare.gov website, the Administration has again delayed full implementation of the Employer Mandate. The final regulations issued on February 10, 2014, split applicable large employers into two categories and further delayed the Employer Mandate as follows:
The first category is employers with more than 50 but fewer than 100 full-time employees (including full-time equivalents) which are not subject to the Employer Mandate, or potential fines, until the later of January 1, 2016 or after the last day of a 2015 plan year ending in 2016 (e.g., plan year runs from July 1, 2015 through June 30, 2016). Applicable large employers claiming they have fewer than 100 full-time employees must also meet all of the following conditions:
Under the regulations issued on February 10, 2014, all applicable large employers (those employing 50 or more full-time or full-time equivalents) will be subject to the Employer Mandate as set forth in the statute as of the later of January 1, 2016 or the last day of a plan year beginning in 2015.
Additionally, the final regulations clarified and revised several issues, including:
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about PPACA or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
On February 10, 2014, the Department of the Treasury (“DOT”) and the Internal Revenue Service (“IRS”) issued final regulations for the Employer Shared Responsibility provisions of the Patient Protection and Affordable Care Act (“PPACA”). These final regulations, effective on January 1, 2015, delay full implementation of the Employer Mandate once again, in addition to clarifying and revising regulations governing enforcement of the Employer Mandate in the future.
As employers have become all too aware, PPACA requires that “applicable large employers” must offer group health insurance coverage to their full-time employees (and their dependents) or potentially face fines. To avoid potential fines, applicable large employers must offer coverage to at least 95% of their full-time employees (and their dependents). PPACA defines applicable large employers as those that employed an average of at least 50 full-time employees (including full-time equivalents) during the preceding calendar year. “Full-time” employment under PPACA is defined as an average of 30 hours of “service” per week (including all paid hours, actually worked and paid time off).
When enacted in March 2010, the Employer Mandate, including the potential for employer fines, was scheduled to take effect on January 1, 2014. As that date approached, employers struggled to evaluate the costs of either offering coverage to previously uncovered employees or paying fines. Several large, national employers announced reductions in employee hours to avoid Employer Mandate fines. As it became clearer that the administrative burdens and potential costs of the Employer Mandate would significantly burden many employers, in July 2013, the Obama Administration effectively suspended enforcement of the Employer Mandate for all applicable large employers until January 1, 2015.
In the face of continued outcry from employers, and after the glitch-plagued rollout of the Healthcare.gov website, the Administration has again delayed full implementation of the Employer Mandate. The final regulations issued on February 10, 2014, split applicable large employers into two categories and further delayed the Employer Mandate as follows:
The first category is employers with more than 50 but fewer than 100 full-time employees (including full-time equivalents) which are not subject to the Employer Mandate, or potential fines, until the later of January 1, 2016 or after the last day of a 2015 plan year ending in 2016 (e.g., plan year runs from July 1, 2015 through June 30, 2016). Applicable large employers claiming they have fewer than 100 full-time employees must also meet all of the following conditions:
- Employ at least 50 but fewer than 100 full-time employees (including full-time equivalents) during 2014;
- Not reduce the number of employees or employee hours of service to fall below 100 full-time employees (including full-time equivalents) between February 9 and December 31, 2014 to avoid Employer Mandate fines (excluding workforce reductions for “bona fide business reasons”);
- Not eliminate or “materially reduce” health coverage offered as of February 9, 2014 (including the employer share of premium contributions); and
- Certify to the IRS that it meets the above conditions (e.g., the employer must certify that it has not reduced its workforce to avoid Employer Mandate fines).
Under the regulations issued on February 10, 2014, all applicable large employers (those employing 50 or more full-time or full-time equivalents) will be subject to the Employer Mandate as set forth in the statute as of the later of January 1, 2016 or the last day of a plan year beginning in 2015.
Additionally, the final regulations clarified and revised several issues, including:
- “Dependent” Definition. The final regulations confirmed that spouses are not considered “dependents” to whom an employer must offer coverage to avoid Employer Mandate fines. The final regulations also exclude foster children and step children from the definition of dependent.
- Breaks in Employment. The final regulations lowered the standard for breaks in employment allowing an employer to treat a former employee as a “new hire” for purposes of calculating full-time status under the Employer Mandate to 13 weeks from 26 weeks.
- Transitional Guidance. The final regulations provide additional guidance for employers regarding how and when to implement the optional “safe harbor look-back periods” for determining whether employees are full-time under the Employer Mandate.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of private and public sector labor relations. For more information about PPACA or labor & employment law, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Thursday, January 2, 2014
A Dime for Your Time: Ohio's Minimum Wage Increases by Ten Cents for 2014
*By David Frantz
With the start of the New Year, Ohio’s minimum wage increased by ten cents to $7.95 for non-tipped employees and by five cents to $3.98 for tipped employees. The increase only applies to employers with annual gross receipts of more than $292,000.00. Ohio employers who gross less than $292,000.00 annually must pay their employees at least the federal minimum wage, which remains unchanged at $7.25 for non-tipped employees and $2.13 for tipped employees.
In addition to Ohio, the following states increased their minimum wage for 2014 as follows:
| 2014 STATE MINIMUM WAGE INCREASES | ||||
| State | Non-tipped | Increase | Tipped | Increase |
Arizona |
$7.90 |
$0.10 |
$4.90 |
$0.10 |
California† |
$9.00 |
$1.00 |
N/A |
N/A |
Colorado†† |
$8.00 |
$0.22 |
$4.98 |
$0.22 |
Connecticut |
$8.70 |
$0.45 |
(No change) |
|
Florida |
$7.93 |
$0.14 |
$4.91 |
$0.14 |
Missouri |
$7.50 |
$0.15 |
$3.75 |
$0.08 |
Montana |
$7.90 |
$0.10 |
N/A |
N/A |
New Jersey |
$8.25 |
$1.00 |
(No change) |
|
New York |
$8.00 |
$0.75 |
(Varies by industry) |
|
Ohio* |
$7.95 |
$0.10 |
$3.98 |
$0.05 |
Oregon |
$9.10 |
$0.15 |
N/A |
N/A |
Rhode Island |
$8.00 |
$0.25 |
(No change) |
|
Vermont |
$8.73 |
$0.13 |
$4.23 |
$0.06 |
Washington |
$9.32 |
$0.13 |
N/A |
N/A |
†Not effective until July 1, 2014. |
||||
*David Frantz practices in all areas of labor and employment law. For more information about changes to the minimum wage or your labor and employment law needs, please contact David (dpf@zrlaw.com) at 216.696.4441.
Sunday, December 29, 2013
NLRB Ruling on Class Action Waivers in Arbitration Agreements Rejected on Appeal
* By Lawrence E. Dube and Peyton M. Sturges
A recent decision holding that an employer may require its employees to sign an arbitration agreement that waives their rights to participate in class or collective actions, without interfering with their rights under federal labor laws, has important implications for health care employers, attorneys told Bloomberg BNA (D.R. Horton, Inc. v. NLRB, 2013 BL 335349, 5th Cir., No. 12-60031, 12/3/13).
The ruling by a split U.S. Court of Appeals for the Fifth Circuit, finding the National Labor Relations Board erred in concluding homebuilder D.R. Horton Inc. interfered with employees’ National Labor Relations Act rights by mandating arbitration with waivers, provides a green light for health-care employers to adopt similar provisions in their employment agreements, the attorneys said.
The decision is also important because it rebuffed the NLRB with respect to one of its many recent initiatives aimed at nonunion workplaces, they said. Although the NLRB is widely expected to appeal the decision, the Fifth Circuit’s ruling is consistent with those of the other federal appeals courts that have addressed the class and collective action waiver issue and recognized the primacy of the Federal Arbitration Act in interpreting and enforcing arbitration provisions, they added.
Patrick J. Hoban, with Zashin & Rich, Cleveland, said the implications of the court’s decision for health-care employers are substantial, but that health care employers are really no different from other employers when it comes to the need to manage the threat of class action litigation. ‘‘Health-care employers face the same risk of class action litigation under the Fair Pay Act, Title VII, the Fair Labor Standards Act, and other employment and discrimination laws as employers in other industries, so this decision is extremely important to them,’’ he said.
Health Care Implications. Edward Berbarie, with Littler Mendelson PC, Dallas, said the D.R. Horton ruling ‘‘is a big victory for all employers, including those in the health-care industry’’ who ‘‘should consider implementing an arbitration program containing class and collective action waivers.’’ The decision ‘‘reaffirms the U.S. Supreme Court’s mandate to enforce arbitration agreements so that litigants get the benefits of informal, efficient, cost-effective dispute resolution,’’ he said.
‘‘The Fifth Circuit has removed what could have been a big hurdle to the enforcement of class-action waiver provisions, and there is no reason that health-care employers should not, at the very least, seriously consider instituting an arbitration program that provides for the efficient and streamlined resolution of claims,’’ he said.
John Doran, in Littler’s Providence, R.I., office, agreed that the decision is very helpful for health-care employers, particularly because it reined in the board with respect to an issue arising in a nonunion setting.
‘‘The NLRB has made a concerted effort over the last several years to expand its reach to nonunion employees,’’ Doran said. ‘‘Although the NLRA does in fact apply to both union and nonunion employees alike, the NLRB has traditionally focused its energies on union employees.’’
‘‘This has changed in recent years with the NLRB actively pursuing cases against nonunion employers on, allegedly, overbroad policies such as social media policies, confidentiality provisions in employee handbooks and class action waivers in arbitration agreements,’’ he continued. ‘‘There is no doubt that D.R. Horton is primarily about the efficacy of class action waivers in general and the benefits that provides to employers, but the courts reining in the NLRB is an important subtext of the decision.’’
Hoban agreed. ‘‘In recent years, the activist, Obama-appointed NLRB has invaded nonunion employer activities and repeatedly held that long-standing and standardized employer practices violate employees’ NLRA rights,’’ he said. ‘‘Here, the Fifth Circuit joined the Second, Eighth, and Ninth circuits in rejecting the NLRB’s rationale and enforcing mandatory arbitration agreements containing class action waivers.’’
Among those decisions, Hoban noted, was Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013), in which the Eighth Circuit found a former nursing home employee was required to arbitrate her FLSA overtime pay claim even though the arbitration pact contained a class action waiver that forecloses her ability to bring the claim as an FLSA collective action (22 HLR 85, 1/17/13).
‘‘Notably, the Fifth Circuit affirmed the NLRB’s conclusion that D.R. Horton’s arbitration agreement violated the NLRA because employees could reasonably interpret its language to prohibit them from filing unfair labor practice charges with the NLRB,’’ Hoban continued. ‘‘Nevertheless, the Fifth Circuit’s decision provides some light for employers who have or are considering mandatory arbitration agreements prohibiting class arbitration.’’
‘‘However, as the NLRB is very likely to appeal the decision to the U.S. Supreme Court, final resolution of this issue is pending. In the meantime, employers that require employees to sign arbitration agreements must ensure that the agreements clearly set forth that employees retain the right to file unfair labor practices and other administrative charges to avoid running afoul of the NLRA,’’ Hoban concluded.
FAA Controls. In a Dec. 3 ruling, and writing for the majority that included Judge Carolyn Dineen King, Judge Leslie H. Southwick said the NLRB ‘‘did not give proper weight to the Federal Arbitration Act,’’ which made the agreement enforceable. The National Labor Relations Act, which protects the right of employees to engage in concerted activity, ‘‘should not be understood to contain a congressional command overriding the application of the FAA,’’ Southwick wrote in the 2-1 ruling.
Judge James E. Graves dissented from the court’s ruling that maintaining the arbitration agreement with the challenged waivers was lawful.
The court was unanimous in rejecting several ancillary arguments asserted by Horton, including its allegation that the NLRB lacked a quorum to decide the unfair labor practice case. Horton didn’t make a timely challenge to President Barack Obama’s 2010 recess appointment of former NLRB member Craig Becker, the Fifth Circuit said, and the company failed to establish that Becker’s appointment expired before he participated in the NLRB decision.
The appellate court agreed with the NLRB, however, that the homebuilder’s arbitration agreement could reasonably be understood by employees as precluding them from bringing unfair labor practice cases before the NLRB. It therefore enforced the NLRB’s order that the company revise the document to clarify that the agreement didn’t limit the employees’ rights to pursue claims before the NLRB.
The appeals court dismissed the company’s allegations that the NLRB order was void because the board lacked a quorum to decide the case against the company. The court acknowledged the D.C. Circuit’s decision in NLRB v. Noel Canning Division of Noel Corp., 705 F.3d 490 (D.C. Cir. 2013), and the fact that the U.S. Supreme Court has agreed to review that decision (22 HLR 977, 6/27/13).
Nevertheless, it found Horton never challenged the validity of board quorum. The court also rejected Horton’s argument that the board lacked authority to issue its decision against the company in the absence of a proper delegation of authority to the three-member panel.
NLRA, FAA Have ‘Equal Importance.’ The appeals court turned to NLRB’s finding that Horton violated Section 8(a)(1) of the NLRA by interfering with the right of employees under Section 7 to engage in concerted activity for their mutual aid or protection. Although the NLRB concluded that an individual filing a class or collective action on behalf of employees is engaged in Section 7 activity, and maintaining an employment policy that requires employees to relinquish the statutory right violates Section 8(a)(1), the court found the waiver didn’t affect substantive rights.
The court also found the NLRB couldn’t rely on FAA’s savings clause to support its decision to invalidate the waiver of class procedures in the Horton arbitration agreement. Finally, the court rejected the contention that the NLRA contained a congressional command to ‘‘override’’ the FAA.
Noting the NLRA doesn’t explicitly provide for employee collective actions or procedures for collective claims, the court said ‘‘there is no basis on which to find that the text of the NLRA supports a congressional command to override the FAA.’’
The court also cited Richards v. Ernst & Young LLP, 2013 BL 22217 (9th Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290 (2d Cir. 2013); and Owen v. Bristol Care Inc., 702 F.3d 1050 (8th Cir. 2013), and said ‘‘[e]very one of our sister circuits to consider the issue has either suggested or expressly stated that they would not defer to the NLRB’s rationale, and held arbitration agreements containing class waivers enforceable.’’
Dissent. Graves dissented from the majority’s finding on the legality of the class and collective action waiver. Citing the board’s Horton decision, Graves said he agreed that the agreement interfered with employee rights under the NLRA and that it didn’t conflict with the FAA.
‘‘The Board made it clear that it was not mandating class arbitration in order to protect employees’ rights under the NLRA, but rather was holding that employers may not compel employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, judicial and arbitral,’’ Graves wrote.
Noting the majority conceded the court’s deference to NLRB decisions interpreting ambiguous statutory provisions, Graves said ‘‘there is authority to support the Board’s analysis’’ and concluded the NLRB’s order against Horton should have been enforced in its entirety.
Ronald W. Chapman, of Ogletree, Deakins, Nash, Smoak & Stewart, in Dallas, argued the case for D.R. Horton Inc. NLRB attorney Kira Dellinger Vol, in Washington, argued for the board.
To contact the reporter on this story: Lawrence E. Dube´ in Washington at ldube@bna.com and Peyton M. Sturges in Washington at psturges@bna.com. To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com.
The opinion is available at http://www.bloomberglaw.com/public/document/DR_Horton_Incorporated_v_NLRB_Docket_No_1260031_5th_Cir_Jan_13_20/3
Reproduced with permission from BNA's Health Law Reporter, 22 HLR 1839 (Dec. 19. 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
A recent decision holding that an employer may require its employees to sign an arbitration agreement that waives their rights to participate in class or collective actions, without interfering with their rights under federal labor laws, has important implications for health care employers, attorneys told Bloomberg BNA (D.R. Horton, Inc. v. NLRB, 2013 BL 335349, 5th Cir., No. 12-60031, 12/3/13).
The ruling by a split U.S. Court of Appeals for the Fifth Circuit, finding the National Labor Relations Board erred in concluding homebuilder D.R. Horton Inc. interfered with employees’ National Labor Relations Act rights by mandating arbitration with waivers, provides a green light for health-care employers to adopt similar provisions in their employment agreements, the attorneys said.
The decision is also important because it rebuffed the NLRB with respect to one of its many recent initiatives aimed at nonunion workplaces, they said. Although the NLRB is widely expected to appeal the decision, the Fifth Circuit’s ruling is consistent with those of the other federal appeals courts that have addressed the class and collective action waiver issue and recognized the primacy of the Federal Arbitration Act in interpreting and enforcing arbitration provisions, they added.
Patrick J. Hoban, with Zashin & Rich, Cleveland, said the implications of the court’s decision for health-care employers are substantial, but that health care employers are really no different from other employers when it comes to the need to manage the threat of class action litigation. ‘‘Health-care employers face the same risk of class action litigation under the Fair Pay Act, Title VII, the Fair Labor Standards Act, and other employment and discrimination laws as employers in other industries, so this decision is extremely important to them,’’ he said.
Health Care Implications. Edward Berbarie, with Littler Mendelson PC, Dallas, said the D.R. Horton ruling ‘‘is a big victory for all employers, including those in the health-care industry’’ who ‘‘should consider implementing an arbitration program containing class and collective action waivers.’’ The decision ‘‘reaffirms the U.S. Supreme Court’s mandate to enforce arbitration agreements so that litigants get the benefits of informal, efficient, cost-effective dispute resolution,’’ he said.
‘‘The Fifth Circuit has removed what could have been a big hurdle to the enforcement of class-action waiver provisions, and there is no reason that health-care employers should not, at the very least, seriously consider instituting an arbitration program that provides for the efficient and streamlined resolution of claims,’’ he said.
John Doran, in Littler’s Providence, R.I., office, agreed that the decision is very helpful for health-care employers, particularly because it reined in the board with respect to an issue arising in a nonunion setting.
‘‘The NLRB has made a concerted effort over the last several years to expand its reach to nonunion employees,’’ Doran said. ‘‘Although the NLRA does in fact apply to both union and nonunion employees alike, the NLRB has traditionally focused its energies on union employees.’’
‘‘This has changed in recent years with the NLRB actively pursuing cases against nonunion employers on, allegedly, overbroad policies such as social media policies, confidentiality provisions in employee handbooks and class action waivers in arbitration agreements,’’ he continued. ‘‘There is no doubt that D.R. Horton is primarily about the efficacy of class action waivers in general and the benefits that provides to employers, but the courts reining in the NLRB is an important subtext of the decision.’’
Hoban agreed. ‘‘In recent years, the activist, Obama-appointed NLRB has invaded nonunion employer activities and repeatedly held that long-standing and standardized employer practices violate employees’ NLRA rights,’’ he said. ‘‘Here, the Fifth Circuit joined the Second, Eighth, and Ninth circuits in rejecting the NLRB’s rationale and enforcing mandatory arbitration agreements containing class action waivers.’’
Among those decisions, Hoban noted, was Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013), in which the Eighth Circuit found a former nursing home employee was required to arbitrate her FLSA overtime pay claim even though the arbitration pact contained a class action waiver that forecloses her ability to bring the claim as an FLSA collective action (22 HLR 85, 1/17/13).
‘‘Notably, the Fifth Circuit affirmed the NLRB’s conclusion that D.R. Horton’s arbitration agreement violated the NLRA because employees could reasonably interpret its language to prohibit them from filing unfair labor practice charges with the NLRB,’’ Hoban continued. ‘‘Nevertheless, the Fifth Circuit’s decision provides some light for employers who have or are considering mandatory arbitration agreements prohibiting class arbitration.’’
‘‘However, as the NLRB is very likely to appeal the decision to the U.S. Supreme Court, final resolution of this issue is pending. In the meantime, employers that require employees to sign arbitration agreements must ensure that the agreements clearly set forth that employees retain the right to file unfair labor practices and other administrative charges to avoid running afoul of the NLRA,’’ Hoban concluded.
FAA Controls. In a Dec. 3 ruling, and writing for the majority that included Judge Carolyn Dineen King, Judge Leslie H. Southwick said the NLRB ‘‘did not give proper weight to the Federal Arbitration Act,’’ which made the agreement enforceable. The National Labor Relations Act, which protects the right of employees to engage in concerted activity, ‘‘should not be understood to contain a congressional command overriding the application of the FAA,’’ Southwick wrote in the 2-1 ruling.
Judge James E. Graves dissented from the court’s ruling that maintaining the arbitration agreement with the challenged waivers was lawful.
The court was unanimous in rejecting several ancillary arguments asserted by Horton, including its allegation that the NLRB lacked a quorum to decide the unfair labor practice case. Horton didn’t make a timely challenge to President Barack Obama’s 2010 recess appointment of former NLRB member Craig Becker, the Fifth Circuit said, and the company failed to establish that Becker’s appointment expired before he participated in the NLRB decision.
The appellate court agreed with the NLRB, however, that the homebuilder’s arbitration agreement could reasonably be understood by employees as precluding them from bringing unfair labor practice cases before the NLRB. It therefore enforced the NLRB’s order that the company revise the document to clarify that the agreement didn’t limit the employees’ rights to pursue claims before the NLRB.
The appeals court dismissed the company’s allegations that the NLRB order was void because the board lacked a quorum to decide the case against the company. The court acknowledged the D.C. Circuit’s decision in NLRB v. Noel Canning Division of Noel Corp., 705 F.3d 490 (D.C. Cir. 2013), and the fact that the U.S. Supreme Court has agreed to review that decision (22 HLR 977, 6/27/13).
Nevertheless, it found Horton never challenged the validity of board quorum. The court also rejected Horton’s argument that the board lacked authority to issue its decision against the company in the absence of a proper delegation of authority to the three-member panel.
NLRA, FAA Have ‘Equal Importance.’ The appeals court turned to NLRB’s finding that Horton violated Section 8(a)(1) of the NLRA by interfering with the right of employees under Section 7 to engage in concerted activity for their mutual aid or protection. Although the NLRB concluded that an individual filing a class or collective action on behalf of employees is engaged in Section 7 activity, and maintaining an employment policy that requires employees to relinquish the statutory right violates Section 8(a)(1), the court found the waiver didn’t affect substantive rights.
The court also found the NLRB couldn’t rely on FAA’s savings clause to support its decision to invalidate the waiver of class procedures in the Horton arbitration agreement. Finally, the court rejected the contention that the NLRA contained a congressional command to ‘‘override’’ the FAA.
Noting the NLRA doesn’t explicitly provide for employee collective actions or procedures for collective claims, the court said ‘‘there is no basis on which to find that the text of the NLRA supports a congressional command to override the FAA.’’
The court also cited Richards v. Ernst & Young LLP, 2013 BL 22217 (9th Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290 (2d Cir. 2013); and Owen v. Bristol Care Inc., 702 F.3d 1050 (8th Cir. 2013), and said ‘‘[e]very one of our sister circuits to consider the issue has either suggested or expressly stated that they would not defer to the NLRB’s rationale, and held arbitration agreements containing class waivers enforceable.’’
Dissent. Graves dissented from the majority’s finding on the legality of the class and collective action waiver. Citing the board’s Horton decision, Graves said he agreed that the agreement interfered with employee rights under the NLRA and that it didn’t conflict with the FAA.
‘‘The Board made it clear that it was not mandating class arbitration in order to protect employees’ rights under the NLRA, but rather was holding that employers may not compel employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, judicial and arbitral,’’ Graves wrote.
Noting the majority conceded the court’s deference to NLRB decisions interpreting ambiguous statutory provisions, Graves said ‘‘there is authority to support the Board’s analysis’’ and concluded the NLRB’s order against Horton should have been enforced in its entirety.
Ronald W. Chapman, of Ogletree, Deakins, Nash, Smoak & Stewart, in Dallas, argued the case for D.R. Horton Inc. NLRB attorney Kira Dellinger Vol, in Washington, argued for the board.
To contact the reporter on this story: Lawrence E. Dube´ in Washington at ldube@bna.com and Peyton M. Sturges in Washington at psturges@bna.com. To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com.
The opinion is available at http://www.bloomberglaw.com/public/document/DR_Horton_Incorporated_v_NLRB_Docket_No_1260031_5th_Cir_Jan_13_20/3
Reproduced with permission from BNA's Health Law Reporter, 22 HLR 1839 (Dec. 19. 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
Monday, December 9, 2013
Waive that Class Goodbye: The Fifth Circuit Reverses the NLRB on Class Action Waivers
By Patrick J. Hoban*
On December 4, 2013, the Fifth Circuit Court of Appeals, in D.R. Horton, Inc. v. NLRB, No. 12-60031, reversed the National Labor Relations Board ("NLRB") decision that mandatory class and collective action waivers in employment arbitration agreements violate the National Labor Relations Act ("NLRA"). In recent years, the activist Obama-appointed NLRB has invaded non-union employer activities including social media policies, at-will statements in employee handbooks, and workplace investigations. The NLRB has repeatedly held that long-standing and standardized employer practices violate employees' NLRA rights. One such practice is the inclusion of waivers of class and collective actions in mandatory employment arbitration agreements.
In a 2012 decision (which Z&R discussed here), the NLRB started a firestorm when it held that homebuilder D.R. Horton's mandatory arbitration agreement, which included a class and collective action waiver, violated employee rights. Specifically, the NLRB held that employees had a substantive right under Section 7 of the NLRA to bring a class or collective actions as a form of protected concerted activity. Although the NLRB continued its attack on class action waivers in subsequent decisions (which Z&R discussed here), the Second, Eighth, and Ninth Circuit Courts of Appeals each rejected the NLRB's rationale and enforced mandatory arbitration agreements containing class action waivers. See Richards v. Ernst & Young, LLP, No. 11-17530 (9th Cir. Aug. 21, 2013); Sutherland v. Ernst & Young, LLP, 726 F.3d 290 (2d Cir. 2013); Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013).
In its decision, the Fifth Circuit held that the NLRA does not prohibit mandatory arbitration agreements with class action waivers. Contrary to the NLRB, the Court held that the right to class action procedures is not a substantive legal right, but rather a procedural device. Therefore, the Court rejected the NLRB's position that Section 7 of the NLRA includes the right to bring class or collective actions as a protected concerted activity.
The Court further explained that the Federal Arbitration Act ("FAA") establishes a national policy of favoring arbitration to resolve disputes. Under the FAA, arbitration agreements must be enforced as written in the same manner as any other contract. The Court held that because there is no substantive right to bring class or collective actions protected by the NLRA, no grounds existed under the FAA to invalidate D.R. Horton's arbitration agreement. The Court further explained that the NLRB's decision actually disfavored arbitration by sacrificing lower costs and informality in favor of time consuming and drawn-out class action arbitration while leaving employers with very limited rights of appeal. Altogether, the Court concluded, the NLRB's decision would make employers less likely to consider using arbitration to resolve employment disputes.
The Fifth Circuit further held that there is nothing in the text or legislative history of the NLRA revealing a congressional intent that its provisions override the FAA and its clear purpose favoring arbitration.
Notably for employers, the Fifth Circuit affirmed the NLRB's conclusion that D.R. Horton's arbitration agreement violated the NLRA because employees could reasonably interpret its language to prohibit them from filing unfair labor practice charges with the NLRB. Specifically, the language failed to expressly state that employees retained the right to file unfair labor practice charges and suggested that such claims were subject to arbitration. Based on this, the Court upheld the NLRB's order requiring D.R. Horton to rescind and revise its mandatory arbitration policy.
The Fifth Circuit's decision in D.R. Horton provides some light for employers who have or are considering mandatory arbitration agreements prohibiting class arbitration. However, as the NLRB is very likely to appeal the decision to the U.S. Supreme Court, final resolution of this issue is pending. In the meantime, employers that require employees to sign arbitration agreements must ensure that the agreements clearly set forth that employees retain the right to file unfair labor practices and other administrative charges to avoid running afoul of the NLRA.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, appears before the National Labor Relations Board and practices in all areas of labor relations. For more information about arbitration agreements, this decision, or the NLRA, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
On December 4, 2013, the Fifth Circuit Court of Appeals, in D.R. Horton, Inc. v. NLRB, No. 12-60031, reversed the National Labor Relations Board ("NLRB") decision that mandatory class and collective action waivers in employment arbitration agreements violate the National Labor Relations Act ("NLRA"). In recent years, the activist Obama-appointed NLRB has invaded non-union employer activities including social media policies, at-will statements in employee handbooks, and workplace investigations. The NLRB has repeatedly held that long-standing and standardized employer practices violate employees' NLRA rights. One such practice is the inclusion of waivers of class and collective actions in mandatory employment arbitration agreements.
In a 2012 decision (which Z&R discussed here), the NLRB started a firestorm when it held that homebuilder D.R. Horton's mandatory arbitration agreement, which included a class and collective action waiver, violated employee rights. Specifically, the NLRB held that employees had a substantive right under Section 7 of the NLRA to bring a class or collective actions as a form of protected concerted activity. Although the NLRB continued its attack on class action waivers in subsequent decisions (which Z&R discussed here), the Second, Eighth, and Ninth Circuit Courts of Appeals each rejected the NLRB's rationale and enforced mandatory arbitration agreements containing class action waivers. See Richards v. Ernst & Young, LLP, No. 11-17530 (9th Cir. Aug. 21, 2013); Sutherland v. Ernst & Young, LLP, 726 F.3d 290 (2d Cir. 2013); Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013).
In its decision, the Fifth Circuit held that the NLRA does not prohibit mandatory arbitration agreements with class action waivers. Contrary to the NLRB, the Court held that the right to class action procedures is not a substantive legal right, but rather a procedural device. Therefore, the Court rejected the NLRB's position that Section 7 of the NLRA includes the right to bring class or collective actions as a protected concerted activity.
The Court further explained that the Federal Arbitration Act ("FAA") establishes a national policy of favoring arbitration to resolve disputes. Under the FAA, arbitration agreements must be enforced as written in the same manner as any other contract. The Court held that because there is no substantive right to bring class or collective actions protected by the NLRA, no grounds existed under the FAA to invalidate D.R. Horton's arbitration agreement. The Court further explained that the NLRB's decision actually disfavored arbitration by sacrificing lower costs and informality in favor of time consuming and drawn-out class action arbitration while leaving employers with very limited rights of appeal. Altogether, the Court concluded, the NLRB's decision would make employers less likely to consider using arbitration to resolve employment disputes.
The Fifth Circuit further held that there is nothing in the text or legislative history of the NLRA revealing a congressional intent that its provisions override the FAA and its clear purpose favoring arbitration.
Notably for employers, the Fifth Circuit affirmed the NLRB's conclusion that D.R. Horton's arbitration agreement violated the NLRA because employees could reasonably interpret its language to prohibit them from filing unfair labor practice charges with the NLRB. Specifically, the language failed to expressly state that employees retained the right to file unfair labor practice charges and suggested that such claims were subject to arbitration. Based on this, the Court upheld the NLRB's order requiring D.R. Horton to rescind and revise its mandatory arbitration policy.
The Fifth Circuit's decision in D.R. Horton provides some light for employers who have or are considering mandatory arbitration agreements prohibiting class arbitration. However, as the NLRB is very likely to appeal the decision to the U.S. Supreme Court, final resolution of this issue is pending. In the meantime, employers that require employees to sign arbitration agreements must ensure that the agreements clearly set forth that employees retain the right to file unfair labor practices and other administrative charges to avoid running afoul of the NLRA.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, appears before the National Labor Relations Board and practices in all areas of labor relations. For more information about arbitration agreements, this decision, or the NLRA, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Subscribe to:
Posts (Atom)