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
Monday, November 16, 2015
Thursday, October 29, 2015
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
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
Tuesday, October 13, 2015
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:
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:
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
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
Friday, September 4, 2015
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:
*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
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
Friday, August 28, 2015
Whether You Knew It or Not, the NLRB Says You Just Might Be a “Joint Employer”
By Patrick J. Hoban*
Yesterday, in a 3-2 decision, the National Labor Relations Board (“NLRB”) reversed a 30-year old standard for determining joint employer status under the National Labor Relations Act (“NLRA”). In Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015)(“Browning-Ferris”), the NLRB considered whether a recycling company and the staffing agency it used to recruit, hire, supervise, and compensate contingent workers in its facility were joint employers for the purposes of collective bargaining. In a decision that has attracted significant national attention, the NLRB scrapped its longtime joint employer analysis and created a new joint employer test under which more companies that use staffing and subcontracting agencies to provide contingent workers will be deemed “joint employers” with the staffing and subcontracting agencies under the NLRA.
The circumstances at issue arise when a company (“User”) contracts with a staffing or subcontracting agency (“Supplier”) to provide contingent workers to perform a function the User’s employees do not perform. These arrangements may include providing temporary employees to fill short-term User needs, providing temporary employees who the User evaluates for full-time employment, or providing contingent workers on an ongoing basis to perform a task in support of the User’s operations (e.g., maintenance, housekeeping, processing). Although there is significant variation in these arrangements, the User generally sets staffing requirements and worker qualifications, and the Supplier recruits, hires, compensates, sets benefits for, and administers the employment of the contingent workers. The User typically pays a fee based on a total hourly cost of each contingent worker including compensation, benefits, and administrative costs. The Supplier may or may not provide on-site supervision of the contingent workers.
Since the early 1980s, the NLRB’s joint employer analysis focused on the extent of the actual control a User exercised over the contingent workers. To be deemed a “joint employer” with the Provider, the User had to actually exercise control over the contingent workers’ terms and conditions of employment in a “direct and immediate” manner. In other words, a User was not a joint employer if it merely exercised “limited and routine” supervision over contingent workers. Absent joint employer status, a User is not subject to a collective bargaining obligation or liability for unfair labor practices under the NLRA even if the Supplier is (and vice versa).
In Browning-Ferris, the NLRB determined that its former analysis was out of step with “changing economic circumstances.” The NLRB cited significant growth in contingent employment relationships and revised its standard to adapt to the “changing patterns of industrial life.”
Under the NLRB’s new standard, multiple entities are “joint employers” of a single workforce if (1) “they are both employers within the meaning of the common law” and (2) they “share or co-determine” matters governing the essential terms and conditions of employment. Central to both analyses is the “existence, extent and object” of a putative joint employer’s control.
Under the first prong, the “right to control” is the key and the NLRB will no longer consider whether the entity exercises that right. Therefore, if an entity reserves a contractual right to determine a specific term or condition of employment (e.g. ultimate discharge authority, job qualifications), it may have created a common law “employer” relationship with contingent workers whether it has ever exercised that right. Additionally, an entity that exercises even indirect control over terms and conditions of employment may meet the common-law employer standard (e.g., gives direction to the Supplier to discipline a contingent worker).
Under the second prong, the NLRB considers the variety of ways in which entities may “share or co-determine” the “essential terms and conditions of employment.” “Essential terms and conditions of employment” include wages, hours, hiring, firing, discipline, supervision, and direction. Evidence of an entity’s control over essential terms and conditions of employment includes: dictating the number of contingent workers supplied; controlling scheduling, seniority, and overtime; and assigning and determining the manner and method of work performance.
Through its Browning-Ferris decision, the NLRB abandoned the certainty over three decades of joint employer analysis precedent provided to most contingent worker agreements. The NLRB’s new standard will very likely impose NLRA bargaining obligations, unfair labor practice liability, and/or lawful economic protest activities (e.g., strikes, boycotts, picketing) on entities that previously were not considered joint employers by the NLRB. The decision stands to significantly affect a wide-range of common business relationships including user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, and predecessor-successor. Additionally, as the dissent warned, the new standard may render smaller employers that lie outside the NLRA’s Commerce Clause-based jurisdiction subject to the statute’s terms.
Although the NLRB recognized the almost tectonic significance of the Browning-Ferris decision, it insisted that the new standard is in full accord with the purposes of the NLRA. As the majority summarized its decision:
Employers who participate in contingent worker, subcontracting, temporary worker, and/or franchise agreements should closely examine the new standard and reevaluate the terms, benefits, and potential risks of such agreements. The examination must include a realistic assessment of the control employers retain over the terms and conditions of the contingent workforce, the potential for NLRA-based liability and alternatives that will reduce the risk of a joint employer determination under the new standard. Additionally, companies with parent/subsidiary structures should examine the relative control reserved to component entities and the risks of joint employer status.
*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 the Browning-Ferris decision or labor & employment law, please contact Pat Hoban | pjh@zrlaw.com | 216.696.4441
Yesterday, in a 3-2 decision, the National Labor Relations Board (“NLRB”) reversed a 30-year old standard for determining joint employer status under the National Labor Relations Act (“NLRA”). In Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015)(“Browning-Ferris”), the NLRB considered whether a recycling company and the staffing agency it used to recruit, hire, supervise, and compensate contingent workers in its facility were joint employers for the purposes of collective bargaining. In a decision that has attracted significant national attention, the NLRB scrapped its longtime joint employer analysis and created a new joint employer test under which more companies that use staffing and subcontracting agencies to provide contingent workers will be deemed “joint employers” with the staffing and subcontracting agencies under the NLRA.
The circumstances at issue arise when a company (“User”) contracts with a staffing or subcontracting agency (“Supplier”) to provide contingent workers to perform a function the User’s employees do not perform. These arrangements may include providing temporary employees to fill short-term User needs, providing temporary employees who the User evaluates for full-time employment, or providing contingent workers on an ongoing basis to perform a task in support of the User’s operations (e.g., maintenance, housekeeping, processing). Although there is significant variation in these arrangements, the User generally sets staffing requirements and worker qualifications, and the Supplier recruits, hires, compensates, sets benefits for, and administers the employment of the contingent workers. The User typically pays a fee based on a total hourly cost of each contingent worker including compensation, benefits, and administrative costs. The Supplier may or may not provide on-site supervision of the contingent workers.
Since the early 1980s, the NLRB’s joint employer analysis focused on the extent of the actual control a User exercised over the contingent workers. To be deemed a “joint employer” with the Provider, the User had to actually exercise control over the contingent workers’ terms and conditions of employment in a “direct and immediate” manner. In other words, a User was not a joint employer if it merely exercised “limited and routine” supervision over contingent workers. Absent joint employer status, a User is not subject to a collective bargaining obligation or liability for unfair labor practices under the NLRA even if the Supplier is (and vice versa).
In Browning-Ferris, the NLRB determined that its former analysis was out of step with “changing economic circumstances.” The NLRB cited significant growth in contingent employment relationships and revised its standard to adapt to the “changing patterns of industrial life.”
The New “Joint Employer” Standard
Under the NLRB’s new standard, multiple entities are “joint employers” of a single workforce if (1) “they are both employers within the meaning of the common law” and (2) they “share or co-determine” matters governing the essential terms and conditions of employment. Central to both analyses is the “existence, extent and object” of a putative joint employer’s control.
Under the first prong, the “right to control” is the key and the NLRB will no longer consider whether the entity exercises that right. Therefore, if an entity reserves a contractual right to determine a specific term or condition of employment (e.g. ultimate discharge authority, job qualifications), it may have created a common law “employer” relationship with contingent workers whether it has ever exercised that right. Additionally, an entity that exercises even indirect control over terms and conditions of employment may meet the common-law employer standard (e.g., gives direction to the Supplier to discipline a contingent worker).
Under the second prong, the NLRB considers the variety of ways in which entities may “share or co-determine” the “essential terms and conditions of employment.” “Essential terms and conditions of employment” include wages, hours, hiring, firing, discipline, supervision, and direction. Evidence of an entity’s control over essential terms and conditions of employment includes: dictating the number of contingent workers supplied; controlling scheduling, seniority, and overtime; and assigning and determining the manner and method of work performance.
Through its Browning-Ferris decision, the NLRB abandoned the certainty over three decades of joint employer analysis precedent provided to most contingent worker agreements. The NLRB’s new standard will very likely impose NLRA bargaining obligations, unfair labor practice liability, and/or lawful economic protest activities (e.g., strikes, boycotts, picketing) on entities that previously were not considered joint employers by the NLRB. The decision stands to significantly affect a wide-range of common business relationships including user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, and predecessor-successor. Additionally, as the dissent warned, the new standard may render smaller employers that lie outside the NLRA’s Commerce Clause-based jurisdiction subject to the statute’s terms.
Although the NLRB recognized the almost tectonic significance of the Browning-Ferris decision, it insisted that the new standard is in full accord with the purposes of the NLRA. As the majority summarized its decision:
It is not the goal of joint employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace. Such an approach has no basis in the [NLRA] or in federal labor policy.
Employers who participate in contingent worker, subcontracting, temporary worker, and/or franchise agreements should closely examine the new standard and reevaluate the terms, benefits, and potential risks of such agreements. The examination must include a realistic assessment of the control employers retain over the terms and conditions of the contingent workforce, the potential for NLRA-based liability and alternatives that will reduce the risk of a joint employer determination under the new standard. Additionally, companies with parent/subsidiary structures should examine the relative control reserved to component entities and the risks of joint employer status.
*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 the Browning-Ferris decision or labor & employment law, please contact Pat Hoban | pjh@zrlaw.com | 216.696.4441
Tuesday, August 18, 2015
Z&R Attorneys Named Best Lawyers in America 2016
- George S. Crisci – Employment Law - Management, Labor Law - Management, and Litigation - Labor and Employment
- Jon M. Dileno – Employment Law - Management
- Jonathan J. Downes – Employment Law - Management and Labor Law - Management
- Stephen S. Zashin – Labor Law – Management and Litigation - Labor and Employment
- Deanna L. DiPetta - Family Law
- Amy M. Keating - Family Law
- Jonathan A. Rich - Family Law
- Andrew A. Zashin - Family Law
Tuesday, July 14, 2015
EMPLOYMENT LAW QUARTERLY | Volume XVII, Issue ii
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A Federal Court recently affirmed an employer’s decision to discharge a janitor who claimed the employer discriminated against him on the basis of his religious belief. Bolden v. Caravan Facilities Mgmt., LLC, No. 1:14-CV-26-RLM, 2015 U.S. LEXIS 73619 (N.D. Ind. June 8, 2015). The employer, pursuant to a neutral, rotating schedule, assigned the plaintiff-employee janitor to work on six Sundays over a ten-week span. The employer had negotiated the schedule as part of the collective bargaining agreement (“CBA”) it entered into with the employee’s union. However, the employee, an ordained Baptist minister, did not work any of the scheduled shifts. He called off, did not appear, or traded shifts with another employee in order to observe the Sabbath. After the employer terminated his employment based on unsatisfactory performance, the employee sued, claiming the employer violated Title VII of the Civil Rights Act of 1964 (“Title VII”).
The Court found the employer did not violate Title VII by failing to accommodate the employee’s religious belief. Reasonable accommodations eliminate conflicts between religious practices and employment requirements. According to the Court, the employer provided a reasonable accommodation through two mechanisms. First, the employer utilized a neutral, rotating shift schedule that spread weekend work among the employees. Second, the employer permitted employees to trade shifts. The opportunity to trade shifts eliminated any conflict the neutral schedule created with an employee’s request for days off.
The Court also reasoned that any additional accommodation would impose an undue hardship on the employer. Employers do not have to incur more than a de minimis cost, in lost efficiency or higher wages, to accommodate an employee’s religious practice. Here, the Court considered the following accommodations: 1) making an exception to the neutral, rotating schedule by never scheduling the employee on Sunday; or 2) moving the employee to third shift. According to the Court, these options imposed more than a de minimis cost. If the employer did not change the employee’s schedule, the employer had to a) pay someone overtime to cover the shift (placing the burden on co-workers), b) work with one less employee (loss of productivity), or c) hire another employee (additional expense).
The CBA’s neutral, rotating schedule and seniority system played a significant role in the Court’s decision. Under the CBA, seniority determined shift selection. The employee worked second shift because he was one of the least-senior union members. Therefore, if the employer moved him to a different shift, it would violate the CBA and deny other employees their contractual rights. The employer had consulted with the union, but the union was unwilling to make an exception to the neutral, rotating schedule it negotiated.
Employers subject to CBAs should consider this decision when presented with requests for accommodations based on religious belief, particularly when those requests violate the CBA.
* George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. If you have questions about the impact of religious accommodations on your workplace, please contact George (gsc@zrlaw.com) at 216.696.4441.
On April 1, 2015, the Equal Employment Opportunity Commission (“EEOC”) ruled that a federal agency discriminated against a transgendered employee when it prohibited the employee from using the common women’s restroom. Lusardi v. McHugh, Dep’t of Army, Appeal No. 0120133395, (EEOC Apr. 1, 2015). The employee presented as female and had not undergone medical procedures to transition from male to female. According to the EEOC, when the employer required the employee to use a single-user restroom, the employer committed sex discrimination in violation Title VII of the Civil Rights Act of 1964 (“Title VII”).
In its decision, the EEOC adopted a standard for determining the sex of transgendered individuals – how the employee identifies himself/herself. Specifically, the EEOC concluded “there is no cause to question that Complainant – who was assigned the sex of male at birth but identifies as female – is female.” Here, after the employee began transitioning her gender presentation, she reached a mutual agreement with her employer regarding bathroom use: she would use a single-user restroom instead of the women’s restroom until she had undergone surgery. The employer advocated this approach based on anticipated discomfort from other female employees. Subsequently, the employee used the women’s restroom when her designated restroom was out-of-order. A supervisor confronted the employee about this use, claiming the employee must prove she had undergone “the final surgery” before she could use the women’s restroom.
The EEOC concluded that the employer’s act of prohibiting the employee from using the women’s restroom constituted direct evidence of discrimination. Here, the employer admitted the employee’s transgendered status was the motivating factor for its decision to prohibit the employee from using the women’s restroom.
The EEOC also determined that restricting the employee from using the women’s restroom was an adverse employment action. According to the EEOC, “equal access to restrooms” constitutes a significant, basic condition of employment. Therefore, where a transgendered individual has begun living and working as a woman (or man), the employer must allow the employee access to the women’s (or men’s) restroom.
Finally, the EEOC rejected the employer’s arguments of 1) anticipated discomfort of female employees and 2) the employee-employer transition agreement. “Nothing in Title VII makes any medical procedure a prerequisite for equal opportunity.” The EEOC concluded an employer may not condition access to terms, conditions, or privileges of employment on completing certain medical procedures that the employer feels conclusively proves the individual’s gender identity. Even though the employee originally agreed to use the single-user restroom, employees cannot prospectively waive their Title VII rights.
This EEOC decision is not an anomaly or new trend. Rather, the EEOC has begun pursuing these types of sex discrimination cases with increasing frequency. In its most-recent Strategic Enforcement Plan, the EEOC identified “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions” as a top enforcement priority. Additionally, as Zashin & Rich previously reported, the EEOC filed two sex-stereotyping, gender-discrimination lawsuits in September 2014. In these cases, the EEOC alleged the employer discriminated against the transgendered employee because the employee failed to conform to the employer’s “sex or gender-based preferences, expectations, or stereotypes.” On April 21, 2015, one court concluded the EEOC sufficiently stated a claim under Title VII and allowed the case to proceed. EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., No. 14-13710, 2015 U.S. LEXIS 52016 (E.D. Mich. Apr. 21, 2015) In addition, the U.S. Court of Appeals for the Sixth Circuit, which covers Kentucky, Michigan, Ohio, and Tennessee, previously held that a transgendered individual presented a valid Title VII discrimination claim. Smith v. City of Salem, 378 F.3d 566 (6th Cir. 2004). On June 1, 2015, as Zashin & Rich recently highlighted, the Occupational Safety and Health Administration released a new best practice guide concerning transgendered workers’ use of workplace restrooms.
Given the EEOC’s increased emphasis on transgendered employees, employers must be cognizant of the protections Title VII and related state laws afford transgendered employees. In particular, employers should consider this EEOC decision when presented with employees transitioning their gender identity and employers should update their company handbooks and policies accordingly.
* Andrew J. Cleves, practices in all areas of labor and employment law. If you have questions about the impact of transgendered issues on your workplace, please contact Andrew (ajc@zrlaw.com) at 216.696.4441.
Recently, the trial between Ellen Pao and her former employer, venture capital firm Kleiner Perkins Caufield & Byers (“Kleiner Perkins”), captivated the business and technology world. Pao, formerly a junior partner at the firm, sued Kleiner Perkins for gender discrimination and retaliation, seeking $16 million in damages. Pao argued that the firm’s culture prevented women from advancing into the more lucrative senior partner positions and that the firm retaliated against her after she filed the lawsuit, eventually terminating her employment. Kleiner Perkins asserted that Pao’s poor performance and inability to get along with colleagues prevented her from receiving a promotion and led to her discharge. On March 26, 2015, a California jury found for Kleiner Perkins on all counts. Since then, Kleiner Perkins has sought to recover close to $1 million in expenses incurred during trial from Pao, and a judge has tentatively ruled that Pao must reimburse Kleiner Perkins for about $250,000 in expenses. Pao recently filed a notice of appeal.
The lawsuit captured headlines in major newspapers and blogs because it pulled back a curtain on the inner workings of one of Silicon Valley’s most respected venture capital firms (known for funding Google and Amazon in their start-up days). From an employment law perspective, the trial highlighted some of the benefits and pitfalls of employee performance reviews. Both sides used Pao’s performance reviews as evidence, with Pao’s attorneys claiming they showed Kleiner Perkins’ bias against Pao, and the defense relying on them as records of her sub-par performance. In particular, Pao’s attorneys’ use of the performance reviews highlights the potential for reviews to backfire against the employer if not done well. Pao’s attorneys pointed to the reviews as evidence of retaliation, since she received poor performance reviews in the year after she filed her lawsuit (despite receiving far more positive reviews the year prior). They also used the performance reviews as evidence of discrimination, noting that Pao received conflicting feedback (advising her to be both more and less aggressive) and that her male peers who received similar comments were later promoted.
The trial serves as a reminder to employers on how to best use employee performance reviews to encourage better work from employees – and how to avoid potential legal pitfalls. Performance reviews can help employers by motivating employees to improve in certain aspects of their jobs or continue good work in other areas. They also create a written record showing that the employer counseled an employee on poor performance and track improvements (or lack thereof).
Abiding by the following tips will help employers more effectively use employee performance reviews:
Finally, to the extent that the employer can identify objective criteria, the review will be all the better.
* Sarah K. Ott practices in all areas of labor and employment law. For more information about conducting employee evaluations or other questions related to performance reviews, please contact Sarah (sko@zrlaw.com) at (216) 696-4441.
The Fair Credit Reporting Act (“FCRA”) regulates the collection and use of consumer information, including employee background and credit checks, and requires employers that rely on third-party companies to conduct background checks to follow certain procedures in notifying the individual being checked. The requirements include the following:
The FCRA requires additional action from employers who take an adverse action based on the information learned from a background check conducted by a third-party company, such as deciding not to hire an applicant, revoking a job offer, or termination. Before taking the adverse action, the employer must provide the individual with a copy of the report and a document summarizing the individual’s rights under the FCRA and give the individual a meaningful opportunity to respond to the information.
Absent an adequate response and assuming the employer takes the adverse action, the employer must: (1) notify the individual of the adverse action; (2) provide the individual with specific credit score information from the report; (3) inform the individual of his or her right to obtain a free copy of the report within 60 days and dispute the information in the report; and (4) provide the contact information of the third-party company that compiled the report for the employer and explain that the third-party company did not make the decision to take the adverse action and cannot explain the reasons for the action. Employers also must destroy any background reports in a secure manner, such as by shredding them or permanently deleting electronic copies.
Despite the many requirements placed on employers by the FCRA, a spate of recent cases show that courts have little sympathy for employers who commit minor technical violations of the law, even when complying with the spirit of the law’s requirements. For example, a federal court in Virginia recently denied summary judgment to an employer who allegedly violated the FCRA when it failed to provide “stand alone” notice that it would be conducting a background check by including a liability waiver on the same document. Milbourne v. JRK Residential America, LLC, No. 3:12cv861, 2015 U.S. Dist. LEXIS 29905 (E.D. Va., Mar. 15, 2015). Other cases involve employers rescinding job offers based on information discovered through a background report before providing the job applicants with a meaningful opportunity to respond to the information. In one case, the employer revoked a job offer to an applicant based on erroneous information in a background report without giving the applicant a chance to challenge the report. Jones v. Halstead Management Co., LLC, No. 14-CV-3125, 2015 U.S. Dist. LEXIS 12807 (S.D.N.Y., Jan. 27, 2015). In another case, the employer rescinded a job offer after its receipt of an unfavorable criminal background report on an applicant without giving the applicant time to correct the inaccurate information with the consumer reporting agency before filling the position. Miller v. Johnson & Johnson, No. 6:13-cv-1016, 2015 U.S. Dist. LEXIS 4448 (M.D. Fla., Jan. 14, 2015).
In a more employer-friendly decision, a federal court in Massachusetts recently granted summary judgment for an employer despite the plaintiffs’ argument that the employer’s notice and request for authorization to conduct a background check did not limit itself “solely” to the disclosure because it included a short preamble regarding customer safety. Goldberg v. Uber Techs., Inc., No. 14-14264-RGS, 2015 U.S. Dist. LEXIS 44675 (D. Mass., Apr. 6, 2015). The court held the employer did not violate the FCRA by including “a few sensible words” about why the company chose to use background checks (i.e., customer safety). The court also found that the employer did not violate the FCRA by failing to notify the job applicant that it intended to make an adverse decision based on information included in the background report. The court found that the statute does not require advanced notice that the employer intends to take an adverse action – it merely requires providing the individual with the background report and a document stating the individual’s rights under the FCRA.
With FCRA cases seemingly on the rise, employers who use third-party companies to compile background information should review their background check policies and procedures. Failure to strictly comply with FCRA requirements can lead to costly litigation, including class action lawsuits brought on behalf of employees and applicants subject to the employer’s non-compliant background check policies and procedures.
* Drew C. Piersall works in the firm’s Columbus office and practices in all areas of labor and employment law. If you have questions about conducting background and credit checks or the FCRA in general, please contact Drew (dcp@zrlaw.com) at 614.224.4411.
Congratulations!
Drew C. Piersall was selected to serve as the Chair of the Columbus Bar Association’s Labor & Employment Law Committee for 2015-2016. The Labor & Employment Law Committee meets on a monthly basis in the fall, winter and spring. In an effort to better serve clients and the legal profession, the Committee shares ideas and provides information on topics of concern to all who participate in the field of labor and employment law.
Jonathan Downes was inducted as a Fellow into the College of Labor and Employment Lawyers. The College of Labor and Employment Lawyers is an intellectual and practical resource for the support of the legal profession and its many audiences. The primary purpose of the College is recognition of individuals, sharing knowledge, and delivering value to the many different groups who can benefit from its value model.
Seminars
Thursday, July 16, 2015 at 10:30 am
Patrick M. Watts presents "2015 Legal Update" at 10:30 a.m. at the Lake/Geauga Area Chapter of the Society for Human Resource Management luncheon.
Tuesday, September 22, 2015 at 1:00 pm
Jonathan Downes presents "Risk Management for Supervisors" for the Ohio Association of Chiefs of Police beginning at 1 p.m. at the Crowne Plaza Columbus North.
Crowne Plaza Columbus North | 6500 Doubletree Avenue, Columbus, OH
Thursday, September 24, 2015 at 10:00 am
Jonathan Downes and Drew C. Piersall present "Negotiations – Post Recession and Impact of The Affordable Care Act" for the Ohio GFOA – Annual Conference & Membership Meeting to be held at the Hilton Netherland Plaza in Cincinnati.
Hilton Netherland Plaza | 35 West Fifth Street, Cincinnati, OH
Friday, November 6, 2015 at 10:15 am
Patrick J. Hoban presents “Affordable Care Act” at 10:15 a.m. at the Ohio Conference for Payroll Professionals (OCPP) to be held at the Embassy Suites Hotel in Dublin, Ohio.
Friday, November 6, 2015 at 10:15 am
Michele L. Jakubs presents “FLSA/Time and Attendance Best Practices” at 10:15 a.m. at the Ohio Conference for Payroll Professionals (OCPP) to be held at the Embassy Suites Hotel in Dublin, Ohio.
- Religious Accommodations and Bargaining – Why Collective Bargaining Agreements May Trump Accommodations
- EEOC: Transgendered Employees Can Use the Restroom of Their Choice
- Employee Performance Reviews Have Their Day in Court: How Employers Can Get the Most out of Employee Performance Reviews
- Courts Have Little Sympathy for Employer Mistakes in Complying with the Fair Credit Reporting Act
- Z&R SHORTS
Religious Accommodations and Bargaining – Why Collective Bargaining Agreements May Trump Accommodations
By George S. Crisci*A Federal Court recently affirmed an employer’s decision to discharge a janitor who claimed the employer discriminated against him on the basis of his religious belief. Bolden v. Caravan Facilities Mgmt., LLC, No. 1:14-CV-26-RLM, 2015 U.S. LEXIS 73619 (N.D. Ind. June 8, 2015). The employer, pursuant to a neutral, rotating schedule, assigned the plaintiff-employee janitor to work on six Sundays over a ten-week span. The employer had negotiated the schedule as part of the collective bargaining agreement (“CBA”) it entered into with the employee’s union. However, the employee, an ordained Baptist minister, did not work any of the scheduled shifts. He called off, did not appear, or traded shifts with another employee in order to observe the Sabbath. After the employer terminated his employment based on unsatisfactory performance, the employee sued, claiming the employer violated Title VII of the Civil Rights Act of 1964 (“Title VII”).
The Court found the employer did not violate Title VII by failing to accommodate the employee’s religious belief. Reasonable accommodations eliminate conflicts between religious practices and employment requirements. According to the Court, the employer provided a reasonable accommodation through two mechanisms. First, the employer utilized a neutral, rotating shift schedule that spread weekend work among the employees. Second, the employer permitted employees to trade shifts. The opportunity to trade shifts eliminated any conflict the neutral schedule created with an employee’s request for days off.
The Court also reasoned that any additional accommodation would impose an undue hardship on the employer. Employers do not have to incur more than a de minimis cost, in lost efficiency or higher wages, to accommodate an employee’s religious practice. Here, the Court considered the following accommodations: 1) making an exception to the neutral, rotating schedule by never scheduling the employee on Sunday; or 2) moving the employee to third shift. According to the Court, these options imposed more than a de minimis cost. If the employer did not change the employee’s schedule, the employer had to a) pay someone overtime to cover the shift (placing the burden on co-workers), b) work with one less employee (loss of productivity), or c) hire another employee (additional expense).
The CBA’s neutral, rotating schedule and seniority system played a significant role in the Court’s decision. Under the CBA, seniority determined shift selection. The employee worked second shift because he was one of the least-senior union members. Therefore, if the employer moved him to a different shift, it would violate the CBA and deny other employees their contractual rights. The employer had consulted with the union, but the union was unwilling to make an exception to the neutral, rotating schedule it negotiated.
Employers subject to CBAs should consider this decision when presented with requests for accommodations based on religious belief, particularly when those requests violate the CBA.
* George S. Crisci, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. If you have questions about the impact of religious accommodations on your workplace, please contact George (gsc@zrlaw.com) at 216.696.4441.
EEOC: Transgendered Employees Can Use the Restroom of Their Choice
By Andrew J. Cleves*On April 1, 2015, the Equal Employment Opportunity Commission (“EEOC”) ruled that a federal agency discriminated against a transgendered employee when it prohibited the employee from using the common women’s restroom. Lusardi v. McHugh, Dep’t of Army, Appeal No. 0120133395, (EEOC Apr. 1, 2015). The employee presented as female and had not undergone medical procedures to transition from male to female. According to the EEOC, when the employer required the employee to use a single-user restroom, the employer committed sex discrimination in violation Title VII of the Civil Rights Act of 1964 (“Title VII”).
In its decision, the EEOC adopted a standard for determining the sex of transgendered individuals – how the employee identifies himself/herself. Specifically, the EEOC concluded “there is no cause to question that Complainant – who was assigned the sex of male at birth but identifies as female – is female.” Here, after the employee began transitioning her gender presentation, she reached a mutual agreement with her employer regarding bathroom use: she would use a single-user restroom instead of the women’s restroom until she had undergone surgery. The employer advocated this approach based on anticipated discomfort from other female employees. Subsequently, the employee used the women’s restroom when her designated restroom was out-of-order. A supervisor confronted the employee about this use, claiming the employee must prove she had undergone “the final surgery” before she could use the women’s restroom.
The EEOC concluded that the employer’s act of prohibiting the employee from using the women’s restroom constituted direct evidence of discrimination. Here, the employer admitted the employee’s transgendered status was the motivating factor for its decision to prohibit the employee from using the women’s restroom.
The EEOC also determined that restricting the employee from using the women’s restroom was an adverse employment action. According to the EEOC, “equal access to restrooms” constitutes a significant, basic condition of employment. Therefore, where a transgendered individual has begun living and working as a woman (or man), the employer must allow the employee access to the women’s (or men’s) restroom.
Finally, the EEOC rejected the employer’s arguments of 1) anticipated discomfort of female employees and 2) the employee-employer transition agreement. “Nothing in Title VII makes any medical procedure a prerequisite for equal opportunity.” The EEOC concluded an employer may not condition access to terms, conditions, or privileges of employment on completing certain medical procedures that the employer feels conclusively proves the individual’s gender identity. Even though the employee originally agreed to use the single-user restroom, employees cannot prospectively waive their Title VII rights.
This EEOC decision is not an anomaly or new trend. Rather, the EEOC has begun pursuing these types of sex discrimination cases with increasing frequency. In its most-recent Strategic Enforcement Plan, the EEOC identified “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions” as a top enforcement priority. Additionally, as Zashin & Rich previously reported, the EEOC filed two sex-stereotyping, gender-discrimination lawsuits in September 2014. In these cases, the EEOC alleged the employer discriminated against the transgendered employee because the employee failed to conform to the employer’s “sex or gender-based preferences, expectations, or stereotypes.” On April 21, 2015, one court concluded the EEOC sufficiently stated a claim under Title VII and allowed the case to proceed. EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., No. 14-13710, 2015 U.S. LEXIS 52016 (E.D. Mich. Apr. 21, 2015) In addition, the U.S. Court of Appeals for the Sixth Circuit, which covers Kentucky, Michigan, Ohio, and Tennessee, previously held that a transgendered individual presented a valid Title VII discrimination claim. Smith v. City of Salem, 378 F.3d 566 (6th Cir. 2004). On June 1, 2015, as Zashin & Rich recently highlighted, the Occupational Safety and Health Administration released a new best practice guide concerning transgendered workers’ use of workplace restrooms.
Given the EEOC’s increased emphasis on transgendered employees, employers must be cognizant of the protections Title VII and related state laws afford transgendered employees. In particular, employers should consider this EEOC decision when presented with employees transitioning their gender identity and employers should update their company handbooks and policies accordingly.
* Andrew J. Cleves, practices in all areas of labor and employment law. If you have questions about the impact of transgendered issues on your workplace, please contact Andrew (ajc@zrlaw.com) at 216.696.4441.
Employee Performance Reviews Have Their Day in Court: How Employers Can Get the Most out of Employee Performance Reviews
By Sarah K. Ott*Recently, the trial between Ellen Pao and her former employer, venture capital firm Kleiner Perkins Caufield & Byers (“Kleiner Perkins”), captivated the business and technology world. Pao, formerly a junior partner at the firm, sued Kleiner Perkins for gender discrimination and retaliation, seeking $16 million in damages. Pao argued that the firm’s culture prevented women from advancing into the more lucrative senior partner positions and that the firm retaliated against her after she filed the lawsuit, eventually terminating her employment. Kleiner Perkins asserted that Pao’s poor performance and inability to get along with colleagues prevented her from receiving a promotion and led to her discharge. On March 26, 2015, a California jury found for Kleiner Perkins on all counts. Since then, Kleiner Perkins has sought to recover close to $1 million in expenses incurred during trial from Pao, and a judge has tentatively ruled that Pao must reimburse Kleiner Perkins for about $250,000 in expenses. Pao recently filed a notice of appeal.
The lawsuit captured headlines in major newspapers and blogs because it pulled back a curtain on the inner workings of one of Silicon Valley’s most respected venture capital firms (known for funding Google and Amazon in their start-up days). From an employment law perspective, the trial highlighted some of the benefits and pitfalls of employee performance reviews. Both sides used Pao’s performance reviews as evidence, with Pao’s attorneys claiming they showed Kleiner Perkins’ bias against Pao, and the defense relying on them as records of her sub-par performance. In particular, Pao’s attorneys’ use of the performance reviews highlights the potential for reviews to backfire against the employer if not done well. Pao’s attorneys pointed to the reviews as evidence of retaliation, since she received poor performance reviews in the year after she filed her lawsuit (despite receiving far more positive reviews the year prior). They also used the performance reviews as evidence of discrimination, noting that Pao received conflicting feedback (advising her to be both more and less aggressive) and that her male peers who received similar comments were later promoted.
The trial serves as a reminder to employers on how to best use employee performance reviews to encourage better work from employees – and how to avoid potential legal pitfalls. Performance reviews can help employers by motivating employees to improve in certain aspects of their jobs or continue good work in other areas. They also create a written record showing that the employer counseled an employee on poor performance and track improvements (or lack thereof).
Abiding by the following tips will help employers more effectively use employee performance reviews:
- Common standards: create and adhere to the same standards so that every employee with the same job or role is evaluated based on the same criteria;
- Set goals: doing so sets a benchmark for the employer to evaluate that employee’s performance;
- Be specific: specificity helps employees understand the employer’s expectations and helps to prevent miscommunication;
- Use deadlines: informing employees of when they are expected to reach a goal creates a record of the employer treating the employee fairly; and
- Avoid personality critiques: rather than general criticism of an employee’s personality traits, employers should focus on specific instances when that trait created a problem.
Finally, to the extent that the employer can identify objective criteria, the review will be all the better.
* Sarah K. Ott practices in all areas of labor and employment law. For more information about conducting employee evaluations or other questions related to performance reviews, please contact Sarah (sko@zrlaw.com) at (216) 696-4441.
Courts Have Little Sympathy for Employer Mistakes in Complying with the Fair Credit Reporting Act
By Drew C. Piersall*The Fair Credit Reporting Act (“FCRA”) regulates the collection and use of consumer information, including employee background and credit checks, and requires employers that rely on third-party companies to conduct background checks to follow certain procedures in notifying the individual being checked. The requirements include the following:
- The employer must notify the individual that the information obtained in the background report may be used in the employer’s decision-making. The notice must be in a “stand-alone” format and may only have minimal additional information accompanying it.
- The employer must obtain the individual’s written permission to perform the background check. The permission form may be part of the notification document.
- For permission to obtain background reports throughout the individual’s employment, the employer must clearly state that intention on the permission form.
- In order to obtain an investigative report, including information on the employee or applicant’s lifestyle, personality, and reputation, the employer must inform the individual of his or her right to a description of the investigation and its scope.
The FCRA requires additional action from employers who take an adverse action based on the information learned from a background check conducted by a third-party company, such as deciding not to hire an applicant, revoking a job offer, or termination. Before taking the adverse action, the employer must provide the individual with a copy of the report and a document summarizing the individual’s rights under the FCRA and give the individual a meaningful opportunity to respond to the information.
Absent an adequate response and assuming the employer takes the adverse action, the employer must: (1) notify the individual of the adverse action; (2) provide the individual with specific credit score information from the report; (3) inform the individual of his or her right to obtain a free copy of the report within 60 days and dispute the information in the report; and (4) provide the contact information of the third-party company that compiled the report for the employer and explain that the third-party company did not make the decision to take the adverse action and cannot explain the reasons for the action. Employers also must destroy any background reports in a secure manner, such as by shredding them or permanently deleting electronic copies.
Despite the many requirements placed on employers by the FCRA, a spate of recent cases show that courts have little sympathy for employers who commit minor technical violations of the law, even when complying with the spirit of the law’s requirements. For example, a federal court in Virginia recently denied summary judgment to an employer who allegedly violated the FCRA when it failed to provide “stand alone” notice that it would be conducting a background check by including a liability waiver on the same document. Milbourne v. JRK Residential America, LLC, No. 3:12cv861, 2015 U.S. Dist. LEXIS 29905 (E.D. Va., Mar. 15, 2015). Other cases involve employers rescinding job offers based on information discovered through a background report before providing the job applicants with a meaningful opportunity to respond to the information. In one case, the employer revoked a job offer to an applicant based on erroneous information in a background report without giving the applicant a chance to challenge the report. Jones v. Halstead Management Co., LLC, No. 14-CV-3125, 2015 U.S. Dist. LEXIS 12807 (S.D.N.Y., Jan. 27, 2015). In another case, the employer rescinded a job offer after its receipt of an unfavorable criminal background report on an applicant without giving the applicant time to correct the inaccurate information with the consumer reporting agency before filling the position. Miller v. Johnson & Johnson, No. 6:13-cv-1016, 2015 U.S. Dist. LEXIS 4448 (M.D. Fla., Jan. 14, 2015).
In a more employer-friendly decision, a federal court in Massachusetts recently granted summary judgment for an employer despite the plaintiffs’ argument that the employer’s notice and request for authorization to conduct a background check did not limit itself “solely” to the disclosure because it included a short preamble regarding customer safety. Goldberg v. Uber Techs., Inc., No. 14-14264-RGS, 2015 U.S. Dist. LEXIS 44675 (D. Mass., Apr. 6, 2015). The court held the employer did not violate the FCRA by including “a few sensible words” about why the company chose to use background checks (i.e., customer safety). The court also found that the employer did not violate the FCRA by failing to notify the job applicant that it intended to make an adverse decision based on information included in the background report. The court found that the statute does not require advanced notice that the employer intends to take an adverse action – it merely requires providing the individual with the background report and a document stating the individual’s rights under the FCRA.
With FCRA cases seemingly on the rise, employers who use third-party companies to compile background information should review their background check policies and procedures. Failure to strictly comply with FCRA requirements can lead to costly litigation, including class action lawsuits brought on behalf of employees and applicants subject to the employer’s non-compliant background check policies and procedures.
* Drew C. Piersall works in the firm’s Columbus office and practices in all areas of labor and employment law. If you have questions about conducting background and credit checks or the FCRA in general, please contact Drew (dcp@zrlaw.com) at 614.224.4411.
Z&R SHORTS
Congratulations!
Seminars
Thursday, July 16, 2015 at 10:30 am
Patrick M. Watts presents "2015 Legal Update" at 10:30 a.m. at the Lake/Geauga Area Chapter of the Society for Human Resource Management luncheon.
Tuesday, September 22, 2015 at 1:00 pm
Jonathan Downes presents "Risk Management for Supervisors" for the Ohio Association of Chiefs of Police beginning at 1 p.m. at the Crowne Plaza Columbus North.
Crowne Plaza Columbus North | 6500 Doubletree Avenue, Columbus, OH
Thursday, September 24, 2015 at 10:00 am
Jonathan Downes and Drew C. Piersall present "Negotiations – Post Recession and Impact of The Affordable Care Act" for the Ohio GFOA – Annual Conference & Membership Meeting to be held at the Hilton Netherland Plaza in Cincinnati.
Hilton Netherland Plaza | 35 West Fifth Street, Cincinnati, OH
Friday, November 6, 2015 at 10:15 am
Patrick J. Hoban presents “Affordable Care Act” at 10:15 a.m. at the Ohio Conference for Payroll Professionals (OCPP) to be held at the Embassy Suites Hotel in Dublin, Ohio.
Friday, November 6, 2015 at 10:15 am
Michele L. Jakubs presents “FLSA/Time and Attendance Best Practices” at 10:15 a.m. at the Ohio Conference for Payroll Professionals (OCPP) to be held at the Embassy Suites Hotel in Dublin, Ohio.
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