Employer Law Report : Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

Starbucks recently won a limited victory in a case involving employees wearing pro-union buttons at work. National Labor Relations Board v. Starbucks Corp. Court of Appeals Second Circuit, Case No. 10-3511. A common union organizing tactic is to have pro-union employees wear union buttons at work. Employers often have the mistaken impression that they can ban union buttons at work as part of their dress code or uniform policy. But, the NLRB and courts have consistently held that expressing support for unions by wearing buttons on clothing is a protected means of expression about union organizing. Even if the company policy is to ban other sorts of buttons, like political campaign buttons or sports team buttons, union support buttons cannot be prohibited because wearing them is a special protected form of expression. Employers can restrict wearing union-support buttons only in very limited circumstances, such as when the buttons may scratch or otherwise damage products.

Even though Starbucks prevailed ultimately, the case illustrates how aggressively the NLRB enforces the rights of employees to wear union buttons at work. Starbucks was actually allowing employees to wear one pro-union button while working. The problem came when some employees insisted on wearing multiple union buttons at the same time. In fact, one worker was wearing eight union buttons. Starbucks argued that multiple union buttons detracted from the the impact of certain company-issued buttons and badges relating to the business. The NLRB held that Starbucks could not limit employees to wearing only one pro-union button. Starbucks appealed and the Second Circuit Court of Appeals reversed the NLRB and held that Starbucks could limit employees to wearing just one pro-union button at a time. The Court also reversed an NLRB finding that Starbucks had fired an employee for union activity and sent a similar claim regarding another worker back to the NLRB for further consideration.

The lesson: If you are faced with employees wearing pro-union buttons, pins, hats, t-shirts, etc., do not presume you have the right to ban or limit those actions. It is not enough to argue that you enforce restrictions consistently. The right to express support for unionization by wearing the message is one protected under the National Labor Relations Act. You should contact legal counsel before deciding how to handle the issue.
 

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The recent decision out of Texas in Sechler v. Modular Space Corporation highlights a recurring issue for employers -- managing employees who return to work following rehabilitation for substance abuse. In Sechler, the plaintiff, a recovering alcoholic, was by all accounts an excellent employee for approximately 10 years until he experienced a relapse. He requested EAP services and, as a result received outpatient treatment for about a month.

Upon returning to work, he was asked to sign a "Return-to-Work” agreement, outlining the requirements with which he had to comply as a condition of his return to work. The Agreement specified that Sechler was to attend weekly Alcoholics Anonymous meetings and provide proof of attendance, as well as submit to at-will drug and alcohol screenings. He also agreed that a positive result on any screening would result in his termination.

Upon his return to work, Sechler asked that he be given permission to leave work early to attend his AA meetings, but was told he needed to schedule them on his own time. He then was scheduled for and passed a drug screening. A few weeks later, he then began exhibiting what his coworkers described as unusual behavior; that his speech was slurred and that he smelled of alcohol. One co-worker said that he thought he had seen Sechler go to the passenger side of his car and take a drink.

As a result, ModSpace scheduled Sechler for another screening and, out of a concern for his and others' safety, insisted that he not drive there himself. He refused to go unless he could drive himself to the screening. ModSpace's chief human resources officer, Sean McManus, then offered to pay for a taxi to take Sechler to the testing facility, which Sechler also refused. Because Sechler refused to allow someone to drive him to the facility, he could not produce a complying test result, and McManus made the decision to terminate his employment.

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Employers often defend against discrimination and retaliation claims by arguing that courts should not act like super human resources managers who second guess their employment decisions. A panel of the Sixth Circuit took that argument to heart in its May 8th decision in Seeger v. Cincinnati Bell Telephone Co., in which the court upheld summary judgment in favor of the employer on the ground that the employer had an "honest belief" that the plaintiff had engaged in disability fraud.

Tom Seeger was on FMLA leave for aback injury when he was spotted at the Cincinnati Oktoterfest by several of his co-workers. One of the employees contacted human resources to say at Seeger was able to walk 50 to 75 feet, seemingly unimpaired. During the employer's investigation, however, others remarked that Seeger seemed to to be in pain. The employer's investigation investigation also included an interview of Seeger and a review of his medical records, disability file and employment history. Seeger was suspended and was given an opportunity to submit a statement as well as a statement from his physician. After considering all of this information, the employer decided that Seeger's activity at Oktoberfest was inconsistent with his claimed disability and terminated him for disability fraud.

Seeger filed suit for interference with his FMLA rights and for retaliation in violation of the FMLA. With respect to the interference claim, the court concluded that Seeger had been given all of the FMLA leave he had requested since he had actually returned to full duty during the course of the investigation. With respect to the retaliation claim, the court noted the closeness in time between the FMLA leave and the termination, but concluded that CBT made a “reasonably informed and considered decision” before it terminated Seeger, and that Seeger has failed to show that CBT's decision-making process was unworthy of credence.

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In 1999, in Cleveland v. Policy Mgmt. Sys. Corp., the U.S. Supreme Court held that in order to avoid summary judgment in a disability discrimination case brought under the ADA, a plaintiff must provide a "sufficient" explanation regarding any conflicting statements made in a Social Security disability application.  According to the Supreme Court, that explanation must be "sufficient to warrant a reasonable juror's concluding that, assuming the truth of, or the plaintiff's good-faith belief in, the earlier statement, the plaintiff could nonetheless 'perform the essential functions' of her job, with or without 'reasonable accommodation.'"

Last week, in EEOC v. Greater Baltimore Medical Center, Inc., the Fourth Circuit federal appeals court rejected the EEOC's position that Cleveland does not apply in enforcement actions brought by the EEOC on behalf of an individual claimant.  While acknowledging that the EEOC has a governmental interest in an enforcement action that is not merely derivative of the individual claimant's interest, the court concluded that "this does not mean that a claimant's statements to other government agencies are somehow less relevant to an enforcement action on behalf of the claimant than they are for an action pursued by the claimant himself."

In concluding that the EEOC and the claimant in GBMC did not meet this burden, the Court noted multiple comments from the claimant indicating his total inability to work and his failure to notify the Social Security Administration of his agreement to notify it if his condition improved to the point where he would be able to return to work.  While noting that it "did not condone" and was "deeply concerned" about the employer's failure to reinstate the individual claimant when the medical evidence demonstrated he was capable of working, the court granted the employer's motion for summary judgment stating that it was constrained to do so based on the plain language of the ADA and relevant case law.

GBMC found that reliance on the Cleveland decision was a great litigation strategy to avoid potential ADA liability, but there may be another lesson for employers to take from the GBMC case prior to litigation.  When an employee is seeking reinstatement from a lengthy leave of absence, employers should make sure they know whether the employee has applied for benefits that may be inconsistent with the request to return to work.  Doing so will help inform any reasonable accommodation process and will help employers ensure that they do not return employees to work who may not be able to work safely.  

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Here is one more potential advantage of using independent contractors rather than employers that so far has flown below the radar screen.  According to a federal district court in Wisconsin, the Fair Credit Reporting Act's disclosure obligations do not apply to independent contractor relationships.

When EMS Energy Marketing Service, Inc., terminated Phillip Lamson based on the results of a background check, it failed to provide him with a copy of the report or the written description of his rights under the FCRA as required by the Federal Trade Commission.  Lamson sued, alleging that his termination violated FCRA.  The Court concluded, however, that FCRA did not apply because Lamson was hired as an independent contractor.  In reaching this conclusion, the court stated that the unambiguous language of the authorization and disclosure sections of FCRA applies to use of a consumer report for the purpose of “evaluating a consumer for employment, promotion, reassignment or retention as an employee.” (emphasis added).

Because EMS did not obtain the consumer report to evaluate Lamson for a position as an employee of EMS, the court granted EMS's summary judgment motion-- but not before evaluating whether Lamson's relationship with EMS actually met the criteria for independent contractor status. The court evaluated the applicability of three different tests before settling on a common law test that the court concluded was met by EMS.

So where does this decision leave businesses? Among the many reasons why a business may choose to use independent contractors, avoiding FCRA liability is probably way down the list. Nevertheless, the court's decision in Lamson vs. EMS Energy Marketing Service, Inc., adds an interesting new wrinkle to the analysis.

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The Equal Employment Opportunity Commission (EEOC) decided on April 20, 2012 that discrimination against an employee on the basis that they are transgender was the equivalent of sex discrimination under Title VII of the Civil Rights Act of 1964. Macy v. Holder, EEOC Case No. 0120120821. Title VII protects employees against discrimination on the basis of a several protected classes, including sex. While many states and municipalities include transgender and sexual orientation as protected classes, Title VII has not been interpreted to protect these individuals on this basis alone. Individuals must show that the discrimination was based on their sex, which is often shown by arguing that stereotypes about genders played a role in the decision making.

The claimant in this case, Mia Macy, was a police detective in the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). Macy, then male, applied for a transfer within ATF. During the background check for the transfer, Macy informed the investigator that he was transitioning to a female. Five days after ATF learned this information, Macy was informed that the position was no longer available due to budgetary restrictions. Macy later learned that someone else had been hired for the position. Macy was later told that the other individual was hired because the individual was further along in the background check process. Macy believed that the other individual was chosen because of discrimination against Macy as a transgender person.

Macy filed a complaint with the EEOC alleging discrimination on the basis of “gender identity, change of sex, and/or transgender status.” ATF argued that this was not a recognizable claim under Title VII. Macy appealed to the EEOC for a determination. Initially, Macy also claimed sex discrimination on the basis of stereotyping, but that claim later was withdrawn. Courts have long-held that sex stereotyping—that an individual does not conform to the stereotypes for the male or female gender—is actionable.

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On April 25, 2012, the EEOC issued a new Enforcement Guidance memorandum focusing on potential race and national origin discrimination arising out of employer use of criminal background checks in making employment decisions. The Guidance discusses disparate treatment and disparate impact analysis under Title VII and concludes that the use of criminal background information may result in a violation of Title VII under either theory of discrimination. Specifically, the Guidance notes that a disparate treatment violation may occur when an employer treats criminal history information differently based on an applicant's or employee's race or national origin. Or, an employer's neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) that disproportionately impacts individuals based on their race or national origin would violate Title VII if the policy is not job related and consistent with business necessity.

The Guidance addresses the differences between arrest and conviction records. With respect to arrest records, the Guidance states that the fact of an arrest does not establish that criminal conduct has occurred, and an exclusion based on an arrest, in itself, is not job related and consistent with business necessity. However, an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question. By contrast, a conviction record will usually serve as sufficient evidence that a person engaged in particular conduct, but according to the EEOC, under certain circumstances, there may be reasons for an employer not to rely on the conviction record alone when making an employment decision.

The Guidance spends the most time discussing the potential disparate impact arising out of criminal background checks. According to the Guidance, national data generally supports a finding that criminal record exclusions have a disparate impact based on race and national origin. As a result, the EEOC will scrutinize a criminal record exclusions. This does not mean that employers cannot demonstrate that the particular exclusion it utilizes will automatically be found to have a disparate impact based on race or national origin. Instead, the EEOC will assess relevant evidence in determining whether a disparate impact exists. For instance, the EEOC will look at applicant flow information, workforce data, criminal history background check data, demographic availability statistics and incarceration/conviction and other similar data for the relevant labor market. Therefore, the employer may demonstrate the lack of any disparate impact by showing that local statistics show that African Americans and/or Hispanics are not arrested or convicted at disproportionately higher rates in the geographic area from which it does its hiring.

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On March 20, 2012, in a 5-4 decision, the Supreme Court of the United States ruled that states cannot be sued for denying workers sick leave under the FMLA.

Daniel Coleman, an African-American male, was employed with the Maryland State Court of Appeals from March 2001- August 2007 and served most recently as executive director of procurement and contract administration. Coleman requested a 10-day medical leave under the "self-care" provision of the Family and Medical Leave Act ("FMLA") to deal with his hypertension and diabetes. Coleman claims he was forced to resign or be terminated because he was African-American and had requested sick leave.

Coleman filed a lawsuit in the District Court alleging the State violated Title VII and the FMLA. He was seeking $1.1 million in monetary damages. The State of Maryland moved to dismiss the complaint based on the grounds that Coleman failed to state a claim for which relief could be granted and that his FMLA claim was barred by Eleventh Amendment immunity.

The State argued Congress did not enact the FMLA "self-care" provision to remedy a pattern of sex-based discrimination found in states' sick leave policies. The "self-care" provision of the FMLA was passed pursuant to the Commerce Clause, which cannot be used to pierce a states' sovereign immunity. The District Court and the Fourth Circuit Court of Appeals agreed.

This decision only denies employees of state agencies, state universities, and their political subdivisions (cities, counties, public boards, etc.), the right to sue state employers under the "self-care" provision of the FMLA. Public employers are reminded that all other forms of FMLA leave remain protected, so to avoid liability under other employment laws, public employers should continue enforcing medical leave policies consistently.
 

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The EEOC recently issued a revised publication on the employment of veterans with disabilities. According to the EEOC, the publication reflects changes in the law made by the ADA Amendments Act of 2008 (ADAAA), which made it easier for persons, including veterans, to establish they meet the definition of “disability.” The wide range of impairments covered by the ADAAA include those that are often not well understood, including post-traumatic stress disorder (PTSD), major depressive disorder, and traumatic brain injuries, as well as deafness, blindness, partial or missing limbs, and mobility impairments. This is an issue that will become of increasing relevance as large numbers of veterans return from Iraq and Afghanistan.

Employers should be aware that the ADAAA and the Uniformed Services Employment Reemployment Rights Act (USERRA) protect disabled veterans from discrimination in different ways. USERRA requires employers to go further than the ADA by making reasonable efforts to assist a veteran who is returning to employment to become qualified for a job, whether or not the veteran has a service-connected disability, often through training or retraining. Veterans may have up to two years from the date of completion of service to return to their jobs or apply for reemployment under USERRA. USERRA also applies to all employers, regardless of size, whereas the ADA applies to employers with 15 or more employees. Employers may be required to accommodate a disabled veteran under USERRA where they would not otherwise be required under the ADAAA.

The link to the updated guide on employment of disabled veterans is: http://www.eeoc.gov/eeoc/publications/ada_veterans_employers.cfm

Highlighting some of the guidance provided by the EEOC:

• Employers may not make assumptions about the veteran’s ability to do the job based on the fact that the veteran has a disability rating from the U.S. Department of Veterans Affairs (VA).
• Employers may, for affirmative action purposes (in accordance with rules regarding applicant self-identification for federal contractors and subcontractors), ask applicants to voluntarily identify as a disabled veteran prior to making an offer. This is an exception to the ordinary rule prohibiting employers from asking for medical information prior to making an offer.
• Employers may also ask for suitable candidates from organizations that help veterans or veterans with disabilities find employment. Federal contractors and subcontractors are required to take affirmative action to employ and advance qualified disabled veterans.
• The ADAAA does not prohibit employers from giving special preference to veterans with disabilities, but employers may not discriminate against individuals with disabilities, including disabled veterans.
• Employers should keep in mind that some veterans with service-related disabilities may require reasonable accommodations during the application process.

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The Department of Labor ("DOL") published proposed regulations to the Family and Medical Leave Act ("FMLA") on February 15, 2012, and the deadline for public comments has been extended through Monday, April 30, 2012.

The DOL introduced the proposed regulations to implement and interpret the 2009 amendments to the federal FMLA. They address three specific areas: 1) Military Family Leave; 2) Flight Crew FMLA Eligibility; and 3) the manner in which employers calculate increments of FMLA leave.

The proposed regulations include several changes in regards to Military Family Leave. First, military caregiver leave has been expanded to cover eligible employees whose family members are recent veterans (active within the past 5 years) with serious injuries or illnesses incurred in the line of active duty, where the veteran is undergoing medical treatment, recuperation or therapy. Previously, only current service members were covered.

Secondly, the definition of a serious injury or illness has been expanded to include serious injuries or illnesses that existed prior to service and were aggravated in the line of active duty.

Thirdly, private health care providers not affiliated with the Department of Defense ("DOD") or Veteran's Affairs ("VA") have been added as authorized health care providers that may provide the necessary "serious illness or injury" certification for military caregiver leave.

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The National Labor Relations Board has postponed indefinitely the effective date for its employee rights posting requirement. On its website, the NLRB states:

"The rule, which had been scheduled to take effect on April 30, 2012, will not take effect until the legal issues are resolved. There is no new deadline for the posting requirement at this time."

The NLRB's action is a result of the decision of the D.C. Circuit Court of Appeals earlier this week enjoining the posting rule while the appeal before that court is pending. (See our earlier post - NLRB Posting Rule Lifted:  At Least For Now.)

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In an order issued today, the Circuit Court of Appeals for the District of Columbia granted a temporary injunction, barring the NLRB from enforcing its posting rule, at least while the appeal before that Court is pending.

We reported yesterday about the decision by a federal District Court in South Carolina invalidating the NLRB posting rule. As we noted, that decision is in contrast with an earlier decision by a federal District Court for the District of Columbia upholding the NLRB's right to impose the rule. The D.C. District Court decision is currently on appeal to the Circuit Court of Appeals for the D.C. Circuit, which issued the injunction order today. The Court set a briefing schedule for hearing the appeal and directed that oral arguments be set for some time in September. That means the temporary injunction will stay in place at least until sometime this fall.

So, if you are keeping score: the NLRB's rule requiring posting was to take effect on April 30. Both cases filed in federal court challenging the rule have gone against the NLRB, at least for now. The dust will not have settled completely until these cases are decided on appeal. In fact, if there are conflicting decisions in the Courts of Appeal, the issue could reach the U.S. Supreme Court. But at least for now, employers will not be required to post the NLRB employee rights notice on April 30.

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In a much anticipated decision, the Ninth Circuit Court of Appeals held in an en banc decision in United States v. Nosal that the Computer Fraud and Abuse Act ("CFAA") was not intended to cover employee misappropriation of trade secrets, violations of corporate computer use policies or violations of an employee duty of loyalty. The decision, which overrules a previous Ninth Circuit panel decision in Nosal, creates a conflict with the Fifth, Seventh and Eleventh Circuits, all of which have interpreted the CFAA broadly to include such employee misconduct. As a result, we can probably expect this issue to show up on the Supreme Court's docket sometime in the future.

In Nosal, a former employee of an executive search firm convinced some of his former colleagues who were still working for the firm to help him start a competing business. The employees used their log-in credentials to download confidential data from a company computer and then transferred it on to Nosal. Under the firm's computer use policy, the employees had authorization to access the data, but were prohibited from disclosing it outside the firm. When his involvement in the plot was discovered, Nosal was indicted on several criminal counts, including a count alleging that he had violated the CFAA by aiding and abetting the current firm employees in "exceed[ing] their authorized access" with intent to defraud.

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Friday the 13th was unlucky for the National Labor Relations Board. A Federal District Court for South Carolina ruled on Friday that the NLRB overstepped its authority by issuing a rule requiring employers to post notices. In Chamber of Commerce of the United States v. NLRB, Case No. 2:11-CV-02516-DCN (D.S.C. April 13, 2012), Judge Norton considered the limits on the rights of federal agencies to impose obligations which are different from those Congress has imposed by law. The NLRB was created by Congress under the National Labor Relations Act (NLRA). Relying on the language of the NLRA, Judge Norton found that the NLRB was created to be reactive, not to create new obligations. The Judge found that the NLRB has two roles: conducting union representation elections; and deciding unfair labor practice charges. The Judge decided that because the NLRB has a purely reactive role, and because the NLRA does not establish any obligation for employers to post notices, the NLRB overstepped its authority by issuing the notice posting rule. The Judge noted the fact that in at least eight other federal workplace laws, Congress did include a posting requirement. The Judge reasoned that if Congress had intended a posting requirement under the NLRA, it would have been included in the statute.

The decision is in stark contrast with the earlier decision in National Association of Manufacturers v. NLRB, Case No. 11-CV-1629 (D.D.C. March 2, 2012). In that case, the Federal District Court for the District of Columbia upheld the Board's right to require posting. (For more discussion about this case, please see our previous post - Federal Court Upholds NLRB Posting Rule.) The D.C. District Court case is on appeal and it is likely the NLRB will appeal the decision of the South Carolina District Court.

So, with conflicting decisions by federal courts in two different parts of the country, what is an employer to do? It is possible the NLRB will postpone the current April 30, 2012 effective date for the posting rule. We will post a notice in this Blog if that happens. But, if the NLRB does not postpone the effective date, it will expect employers to post by April 30, with the possible exception of employers in the jurisdiction of the South Carolina District Court.
 

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