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The National Labor Relations Board Office of the General Counsel released an Advice Memorandum in Tasker Healthcare Group, d/b/a Skinsmart Dermatology ("Tasker") Case 04-CA-094222 on May 16, 2013 and concluded that an employee was not engaged in protected concerted activity when she posted comments to a Facebook group message that taunted her employer to "FIRE ME ... Make my day ..."

The Charging Party was employed by Tasker, which was a medical office with approximately nineteen employees. The Charging Employee along with a few current and former employees engaged in a private Facebook group message to organize a social event. The first hour of the exchange was non-eventful and focused on planning the social event. Things soon got interesting when a former employee made a joke. In response, the Charging Party mentioned that a former employee who had previously left was coming back to work and speculated that Tasker may make the returning employee a supervisor. The Charging Party then attacked her current supervisor claiming he "tried to tell [her] something today and [she] said aren't you the supervisor for mind and body ... in other words back the freak off..." But Charging Party was not done there and added, "[Tasker is] full of shit ... They seem to be staying away from me, you know I don't bite my [tongue] anymore, FUCK ... FIRE ME ... MAKE my day ..." Other than Charging Party, no other current employees took part in this portion of the conversation, but one did pipe up after Charging Party complained following a two hour lull that she had been deserted and there was "[n]o one to make [her]laugh." In response, the current employee said she made the Charging Party laugh and added "it's getting bad there [at Tasker], it's just annoying as hell. It's always some dumb shit going on." The Charging Party did not have anything substantive to add to this and no other current employee added anything else work-related.

As you might have guessed, one of the current employees included on the group message who did not say anything during the exchange showed the Facebook posts to the employer. The employer took Charging Party up on her request to be fired stating that it was "obvious" that she was not longer interested in working there, and indeed made her day.

The employee filed a charge alleging that her termination violated the National Labor Relations Act ("NLRA") because her Facebook comments constituted protected concerted activity. In an Advice Memorandum, the NLRB Office of the General Counsel concluded that the employee's Facebook message did not constitute protected concerted activity because they did not involve shared employee concerns over terms and conditions of employment. To understand this conclusion, it is important to understand the NLRB's test for concerted activity, which is whether the activity is engaged "in with or on the authority of other employees, and not solely by and on behalf of the employee himself" and includes circumstances where employees seek to "initiate or to induce or to prepare for group action," and where individual employees bring "truly group complaints" to the employer's attention. However, comments made "solely by and on behalf of the employee himself are not concerted" are not protected and neither is "mere griping" by an employee who does not look forward to any action.

Applying this to the facts at hand, the Advice Memorandum found that the employee's comments merely expressed an "individual gripe rather than any shared concerns about working conditions." Specifically, the employee's comments telling a supervisor to "back the freak off"; stated her employer was "full of shit"; and that her employer should "FIRE ME ... Make my day" reflected individual "griping" and personal contempt rather than shared employee concerns over terms and conditions of employment. In addition, there was no evidence that any of the Charging Party's coworkers interpreted the postings as shared concerns over their working conditions, not even the posting "it's getting bad there[,] it's just annoying as hell" because it was ambiguous and bore no relation to the Charging Party's earlier comments.

Takeaways: This one is a win for employers, but employers are still reminded to be cautious when terminating an employee for the things they say on social media. This case demonstrates that even when an employee's comments on social media are so outrageous that they literally ask the employer to fire the employee, the employer must still do some analysis to determine whether the comments may constitute concerted protected activity under the NLRA. So employers keep the NLRB's standard for concerted protected activity in mind before terminating an employer for social media posts and ask yourself: (1) What was said? (2) Who said it? (3) Who commented on it or chimed in on the conversation? (4) Could it be considered shared employee concerns about terms and conditions of employment?
 

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Two Sixth Circuit decisions issued last week underscore the hazards associated with terminating an employee between the time that she announces her pregnancy and any time shortly after she returns from pregnancy leave. Fortunately, both decisions, which uphold lower court summary judgment decisions, also demonstrate that an employer can escape liability when it has valid reasons for the termination, even when the termination was made at a time that was temporally close to the pregnancy announcement or the pregnancy itself. In the first decision, Madry v. Gibraltar National Corporation, the court upheld summary judgment for the employer on Madry’s claim that the FMLA required her employer, Gibraltar, to reinstate her to the position that she held prior to her leave. Gibraltar defended on the grounds that an employee returning from FMLA leave is not entitled to restoration unless she would have continued to be employed if she had not taken FMLA leave. Gibraltar claimed that Madry was terminated for lack of work caused by economic reasons. It does not appear that Madry relied on the retaliation provisions of the FMLA nor any state or federal pregnancy discrimination statutes to support her contention that her termination was unlawful.

Madry offered four reasons why the employer’s “lack of work” explanation should not be believed. First, she argued that another similarly situated employee whom the employer identified as having also been laid off during her FMLA leave for a “lack of work” really was a “problem employee who at best was laid off for multiple reasons and at worst because she performed poorly.” The court, however, easily rejected this argument because it did not refute that “lack of work” was one of the reasons for the layoff. Second, she argued that the economic data did not support the employer’s claim that it suffered a downturn in business, but in fact shows that business was slightly increasing. The court again, however, rejected this argument because the economic data for the critical two months leading up to the decision not to reinstate Madry supported the employer’s argument that its business was in decline prior to the termination decision. In addition, to the extent that Madry argued that Gibraltar was required to show that her termination was economically required, the court noted that reducing labor costs and improving efficiency are valid business reasons for conducting layoffs, even when the degree to which such actions are motivated by economic hardship is debatable. Third, Madry argued that any terminations occurring after her termination were irrelevant to her claim and Gibraltar’s proffered reason for her termination. Though the Sixth Circuit agreed with this argument, it also held that this evidence is not necessary in finding the employer’s proffered reason legitimate, as the pre-termination economic data amply supported its burden of production. Finally, Madry argued that Gibraltar did not produce any company communications from around the time of her leave and termination that indicate a necessity for company layoffs as a result of reduced business. The court held, however, that the lack of any formal communications regarding the necessity to lay off employees does not render its decision unreasonable.

In the second case -- Megivern v. Glacier Hills Incorporated -- the plaintiff alleged that her employment was unlawfully terminated on the basis of her pregnancy and that her employer interfered with benefits due her under the FMLA and ERISA. The facts of this case are quite long and involved. Suffice it to say that Megivern had ongoing performance issues that resulted in her being placed on a performance improvement plan (“PIP”) approximately two weeks after announcing her pregnancy to co-workers. Approximately five weeks later, she was terminated for not improving to satisfactory status after being placed on the PIP. As these cases typically develop, in upholding the lower court’s grant of summary judgment in Glacier Hills’ favor, the Sixth Circuit focused ultimately on whether Megivern had sufficient evidence to prove that Glacier Hills’ proffered performance reasons for the termination decision were pretextual. In particular, the court found that the temporal proximity between the pregnancy announcement and the termination was not sufficient by itself to establish pretext. Instead, the court required Megivern to present other, independent evidence of pretext, which she was unable to do. The court rejected Megivern’s primary argument that the reasons for her termination shifted over time, finding instead that “the rationale given for terminating Megivern’s employment was clearly articulated in the termination notice prepared by Thompson and has remained the same since. In addition, the court not surprisingly found that the final decision-maker’s failure to congratulate her on her pregnancy did not provide evidence of pretext, especially since there was no evidence that Megivern had ever told that she was pregnant directly. Finally, Megivern presented “me too” testimony from three other employees who contended that they too were treated badly based on their pregnancy, but the court upheld the rejection of this evidence because the others’ situations were all factually distinct from Megivern’s.

Madry and Megivern demonstrate that an employee’s pregnancy does not immunize her from discipline or termination. This, of course, does not mean that a discipline or termination decision is not going to result in lengthy and costly litigation against a potentially sympathetic plaintiff. Nevertheless, particularly where legitimate business reasons -- whether they be economic or performance-based -- can be documented, the employer may be better served by taking the litigation risk rather than whatever risks may be associated with retaining the employee.
 

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In today's world of social media, we know that employees live online. With LinkedIn, this includes having a living resume for anyone with a LinkedIn account to see. The up-to-date part, or rather how up-to-date someone's LinkedIn profile (or resume) is, has become somewhat of a concern.  The recent case of Jefferson Audio Video Sys. Inc. v. Light (W.D. Ky. May 8, 2013) demonstrates how the updating of a LinkedIn profile can become a concern for employers, particularly as it pertains to an employer's former employees. 

Here is the situation: An employee leaves a company for whatever reason yet fails to update his or her LinkedIn profile. To anyone who views the individual's profile or searches the company's name, the individual appears to be a current employee.

In Jefferson, the employer Jefferson Audio Video Systems, Inc. ("Jefferson") sued former employee Gunnar Light ("Light") in part because he said some pretty awful things about the company to a customer while employed and, in part, because he would not update his LinkedIn profile. So, how did that turn out for the employer? Not so well.

Jefferson hired Light as a Sales Manager. During a sales meeting with a customer, Light allegedly made some less-than-flattering statements about the company to the customer, including comments that Jefferson was "unorganized," that "they don't know what's going on," "they've made a mess of things," "I unfortunately am stuck with this Company that is very dysfunctional," and suggested that the fact that Jefferson had a business at all was "a miracle." While Light made the sale despite his employer bashing, the sale was for less than Jefferson had anticipated. Not surprisingly, when Jefferson became aware of Light's statements about the company, it fired him.

Jefferson sued Light alleging numerous state law claims including: defamation, tortious interference, breach of fiduciary duty, trade, disparagement, fraudulent misrepresentation, and breach of contract. Light moved to throw out Jefferson's lawsuit, and the court did.

Light’s failure to update his LinkedIn profile provided the basis for Jefferson's claim for fraudulent misrepresentation. Jefferson claimed that for several months following Light's May 9, 2011 termination, he "falsely represented on social media outlets, such as LinkedIn, that he held the position as ... International Managing Director after his date of termination." According to the opinion, Jefferson had contacted Light twice in May 2011 to request that he update his social media to indicate that he was not a current employee of Jefferson. Light responded that "he intended to promptly update his employment profile," but he did not change his information until after he received a third request in June, in which the company said it would file a formal complaint with LinkedIn.

The court found that Jefferson failed to plead the claim with the required particularity because Jefferson failed to "indicate it reasonably relied on Light's misrepresentation" and admitted as much in its response brief that it was "not asserting that it a was defrauded by Light but, instead, is making a claim that Light's fraudulent misrepresentation to the world damaged [Jefferson]." Because Jefferson failed to assert facts that it reasonably relied on Light's misrepresentation itself, a requirement to the claim, the court found the claim lacking and threw it out.

The company also attempted to argue that it was somehow advocating that Light committed fraud on potential third-party customers, but the court did not buy that argument either.

[C]iting no case law in support of its argument, [Jefferson] urges this Court to expand the scope of an actionable fraud claim by permitting it to assert a claim based upon third party rights. [Jefferson] wants to stand in the place of those customers with reference to the issues of intentional misrepresentation and reliance upon the same. While novel in its genesis, Kentucky courts have not recognized such an argument."

As an aside, the court's decision throwing out the employer's defamation claims is also instructive for employers because the court did a nice job of outlining what constitutes defamation in this setting and what does not. Here, the court tossed the employer’s defamation claims because it found Light's statement to be "protected expressions of opinion," which are not actionable as they are expressions that merely voice "subjective thought". So employers a caution: Statements of opinion, rather than fact, typically won’t provide a basis for a defamation claim.

Takeaways: Employers, while it is understandable that you do not want a terminated former employee holding out that he or she still works for you, it may not be worth your time to try to force the former employee to update their social medial through the courts. It might be more worthwhile to contact LinkedIn who may take up the issue with the user based on their user terms and conditions. In any case, if the saying "it's easier to find a job when you already have a job" is true, allowing a former employee to keep a "currently employed" status might allow your former employee to get a new job faster. The upside for you, it will stop unemployment payments to the former employee and, if the employee had a wrongful termination claim against you, it will stop any potential back pay from continuing to accrue. Another thought, you may include in the employee's offer letter and/or separation agreement a provision where the employee agrees to update all social media to reflect that he or she is no longer employed with the company no later than three days (or whatever you deem reasonable) after separation of employment for whatever reason.

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The Office of Federal Contract Compliance Programs (OFCCP) recently released a notice that the 2006-2010 census data must be used for all affirmative action plans for plan years beginning on January 1, 2014, and OFCCP will begin using 2006-2010 census data to evaluate affirmative action plans and efforts as of that same date. Keep in mind that, since the data was released in late November 2012, federal contractors were permitted to voluntarily begin using the census data, which is based on a compilation of 2006-2010 American Community Survey (ACS) data. Contractors should keep in mind that the data is coded and categorized differently than the 2000 census data and should plan accordingly regarding the preparation of any 2014 affirmative action plans.

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Recently, we pointed out that the effort by the National Labor Relations Board to impose on all employers an obligation to post notices about union organizing rights remains stalled. That article resulted in some questions about whether federal contractors and subcontractors are still required to post a notice about union organizing. The posting obligation for federal contractors and subcontractors is based on Executive Order 13496, which was signed by President Obama in 2009 and took effect in June, 2010. That obligation remains in effect for federal contractors and subcontractors. It is not changed by the NLRB's stalled effort to extend the obligation to all employers.

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Please join the labor and employment group of Porter Wright as we address issues that will help keep your workforce out of hot water. 

There is no charge for this seminar; however, seating is limited. Register today!

Topics Include:

Case Law Update:
A Sprinkling of New Cases from State and Federal Court

Health Care Reform is Raining Down:
What Employers Need to Do to Take Cover

Stopping the Flood of Intentional Torts

Riding the Social Media Tidal Wave: 
Understanding the Risks and Rewards for Employers Need to Do to

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It has been almost a year since there was news to report about the NLRB proposed rule requiring employers to post notices about union organizing rights. As you might recall, the NLRB issued the rule in the fall of 2011 and it caused immediate controversy. Many in the business community considered the posting an unwarranted effort by the NLRB to support union organizing. Many considered the rule to go well beyond the NLRB's authority under the National Labor Relations Act. Lawsuits were filed in two federal district courts challenging the NLRB's authority to issue and enforce the rule. The lower court decisions in those cases were in conflict. A district court in South Carolina ruled that the NLRB had exceeded its authority and could not enforce the rule. The district court for the District of Columbia upheld the NLRB's right to issue and enforce the rule in general, but overruled two specific aspects of the rule. Both of these lower court decisions were appealed to the federal Courts of Appeal; the Fourth Circuit Court of Appeal which covers South Carolina and the D.C. Circuit Court of Appeal. As a result of the litigation, in April of 2012, the NLRB issued an indefinite stay on the enforcement of the rule. Since then, we have been waiting to see how the issue would be decided by the Courts of Appeal.

On Tuesday, the D.C. Circuit Court of Appeal issued its decision in National Ass'n of Manufacturers, et al. v. National Labor Relations Board, et al. (U.S. Court of Appeals for the District Court of Columbia Circuit, Case No. 12-5068). The Court found that the NLRB cannot enforce the posting rule. The majority decision invalidates the rule because it essentially forces an employer to communicate to its workforce about unionization. The majority found that doing so violates the employers' right under the National Labor Relations Act to speak or be silent about union organizing issues. Because the rule was invalidated on those grounds, the majority decision does not address the question of whether the NLRB can even issue a rule requiring employers to take some affirmative step, like a posting. One of the arguments in the case was that the NLRB's specific role under the law is conducting union organizing elections and investigating alleged unfair labor practices, and that they have no authority to make employers do anything outside that limited role.

So, where do things stand now? The NLRB had already imposed an indefinite stay on enforcing the rule, so clearly the rule is currently dead. The decision by the D.C. Circuit Court of Appeals may make it less likely the rule will ever re-surface. But do not be too sure of that.

The NLRB will probably continue to fight the case pending in the Fourth Circuit Court of Appeals to see if it can obtain a different result there. The NLRB can also appeal the issue to the United States Supreme Court. Certainly, we will report on any further developments.
 

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First it was Wisconsin. Then Indiana. Then Michigan of all places. Right-to-work legislation is being considered, and in some cases passed, by legislatures throughout the Rust Belt. Given that trend, and the economic benefits to businesses and the state that follow with right-to-work, it was only a matter of time before regional pressures led the Ohio legislature to consider the idea notwithstanding the previously failed attempts on Senate Bill 5.

Just recently, two Ohio House of Representatives members, Kristina Roegner (R-Hudson) and Ron Maag (R-Lebanon), announced they are sponsoring bills that would enact right-to-work for both the public and private sectors in Ohio. There are two proposed avenues: by statute or by a constitutional amendment engraining right-to-work in the Ohio Constitution. The legislation encompasses a basic right-to-work provision and only prevents an employee from being forced to join a union or pay dues to a union as a condition of employment.

However, just the other day, all of this became a moot point—for now. Ohio Senate President Keith Faber announced that right-to-work legislation will not be taken up by the Ohio Senate. This effectively makes right-to-work “dead in the water.” It also has been reported that Governor John Kasich was not particularly interested in the idea. As of April 8, 2013, the New York Times’ expert pollster and election predictor Nate Silver of the FiveThirtyEight blog, places Governor Kasich in “better shape” for his reelection in 2014. According to Mr. Silver, surveys are showing Governor Kasich currently has a 50% job approval rating. This compares to a job approval rating in the 30s for Kasich in 2011 when Senate Bill 5 was in the forefront. For Kasich, he has nothing to gain (and everything to lose) by forcing a controversial issue and reigniting the firestorm.

But the question may be one of timing. Governor Kasich is up for reelection in 2014. Republicans are also trying to hold the U.S. House of Representatives and make gains in the U.S. Senate. Motivating unions to campaign with their union dues and get-out-the-vote efforts in 2014 by pushing right-to-work does not seem like the wisest course of action for Republicans in Ohio. It would heavily motivate the Democratic Party and Democratic voters. This was explicitly acknowledged by Ohio Senate President Faber, when he said “[t]he only purpose this discussion serves right now is to generate a bunch of breathless fundraising appeals from the Ohio Democratic Party.”

So, for now, right-to-work is on the minds of Ohio’s Republicans, but the expectation is no legislation will be forthcoming. Expect the issue to die out in time for the 2014 election, but then it may rear its head once again in 2015. If right-to-work can be enacted in Michigan, it can certainly be enacted in Ohio.
 

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Until the Ohio legislature enacted R.C. 2745.01 in 2005, the employer intentional tort exception to workers’ compensation immunity exasperated Ohio employers. Under the exception as interpreted by the Ohio Supreme Court, employers could be held liable for an intentional tort (with the accompanying tort damages such as punitive damages) so long as they had knowledge of a dangerous condition in its workplace that was substantially certain to cause injury and nevertheless required its employee to work under that condition. This was a very relaxed standard for an “intentional” tort and one that was made even more relaxed by increasingly liberal interpretations from Ohio appellate courts.

R.C. 2745.01 was designed to raise the standard by requiring employees to prove that the employer acted with “deliberate intent” to cause an employee to suffer an injury, a disease, a condition, or death. The statute created only two presumptions of a deliberate intent to injure: (a) if an employer deliberately lied to an employee about whether a substance was toxic or hazardous and as a result that substance injured the employee, or (b) if an employer deliberately removed an “equipment safety guard” and as a result of the removal the employee was injured. In those two circumstances, specific intent would be presumed.

Once the Ohio Supreme Court upheld the constitutionality of R.C. 2745.01 the plaintiffs’ bar attempted to find ways around the statute to once again open up the lucrative business of employer intentional torts. However, one-by-one early successes by the plaintiffs’ bar in the appellate courts have been overturned in the Ohio Supreme Court.

For example, in Houdek v. ThyssenKrupp Materials N.A., Inc., the Ohio Supreme Court rejected the Eighth Appellate District’s finding that R.C. 2745.01 did not really require deliberate intent to injure in order to establish an employer intentional tort. Similarly, in Hewitt v. L.E. Myers Co., the Ohio Supreme Court rejected the Sixth Appellate District’s broad interpretation of an “equipment safety guard” to include personal protective equipment (rather than a guard attached to a piece of a equipment) Had it been upheld, the lower court decision in Hewitt in effect would have imposed an affirmative duty on employers to make available personal protective equipment at the risk of being found liable for an employer intentional tort. In reaching its decision, the Ohio Supreme Court in Hewitt defined an equipment safety guard as “a device designed to shield the operator from exposure to or injury by a dangerous aspect of the equipment.”

Despite the Ohio Supreme Court’s rejection of expansive interpretations of employer intentional torts from the intermediate courts of appeal, the Sixth Appellate District again has attempted to find a way around the statute. Specifically, in Pixley v. Pro-Pak Industries, Inc., the Sixth District concluded, contrary to the Supreme Court's Hewitt decision, that for purposes of interpreting R.C. 2745 an equipment safety guard need not be a device “designed to shield the operator [of the equipment] from injury.” Therefore, according to the Sixth District non-operators injured by removal of such a device from a piece of equipment could obtain a presumption of specific intent and proceed to a jury on an employer intentional tort claim. This interpretation by the Sixth District, if upheld by the Ohio Supreme Court, would substantially expand the scope of the intentional tort exception by expanding the types of devices that can constitute equipment safety guards as well as expanding the types of employees who could argue for the exception.

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The National Labor Relations Board (NLRB) has issued its third Facebook firing decision. In Design Technology Group LLC dba Bettie Page Clothing (Case No. 20-CA-035511, 359 NLRB No. 96), the Board found that the employer, a clothing store, violated Section 8(a)(1) of the National Labor Relations Act (NLRA) by discharging three employees for engaging in what the Board deemed protected concerted activity after the employees posted messages on Facebook complaining about their working conditions. The Board also held the store violated the NLRA by maintaining a “Wage and Salary Disclosure” rule in its handbook prohibiting employees from disclosing information about wages or compensation to any third party or other employees.

The employees worked at a retail store in a tourist area in San Francisco. The store closed an hour later than other stores in the area, and employees claimed they felt unsafe leaving when the area was deserted. The employees directed their concerns to the manager, who they claimed did nothing. The employees went over the manager's head to the store owner who said they would close the store earlier. The manager got upset because the employees went around her to the owner and verbal arguments between the manager and employees ensued. So what did the employees do? Well, they did what every 20-something-disgruntled-clothing-store employee does when they are mad — they took to Facebook and posted about the situation to hundreds of their closest “friends.” While some comments were clearly unprotected venting that were not directed specifically to work conditions, e.g., “bettie page would roll over in her grave” and “I’m physically and mentally sickened,” one zinger was a more than a rant: “hey dudes it’s totally cool, tomorrow I’m bringing a California Worker’s Rights book to work. My mom works for a law firm that specializes in labor law and BOY will you be surprised by all the crap that’s going on that’s in violation 8) [sic] see you tomorrow!”

And as many 20-something-clothing-store employees would do, one employee who saw the posts showed them to the owner who subsequently fired the other three employees. One of the terminated employees filed an unfair labor practice charge with the NLRB challenging the termination and the employer’s policy that prohibited employees from discussing their wages and salary.

By now, I think we know how this story ends. The NLRB found the Facebook posts were part of the employees' efforts to get the clothing store to close earlier based on safety concerns and thus, the store committed an unfair labor practice when it fired the employees. Neither the ALJ nor the Board bought the employer’s argument that the posts were an attempt to entrap the employer into firing the employees and were not intended for employees' mutual aid and protection. Going one step further, the NLRB held the posts themselves constituted protected concerted activity under the NLRA. Specifically, the NLRB found: “The Facebook postings were complaints among employees about the conduct of their supervisor as it related to their terms and conditions of employment and about management’s refusal to address the employees’ concerns,” the board's decision said. “Such conversations for mutual aid and protection are classic concerted protected activity, even absent prior action.” The Board ordered the store to reinstate all three employees and to give them back pay. That reunion should be interesting!

Takeaways:

• This should be old hat by now as it follows the Board’s rulings in Karl Knauz Motors, Inc., case i.e., the “this is your car on drugs” and the Hispanics United of Buffalo Inc. case, i.e., the “a coworker feels that we don’t help our clients enough,” but, nevertheless, here we go again. If an employee complains in any forum about their working conditions, including on social media, those complaints likely are protected and an employer may not take adverse action against the employee for those complaints/posts.
• Employers cannot issue gag orders and prohibit their non-management employees from talking about their wage and salary information. An employer can argue that this information is confidential, but they will lose this argument in favor of an employee’s rights under the NLRA.

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Back in August, we alerted you to an NLRB decision in Banner Health System dba Banner Estrella Medical Center and James A. Navarro, Case No. 28-CA-023438, in which the Board held that an employer’s blanket rule requiring employees to maintain the confidentiality of pending internal company investigations violated the employees’ Section 7 right to discuss discipline or disciplinary investigations involving their fellow employees. At the time, we expressed the concern that the NLRB's position complicates an employer’s ability to protect the integrity of an ongoing investigation. Nevertheless, at the time, we recommended that employers should treat each investigation on an individualized basis and that employers should document its specific business rationale for requesting employee confidentiality during an investigation.

Last week, the NLRB’s Division of Advice issued a Memorandum revisiting this issue. In Verso Paper, NLRB Div. of Advice, No. 30-CA-89350, 1/29/13 [released 4/16/13] Associate General Counsel Barry J. Kearney advised that the employer maintained an overbroad rule requiring employee confidentiality to maintain the integrity of all internal investigations. The company’s Code of Conduct specifically provided:

Verso has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Reviewing this policy, Mr. Kearney reiterated the Board’s position from Banner Health that an employer must show more than a generalized concern with protecting the integrity of its investigations. “Rather, an employer must ‘determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, and there [was] a need to prevent a cover up." Thus, according to Kearney, a blanket rule prohibiting employee discussions of ongoing investigations is unlawful because it does not require the employer first to demonstrate a particularized need for confidentiality in any given situation. He therefore advised the NLRB’s Region 30 Director to issue a complaint against the employer in the absence of settlement.

In a footnote to his Memorandum, Mr. Kearney provided employers with a safe harbor policy that would avoid the potential Section 7 pitfalls. Specifically, he noted that the first two sentences of the employer’s rule lawfully set forth a legitimate interest in protecting the integrity of its investigations and then recommended modifying the remainder of the rule to lawfully advise employees that:

Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

It is easy for employers to make any necessary changes to its policies. In addition, there is not a lot of gray area in the Board’s position as there was with respect to social media policies. Therefore, it is unlikely that we will see any actual litigation arising out of the Verso complaint if it gets issued or regarding any other similar company policies. As we previously pointed out, however, it is hard to imagine many, if any, internal investigations that could not be thwarted by the loose lips of co-workers. As a result, I expect that the next significant clash on this issue that goes before the Board will address actual employee discipline cases. When that happens, we will see how far the Board is willing to go to protect employees who interfere with their employer’s internal investigations.
 

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By a tight five-to-four decision, the United States Supreme Court's Genesis Health Care Corp. v. Symczyk decision provides employers a method to "pick off" the lead plaintiff in an FLSA collective action using a Federal Rule of Civil Procedure 68 offer of judgment and by doing so, take out the remaining collective action. For reasons we will explain in a bit, however, the Court merely "assumed" -- without deciding -- that an unaccepted Rule 68 offer of judgment that offers complete relief moots the named plaintiff's individual claim and, in the absence of any other claimant having opted into the action, the individual plaintiff lacks any personal interest in representing others in the case. Because the Court was unwilling to resolve the predicate issue as it was anticipated it would, however, there remains a split among the circuit courts of appeal as to the effect of the Rule 68 offer of judgment under this scenario. As a result, the four dissenting justices argued, the decision “aids no one, now or ever” and should simply be forgotten.

Because the circuits are split on the mootness issue, employers should take Genesis for what it is: A potential weapon to stop frivolous wage/hour cases before they become expensive collective actions and further indication of the Supreme Court's efforts to limit the ability to bring class and collective actions – at least in those Circuits -- the Third, Fourth, Seventh (and perhaps the Fifth, which appears to be leaning this way) – that already have held that an unaccepted offer of judgment moots an individual plaintiff's claims. Unfortunately for those employers in Ohio, the Sixth Circuit, along with the Second, has gone the other way, rendering this strategy useless here – until the Supreme Court ultimately decides to actually resolve the split.

The Back Story: This case originated when respondent Laura Symczyk ("Symczyk") filed this case on behalf of herself and "all other persons similarly situated" as a collective action under the Fair Labor Standards Act ("FLSA") against her former employer, the petitioners, alleging the company's automatic meal break deduction policy violated the FLSA because it failed to pay employees for compensable work. While Ms. Symczyk purported to bring the case as a collective action, rather than a single-plaintiff lawsuit, she remained the sole plaintiff.

When the petitioners answered the complaint, and before Symczyk could move for conditional certification, they served Symczyk a Federal Rule of Civil Procedure Rule 68 offer of judgment and offered her $7,500 for her alleged unpaid wages, "reasonable attorneys' fees, costs, and expenses" as the Court would determine. The petitioners gave Symczyk ten days to respond, and when she did not, petitioners filed a motion to dismiss for lack of subject matter jurisdiction arguing they had offered Symczyk complete relief on her individual damages claim and she no longer had a personal stake in the outcome of the case. Symczyk argued in response that the petitioners were trying to "pick off" the named plaintiff before the collective action could play out.

The District Court found that because no other individuals had joined the suit and the Rule 68 offer of judgment fully satisfied Symczyk's individual claim, Symczyk's claim was moot and it dismissed her suit for lack of subject matter jurisdiction.

On appeal, the Third Circuit reversed. In holding that the case was not moot, the Third Circuit explained that the defendants' attempts to "pick off" the named plaintiff with a Rule 68 offer could short circuit the collective action process and frustrate the goals of collective actions. The Third Circuit remanded the case to allow Symczyk to seek conditional certification.

The Supreme Court's Decision: The Supreme Court overturned the Third Circuit. While most waiting for this decision expected the Supreme Court to resolve the issue of whether an unaccepted offer of judgment under Rule 68 that fully satisfied a plaintiff's claim renders a claim moot, it did not. While recognizing this is an issue on which the circuit courts remain split, the Court refused to decide this significant issue. Rather, the Court chose to "assume" Symczyk's individual claims were moot because she had conceded the point at the district court level and had not filed a cross-petition challenging it. The majority then determined that Symczyk had no "personal interest" left in the case to represent the other employees who had failed to join the suit, and therefore had no other "continuing interest to preserve her suit".

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The United States Supreme Court issued an opinion earlier this week in an ERISA case regarding the breadth of Section 502(a)(3) relief, and the common-fund doctrine. While the decision was unanimous on the primary issues, the Court surprised us with a 5-to-4 split on a secondary issue. Overall, the decision in U.S. Airways, Inc. v. McCutchen is favorable for employers sponsoring health care plans. The decision is also favorable for health care plan participants in the aggregate because it allows for control of plan costs, and premiums, at a critical time when plans are gearing up for 2014 health care reform cost increases.

We discussed the facts and prior decisions in this case in considerable detail in a prior blog. You might want to review that blog to put this decision in context. To summarize, a health care plan provided that it would cover expenses caused by a third-party, subject to the condition that the plan be reimbursed from any monies recovered from a third party. (This is a common provision in ERISA health care plans, intended to control costs for all participants and to avoid costly litigation over recovery.) Mr. McCutchen was in an auto accident with another vehicle, and the plan paid $66,866 of health care plan expenses he incurred due to that accident. After Mr. McCutchen recovered funds from the other driver and his own insurer for underinsured motorist coverage, the plan sought reimbursement of expenses it had paid, in accordance with plan terms. He refused to repay anything, and the case headed to court.

Eventually, the U.S. Supreme Court agreed to hear the case to resolve a circuit split on whether "equitable defenses" could override an ERISA plan's reimbursement provision. Justice Kagan delivered the opinion, joined by four other justices. Applying prior case law (Sereboff v. Mid Atlantic Medical Services, Inc.), the Court first held that in a Section 502(a)(3) action based on equitable lien by agreement, the ERISA plan's terms govern. Neither general unjust enrichment principles nor specific doctrines reflecting those principles can override the applicable contract. Accordingly, the plaintiff's argument that double-recovery rules prevailed over plan terms was rejected. The participant was being held to the agreement to reimburse in the event of recovery.

The Court next rejected the Department of Labor's argument that the common-fund rule has a special capacity to trump a conflicting contract. The common-fund rule provides that "a litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole." The Court found that this rule was treated the same as any other rule: ERISA plan terms prevail.

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Cases involving an equal opportunity harasser are usually entertaining, but Colston v. Cleveland Public Library, (6th Cir. Apr. 15, 2013) is also educational because it demonstrates how an employer can properly get rid of an equal opportunity harasser and defeat discrimination and harassment claims based on the harasser's conduct at the same time.

Plaintiff Mary Jane Colston was, and still is, a union security officer with the Cleveland Public Library ("CPL"). Ms. Colston alleged that the CPL, along with several of its employees, sexually harassed her, retaliated and discriminated against her because of her gender, and was liable to her for intentional infliction of emotional distress. She also charged the CPL with negligently hiring Melvin Abrams, the CPL's former Assistant Chief of Security, against whom the bulk of Ms. Colston's allegations were ultimately directed. The CPL and the individually-named defendants prevailed on all claims at the district court and Sixth Circuit court levels.

Here is what I found most interesting about this case. A person who harasses everyone, male or female, is not harassing or discriminating against someone because of gender. The standard for gender discrimination under Title VII and the Ohio Civil Rights Act, Ohio Revised Code 4412.02 is that to be actionable, the verbal or physical harassment must be "because of sex." Similarly, to establish a hostile work environment, a plaintiff must demonstrate that the harassment was "based on sex." In other words, a plaintiff seeking protection under the discrimination laws must affirmatively establish that he or she was "treated differently than similarly situated" individuals because of gender. If the same demeaning or derogatory conduct is directed at men and women alike, it is not "because of" or "based on" gender and is not actionable.

Ms. Colston cited a few different ways she suffered discrimination and/or a hostile work environment, but none were deemed actionable. Ms. Colston claimed that Mr. Abrams engaged in "unprofessional" behavior by using insulting and profane language and made comments about her physical appearance. Now, if Mr. Abrams had been speaking just to Ms. Colston, referring to just Ms. Colston's physical appearance, or using a gender-specific epithets like "bitch," the courts may have upheld these claims, but that is not what happened. Here, Ms. Colston admitted that Mr. Abrams was insulting and profane to all officers, male and female, and referred to them as "imbeciles" and "idiots," and that he commented on their personal lives and about their manliness and weight. Ms. Colston testified that Mr. Abrams "just basically emasculated the men right in front of me" and that he repeatedly made comments about the physical appearance of other male officers, including that they were overweight and looked sloppy in their uniforms. The good news for Mr. Abrams, and in turn the CPL, is that the courts found that no discrimination against Ms. Colston because of her gender and found that she was not subjected to an unlawful hostile work environment based on her gender.

The bad news for CPL is that it had a rogue, equal opportunity harasser – a bully – on its hands.

But...because it properly addressed the conduct of its equal opportunity harasser, it also defeated the remainder of Ms. Colston's claims. With respect to Ms. Colston's hostile work environment claim, the evidence demonstrated that every time Ms. Colston complained about Mr. Abrams, the CPL responded immediately with an investigation into the matter, which resulted in disciplinary action. In fact, after Ms. Colston’s first complaint, the CPL hired an independent investigator to investigate, which resulted in a five-day unpaid disciplinary sanction for Mr. Abrams. The second time Ms. Colston complained, the CPL hired another independent investigator to investigate.  That investigation led to Mr. Abrams being placed on administrative leave; however, he resigned before his pre-termination hearing. Because the CPL properly responded to all of Ms. Colston's complaints, the courts determined that she could not support a claim for hostile work environment.

The Takeaways: This case provides guidance to employers about how to properly respond to complaints of discrimination and harassment. In the event an equal opportunity harasser is identified, it is important that the employer investigate, document and discipline. Taking these steps promptly will help an employer not only identify and get rid of an equal opportunity harasser, but they will help protect against discrimination/harassment claims based on the equal opportunity harasser's conduct.

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