Employer Law Report

Are you a “joint employer” with your temporary staff supplier? The National Labor Relations Board says “Yes.”

Following a decision last week by the National Labor Relations Board (NLRB), it is likely that all companies that use temporary staff workers will be considered a “joint employer” with the temporary staffing agency if efforts are made by a union to organize the temporary workers.

The use of temporary staff is a significant part of the business plan for many companies. Although it was in the past a strategy used primarily by manufacturing companies, temporary staffing is now common across many industries, including warehousing, logistics and service. The potential advantages to using temporary staff include off-loading human resource responsibilities, lowering unemployment and workers compensation expenses, tax withholding responsibility, and many of the other attendant costs of the employment relationship.

Companies who use temporary staff (I will call them “user” companies here) often take careful measures to limit the risk of being determined a joint employer with the company providing temporary staff. Those steps include having the temporary staffing company (I will call them “temporary staff providers” here) be responsible for all hiring, discipline, and termination decisions. In some cases, the user company relies on the temporary staff provider for on-site supervision and sometimes even human resources support on-site. In most cases, the user company has an indirect impact on wages of the temporary staff by virtue of the negotiated labor rate but, in almost all cases, all other employment benefits are provided solely by the temporary staff provider.

What if a union targets the temporary workers at a user company’s workplace for organization? If the union is successful, who is the “employer” required to recognize and bargain with the union? Until recently, the answer was pretty easy. As long as the user company was careful not to exert direct control over the terms and conditions of employment of the temporary workers, then the employer required to recognize and bargain with the union was the temporary staff supplier only. Efforts made by unions to argue for a joint employment determination were usually unsuccessful. All that has changed.

What does the case say?

Last Thursday, in Browning-Ferris Industries of California, Inc., the NLRB decided that the user company and the temporary staff supplier are a joint employer. The user company was Browning-Ferris (BFI), which operates a recycling facility. The temporary staff supplier was Leadpoint. The Teamsters Union tried to organize a group of 240 Leadpoint employees working at the BFI facility. The temporary staff performed work different than that performed by the BFI regular workforce. The BFI regular workforce was already unionized. Leadpoint provided on-site supervision and an on-site human resource representative. Leadpoint also kept control of hiring decisions, subject to certain broad criteria imposed by BFI. When there were on-site misconduct issues involving temporary staff people, BFI made Leadpoint aware and Leadpoint was responsible to investigate and take action, though BFI retained the right to discontinue the assignment of any of the temporary staffers. In other words, Browning-Ferris did all “right” things in its effort to remain separate from Leadpoint. Continue Reading

Another FLSA case gets to trial based only on uncorroborated testimony

In June, we told you about Moran v. Al Basit LLC, 14-2335 (6th Cir. 2015), a new decision from the Sixth Circuit Court of Appeals demonstrating how easy it is to get to trial on a claim of unpaid overtime. Last month, in Garcia v. SAR Food of Ohio, Inc., 1:14-cv-01514 (N.D. Ohio 2015), a district court in Ohio relied on that decision to deny summary judgment to an employer that did most things right with regard to its Fair Labor Standards Act compliance.

Jose Garcia and Raymond Sutton were employed by SAR Food of Ohio, Inc. (“SAR”), which owns and operates several restaurants, in a variety of hourly positions. These positions, including cook, were not exempt from the overtime requirements of the FLSA and applicable state law. Garcia and Sutton worked varying hours based on work schedules set for them by SAR, but claim that they were frequently required to continue working beyond their scheduled shifts and that these additional hours usually amounted to several hours each week.

SAR used the work schedules to keep track of the hours employees worked. Employees were instructed to make changes to the schedules to reflect the hours that they actually worked and to initial the schedules to confirm their accuracy before payroll was processed. Other SAR employees testified that, when they made changes to their schedules to reflect their actual hours worked, they were paid appropriately. Garcia and Sutton, however, never made any changes to their schedules, but generally initialed them anyway (some schedules, they claim, were initialed by their supervisors on their behalf). As a result, they were paid for only the hours that they were scheduled to work. Continue Reading

Second Circuit rejects DOL test for unpaid internships

The Second Circuit Court of Appeals in Glatt et al. v. Fox Searchlight Pictures, Inc. recently rejected the Department of Labor (“DOL”) six factor test for determining whether an individual has been properly classified as an unpaid intern in favor of another test that looks at whether the intern or the employer is the primary beneficiary of the relationship.

The DOL’s six factors are:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the end conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. Rejecting the DOL test, the court (as discussed below) elected to adopt a test that it believed aligned more closely with common law and the underlying purpose of an unpaid internship.

In Glatt, the Second Circuit reversed a district court decision that held, in part, that three individuals working for either Fox Searchlight or Fox Entertainment Group were improperly classified as “unpaid interns” in accordance with the FLSA and the New York Labor Law (“NYLL”). In doing so, the Second Circuit rejected the district court’s analysis that relied on the DOL test. The six factors came directly from a 1947 Supreme Court decision in which the Supreme Court refused to recognize unpaid railroad brake trainees as employees under FLSA. The Glatt court rejected the DOL test because it relied on what it considered to be an outdated Supreme Court decision that failed to reflect the purpose of the modern internship. Continue Reading

Another Federal District Court upholds NLRB expedited election rules

In April 2015, the National Labor Relations Board (NLRB) implemented a rule that effectively speeds up the time in which union representation elections occur. The process toward a union representation election typically starts when the union petitions the NLRB to conduct an election. During the months since the rule took effect, the time between petition filing and the representation election has been about 23 days. That is down 39.5 percent from the 38 day average that was common before the rule went into effect. As long as the rule remains in effect, there is every reason to expect this trend of quicker elections will continue.

The employer community has great concerns about the NLRB rule and the resulting reduction in the time for union representation elections. It is often referred to by employer groups and representatives as the “quickie election rule” or the “ambush election rule.” The time between petition filing and election is a crucial period for employer communication to employees. When a union files a petition for representation election, the union is usually at the peak of its support among employees. Between petition filing and election, the union’s representatives will actively campaign for employee votes in the upcoming election. Employers have the same right to communicate lawful and honest information to employees in an effort to influence them to vote to stay non-union. An abbreviated time for communication makes it much more difficult for the employer to convey the message, especially in a large workforce. Therefore, shortening the time between petition and election may give unions an advantage. Although, it is interesting to note that in the months since the rule took effect the union percentage win rate in elections has been about 62 percent, which is very close to the overall union win rate in elections for the past few years. Continue Reading

New app allows consumers to buy based on which companies are female-friendly

Thanks to Summer Associate Christopher Hawthorne for his assistance with this blog entry.

In an era of consumers making choices based on whether companies have ethical labor and sourcing practices, a new app now tracks how female friendly a company is. “Buy Up Index,” reveals whether a company’s workplace policies and practices accommodate and empower its female employees. Through this app, consumers no longer have to rely on the company’s public persona.

The app uses four criteria—women employees, women’s leadership, corporate citizenship, and marketing—to create an overall score that grades the company’s treatment of its female employees. Employers are graded from A to C.  From maternity leave to the representation of women in leadership roles, Buy Up Index gives insight as to which employers are at the forefront of gender and diversity issues in the workplace.

With this type of information at consumers’ fingertips, companies should be aware that their internal policies and practices may be available to those on the outside and used for the purpose of encouraging or discouraging consumers from purchasing their products or services. While the app promises that it fact-checks the data thoroughly, it remains to be seen how accurate or complete the data really is. Given the increasing transfer of information electronically, employee policies designed to encourage recruitment and retention of female employees may have the added benefit of increasing the company’s goodwill and bottom line.

Sixth Circuit Court of Appeals reverses district court’s ruling in Title VII retaliation case, proving that getting the entire story is key for employers

The Sixth Circuit Court of Appeals reverses district court’s summary judgment ruling in Yazdian v. ConMed Endoscopic Tech., Inc., on a Title VII retaliation claim, finding a reasonable jury could conclude the former employee was terminated for engaging in protected activity.

Background

Reza Yazdian, an Iranian-American Muslim, was employed with ConMed Endoscopic Tech., Inc. from April 1, 2005 through July 26, 2010, as a territory manager. In 2009, Yazdian received favorable ratings in all categories and was described as a talented salesman. Yazdian’s direct supervisor from 2008 until the time of his termination was Timothy Sweatt, and Sweatt reported directly to Scott Jackson.

In or around 2009, Yazdian began noting incidents that he believed demonstrated Sweatt’s prejudice against Iranians and Muslims. In April 2010, Yazdian closed a major sale and drafted a news article about the sale he wished to have published in ConMed’s internal newsletter. After much back and forth, Sweatt stated that the article would not be published as written. Sweatt went on to describe the article as “embarrassing,” “poorly worded,” and “far too self-serving.” Yazdian confronted Sweatt about the comments stating “[y]ou don’t like the way I write, you don’t like the way I talk, I guess you don’t like my race, either.”

During a June telephone meeting, Yazdian accused Sweatt of creating a hostile work environment. Shortly after that call, Yazdian called Scott Jackson and requested a transfer to another division that was under a different manager. Yazdian also told Jackson that Sweatt was creating a hostile work environment, treating him differently from other territory managers and possibly discriminating against him. Jackson took no action.

Sweatt, Jackson and Karen Hutto, Vice President of Human Resources, met to discuss the tension between Sweatt and Yazdian and, after the meeting, Sweatt drafted an email to Hutto detailing examples of Yazdian’s “behavioral issues.” Hutto reviewed the email and directed an HR manager to prepare a written warning. Yazdian, however, was never provided an opportunity to respond or present his side of the story.

On July 13, 2010 Sweatt called Yazdian to inform him about the written warning and informed Yazdian that the reason for the warning was his “ongoing unacceptable conduct and behavior, particularly in his communications.” Sweatt provided the written warning and several supporting examples. In fact, Sweatt referenced Yazdian’s comment that Sweatt was creating a hostile work environment. Yazdian stated he would provide a response through his counsel in writing. Sweatt again drafted an email to HR and Jackson outlining the comments made by Yazdian during the call. Sweatt closed the email by stating, he was “not optimistic that there was anything close to a recognition [by Yazdian] of needed behavioral changes much less a commitment for improvement” to which Jackson asked what “next steps” should be taken. Sweatt found termination was the only appropriate next step.

Continue Reading

Employment law and recent events: Confederate flag unrest

Thanks to Porter Wright Summer Associate Carolyn Alford for her assistance in preparing this blog post.

The recent tragedy in South Carolina, where a reputed white supremacist opened fire on a crowd of Black churchgoers, has propelled the Confederate flag as a symbol of racism back into the public spotlight, after a picture surfaced of the shooter posing with a gun in front of a Confederate flag. The attention the Confederate flag has received nationwide will no doubt be reflected in the workplace as well. But what are an employer’s responsibilities when an employee or manager wants to display the confederate flag or any other symbol that incites such deep and conflicting emotions?

Case law interpreting the meaning of the flag has evolved in recent years. In 2002, a Kansas court determined that an employee could display a Confederate flag tag on his car because it did not impede his coworkers’ ability to perform their jobs. The court held that the meaning of the flag, be it a representation of southern heritage or of white supremacy, depended upon one’s perspective and the court was not prepared to say either was incorrect. However, a decade later, a New York court in Devers v. SNC-Lavalin Generation, Inc. found that “there is no question that the display of the Confederate flag recalls a history of racial oppression.”

While the Confederate flag is recognized as offensive by many, its display in the workplace is oftentimes not enough to support a hostile work environment claim. The Devers court recognized the objectionable nature of the flag, but found it, accompanied by isolated racist remarks, insufficient to support a hostile work environment claim. In Walton v. United States Steel Corp., an Indiana court found a co-worker’s Confederate flag tattoo “was not sufficiently severe and pervasive to establish a hostile work environment.” The Alabama court in Carter v. Daehan Solutions Ala., LLC., similarly determined that co-workers’ Confederate flag apparel was not “frequent, severe, or physically threatening and humiliating enough to constitute a hostile work environment.”

Those who bring the Confederate flag or other symbols representing white supremacy into the workplace occasionally, though unsuccessfully, argue that their display of the symbol is actually protected under Title VII because it speaks to their national origin or religious beliefs. In Storey v. Burns, the employee claimed his confederate flag lunch box sticker and bumper stickers were based on his national origin of “Confederate Southern American” and his religious belief, Christian. The employer required the employee to cover the stickers and when he refused, the employer terminated him. On a motion to dismiss, the court ruled against the employee because neither his national origin nor his religious belief required him to display stickers with the confederate flag. “His personal need to share his heritage cannot be equated with something endemic to national origin or a religiously mandated observance.” The employer, according to the court, therefore was not discriminating against him based on his religious beliefs or national origin when it terminated him for failing to remove the stickers.  Similarly in Swartzentruber v. Gunite Corp., an employee sported a tattoo of a KKK member standing in front of a burning cross. The employer required that the tattoo be covered except when washing. The employee argued that his tattoo contained religious symbols entitled to Title VII religious protection, but the court found no evidence that the act of covering up his tattoo conflicted with his religious beliefs and it granted employer’s summary judgment motion.

In the public sector, courts use a balancing test to decide whether employees have a First Amendment right to display the Confederate flag, which weighs the employee’s First Amendment rights against the employer’s interest in avoiding workplace disruption. Under this test discussed by the federal district court in Maryland in Buker v. Howard Cnty., the “employee bears the burden of demonstrating that he was speaking as a citizen on a matter of public concern” and is therefore protected by the First Amendment.  In Duke v. Hamil, the court upheld a senior police officer’s demotion for displaying the flag on his Facebook page where the police departments interest in safeguarding its good working relationships and its reputation outweighed the officer’s free speech rights. The court considered the facts that the Confederate flag was considered offensive by many, especially when associated with law enforcement, and that the officer shared it with a broad audience during a politically charged election season.

The Confederate flag has always been a divisive symbol, with staunch supporters on both sides of the debate.  But recently, in the wake of the shootings, those that once accepted displaying the flag have reversed course. Amazon and Walmart, among others, now ban the sale of Confederate merchandise and the South Carolina government has stopped flying the Confederate flag on statehouse grounds. Perhaps these changes of opinion signal a shift in the social thinking on the flag, which may further seep into judicial consideration of employer policies and practices related to it. Employers should be careful to consider the use of the Confederate flag in context when it is displayed by employees on employer grounds and take action and investigate if complaints are raised.

DOL memo says most workers are FLSA employees, not independent contractors

Following on the heels of its proposed rule expanding the number of employees entitled to overtime under the FLSA, the Department of Labor’s Wage & Hour Division has issued an Interpretation Letter that addresses independent contractor misclassification. Though the Letter, issued by WHD Administrator David Weil, contains no earthshaking new compliance obligations for employers, it does suggest that businesses can expect a more aggressive enforcement regime from the Department of Labor on independent contractor issues. In fact, the Letter directly states that “applying the economic realities test in view of the expansive definition of “employ” under the Act, most workers are employees under the FLSA.”

In reaffirming the “economic realities” test for evaluating independent contractor status, the Administrator’s Interpretation Letter makes clear that no single factor is determinative of the issue, but rather that businesses claiming that their workers are independent contractors should use the economic realities factors as a guide to answering the ultimate question whether the workers are economically dependent on them or really are in business for themselves. As a reminder, those factors as discussed in both the Interpretation Letter and WHD Fact Sheet #13 are:

  1. The extent to which the work performed is an integral part of the employer’s business.
  2. Whether the worker’s managerial skills affect his or her opportunity for profit and loss.
  3. The relative investments in facilities and equipment by the worker and the employer.
  4. The worker’s skill and initiative.
  5. The permanency of the worker’s relationship with the employer.
  6. The nature and degree of control by the employer.

In light of this new Interpretation Letter, businesses should plan to review all of their independent contractor relationships to ensure that appropriate agreements are in place and that relationships that may have started as independent contractor arrangements have not morphed over time into employment relationships.

U.S. Supreme Court decision on same-sex marriage – workplace implications

The United States Supreme Court decision in Obergefell v. Hodges  requiring that all states recognize same-sex marriages is one of the more significant constitutional law decisions from the Court in many years. The impact of the decision extends in some ways to the workplace and to the day-to-day responsibilities of human resource and benefits professionals.

Of course, the immediate impact is the legalization of same-sex marriages in all states, regardless of where the marriage was performed. That means that all spousal privileges associated with employment must be extended to same-sex married couples. Examples include:

  • FMLA: Time off to care for a spouse with a serious medical condition and time off associated with a spouse’s military deployment.
  • Spousal participation rights in group medical or other employer-provided fringe benefits plans, including the right to COBRA coverage in the event of divorce or other qualifying event that triggers spousal election rights.
  • Application of employer policies with spouse-specific terms, such as bereavement or other time off policies.
  • Protections afforded by state or local law or employer-adopted policies that prohibit discrimination based on marital status.

 

Also, employers that have adopted policies extending benefits or other privileges to “domestic partners” may decide  to re-visit the need for those policies in light of the Court’s decision. In reviewing any existing policies concerning domestic partner benefits, be aware that some state and local governments have enacted laws mandating equal treatment for domestic partner relationships.

The focus of the ADA turns to websites in the digital age: Is your site compliant?

Americans with Disabilities Act compliance can take you beyond workplace and employment issues. If you operate a business accessible to the public then the ADA public accommodation rules are important to you as well. That can mean more than just making sure your physical facilities are accessible. If you maintain a website for use by customers, such as for online shopping, have you considered whether your website is accessible to persons with disabilities? Our colleagues wrote on the Technology Law Source blog about how you can make sure your site is compliant. We definitely think it’s a worth-while read for any business.

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