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Employer Law Report

Join us on Thursday, September 18 in Cincinnati for a free, half-day seminar

Posted in Events

Join Porter Wright labor and employment attorneys Dave Croall and Rachel Burke on Thursday, September 18, 2014 for a seminar — Renovating your workplace: Employment relations best practices for HR professionals. Reserve your spot today for this free, half-day seminar sponsored by the Ohio Chamber of Commerce’s HR Academy, which will cover these topics:

Tricks of the trade: How the pros deal with an FMLA abuser

Attendees will hear key strategies for managing the primary situations in which FMLA abuse by employees occurs, learn how to counteract that abuse within the confines of the law, and how to avoid pitfalls when doing so. Of particular focus will be how to use the provisions of the FMLA to the employer’s advantage to legally and permissibly root out abuse and fraud by employees.

Danger zone: Avoiding the 10 most common mistakes under the FLSA

Employer compliance with the Fair Labor Standards Act continues to be one of the most litigated areas in employment law. This session will address the 10 most common mistakes made under the FLSA and key takeaways to keep your workplace out of the danger zone.

What’s in your toolbox?

Defining a blueprint for your HR decision-making process to reduce risk: As a busy HR professional, you need to make sure you have the right tools in your toolbox and a solid blueprint for success. One wrong move can put your business at risk. In this session, we will train your HR reflexes to help you navigate the decision making process effectively. We will help you manage each important step, focusing on workplace investigations and other fact-gathering efforts, best practices for making fair and defendable decisions, and the importance of documentation along the way.

DATE:
Sept. 18, 2014

TIME:
8:15 a.m. – 12:00 p.m.

LOCATION:
Receptions, Inc.
10681 Loveland-Madeira Rd.
Loveland, OH 45140

COST:
Free

RSVP by Sept. 16 to:
Andrea Wise
awise@ohiochamber.com
614.228.4201

 

NLRB reinstates food industry employees following work-related complaints

Posted in Labor Relations, Traps for the Unwary

Employees today are certainly more media and marketing savvy than they were even 10 years ago, and they have more tools through which they can reach the public and each other to let their voices be heard. Two recent NLRB cases demonstrate that if employers are too aggressive in attempting to combat these employee communications, they can end up on the wrong end of an unfair labor practice finding.

In Triple Play Sports Bar & Grille, the National Labor Relation Board held that two employees had engaged in protected concerted activity under the National Labor Relations Act (“Act”) when they responded to a co-worker’s post on Facebook complaining that the employer had incorrectly withheld taxes from their paychecks. The error apparently resulted in several employees having an unpleasant surprise on tax day. One employee commented “I owe too. Such an asshole.” The other employee merely clicked on the “Like” button.

The Board concluded that both employees had lawfully engaged in dialogue about terms and conditions of employment and that they had not been “so disloyal as to lose the Act’s protection” because they did not disparage their employer’s products or services or defame the employer. In addition, the Board concluded that the one employee’s use of a single expletive did not deprive him of the protections of the NLRA.

In MikLin Enterprises dba Jimmy John’s, pro-union employees engaged in a campaign to bring public attention to their goal of getting paid sick leave from their employer. As part of their campaign, they created posters that showed two identical looking sandwiches and asked whether the viewer could tell which sandwich was made by the sick Jimmy John’s employee. The point of course was to show potential customers that there was no way to know. The poster then stated that Jimmy John employees were not permitted to call in sick and asked people to call a phone number to encourage the company to provide its employees with paid sick leave.

“Like” the employer in Triple Play (sorry, pun intended), the employer terminated its employees who were involved in the campaign. The Board, in a 2-1 decision, however, ordered the employees reinstated with back pay. The Board concluded that the posters were prepared as part of an ongoing labor dispute, were essentially true, and were not maliciously motivated. Although the dissent agreed that the posters were created as part of an ongoing labor dispute, it disagreed with the majority on the poster’s truthfulness and maliciousness. First, the dissent noted that the employees in fact could call in sick, so long as they were able find a replacement for the day. In addition, the dissent contended that even the intimation that a food industry employer’s food was contaminated was so malicious as to be disloyal.

The bottom line for employers is simply this: While the desire to discipline or terminate employees who say things that feel overly critical or disloyal is certainly understandable, it is important to take a step back and consider whether the communications may be protected under the NLRA. If the communication addresses employees’ working conditions or issues in an ongoing labor dispute, the employer can expect the Board to give the employees the benefit of the doubt except in the most extreme cases where the employee’s comments can be shown to be defamatory or so disloyal as to lose protection under the Act.

Introducing Porter Wright’s newest blog – Antitrust Law Source

Posted in Business Competition, Porter Wright News

We wanted to take a moment to announce Porter Wright’s newest endeavor, Antitrust Law Source. Antitrust Law Source is a new site designed for visitors to quickly and easily learn about developments in this growing arena. The site primarily will focus on providing news and legal updates in the antitrust arena in a podcasting format. The podcasts will feature a variety of insights, educational offerings, discussions and interviews with thought leaders across a variety of industries.  For those of you who are frequent readers of this blog you may recall two recent blog posts by Jay Levine (editor of the Antitrust Law Source blog) and Jason Starling that address some recent examples of how antitrust law and employment law can intersect.

Antitrust Law Source is prepared by members of our firm’s and will feature news and information on a wide range of areas, including:

  • Agriculture
  • Civil litigation
  • Compliance programs/audits
  • Consumer protection
  • Criminal and civil government enforcement
  • Distribution, pricing and promotional allowance programs
  • Healthcare
  • Intellectual property/Technology
  • International issues
  • Legislative matters
  • Mergers, acquisitions and joint ventures
  • Privacy and data securityWe encourage you to visit the site and share your thoughts with us.

Covered affirmative action employers — more scary news from the OFCCP

Posted in EEO

On August 6, 2014, the Office of Federal Contract Compliance Programs (OFCCP) announced a proposed rule that should be of real concern to covered affirmative action federal contractors. The OFCCP is the agency that enforces federal affirmative action laws. If the proposed rule is adopted, it will add compensation data to the information that covered employers must submit with their annual EEO-1 reports. Keep in mind the “web” of coverage under affirmative action laws reaches far. Coverage is triggered not just by direct federal contracts but also by contracts to provide goods or services to any private sector entity, as long as those goods or services are used in connection with fulfilling some federal contract that your customer or their customers may have. Coverage of financial institutions is triggered by being a depository for federal funds or by being an issuing or paying agent for U.S. Savings Bonds or Notes. Coverage issues and obligations can vary with the dollar volume of the covered work.

The Specifics:

What:

Currently, the annual EEO-1 report contains race, ethnicity, and gender information about your workplace, sorted by nine EEO job-type categories. The proposed rule would expand the report to include the following information for each of the EEO categories by race, ethnicity, and gender: total number of employees; total W-2 income; total hours worked.

Who:

The obligation to provide compensation information on EEO-1 reports would apply to covered affirmative action employers with more than 100 employees and a covered federal contract or subcontract for $50,000 or more covering a period of at least 30 days, including modifications.

The Concerns:

The employer community which is subject to affirmative action obligations has very legitimate concerns about this new reporting obligation. OFCCP will use the data as part of its method for identifying contractors for compliance reviews. An OFCCP compliance review can involve not just review of the Company’s written affirmative action plan, but, also, a detailed review of its employment practices including compensation, hiring, and terminations. Employers have a legitimate question whether this broad-based compensation data is a legitimate basis for identifying a contractor for compliance review based on alleged concern about equal pay. A second, very real concern for the covered employer community is confidentiality of compensation information. OFCCP assures that the information can be submitted on a web-based data tool conforming with government IT security standards. But, EEO-1 reports are subject to Freedom of Information Act requests from the public. Even though OFCCP assures companies they will be given notice of any FOIA requests for their data and an opportunity to object, there is no assurance that the objections would be successful. Therefore, this proposed rule opens the door for confidential compensation information to be made available to competitors and the general public.

OFCCP intends to release aggregate summary compensation data by race and gender annually to the public. OFCCP believes that public dissemination of the aggregate data will give employers an opportunity to evaluate their own compensation structure against that of others in their industry.

Public comment on the proposed rule can be submitted through November 6, 2014.

Federal judge rejects the proposed settlement for tech companies who allegedly violated antitrust law by agreeing not to solicit each other’s employees

Posted in Business Competition

We previously discussed here the antitrust case involving several high-tech companies who allegedly entered into bilateral agreements in which they agreed not to solicit each other’s employees. These companies settled with the U.S. Department of Justice and were subsequently sued by a class of software engineers. Early on, Intuit and Pixar/Lucasfilm settled, and recently the plaintiffs and the remaining tech companies reached an agreement to settle the case for $324.5 million. Or maybe they thought they had, but guess what? The federal judge overseeing the case rejected that settlement, finding that it did not provide adequate monetary compensation.

U.S. District Judge Lucy Koh rested her decision primarily on the fact that, in the present settlement, the plaintiffs would recover proportionally less than the plaintiffs in the earlier settlements. The settling parties argued that the settlement was fair because the plaintiffs had “weaknesses in [their] case such that [they] face[] a substantial risk of nonrecovery . . . .” But, the judge found this explanation dubious, at best. In fact, the judge found that the plaintiffs had overcome substantial hurdles such as achieving class certification and overcoming dispositive motions. As the judge saw it, achieving class certification and beating dispositive motions provided greater settlement leverage, which the earlier settling defendants lacked, and thus should result in a larger settlement. Plus, and this should really scare the remaining defendants, the judge wrote that she believed that the plaintiffs had presented overwhelming documentary evidence in support of their antitrust claims. Thus, about the only remaining risk faced by the plaintiffs would be the unpredictability of trial. Yet, for the remaining defendant tech companies, they faced the potential of $9 billion in damages exposure.

The judge did throw a bone to the defendants by noting what settlement offer she would approve. She stated that the plaintiffs should receive at least $380 million—a mere $59.5 million raise—as that figure would be proportionate to the recovery against the earlier settling companies.

Now, the parties go back to settlement negotiations where the plaintiffs clearly have the momentum and leverage on their side given the judge’s favorable decision. It will be interesting to see what settlement results from those negotiations and how much the remaining tech companies will need to pay to resolve the civil claims by their software engineers.

Appellate Court throws exemptions to minimum wage laws in Ohio out the window

Posted in Other Articles, Wage & Hour

A divided Montgomery County Court of Appeals has determined that the Ohio minimum wage statute unconstitutionally restricted the definition of “employee” in the Ohio constitution and declared the law invalid, thereby eliminating exemptions to Ohio’s minimum wage laws.

John Haight and Christopher Pence were employed as advertising salespeople for Cheap Escape Company dba JB Dollar Stretcher, which published a coupon magazine and website for electronic coupons, and were paid mostly through commissions. In 2012, Haight and Pence sued Cheap Escape alleging they were employees of Cheap Escape and that the company failed to pay them minimum wages each week. Cheap Escape denied Haight and Pence allegations and claimed that as outside sales representatives, Haight and Pence were exempt from Ohio’s minimum wage law and had been paid properly. Haight v. Cheap Escape Co., 2014-Ohio-2447.

The Ohio Fair Minimum Wage Amendment to the Ohio Constitution, approved by voters in November, 2006, states in part that every employer is required to pay their employees a wage of not less than six dollars and eighty-five cents per hour beginning January 1, 2007 with the amount to be adjusted annually. In addition, the amendment provides that future laws may be passed to increase the minimum wage rate and extend coverage of the section, but no laws could restrict any provision of the law. The Amendment defines an employee to have the same meaning as under the Fair Labor Standards Act (“FLSA”). Haight and Pence asserted that they were Cheap Escape’s employees as defined by the Ohio constitutional amendment as well as the FLSA.

After voter approval of the amendment, the Ohio General Assembly enacted a statute which acknowledged that the amendment defined “employee” to have the same meaning as under the FLSA, but also added its own definition of “employee” which included “individuals employed in Ohio, but does not mean individuals who are excluded from the definition of ‘employee’ under the FLSA.” The FLSA specifically excludes outside salespeople from the minimum wage requirements. Hence, the statute excluded outside salespeople from being considered employees of an Ohio employer for purposes of minimum wage laws.

Haight and Pence’s appeal stemmed from their allegation that they were entitled to be paid the Ohio minimum wage even though they were outside salespeople. They alleged that the exemptions for outside sales representatives from the minimum wage requirements set forth in the statute and in the FLSA did not apply under the Ohio constitution. They argued that the definition of “employee” as contained in the amendment to the Ohio constitution was broad and did not exclude employees who are exempt from the federal minimum wage laws. They argued that the statute, by excluding outside sales representatives from minimum wage protection, was unconstitutional. In essence, they argued that by including its own definition of employee in the statute, the Ohio legislature impermissibly narrowed the definition of employee as laid out in the amendment.

The Court of Appeals determined that even if individuals such as salespeople are exempt from the FLSA’s minimum wage provisions, they remained “employees” as defined by the FLSA. The court concluded that the definition of employee is “any individual employed by an employer,” which includes outside salespeople. Hence, the court held that the Ohio legislature impermissibly narrowed the definition of employee in the statute when it excluded outside salespeople from the definition of an employee. Consequently, the court found that the statute was invalid and the judgment of the trial court was reversed. Now, the case will return to the trial court for a determination as to whether or not Haight and Pence should have received minimum wages while employed by Cheap Escape as outside sales representatives.

One judge dissented from the court’s decision, concluding that the statute did not conflict with the constitution because the meaning of employee included the FLSA exemptions. This split among the judges indicates that it is likely that Cheap Escape will appeal to the Ohio Supreme Court for a final decision.

If Cheap Escape does not appeal this decision to the Supreme Court and this decision stands, this case may have far-reaching implications. Ohio employers could lose any minimum wage exemptions for all employees and would be subject to recordkeeping and reporting procedures that currently apply to non-exempt, hourly employees. Some employees may be considered exempt employees for federal wage purposes, but would not be considered exempt employees in Ohio. As a result, employers will need to change their payroll practices and recordkeeping and reporting procedures to include all employees, not only non-exempt employees.

 

NLRB decisions on “mini-unit organizing”

Posted in Labor Relations

We reported in 2011 about the National Labor Relations Board (NLRB) decision in Specialty Healthcare. That controversial decision opened the door for unions to target small sections of a workforce for union organizing.  For example, in the past, a union trying to organize had to target all similarly-situated employees. In a manufacturing plant that was typically all production and maintenance workers and usually included all blue-collar departments, like shipping and receiving. But, the Specialty Healthcare case opened the door for a union to target smaller groups, like the maintenance group alone, or the shipping and receiving group. Being able to target smaller units for organizing improves a union’s chance for success because there are fewer voters to persuade to sign organizing cards and to vote for a union in an election.

Two recent NLRB cases show that the NLRB’s decisions about mini-unit organizing will be fact-specific and may be difficult to predict. On July 22, the NLRB approved a union’s effort to organize a unit at a Macy’s store in Massachusetts made up only of the cosmetics and fragrance sales workers. Before the dust had settled from the management-side concern about that ruling, the NLRB ruled just last week in a case involving Bergdorf Goodman’s department store that a targeted group made up of only shoe salespeople was not appropriate.  The NLRB recognized that the targeted shoe sales group had been carved out from a larger group of shoe salespersons in the store.

These conflicting decisions illustrate the importance of strategic consideration by employers when establishing departmental structure and reporting lines. Of course, business needs and efficiency must be the primary driving force in deciding how your organization should be structured. But, to the extent that there is some degree of integration among groups of employees, such as cross-training, common supervision, and movement of employees back and forth, the employer’s argument to require unions to target larger, rather than smaller, groups for organizing will be stronger.

Reminder to federal contractors about NLRA Employee Rights poster obligations

Posted in Labor Relations

There is some confusion in the employer community about the obligation to post a notice concerning union organizing rights. Most employers do not have the obligation, but many companies with federal contracts or subcontracts do.

In 2013, as a result of the National Ass’n of Manufacturers v. NLRB, 717 F.3d 947 (D.C. Cir. 2013) and Chamber of Commerce v. NLRB, 721 F.3d 152 (D.C. Cir. 2013) decisions, the National Labor Relations Board (NLRB) rule requiring all private employers to post a notice to employees of their rights under the National Labor Relations Act (NLRA) was invalidated. The NLRB did not seek Supreme Court review. As a result, most employers were let off the hook for the posting obligation. But federal contractors and subcontractors should be reminded that they likely continue to have obligations under Executive Order 13496, issued in 2010, to post this notice to all employees, and this obligation remains effective.

Executive Order 13496 applies to any construction, supply, or service prime contract of $100,000 or more solicited after June 21, 2010 and any subcontract to that prime contract of $10,000 or more.

The primary obligations of Executive Order 13496 are:

  • Physically post the Notice of Employee Rights under the National Labor Relations Act where other employee notices are posted.
  • Include a clause in covered subcontracts and purchase orders setting out the text of the required notice (or incorporating the regulation text by reference) and outlining the posting obligation.
    • To include the clause by reference, the contract or purchase order must cite to “29 C.F.R. Part 471, Appendix A to Subpart A.”
  • Post the notice electronically if the contractor posts employee notices regarding the terms and conditions of employment electronically.
    • Electronic posting requires the contractor to post a link to OLMS’s website containing the employee notice where they customarily place other electronic notices to employees about their employment. This link must be no less prominent than other employee notices and must read “Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employees.”
    • Electronic posting does not substitute for physical posting. Both types of posting are required if electronic posting is applicable.

Audits of E.O. 13496 compliance may be a part of OFCCP desk audits.

A copy of the poster is available here.

President Obama issues executive order prohibiting federal contractors from discriminating on the basis of sexual orientation and gender identity

Posted in EEO

On July 21, 2014, President Obama issued an executive order amending Executive Order 11246 by adding sexual orientation and gender identity to the list of protected classes for federal contractors and subcontractors. Under the amended Executive Order 11246, federal contractors and subcontractors are required to select and employ individuals without regard to sexual orientation and gender identity.  Executive Order 11246’s nondiscrimination provisions apply to contractors and subcontractors with over $10,000 in total government contracts and subcontracts in one year. This executive order does not include a religious exemption, which was the subject of negotiation between the White House and religious groups over the past few months. Although the amendments add sexual orientation and gender identity to the discrimination prohibitions under the Executive Order, they do not include any obligation for affirmative action on these bases.

The order takes effect immediately but applies only to government contracts entered into after July 21, 2014. Regulations implementing the Order will be issued within 90 days.

Federal contractors should review their discrimination and harassment policies and modify them to add protections for sexual orientation and gender identity if those protections are not already included. Sexual orientation and gender identity remain outside the protection of federal and Ohio nondiscrimination laws for private employers who are not federal contractors, although they are sometimes covered  by local municipal law. The proposed federal Employment Non-Discrimination Act (EDNA), which would prohibit discrimination and harassment on the basis of sexual orientation and gender identity for all private employers (exempting only businesses with less than 15 employees and religious organizations), was passed by the Senate but is stalled in the House.

The Obamacare see-saw — an opposing decision on subsidies

Posted in Employee Benefits/ERISA, Traps for the Unwary

Some days are just more fun that others!

Just hours after the D.C. Circuit Court of Appeals issued its opinion in Halbig v. Burwell, which held that tax subsidies made available under the Affordable Care Act (“ACA”) to lower income individuals to help defray the cost of health care coverage may not be extended to individuals who reside in states that have elected not to establish their own health care exchanges, the 4th Circuit Court of Appeals today issued a unanimous decision today in King v. Burwell that upholds entitlement to tax subsidies available under the ACA for all eligible lower income individuals—whether or not they reside in a state that has established its own health care exchanges under the ACA (see http://www.ca4.uscourts.gov/Opinions/Published/141158.P.pdf). As in Halbig, the plaintiffs in King argued that Congress intended that the subsidies only be available in states that set up their own exchanges. In essence, the plaintiffs were challenging the interpretation of the ACA made by the Internal Revenue Service (the “IRS”) that authorized the IRS to grant subsidies to individuals who purchase health care coverage both through state-sponsored exchanges and through the federally-run exchange. Like the plaintiffs in Halbig, the plaintiffs in King argued that the IRS’s interpretation was contrary to the language in the ACA. The Fourth Circuit panel viewed the issue quite differently, and upheld the system of federal subsidies now available under the ACA.

In affirming the decision of the District Court judge in King, the panel acknowledged that the language in the ACA on this question was ambiguous. The panel decided it was appropriate to extend deference to the interpretation of the IRS, and thus upheld the interpretation that subsidies were available no matter whether a state had established its own exchange.

We are early in this game, but with today’s dueling decisions coming down on opposite sides of this issue, one has to assume that it is increasingly likely (perhaps virtually certain) that this issue is headed to the United States Supreme Court for resolution. Here we go again.