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

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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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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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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Federal contractors and subcontractors should take notice that, in the last couple of years, the Office of Federal Contract Compliance Programs (OFCCP) has been pursuing a much more aggressive enforcement and regulatory agenda. Final revised rules on disability and veterans affirmative action are expected soon. Later in 2013, proposed new rules for construction contractors and gender discrimination are expected. We will post to this blog when these are available.

As we are awaiting these new regulatory frameworks, it should be noted that OFCCP has also been conducting more in depth and more aggressive compliance evaluations of federal contractors and subcontractors. Of note, OFCCP recently abandoned its prior framework for analyzing pay discrimination in favor of a much more flexible approach that permits it greater latitude in analyzing potential discrimination and in requesting documentation and data. [INSERT (See our recent post: OFCCP Signals Formal Change of Course on Pay Discrimination.)

Also of note, OFCCP’s planned compliance evaluations for fiscal year 2013 (October 1, 2012 – September 30, 2013) represent a significant 12% increase from fiscal year 2012. Consider this data on the number of compliance evaluations conducted or planned:

Also, OFCCP is boasting that the compliance evaluations it conducts today are much more in depth. From 2010 to 2011, OFCCP reported a 36.7% increase in audits closed with a financial remedy. For example, OFCCP recently released a press release regarding a $439,538 back pay settlement for nearly 2,000 female job applicants involving a subsidiary of Hormel Food Corp. (Clougherty Packing Co. – “Dodger Dog” hot dogs). The Company must also offer positions to 700 affected women applicants as positions become available.

With most contractors finalizing their calendar year 2013 Affirmative Action Plans and executing recruiting and outreach efforts for 2013 at this time, it becomes more important than ever to pay critical attention to affirmative action given the OFCCP’s recent activity.
 

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Our colleagues over at Technology Law Source advise today of an interesting case in which a New Jersey federal court held that a plaintiff in a personal injury lawsuit failed to preserve relevant evidence when he deactivated his Facebook account and failed to reactivate it within fourteen (14) days – which according to Facebook’s terms and conditions renders the account’s contents irretrievable. As a result, the court found that the defendant was entitled to a jury instruction that permits the jury to infer that “the fact that a document was not produced or destroyed is ‘evidence that the party that has prevented production did so out of the well-founded fear that the contents would harm him.’” In short, the court concluded that the plaintiff’s permanent deactivation of his Facebook account prejudiced the defendant’s ability to refute his claim that he had sustained permanently disabling injuries. Although this is not an employment case, it is easy to see where this issue is likely to come up in workers’ compensation, employment discrimination and other employment law contexts. Because this type of jury instruction can be devastating to a plaintiff’s case, employer’s counsel should be sure to ask for this type of instruction when plaintiffs have deactivated their relevant social media accounts. You can find the full Technology Law Source post and a copy of the court’s decision in Gatto v. United Air Lines, Inc. here.
 

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All too often it seems employers are entirely unaware of the steps they can take to proactively protect themselves from employment litigation. Instead, employers and their attorneys do not address potential issues until litigation has actually been threatened or filed, by which time preventative measures have likely become a moot point. Yet, the law is providing more and more innovative opportunities to strategically protect an employer in ways much cheaper than actual litigation. This protection can reduce an employer’s potential monetary exposure for labor and employment matters by either minimizing litigation or by placing an employer in a position of greater strength should litigation arise.

Written agreements signed by new hires is one of these innovative opportunities. Most employers are undoubtedly aware of the basic written agreements for new hires. For example, a written authorization to deduct from the employee’s final paycheck any debts owed to the company or the value of any company property not returned at termination. Another common example includes a basic non-disclosure agreement prohibiting the employee from disclosing the employer’s confidential information both during and after employment (including the all-important fee-shifting provision if an employer successfully pursues a claim against an offending employee). Some employers may also be aware of the more advanced examples such as continuing (as opposed to one-time) authorizations for background checks or a non-competition agreement. Finally, only a slim number of employers may be aware of one of the most advanced examples; namely, a statute-of-limitations waiver reducing the time to file a lawsuit under Ohio’s anti-discrimination law from six years to six months.

These examples just scratch the surface of how employers can use written agreements with new hires to protect themselves from litigation, unfair competition, and the a myriad of other issues that arise under federal, state, and local law. One new option that has now become increasingly available for employers is the class action waiver and arbitration agreement.

The current impetus for these types of agreements comes from the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). There, the high court upheld an agreement between AT&T and a customer requiring claims by the customer to be arbitrated and requiring the customer to waive his or her right to a class action. The AT&T agreement also had a number of clever provisions strategically designed to reduce the cost and expense of any legal dispute. Specifically, (1) a requirement that the customer provide AT&T with 30 days to provide an offer of settlement before the customer could file for arbitration, (2) a requirement that AT&T need only pay arbitration costs for non-frivolous claims, (3) a provision stating that for claims of $10,000 or less, the customer may choose a form of expedited arbitration where the case could be heard via telephone or based upon written submissions only, and (4) a provision stating that either party could proceed in the very inexpensive and quick small claims court in lieu of arbitration.

Management-side labor and employment attorneys have built upon Concepcion’s approval of class action waiver and arbitration agreements. They have done so by incorporating the waiver and arbitration provisions into employment agreements with the specific purpose of avoiding class actions or collective actions (i.e., the Fair Labor Standards Act’s version of a class action) that can create substantial monetary risk for an employer. In particular, class action waivers and arbitration agreements can try to minimize that risk even where an employer admittedly erred under the law.

Take, for example, an employer who clearly failed to comply with the Worker Adjustment Retraining and Notification Act (WARN), which requires a covered employer to provide 60 days’ notice or 60 days’ pay to employees suffering what the law defines as a “plant closing” or a “mass layoff.” If one employee files suit alleging a violation of the WARN Act, the liability on back pay is 60 days’ worth (plus, of course, any penalties, costs, or attorneys’ fees available under WARN). However, if that employee files a class action, and there were 300 employees terminated and not provided notice or pay, then all of a sudden the employer is facing liability 300 times greater than on the individual claim. The other 299 employees may have never even thought to consult an attorney and may have never brought a lawsuit against the company, but because one employee did consult an attorney who filed a class action all 300 employees (assuming class certification by the court) are now all pursuing claims against the employer.

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 On February 28, 2013, the Office of Federal Contract Compliance Programs (OFCCP) rescinded two Bush-era enforcement guidance documents on pay discrimination from 2006—the “Compensation Standards” and “Voluntary Guidelines.” This is consistent with OFCCP’s stated focus on pay discrimination since the beginning of the Obama administration.

OFCCP’s Director, Patricia Shiu, issued a press release and authored a blog article, stating that OFCCP intended to align its analysis of pay discrimination with the principles used to enforce Title VII. She stated that OFCCP intended to no longer limit its pay discrimination focus to equal pay in the same job but to expand its focus to more tacit practices like discrimination in assigning sales territories or departments or in promotion or bonus, overtime, or commission opportunities. She also signaled that OFCCP would no longer take a “narrowly defined, cookie-cutter approach” to evaluating contractor pay practices but that pay analysis would be tailored to the individual contractor, industry, types of jobs, and pay practices.

It is important to note that prior guidelines were rescinded immediately, and new procedures are in place for all compliance evaluations going forward. Employers using the 2%/$2,000 rule, screening by job title, are no longer safe using this simple rule of thumb, which was rescinded as part of the prior guidance.

OFCCP will now use a flexible, fact-based approach, similar to what courts use for Title VII and not restrict itself to any formula or framework. Briefly, the new approach will involve:

• OFCCP investigators working with government statisticians and attorneys to determine the appropriate analytical methods for use in each investigation;
• Analyzing comparative compensation data using both large and small groups to determine if discrimination has occurred;
• Reviewing and testing of all factors (such as experience, tenure in position, performance ratings, etc.) provided by the contractor as an explanation for employee compensation disparities to determine if they are relevant to compensation and whether they were consistently applied;
• Not requiring statistical analysis to prove pay discrimination in all cases; and
• Not requiring anecdotal evidence (statements by workers about pay discrimination) to prove systemic pay discrimination.

“Compensation discrimination” will not be limited to base pay, but could include other earnings (e.g., bonuses, overtime, and commissions) and benefits, job assignments, training and advancement opportunities, differences in opportunities for increased compensation, or other unexplained differences.

During a desk audit, OFCCP will:

• Gather summary data for pay comparison (average compensation by sex and race by pay grade or job group);
• Assess quantitative factors, such as:
  • The size of overall average pay differences based on race or sex,
  • The number of job groups/pay grades where average pay differences exceed an unstated certain threshold, and
  • The number of employees negatively affected within job groups/pay grades;
• Assess qualitative factors, such as:
  • Compliance history (prior violations),
  • OFCCP or EEOC complaints,
  • Anecdotal evidence,
  • Potential violations found during the audit involving other employment practices, and 
  • Inaccurate or incomplete initial data submitted;
• Gather individual data after gathering summary data or at the same time as the summary data;
• Review policies and practices;
• Interview HR personnel and employees; and
• Examine payroll and human resource information systems.

If satisfied with a preliminary analysis of summary data, OFCCP may (but is not required to) stop its analysis and not conduct individual or more in depth review. The analytical methods to be used include pooled regression analysis (large groups) or non-pooled regression analysis (small groups), using a 2-standard deviation standard, and cohort analysis, comparing similarly-situated individuals.

Information on this new directive is available here.

While OFCCP states that the new approach is intended to make the process more clear, the information released thus far does not provide a new “OFCCP-sanctioned” roadmap for contractors to follow in conducting their yearly compensation analysis as part of their affirmative action plan preparation or in preparing for a desk audit. OFCCP has indicated that it will be releasing further guidance documents and conducting webinars on this topic in the near future. We will update this blog post as more information is provided by OFCCP.

(More specifically, the two guidance documents rescinded were: (1) Interpreting Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination (“Compensation Standards”), 71 FR 35124, and (2) Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Nondiscrimination Requirements of Executive Order 11246 (“Voluntary Guidelines”), 71 FR 35114.)

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Naked pictures? Drunken celebrations? Sexist comments? A click of a button and all evidence of your "Weekend at Bernie's" can disappear. Job seekers know to scrub clean their Facebook pages before they connect with potential employers, to remove all trace of their off-color on-line life. But here in Ohio you can't delete your way out of the mess you created through social media. Employers can legally ask employees and recruits to surrender their social media passwords, and thanks to Facebook's newly expanded access program, the result is a stunningly deep portal into private messages, deleted posts, photographs and everything you ever posted on your Facebook wall.

Where does an employer's right to screen applicants and monitor employee behavior end and personal privacy begin? It's a murky line drawn so far by only six states — and Ohio isn't one of them. After failing to win support for Senate Bill 351 in 2012, Ohio Senator Charleta Tavares will this month reintroduce her proposal to make it illegal for an employer to require an employee or potential employee to surrender their social media passwords. Tavares argues that employers should not be able to access personal thoughts and messages that employees never intended to be broadly distributed.

Tavares' legislation would not restrict employers from inspecting the social media that is readily available to an applicant's network of friends, and can legitimately help employers determine if a prospective employee would be a good organizational fit. Employers, for example, could still inspect your Facebook page, but they would do so without the personal password that gives them expanded access to your history and hidden files.

As we have noted in the past, whether such legislation really is necessary, however, is subject to debate. Few employers need — think law enforcement, finance and child care industries that require more in-depth screening — or want to delve deeply into their applicants’ or employees' personal lives, but employers and recruiters rightfully argue that social media is a valid screening method that can reveal both negatives and positives about potential hires. A recruit who is not on LinkedIn and has no professional social media presence can appear to be not relevant. Your social media profile can paint a flattering picture of your volunteer efforts, your professional affiliations and your networking capabilities. Conversely it can expose your poor grammar and your lack of judgment. What exactly were you thinking when you posted that picture of yourself, half-naked, with a beer bottle in one hand, a joint in the other, wearing a ball-cap that says "Female Body Inspector?" We've all seen such pictures.

Beyond the hiring process, however, employers should know that a wealth of information is available to them if they obtain that magic password for other purposes, particularly during discovery in matters involving disputes with current or former employees. Employers can use social media to great advantage in such cases. It is difficult to sustain a claim for disabling injuries, for example, when the employer displays recent photographs of your weight-lifting workout at the gym. One manager who denied a personal relationship with a subordinate happily posted romantic pictures and glowing descriptions of their encounters.

By obtaining the personal password of a volunteer, a recent test of the new Facebook access program provided an astounding amount of personal information, hidden files, private conversations, and remarkably every item ever posted on the user's Facebook wall dating back to her original sign-on date in 2008. In a printed format (with small font) the wall posts were nearly one thousand pages long. Surprisingly, even the private conversations the volunteer typed into pop-up message boxes, directed at individuals, were recorded and stored and resulted in 200 printed pages of "private" conversations. Every photograph the volunteer ever posted, every person the volunteer had deleted from her friend list, and all files the volunteer thought to be "hidden" were readily available. Specific devices used by the volunteer to log-on, the time spent on Facebook, and a list of every ad viewed by the volunteer over the past five years were also accessible. It is a stunning amount of information that can provide undisputable evidence, particularly in the labor and employment context.

A recent survey by Jobvite, a company that provides applicant tracking software, shows that 92% of employers are using or planning to use social networks as a recruiting tool this year.  Careerbuilder.com reports roughly 40% of employers are using social media as a screening tool, but there are no statistics that show how many employers require social media passwords to be surrendered.

Employers can establish a clear process that allows for legitimate inspection of a prospective employee's social media profile — without asking for personal passwords. A successful social media review process is one that minimizes the employer's chance for a charge of discrimination while allowing the employer to determine whether an applicant posesses reviewable, legal characteristics that make the applicant a good or bad fit for the company. You might wonder why the concern for a charge of discrimination comes in to play. Well, by just scanning an applicant's social medial profile, an employer can uncover a lot of information, and some of it is unlawful information for an employer to use or consider in the hiring process. This information includes an applicant's race, age, religious affiliation, national origin, gender, veteran status, pregnancy status, genetic information, sexual orientation (in some states and localities), and gender identify (some states and localities).

Successful policies usually include the following:

1. Layout Search Criteria: A standard written search policy that defines for the employer and the applicant what social medial sites will be searched and what information reviewed; e.g., engaging in hate speech, discriminatory conduct, criminal activity.
2. Put a Wall Between Reviewer and Ultimate Decision Maker: A two-tiered approach that provides for an initial screening of the social media before information is presented to the person who will make the actual hiring decisions. In turn, the reviewer will forward on to the ultimate decision maker only the information about the applicant that hit the employer's defined search criteria. This ensures that the person who makes the ultimate employment decision has never actually viewed the applicant's social media profile. This eliminates even the appearance that the applicant was hired or rejected on the basis of inadvertent access to legally protected information.
3. Document, Document, Document: You have a strict policy in place. Now prove it. Keep uniform records about what disqualifying information was obtained through the social media sites for use in the event a lawsuit ensues.
4. Stay True To Your Policy: Again, you have a strict policy in place — abide by it. Do not attempt to circumvent an applicant's privacy settings to collect more information about the applicant. This includes creating a false profile to gain access to the applicant's information or impersonating a "friend" for the same reason.

With proper guidance your social media policies can reflect the culture of your company, and will enhance — not ensnare — your workforce.

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With Valentine's Day approaching, it is a good time to remind employers that dear old Cupid is alive and well, and strutting his stuff in the workplace. I won't bore you with the statistics about how many romantic relationships blossom in the workplace, and how many of those end up in marriage or crash and burn like the Hindenburg. As many employers already know, it is not just the parties actually involved that can get burned when it comes to workplace romances. Most often, it is the employer that feels most the heartburn when workplace romances turn sour. Because romantic workplace relationships will develop, regardless of what an employer does to try to stop them, here are some thoughts about how to protect your workplace and avoid the inevitable sexual harassment lawsuit.

Don't Put Yourself Between a Rock and Hard Place by Banning Office Relationships

As I said, romantic workplace relationships will develop, no matter what policies employers have in place to prohibit them. These policies simply are unrealistic and ineffective. Policies that prohibit romantic relationships merely prompt employees to hide the relationship and lie to cover their tracks. As you can imagine, this does not bode well for a happy, productive workforce ... and that's before the relationship heads south. Imagine trying to supervise an employee who just got dumped by her (covert workplace) boyfriend. When you ask her what's going on with her performance, she either lies and tells you nothing to perpetuate the secret, or unleashes the tale of the forbidden affair and all its details. This leaves you, the employer, with two choices. You either enforce your "Workplace Relationships Prohibited" policy, which means you may have to fire a good employee for something that could have been handled differently and likely avoided, or, you choose not to enforce your policy and communicate to your employees that you don't enforce your policies. And keep in mind, co-workers will know about the affair long before you ever do, so they will know when you choose not to do anything about it. As you can see, a prohibition on these relationships is not only unrealistic, it's ineffective and distracting.

So, to avoid that awkward situation between a rock and a hard place, don't flat out prohibit such relationships. Instead, recognize that these relationships happen, and put policies and procedures in place to deal with them when they do.

Steps for Employing Targeted Workplace Relationship Policies

1. Come Out Come Out Wherever You Are. Require Disclosure Of Office Relationships.

Relationships between co-workers are difficult enough for employers to handle, but when those relationships turn into sexual harassment claims, the employer has the affirmative Faragher/Ellerth defense and can only be liable it was negligent either in discovering or remedying the harassment.

When the romance is between supervisor and subordinate or on an executive level, the stakes become higher for the employer. In a supervisor on subordinate sexual harassment case, the Faragher/Ellerth defense is not available. Meaning, if the supervisor's harassment of a subordinate employee culminates in a tangible employment action against the subordinate, like termination or a demotion, the employer will be strictly, or automatically, liable. If the harasser is a supervisor, but the subordinate has not been subject to a tangible employment action, the employer can avoid liability by showing: (1) it "exercised reasonable care to prevent and correct promptly any sexually harassing behavior"; and (2) that the complaining employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise" i.e., failed to follow the employer's harassment reporting policy outlined in the employer's handbook. While the Supreme Court grapples with the issue of who qualifies as a "supervisor" in this context in Vance v. Ball State University, a case that is awaiting decision, employers can get ahead of the issue and put policies in place to deal with disclosed relationships.

A more targeted policy that requires employees to disclose romantic relationships and provides that employees may not be in a romantic relationship with anyone they have supervisory authority over or with someone who has supervisory authority over them area advisable. In the event a supervisor/subordinate relationship is disclosed, the company can then review their workforce needs to determine if a transfer or schedule change would be appropriate to accommodate the relationship. If not, employees should be informed that they may be subject to termination.

2. Sign on the Dotted Line. Have Employees Enter Into a Consensual Relationship Agreement, i.e., A Love Contract.

A Consensual Relationship Agreement, a/k/a, a "love contract" establishes workplace guidelines for workplace dating or romantically involved coworkers. The purpose of the policy is to limit employer liability in the event that the romantic relationship ends. 

A love contract is kind of like a pre-nup agreement between the two employees involved in the relationship. Instead of dividing assets ahead of time though, it protects the employer and provides that if (when) the relationship fails, neither employee will blame (sue) the company. Although employers may be squeamish about approaching their employees about signing these contracts, the benefit to the employer is that the contract can require the employees to waive claims that may have already accrued prior to the signing of the agreement.

So what else should be in a love contract?

1. Statement of Consent: Typically, a love contract requires the two employees in a consensual dating relationship to sign it and declare that their romantic relationship is voluntarily and without any type of coercion or duress.
2. Prohibited Conduct. They should also outline what conduct in the workplace is and is not appropriate. This keeps all the "love" from spilling out into and distracting the workforce, which could make it uncomfortable for other employees.
3. Arbitration. Another helpful feature that can be included in a love contract is a binding arbitration clause. This type of clause makes arbitration the only grievance process available to the romantically-linked employees and eliminates the possibility of a later sexual harassment lawsuit if (when) the relationship ends.

When the employees sign their love contract, it is also a good opportunity for the employer to remind the employees of the company's anti-harassment and anti-discrimination policies.

3. "You Are Not Doing That Here!"

In the event a workplace relationship is disclosed, the employer can get ahead of it. Office romances don't just create liability for employers dealing with the employees in the relationship. Lawsuits stemming from workplace romances can come from all sides, including from employees who feel they are being discriminated against or harassed because of an office relationship. This typically comes in the form of a discrimination suit from an employee believes an employee in the relationship is getting more favorable treatment. Just because an employer allows office relationships to happen does not mean the employer relinquishes control over its workplace. Employer policies also should explicitly indicate that employees have no expectation of privacy and define what conduct cannot occur in the workplace, i.e., no "public displays of affection."

It is also important that employees know how to complain about harassing behavior and that managers are trained how to respond to it. This can mean the difference between an employer being liable or not. This also means that all complaints should be taken seriously and that a thorough investigation into all complaints must be done. By now, most employers know they have to have anti-harassment policies and reporting and investigation protocols. Just remember, they apply in workplace romance situations too. So, train, remind, enforce, investigate and take seriously!

Key Takeaways

The heart wants what the heart wants. Since you likely can't stop them, an employer's best defense is to deal with workplace romances head on. This means making your employees in those relationships deal with it head on too by disclosing their relationships and by signing agreements to deal with the potentially legal ramifications from the fallout. Most importantly, make sure your anti-harassment policies are up to date and that your complaint procedure protocols are up to date and strictly and fairly enforced.
 

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According to a news release issued by the university, a Kansas State University study to be published in the journal Computers in Human Behavior concludes that between 60 and 80% of the time spent by people on the internet at work has "nothing to do with work." The study, which was profiled this morning on The Today Show, suggests that "cyberloafers" come in all ages. According to one of the researchers, "Older people are doing things like managing their finances, while young people found it much more acceptable to spend time on social networking sites like Facebook."

Certainly, while the estimated percentage might be unexpectedly high to some, there is no doubt that workers are spending more time on the internet for personal reasons. The study goes on to note that employer electronic monitoring policies do little to change behaviors unless the policies are enforced. According to the news release announcing the study, "Researchers discovered that the only way to change people's attitudes is to provide them with information about other employees who were reprimanded."

The question I have is whether enforcement of these policies really discourages employees from surfing the web or whether it merely drives the behavior underground. My bet is that many – I won't say most – employees who fear discipline as a result of electronic monitoring at work will simply resort to using their personal electronic devices, which the employer will not be able to monitor. In my mind, the best way for an employer to ensure that workers are actually working is to monitor their actual work performance, both quantity and quality, and in the process it will catch most, if not all of its cyberloafers.

I'm not suggesting that electronic monitoring policies are bad or even ineffective; just don't ask them to cure more problems than they are capable of doing. Indeed, such policies are invaluable in making sure that employees are not accessing pornography or other material at work that may subject an employer to liability. These policies also can help prevent trade secret leakage or outright misappropriation. But to think that enforcing these policies, without more, will deter most employees from shopping on Amazon.com or checking Espn.com for the latest trade rumor in my opinion is a bit naïve and maybe even somewhat counterproductive.

Even the researchers noted that the strategy can have negative consequences in the workplace and can lower morale. Indeed, in many work environments where employees are one dinner time cell phone call away from being back on the clock, it is not entirely unreasonable to think that some employees will conduct some personal business while at work. In addition, some studies have suggested that occasional personal use of the internet while at work might help recharge employees' batteries and keep them more focused on their jobs.

I'm all for enforcing electronic monitoring policies at work; let's just not ask them to do too much. Now, if you don't mind, there is this set of golf clubs that I saw on the internet last night….

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The Internet is burning up this morning with the story of an Applebee's waitress who was fired for posting on Reddit, a social news and entertainment site, the receipt from a customer who gave her no tip on a $35.00 check, writing "I give God 10% why do you get 18?" Unfortunately, the waitress did not obscure the customer's signature when she posted a picture of the receipt, which naturally set off a firestorm of Reddit users and others on the Internet attempting to identify the customer. The customer apparently then contacted Applebee's and demanded the waitress's termination.

While there is plenty of reason to sympathize with the waitress, particularly if the facts are as represented here and here, it is hard to fault Applebee's for its decision at least to discipline the waitress. As I see it, this was an individual gripe by the waitress, so no concerted protected activity for the NLRB to get riled up about and, regardless of whether he deserved it or not, she created at least one really unhappy customer.

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As the D.C. District Court's long-awaited decision in Noel Canning v. NLRB, invalidating President Obama's January 2012 "recess" appointments, likely heads to the United States Supreme Court, here's what employers need to know in the interim about the impact of that decision.

The Background

As we explained in our post, President Obama's Move to Sidestep the Senate with Recess Appointments, when the National Labor Relations Board's ("NLRB") normal five-person membership fell to two in late 2011 when Craig Becker's (who had also been an Obama recess appointee) appointment expired and the agency, therefore, lost its statutory authority to issue rulings, President Obama made three appointments in early 2012 as the Senate was scheduled to leave on holiday break, which sparked a host of controversy.

The controversial appointments included the appointment of Democrat Sharon Black, a Labor Department Official; Democrat Richard Griffin, General Counsel for the International Union of Operating Engineers; and Republican Terrance Flynn, an NLRB attorney.

Setting the Stage for a One-To-Watch Decision

So why the controversy? Well, President Obama made the appointments while the Republican Senate was holding pro forma sessions over the holiday to technically avoid going into recess. While this tactic was certainly not a new one, as it had been used by other Congresses to avoid triggering the president's recess appointment power, President Obama's move was particularly aggressive because the Senate was meeting every three days with the specific purposes of staying in session and denying him the chance to make recess appointments. With the standoff, President Obama called the Senate's bluff and seated all NLRB nominees.

The recess appointment issue is the focus of over a dozen lawsuits, many of which remain pending, but the lead case — the one to watch — has always been Noel Canning v NLRB pending in the D.C. District Court, which we first introduced you to back in March 2012 in A New Challenge to President Obama's Recess Appointments in Federal Court Means a Decision on the Constitutionality of the Appointments is Getting Closer. The attention certainly is warranted, but not because of the underlying facts, which concern a run-of-the-mill, routine labor dispute. Where it gets interesting is that the decision was decided by three of the five NLRB members, two of whom were "recess" appointees. The case was appealed to the D.C. District Court and the issue to be decided was whether the three-person decision had the necessary quorum of at least three members to be valid. Because the three temporary appointees, were arguably, not legally appointed, the decision was subject to nullification.

The challenge was based on the United States Supreme Court's 2010 case New Process Steel, L.P. v. NLRB where it held that the five-member NLRB could not delegate its authority to fewer than three members. Thus, a two-person board is not a quorum and is powerless to render decisions. Since Wilma Leibman's term expired in August 2011, the NLRB had been functioning as a three-member unit. The NLRB lost that three-person quorum when Becker's term expired at the end of 2011. When President Obama made the three "recess" appointments, the NLRB only had two members. Therefore, if the President's three "recess" appointments were unconstitutional, arguably every decision made by the NLRB with the recess appointments sitting as quorum effectively would be moot.

The D.C. District Court's Decision

The D.C. District Court issued a two-part decision and held that President Obama's "recess" appointments in January 2012 were constitutionally impermissible.

Part One: The appointments were "made when the Senate was not in Recess" because the President's recess appointment power does not apply to "intrasession" appointments, only "intersession" appointments.

The first part of the court's ruling was unanimous and answered the question: "How long must the Senate be away to technically be on 'recess'"? Article II, Section 2 of the Constitution gives the President the "[p]ower to fill up all vacancies that may happen during the recess of the Senate," and these recess appointments do not have to be filled by the Senate. The Constitution does not specify how long the Senate had to be in recess to trigger the President's appointment power so the court answered it, and held that the constitutional authority to fill a vacancy can only be used when one Congress has ended and before a new Congress comes to town, and not during a break between two sessions of the same Congress. Therefore, the President's recess appointment powers do not apply to "intrasession" appointments i.e., those made when Congress has left town for a few days or weeks.

The court's opinion affirmed the "original meaning" mode of interpreting the Constitution, meaning the judges reviewed the constitutional issue by looking at what the framers meant by the words when they originally wrote them. The D.C. District Court reviewed the history of the Recess Appointment Clause, and concluded that "Recess" referred to intersession recesses and not the generally shorter intrasession ones and found:

We hold that "the Recess" is limited to intersession recesses. The Board conceded at oral argument that the appointments at issue were not made during the intersession recess: the President made his three appointments to the Board on January 4, 2012, after Congress began a new session on January 3 and while that new session continued. Considering the test, history and structure of the Constitution, these appointments were invalid from their inceptions. Because the Board lacked a quorum of three members when it issued its decision in this case on February 8, 2012, its decision must be vacated.

The court found that to interpret "the Recess" to include other breaks in Senate business would give the President "free rein" to make appointments "at any time he pleases, whether that time be a weekend, lunch or even when the Senate is in session and he is merely displeased with its inaction." Thus, the judges made a bright-line decision in holding that the Senate only recesses, for purposes of the President's recess appointment power, at the end of the year.

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In Dixon v. Univ. of Toledo et al., the Sixth Circuit Court of Appeals has held that a high-level human resources official who writes publicly against the policies her government employer charges her with creating, promoting and enforcing, is not engaging in protected speech. Crystal Dixon, an African-American woman, who was the acting Interim Associate Vice President for Human Resources at the University of Toledo ("the University") when she penned a riveting op-ed column rebuking comparisons between the civil-rights and gay-rights movements. The piece ultimately led to her termination.

On April 4, 2008, Toledo Free Press Editor-in-Chief Michael Miller wrote an editorial titled "Gay rights and wrongs." In his piece, Miller compared the gay rights movement to the civil rights movement and expressed concern that Medical College of Ohio employees who became University of Toledo employees following a 2006 merger were not offered domestic-partner benefits that were available to other University employees. Dixon responded to Miller's piece with her own op-ed column, "Gay rights and wrongs: another perspective," on April 18, 2008. Dixon rejected Miller's comparisons of the gay-rights and civil-rights movements stating,

"[a]s a Black woman who happens to be an alumnus of the University of Toledo's Graduate School, and employee and business owner, I take great umbrage at the notion that those choosing homosexual lifestyle are 'civil rights victims.' Here's why. I cannot wake up tomorrow and not be a Black woman. I am genetically and biologically a Black woman and very pleased to be so as my Creator intended. Daily, thousands of homosexuals make a life decision to leave the gay lifestyle as evidenced by the growing population of PFOX (Parents and Friends of Ex Gays) and Exodus International just to name a few...."

Dixon also responded to Miller's comments regarding health insurance, stating, "[t]he reference to the alleged benefits disparity at the University of Toledo was rather misleading....To suggest that homosexual employees on one campus are being denied benefits avoids the fact that ALL employees across the two campuses regardless of their sexual orientation, have different benefit plans."

Dixon was placed on paid administrative leave on April 21, 2008, as a result of her op-ed column. President Jacobs wrote a guest column in response to Dixon's op-ed column, on May 4, 2008. Jacobs repudiated Dixon's opinion on behalf of the University and emphasized the University's position on diversity. Jacobs also highlighted the various programs at the University aimed at expanding and supporting diversity.

Dixon's disciplinary hearing was held on May 5, 2008. Dixon read a prepared statement reiterating the beliefs stated in her op-ed column, and she stated she was speaking as a private citizen. She also claimed she had never discriminated based on sexual orientation, and accused the University of treating her differently than other employees. President Jacobs issued a termination letter to Dixon on May 8, 2008.

On December 1, 2008, Dixon filed suit in the U.S. District Court against the University, President Jacobs, and Vice President for Human Resources and Campus Safety William Logie, alleging First Amendment and other violations. The District Court granted the Defendant's motion for summary judgment. Dixon filed an appeal to the Sixth Circuit Court of Appeals.

The Court analyzed Dixon's claim of First Amendment Retaliation specifically focusing on whether her speech was protected. Dixon needed to show the following: 1) her speech touched on a matter of public concern; 2) that under the balancing test announced by the U.S. Supreme Court in Pickering v. Board of Education, her "free speech interests outweigh the efficiency interests of the government as employer"; and 3) that the speech was not made pursuant to her official duties." The parties agreed Dixon was speaking on a matter of public concern, but the University argued Dixon could not satisfy the Pickering requirement, and was speaking in her official capacity.

The University argued Dixon's speech fell within the presumption set forth by the Sixth Circuit Court of Appeals in Rose v. Stephens, which states "where a confidential or policymaking public employee is discharged on the basis of speech related to his political or policy views, the Pickering balance favors the government as a matter of law." The evidence established Dixon was delegated appointing authority and was responsible for recommending, implementing, and overseeing policy. Moreover, Dixon's comments implying that homosexuals should not be afforded the same protections as African-Americans is in direct contradiction to several University policies developed and promoted by the Human Resources Department. The Sixth Circuit found the University's interests outweighed Dixon's interest as a matter of law and affirmed the district court's grant of summary judgment.

Reminders
Government employers should understand that the First Amendment will not prevent them from disciplining employees serving in policy-making positions for public speech that contradicts the employer's policies. Such employers, however, should be careful to consider the disruption caused by the employee's speech before taking disciplinary action. 

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We hope you enjoyed our five-part series last week addressing the Top 5 Holiday Headaches for Employers. Due to popular demand, we have compiled this series into an eBook for you and have added a special bonus:

Three FMLA Stocking Stuffers: How to Avoid a
Big Lump of Coal

We couldn't do a holiday-blog series and NOT include something about every employer's favorite holiday topic. Like fruitcake, it is a gift that nobody really wants or knows what do with... the FMLA.

Here we tackle three prickly FMLA-holiday questions. First, do holidays count against an employee's FLMA leave entitlement? Second, how does FMLA work in the case of a week-long plant, office or school shutdown? Lastly, does an employer have to pay an employee on FMLA leave holiday pay?

#1 - Does a Holiday Count Against an Employee's FMLA Leave Entitlement?

Let's say you have an employee who is out on FMLA leave from Monday, December 3, 2012 through Thursday, January 31, 2012. Let's also say that your office is closed Tuesday, January 1, 2013 to celebrate New Year's Day. Does the January 1, 2013 holiday count against the employee's FMLA leave entitlement?

The FMLA itself does not directly answer this question, so we look to the general rule for counting FMLA leave during a holiday week. The key here is whether or not the employee is absent for the entire week in which the holiday is observed. In our example, the answer is "yes." Under the FMLA, leave is calculated in workweek increments. While there are some exceptions when employers have to deal with intermittent or reduced schedule leaves when shorter periods of leave of observed, the week is the standard unit. If an employee is out on FMLA for the entire workweek, like in our example, the holiday would count against the employee's FMLA leave entitlement.

If, however, the employee works part of the week, e.g., if the FMLA leave is certified from Friday, December 21, 2012 through Wednesday, January 2, 2012, then only the days the employee would have been expected to report to work would count against the employee's FMLA leave entitlement. In this case, the holiday days will not count against the employee's FMLA leave entitlement unless the employee was otherwise scheduled to work as the FMLA provides:

For purposes of determining the amount of leave used by an employee, the fact that a holiday may occur within the week taken as FMLA leave has no effect; the week is counted as a week of FMLA leave. However, if for some reason the employer's business activity has temporarily ceased and employees generally are not expected to report for work for one or more weeks (e.g., a school closing two weeks for the Christmas/New Year holiday or the summer vacation or an employer closing the plant for retooling or repairs), the days the employer's activities have ceased do not count against the employee's FMLA leave entitlement.
29 C.F.R. § 825.200(h) (emphasis supplied).

Here's what it looks like in application. In our example, the employee has FMLA leave certified from Monday, December 3, 2012 to Thursday, January 31, 2012. So, the whole week, which includes the holiday, counts against the employee's FMLA leave entitlement.

-- Count Whole Week as FMLA Leave --

In the second example, where the employee has FMLA leave certified from Friday, December 21, 2012 through Wednesday, January 2, 2012, only Monday and Wednesday count against the employee's FMLA leave entitlement.

-- Count Monday and Wednesday
as FMLA Leave --

FMLA leave the employee used for the week. For this, divide the hours the employee missed for FMLA leave over the hours the employee would have worked but for the FMLA leave and get the fraction of FMLA leave to charge the employment's leave allotment. Using our second example, and an 8-hour workday, here is what that looks like:

Hours missed for FMLA                            16  = 1

Hours would have worked but for FMLA      32     2 

Instead of

Hours missed for FMLA                            16  = 2

Hours would have worked but for FMLA      40     5 

In our example, the employee missed 16 hours for FMLA leave divided by the 32 hours the employee would have worked that week but for the FMLA leave. Divide the hours missed for FMLA, which is 16, over the hours the employee worked have worked, 32, and you get 1/2 a workweek FMLA used, instead of 2/5 the employee would be charged in a five-day workweek.

If an employer cannot determine how many hours the employee typically works in a workweek, i.e., the employee's schedule varies from week to week, the employer should take the average number of hours the employee works (including hours worked, leave time used and overtime) taken over the past twelve months. The 12-week period is a look-back period from the date of the leave, not the date of the request for leave. When it comes to overtime, the regulations provide a bright-line rule that if an employee is typically required to work overtime, but is unable to do so because of an FMLA qualifying reason that precludes that employee from working overtime, the overtime hours should be counted against that employee's FMLA entitlement. This is essentially intermittent leave, and the hours counted against the employee are counted at straight time, not time and a half. Voluntary overtime, however, is not to be counted against the employee's FMLA leave allotment.

#2 – How Does This Work In Case of a Weeklong Plant, Office or School Shutdown?

If there is a weeklong shutdown, like a plant closing or school shutdown, where employees are not expected to work, the regulations are clear that the shutdown period cannot count against the employee's FMLA allotment. This is referred to in 29 C.F.R. § 825.200(h), cited above.

#3 - Do Employees on FMLA leave Get Holiday Pay?

Last issue: Do employees on FMLA leave get holiday pay if they are on FMLA leave during the holiday? This issue has presented quite a conundrum, and if you Google this issue, you will be find a number of varying responses.

There are two regulations on point. 29 C.F.R. § 825.09, which provides how an employer must maintain an employee's benefits while on FMLA leave, provides "[a]n employee's entitlement to benefits other than group health benefits during a period of FMLA leave (e.g., holiday pay) is to be determined by the employer's established policy for providing such benefits when the employee is on other forms of leave (paid or unpaid, as appropriate)."

In addition, 29 C.F.R. § 825.215(c)(2), which provides how an employer must maintain equivalent pay, provides:

Equivalent pay includes any bonus or payment, whether it is discretionary or non-discretionary, made to employees consistent with the provisions of paragraph (c)(1) of this section. However, if a bonus or other payment is based on the achievement of a specified goal such as hours worked, products sold or perfect attendance, and the employee has not met the goal due to FMLA leave, then the payment may be denied, unless otherwise paid to employees on an equivalent leave status for a reason that does not qualify as FMLA leave. For example, if an employee who used paid vacation leave for a non-FMLA purpose would receive the payment, then the employee who used paid vacation leave for an FMLA-protected purpose also must receive the payment.

Here's what these regulations mean: Under FMLA, you treat FMLA leave like you would treat comparable non-FMLA leave. Suppose you have an employee who is taking vacation time during the holiday week and your policy provides that if an employee is on vacation the day before the holiday the employee will get paid for the holiday, but will not get paid for the holiday if the employee is on an unexcused absence the day before the holiday. Now suppose an employee is absent for an FMLA-qualifying reason the day before the holiday. The way you treat that holiday pay may depend on whether the FMLA leave is going to be running concurrent with the employee's paid vacation leave, or whether it is simply an unpaid leave under the FMLA. If the employee is using vacation, and the employer policy would allow the employee to take holiday pay if they are using vacation the day before the holiday, the employer would have to allow that for the employee on FMLA leave. On the other hand, if an employer does not ordinarily pay an employee for the holiday if the employee is absent on some other kind of unpaid leave the day before the holiday, the employer would not have to pay the employee on FMLA leave. Employers just have to be sure they are treating employee consistently with similar forms of non-FMLA leave under your policies.

This year, the United States Court of Appeals for Eighth Circuit held in Keeler v. Aramark, that an employee out on FMLA leave was not entitled to holiday pay when his employer had a policy of not providing such pay to employees who did not work the day before the holiday regardless of the reason. In Keeler, the employer requested various leaves in the fall of 2007. His FMLA time went through Labor Day, a day the employer typically paid its employees, even though they were not required to work.

The employer's policy provided that it did not provide holiday pay for any employee on unpaid leave during the holiday, or for any employee who did not work the last regularly scheduled workday before the holiday, unless that absence was previously approved. Pursuant to this policy, the employer did not pay the employee for Labor Day because the employee was absent on the last workday before Labor Day.

The employee sued claiming he was entitled to holiday pay for Labor Day even though he was out on FMLA leave. The employee argued that because the FMLA prohibits an employer from using an employee’s use of FMLA leave as a negative factor in employment actions, he was entitled to the same paid leave he would have received as had he not been out on FMLA leave. The court disagreed and relied on 29 U.S.C. § 825.215(c)(2), set forth above, in particular: “if a bonus or other payment is based on the achievement of a specified goal such as hours worked … or perfect attendance, and the employee has not met the goal due to FMLA leave, then the payment may be denied." Relying on this regulation, the court found that so long as the employer treats other employees who were absent for non-FMLA reasons in the same manner. This regulation, with the employer's policy of not providing holiday pay for any employee on unpaid leave during the holiday, meant the employee had no claim.

The takeaway here for employers is simple: check your leave policies and check them twice, and make sure you are applying FMLA leave entitlements in conformity with the FMLA and your own policies.

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It is important not to require employee attendance at holiday parties and that pressure to attend is properly managed. Mandatory attendance at company-sponsored functions, like holiday parties, can result in workers' compensation claims if an attending employee is injured. It can also mean that the employee is entitled to be compensated for his or her time spent at the event pursuant to the Fair Labor Standards Act ("FLSA").

For workers' compensation liability, if the employee is required to attend a company-sponsored event, or there is significant business that takes place at the event that essentially makes attendance mandatory, then the employee will be considered to have been acting in the course of his or her employment and the same rules that apply to typical workers' compensation claims apply to injuries the employee suffers while at the holiday party.

The timing of the event is important for determining if and when workers' compensation laws may come into play. For example, if the event is held during normal working hours, then employee’s attendance will likely be considered as “in the course and scope of their employment” though courts will also typically look at:

• The extent to which the employer expects/ requires employees to attend; 
• The extent to which the employer benefits from the event, e.g., will clients be present and/or will work be done;
• The degree of participation by the employer; 
• Whether the activity takes place on the employer's premises or off-site; and
• When the event takes place in relation to the employee's normal work hours. 

Several courts have recognized that an employee's voluntary attendance at a social event sponsored by his employer off the employer's premises and outside normal working hours cannot reasonably be viewed as conduct within the scope of his employment.

To help make your company holiday event festive while reducing your liability, keep the following tips in mind:

• Make Attendance Optional: Make it clear to employees that attendance at a company-sponsored events is purely optional, not mandatory. This also means keep the event social, not work related. Keep work-related events, like handing out of bonuses or awards, for another day.
• Pony Up the Pay: If attendance is required or the event is during work-time, compensate your employees, including overtime pay if their hours for the week exceed 40.

Thank you for sharing with us the fun with our week-long holiday blog series.  Stay tuned for a special "stocking stuffer" on Monday, December 17 as we wrap this up!  (Hint ... you didn’t think we could talk about holiday headaches without mentioning the FMLA, did you?)

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Many employees believe they are entitled to holiday pay, even if they do not work on the holiday. This is not the case. In fact, neither the Fair Labor Standards Act ("FLSA") nor most state laws, including Ohio, require a private employer to pay hourly employees for working or not working on holidays (federal or otherwise).  (For employers in Massachusetts, however, be sure to check your Blue laws.) This type of pay, if provided, is typically considered a fringe benefit and is a matter of agreement between an employer and an employee (or the employee's union representative). Please note that this does not apply to salaried, exempt employees who get paid for holidays (even ones they don't work) because the law prohibits employers from making wage deductions if the company is closed on a holiday.

What if an employer pays its employees for holidays for which they don't actually work?

Some employers may choose to pay their employees for the holiday, e.g., eight hours for New Year's Day, so it is important that employers understand the FLSA and comparable state law overtime implications. While employers may choose to pay employees for an additional eight hours on a holiday they did not work, these additional eight hours of time that did not constitute actual work cannot be used to go into a calculation for overtime purposes. Federal and most state laws require employers to pay nonexempt employees one and one-half times their regular rate for each hour worked over 40 in a workweek. These non-worked hours don't count.

Here's what it looks like in application:

Say an employee works 42 hours in a workweek and gets an additional 8 hours of pay for New Year's Day, even though the employee did not actually work on New Year's Day. The employee earns $10 an hour. The employee is entitled to 48 hours of straight pay and 2 hours of overtime, not 40 hours of straight pay and 10 hours at time and a half.

What if an employer gives an employee a holiday bonus?

Some employees really get into the holiday spirit and include holiday bonuses, along with other compensation. The FLSA excludes eight types of payments from the regular rate, one of which is the discretionary bonus. Discretionary bonuses are when the employer has discretion both on whether the payment is actually awarded and on the amount of the payment until a time close to the end of the period for which the bonus is paid. Nondiscretionary bonuses, on the other hand, typically are those agreed to, promised or contracted. Thus, for FLSA purposes, only nondiscretionary bonuses affect the overtime calculation.

For purposes of the FLSA, nondiscretionary bonuses must be included in the calculation for regular pay when computing overtime. For example, if an employee earns $10 an hour and works 45 hours in a work week, the employee would be entitled to 40 hours at $10 an hour and 5 hours at time and a half, or $15 for a grand total of $475.

Now let's go one step further. Let's say the employer gives the employee a holiday bonus that is a matter of contract between the employee and the employer paid out the bonus in the amount of $500 in the week discussed above, when the employee worked 45 hours. To calculate the overtime due for a week covered by a nondiscretionary bonus, the employer must first calculate the average rate of pay for the week, given the impact of the bonus. Here's how that calculation works:

Failing to include the $500 non-discretionary bonus when calculating the regular rate of pay would violate the FLSA and could mean steep penalties for the employer. So, if you decide to give holiday bonuses, make sure you comply with the FLSA and comparable state laws regarding overtime pay or make sure your holiday bonuses qualify as discretionary so they can be excluded from this calculation.

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So the question on everyone's mind when it comes to holiday parties: Will alcohol be served? For employers this is a big decision and, depending on where the holiday party is held and how it is contained, one that may come to expose an employer to liability. For the most part, whether an employer can be held responsible for alcohol-related incidents at or after company-sponsored events depends on the state in which the party is held and the circumstances.

First things first: If the event involves a business purpose that can be considered to have a direct effect on the commercial profitability of the business or if attendance is mandatory, the employer could find itself exposed to liability, so it is important to make attendance optional. Normally, however, merely attending an employer sponsored party will not expose the employer to liability for injuries that an intoxicated employee may cause once away from the premises.

In Ohio specifically, a social host, (i.e., the employer, in the case of an office holiday party) who provides alcohol on company premises is typically not liable to a third person subsequently injured by the intoxicated person. Ohio courts have refused to impose liability on a social host in a situation where a guest becomes intoxicated and injures a third party. Specifically, in Settlemeyer v. Wilmington Veteran's Post No. 49, 11 Ohio St.3d 127 (1984), the Ohio Supreme Court has held that a social host is not liable for injuries to a third-party that occur as a result of the negligence of an intoxicated social guest. Settlemeyer has been applied in the employer-holiday party context and been found controlling. See Gilkey v. Gibson, No. 98AP-1570, 2000 WL 4973 (10th App. Dis. Jan. 6, 2000); Knox v. Bell Optical Lab, Inc., No. 1145, 1989 WL 126857 (1st App. Dis. Oct. 24, 1989). In this context the courts typically have reasoned that the proximate cause of the injury is the consumption of the alcoholic beverage itself, not the act of furnishing the beverage. This is especially true when it concerns an adult guest; it’s a little different for minors, as set forth below. If the event is held at a restaurant or off-site, the vendors selling/providing the alcohol for profit may be liable for resulting injuries to third parties if they provide alcohol to noticeably intoxicated guests; however, the employer sponsoring the event generally has no liability.

When minors are involved, Ohio courts in some instances have found a furnisher of alcohol liable for injuries to a third person as a result of an intoxicated guest’s actions. These instances include cases where a person under 21 is provided beverages and when a liquor license holder knowingly violates the law relative to the sale of alcoholic beverages. In each such instance, the courts have determined that by enacting specific statutes that forbid the furnishing of alcohol to minors, the legislature meant business. Because these instances constitute statutory violations, Ohio courts have imposed liability on the social host and/or license holder in the event that the intoxicated minor causes injuries to a third party.

A minority of the states have adopted social host liability, in order for an employer to be found liable in one of these states, typically there must be an affirmative showing that the social host served alcohol to a person when the host knew or should have known that the person was intoxicated, and further knew that the intoxicated guest would be driving away from the event.

The problem for employers, even those in Ohio where there is no social host liability typically, is that there is no law that prohibits an intoxicated adult from suing a social host for injuries to that adult guest as a result of the intoxication. This means that if something happens to an employee or someone else due to the actions of an employer who became intoxicated at a company holiday party, the employer can still be named as a defendant in a lawsuit and spend money defending the suit.

If you decide to have alcohol at your company holiday party, here are some steps that might lessen the possibility of being held responsible for an employee's conduct after drinking too much:

• Don't Serve Minors: Make sure no minors are served. Check IDs, pass out wrist bands, and post signs that guests must be 21 in order to consume alcohol beverages. If fraternities can do it, so can you.
• Be Aware of Your State Law: Be familiar with your state’s laws regarding liability and alcohol at company-sponsored events.
• Make Attendance Optional: Make it clear to employees that attendance at a company-sponsored event is purely optional, not mandatory. This also means, keep the itinerary for the event social, not work related. Keep work-related events, like handing out of bonuses/awards or discussing yearly goals, for another day.
• Remind Employees of Policies: Remind employees of your policies regarding proper decorum. While you can encourage them to have fun, remind them that they are expected to act responsibly, which includes not drinking too much and then driving. With this, also remind salaried-exempt managers to keep an eye on employees even though technically it's not work time.
• Limit Consumption: Use a cash bar or drink ticket system to limit alcohol consumption.
• Take it Outside: Have the party at an off-site restaurant, party hall or hotel where the facility will serve the drinks. This will reduce the risk o employer liability. If the party is on-site, at a minimum hire a professional wait staff or bartenders so the alcohol is being served by non-company employees. Ask the bartenders/caterers to prepare low-alcohol mixed drinks or punches that look and taste as festive as their high-alcohol content counterparts. DO NOT have managers/supervisors/co-workers making and serving their colleagues/subordinates beverages.
• Be Careful with Your Choice of Beverages and Food. Provide a variety of non-alcoholic beverages and plenty of food. Stay away from sweet punches that contain alcohol, which make it difficult for employees to monitor how much alcohol they are consuming. Go easy on the greasy, salty or sweet foods, which tend to make people thirsty, and serve starchy and protein-heavy foods that slow the absorption of alcohol into the bloodstream. If possible, serve appetizers that are easy to eat while standing and mingling. Employees who have to choose between holding a drink and holding a plate of food may choose the drink only.
• Close the Bar Early: Close the bar well before the end of the event, no less than a half hour, but keep serving food.
• The More the Merrier: Consider opening the party to spouses/partners/significant others, which tends to reduce alcohol intake in addition to providing a possible designated driver.
• Plan Ahead: Discuss transportation ahead of time with employees and encourage them to coordinate rides with designated drivers. Another option: Arrange for taxis, a shuttle, or other transportation at the company's expense. Let employees know that transportation options are available so they can plan ahead. Announce during the party that transportation is available, even for employees who did not make an advance request.

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Religion is also a hot-button workplace issue in December because so many different religious groups celebrate different holidays in December. For example: Christians commemorate the birth of Jesus at Christmas; Buddhists celebrate Buddha's Enlightenment with Bodhi Day; Jewish people celebrate Hanukkah, the Festival of Lights; African-Americans celebrate Kwanzaa, Muslims celebrate Eid al-Adha, or the Feast of Sacrifice; Seinfeld enthusiasts celebrate Festivus, and there are many others.

Federal and state laws prohibit discrimination and/or harassment on the basis of religion. This means that an employer cannot treat persons of different religions differently or appear to favor one religion over another. As such, having a party that is focused on a single religious theme, i.e., a "Christmas" party, excludes employees who do not practice Christian beliefs. As such, employees should be mindful of varying cultural differences among their employees and determine a neutral way to celebrate this special time of year. Here are some tips:

• Keep Decor Wintery, Not Religious-Centered: In the office, its goodbye to the Christmas tree, the nativity scene and the menorah. Unless you allow all types of religious symbols during the holidays, its best to deck the halls with neutral themes, like wintery snowmen, snowflakes and colorful lights.
• Give Peas a chance! Some religious observances restrict diets or require fasting during certain periods. Do what you can to avoid holiday parties during times of fasting and offer food options that are sensitive to various religions and nationalities that are likely to be represented at your party.
• Music Makes the World Go Round: Music sets the tone of the party, and if done wrong your party can have two left feet. Music can be tough, especially with a workforce of varying ages, cultural backgrounds and/or religious beliefs. One suggestion is to avoid overly religious Christmas carols.
• Foster an Atmosphere of Inclusion not Cliques: Take steps to keep employees from hanging out with their workplace friends. Encourage employees to mix and mingle by assigning seats randomly and/or have everyone engage in an activity, like a gift exchange. Most importantly, make sure everyone feels welcome and included. Holiday parties should promote office morale and bolster workplace cohesion, not remind employees of high school.

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As much as everyone loves them, the holidays create increased risk of employer liability and can result in a long list of legal problems for an unprepared employer. As our holiday gift to you, we've put together our top five holiday headaches for employers, which will be provided to you in a week-long series starting today.

Numero uno on our list: Sexual harassment at the office holiday party. Who doesn't have at least one inappropriate office holiday party story? If you don't, you've at least heard a couple doozies. The mix of sparkly outfits, tasty snacks, free-flowing libations and people who typically spend their working hours together and you have a recipe for jaw-dropping, not to mention, litigious situations. For example, there's the uncomfortable flirtation, the inappropriate comment about someone's appearance or outfit, the misconstrued invitation, and the just-asking-for-problems mistletoe decoration, which should never be featured at a holiday party. And lest we forget, there is a whole host of problems that ensue when the office Santa keeps asking female employees to sit on his lap.

Holiday-related sexual-harassment lawsuits are not new and not unusual. Under federal and state law, employers have a legal obligation to prevent harassment in the workplace. This duty extends to work-sponsored events, like holiday parties and even extends to the appropriateness of gifts for a holiday gift exchange. When it does not abide by this duty, an employer can be vicariously liable for employee behavior that concerned sexual harassment committed in the course of employment. There is a bright side: generally, employers will not be vicariously liable for the actions of its employees if it can demonstrate it took reasonable steps to prevent the sexual harassment or that the employee did not use the employer's complaint procedures to alert the employer of the problem. Some cases on this subject have addressed comments with suggestive innuendos and some have been more overt. Take Grigaliunas v. Rockwell Intern. Corp. (defended by our own Charlie Warner), where the plaintiff alleged a co-worker kissed her at a holiday party for example. While that employer was lucky enough to get the case thrown out early by showing it took reasonable steps to correct the problem when notified, some employers aren't so lucky, and in any event, it costs a lot of money to get the case tossed out.

No matter how well planned or well-intended and despite an employer's best efforts to train their employees, office parties tend to encourage employees to behave in odd ways. This is despite an employer's best efforts to train their employees. Thus, employers are advised to remind their employees, not only of the company's anti-harassment policy, but to remind them that it applies to employer-sponsored parties and events. Here are some other tips to help keep your office Santa off the real one's "Naughty List":

• Review, Update, Remind: Review your employment handbook and, if necessary, update it so it expressly notes that employees are subject to the employer's anti-harassment policy at company-sponsored events. Once reviewed and updated, remind employees of the company's anti-harassment and reporting policies. Let them know that the policies apply to social and non-social events inside and outside the office equally and that they will be subject to discipline if they are involved in harassment during the holiday party. Don't forget to make sure your employees know this applies to their social media activities too ... just in case one of them decides to make a co-worker's dance with the lampshade the new YouTube sensation.
• Take a Top Down Approach: Start at the top and remind supervisors of the company's anti-harassment policies and what to do if they learn of or witness potential harassment.
• Caution Gifting: If there is going to be a holiday party gift exchange, employers should inform employees that gifts should be workplace appropriate. If necessary, employers should expressly state that employees are not to bring gifts/cards that contain derogatory images, language, innuendos or otherwise humorous gifts to which someone might take offense.
• The More the Merrier: Consider inviting your employees' spouses/partners/families. Their presence may change the dynamic, in a good way, and keep the inappropriate conduct at bay.
• Dress for Success: Consider implementing a dress code that maintains a professional environment, e.g., instead of "holiday attire," which could mean sparkly tube tops to some, keep it "business casual."
• Act Fast: Should all else fail and you find yourself dealing with a sexual harassment issue, act promptly! All acts of sexual harassment, even those that occur at a holiday party, should be taken seriously and dealt with properly. This includes a proper investigation and implementation of disciplinary procedures as necessary.

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In Nitro-Lift Technologies, L.L.C. v. Howard, the U.S. Supreme Court this week held that if a contract contains an arbitration provision and there is a challenge to the validity of the contract, it is for the arbitrator and not a court to hear that challenge. The case is important for employers because the challenge was to the validity of a non-competition agreement. More specifically, the Supreme Court held that if a contract contains an arbitration provision, it is up to an arbitrator, and not a court, to determine whether the non-competition provision of the contract runs afoul of a state law limiting the enforceability of such restrictive covenants. In so holding, the Court reaffirmed its earlier precedent that when a contract contains an arbitration provision, the Federal Arbitration Act. (“the FAA”), is the law of the land and that the FAA promotes a “national policy favoring arbitration.” So, the Supreme Court held, the Oklahoma Supreme Court erred when it held that a state law limiting the enforceability of non-competition agreements essentially negated the arbitration provision of the contract and allowed a court to declare the non-competition agreement void. Rejecting this judicial hostility towards arbitration, the U.S. Supreme Court held that pursuant to the arbitration provision, the validity of the contract as a whole, including the non-competition agreement, was a question for the arbitrator and not an Oklahoma state court.

Nitro-Lift Technologies, L.L.C. provides services to operators of oil and gas wells that enhance production of those natural resources. Nitro-Lift entered into confidentiality and non-competition agreements with two of its employees, Eddie Lee Howard and Shane Schneider. Each of those agreements also contained an arbitration clause providing in pertinent part: “Any dispute, difference, or unresolved question [between the parties] shall be settled by arbitration[.]” Howard and Schneider quit working for Nitro-Lift and began working for one of its competitors.

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The summary judgment decision issued on October 31st by Ohio federal district court judge David Dowd in Barnett v. Aultman Hospital contains important reminders for both private employers and their employees. For employers, there is the reminder that they are not bound by the First Amendment's protections for free speech. And for employees: Always remember to confirm that your supervisor actually has been fired before going to Facebook to celebrate.

In January 2011, after receiving the erroneous information that her supervisor had been fired, the plaintiff, Wendy Barnett, a registered nurse at Aultman Hospital sent an email through Facebook to nine current and former hospital employees (and others) that according to the court, read as follows:

Lisa got officially ax (sic) today! I am singing DING DONG THE WITCH IS DEAD THE WICKED WITCH, DING DONG THE WICKED WITCH IS DEAD.

How poetic this comes the same day Sexton died, I would much rather get f..cked up the ass with hot pepper than endured what that souless (sic) bitch put me through for 4 years...including turning me into the board...God does grind a fine mill when revenge is taken on by him...back when I was off due to drug accusations and praying, and praying, never would I have imagined she lose (sic) her job, marriage, and family, friends all at the same time! Karma Now I should tell you how I really feel!

Love and fuzzies, Wendy

As inevitably happens in this kind of situation, the email was given to the supervisor who sent it on further and eventually an investigation was initiated. When confronted with the email, Ms. Barnett denied that she had typed it and intimated that someone had hacked into her Facebook account. Ms. Barnett was suspended pending the results of the investigation. While Ms. Barnett continued to push her hacking theory, the investigation worked its way back to the employee who originally gave the email to the supervisor. She confirmed that Ms. Barnett had admitted to sending the "celebratory" email. Another employee came forward and offered to show the investigator text messages she had received from Ms. Barnett. Although she was unable to retrieve the text messages, she confirmed that they said something along the lines of, "The witch is dead… Lisa got fired."

As the investigation proceeded, Ms. Barnett contacted the hospital's employee responsible for processing leaves of absences for FMLA paperwork. Meanwhile, apparently unaware of the FMLA request, the investigator and the hospital's vice president of human resources decided to terminate Ms. Barnett for dishonesty pursuant to its employee handbook. Plaintiff was specifically told she was not being terminated because of the content of the email, but rather because she had repeatedly lied about sending it. Ms. Barnett was given the opportunity to resign, which she accepted, but still had the audacity to maintain the lie about sending the email. (She later came clean at her deposition.)

Ms. Barnett's subsequent lawsuit against the hospital claimed that she was terminated in violation of Ohio's public policy protecting freedom of speech, and for FMLA interference and retaliation. The court had no trouble dispensing with each of these claims. First, the court noted that there is no clear public policy forbidding private actors from restricting free speech. Instead, the First Amendment guarantee of freedom of speech is a restraint on governmental actors only. Therefore, the court concluded that the guarantees of freedom of speech under the federal and state constitutions cannot provide the basis for a public policy exception in a wrongful discharge claim in the absence of state action.

Moving on to the FMLA claims, the court noted that Ms. Barnett's only claimed interference was that the hospital failed to provide her with notice as to whether the leave requested would be counted as FMLA. Of course, as the court also commented, the period of time had not expired as of the date that Ms. Barnett offered her resignation. Furthermore, the court noted that Ms. Barnett was not harmed by any failure to provide her the requisite notice because she had already been terminated.

Finally, the court also disposed of Ms. Barnett's retaliation claim based on the evidence presented that demonstrated that the decision to terminate her was made without any knowledge that she was attempting to pursue an FMLA claim. In addition, relying on a Sixth Circuit decision in Gipson v. Vought Aircraft Industries, Inc., the court held that an employee may not insulate herself from termination by "opportunistically invoking the FMLA."

Though the result of this case was rather predictable to everyone other than apparently Ms. Barnett and her counsel, it probably does bear emphasizing that:

1. An employee of a private employer has no automatic right to freedom of speech.
2. In this case, the hospital was best served by terminating Ms. Barnett based on her dishonesty. This decision probably helped avoid disputes over whether other similarly situated employees had not been terminated over similar comments about their supervisor. (No, I don't think that the email would have been protected by Section 7 of the NLRA, had Ms. Barnett filed an unfair labor practice charge.)
3. Offering an employee the opportunity to resign rather than accept being terminated does not always avoid a lawsuit, which can be based on a constructive discharge theory.
4. There is nothing that is beyond the capabilities of some employees.

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In Hewitt v. L.E. Myers Co., 2012-Ohio-5317, the Ohio Supreme Court held last week that protective gloves and sleeves are “personal protective items” that an employee controls and not equipment safety guards for purposes of stating a cause of action under Ohio's intentional tort statute, which provides an exception to an employer's workers’ compensation immunity. The Court also clarified that an employee claiming that his employer removed a safety guard—which creates a rebuttable presumption of intent to injure under the statute—must establish that the employer made a deliberate decision to lift, push aside, take off, or otherwise eliminate the safety guard. Finally, the Court held that an employee’s failure to use personal protective items or an employer’s failure to require an employee to use personal protective items does not constitute the deliberate removal of an equipment safety guard.

Larry Hewitt was working as an apprentice lineman for L.E. Myers Company, an electrical utility construction contractor. Hewitt was working on de-energized power lines while connecting new power lines to old power lines. Workers were required to use rubber gloves and sleeves in the event that the lines became energized, which was consistent with company policy. Hewitt claimed that another lineman told him that he would not need the gloves and sleeves because the lines were de-energized. While he was working, Hewitt turned toward a coworker who yelled something to him. In doing so, the wire in his hand came into contact with an energized line, and he received burns from an electric shock. He applied for and received workers’ compensation benefits. He also sued for an intentional tort, alleging that the workers’ compensation immunity provided for under Ohio law did not apply because L.E. Myers knew with substantial certainty that he would be injured when working near energized lines without protective gloves and sleeves. He alleged that his employer removed a safety barrier by allowing him to work without protective gloves and sleeves.

The trial court agreed with L.E. Myers that there was insufficient evidence of any actual intent to injure and therefore required Hewitt to proceed on a theory of recovery that L.E. Myers’s intent to injure could be inferred from the deliberate removal of an equipment safety guard. A jury returned a verdict in favor of Hewitt on this theory of recovery. L.E. Myers filed a motion for a directed verdict prior to the jury verdict and a motion for judgment notwithstanding the verdict after the verdict. Both were denied. An appeals court affirmed, holding that protective gloves and sleeves were equipment safety guards and that the decision to not require him to wear protective gloves and sleeves amounted to a deliberate removal of a safety guard.

The Ohio Supreme Court reversed. R.C. 2745.01 states that an employer can be liable for an intentional tort if the injury was “substantially certain” to occur—meaning that the employer acts with deliberate intent to cause an employee to suffer an injury, a condition, or death. R.C. 2745.01 (C) states that the deliberate removal of an equipment safety guard creates a rebuttable presumption that the removal was committed with an intent to injure if an injury occurs as a direct result.

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As we reminded you last month here, the Consumer Financial Protection Bureau ("CFPB"), the agency that has enforcement responsibility over the Fair Credit Report Act ("Act"), revised the forms which employers must use to comply with the FCRA, effective January 1, 2013. There was only one little problem with the forms the CFPB provided for use: They contained various typos and technical errors that the CFPB now has recognized in its Supplementary Information in the November 14, Federal Register Notice.

The forms at issue:

• The Summary of Consumer Identity Theft Rights;
• Summary of Your Rights Under the Fair Credit Reporting Act, which employers are required to provide to applicants and employees with the FCRA disclosure and authorization form when the employer procures an investigative consumer report and with any pre-adverse action notice sent when an employer intends to rely in whole or in part on information contained in a background check report to make an employment decision;
• Notice of Furnisher Responsibilities, which background check providers must provide to certain furnishers of information; and
• Notice to Users of Consumer Reports: Obligations of Users Under the FCRA, which background check providers must give employers who procure background check reports.

These forms appear, respectively, in Appendices I, K, M and N of Regulation V, and the new corrected forms are available here.

The good news for those employers who have already transitioned to the forms that were published in December 2011, the CFPB says it will regard the use of the originally-published model forms, typos and technical errors notwithstanding, “to constitute compliance with the FCRA provisions requiring such forms and will regard those forms to be substantially similar to the corrected forms” until it directs otherwise. The CFPB further states that it plans to so advise, and to provide sufficient time to allow for orderly discontinuation of the December forms, when it issues a final rule to restate Regulation V in 2013.

Takeaways. For employers that have not yet started using the new FCRA forms, make sure you use the newly-corrected ones available above. For employers that already transitioned to the originally-published model forms, consider transitioning to the correct model forms as it is unclear how must advance notice the CFPB will give before ending its grace period.
 

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By now, you should know that the Equal Employment Opportunity Commission ("EEOC") has issued “Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions”, which is designed to restrict criminal background checks by employers, but you may not know that enforcement responsibility for the Fair Credit Reporting Act ("FCRA") has been transferred from the Federal Trade Commission to the recently created Consumer Financial Protection Bureau ("CFPB").

The FCRA, of course, is the federal law that imposes requirements on employers who use third party Consumer Reporting Agencies ("CRA's") to obtain “consumer reports" (i.e., background check, reference check, credit check) and "investigative consumer reports" (i.e., a consumer report where information regarding character, general reputation, personal characteristics, etc is obtained through personal interviews) on prospective or current employees.

What this means for employers is that they should expect heightened scrutiny on their FCRA compliance. The FCRA requires employers who use CRA's to do their background checks to go through a four-step process, using federally-mandated forms. One of the CFPB's first steps in its role as chief enforcer of the FCRA, was to revise that forms which employers must use, effective January 1, 2013.

The three notices the CFPB revised, which are available in Appendices K, M and N to 12 C.F.R. part 1022, are summarized as follows:

• A Summary of Your Rights Under the FCRA: CRAs must provide this form to employers and employers must provide this form to prospective employees and current employees when either will be subject to an investigative consumer report or when a pre-adverse action notice is sent.
• Notice to Users of Consumer Reports: Obligations of Users Under the FCRA: CRAs must provide this form to their employer-clients.
• Notice to Furnishers of Information: Obligations of Furnishers Under the FCRA: CRAs must provide this notice to certain furnishers of information.

The forms CRAs and employers are to continue to use until January 1, 2013 are available in Appendices F, G and H to 16 C.F.R. part 698.

Below is a summary of the four steps and, more helpful, how the CFPB's changes to the FCRA impact each step and when the new notices are required:

Step 1: Certification to the Consumer Reporting Agency

A CRA may furnish a consumer report for employment purposes only if the employer certifies to the CRA, among other things, that:

• It notified the prospective employee or current employee clearly and conspicuously and in writing that a consumer report is being requested for employment purposes;
• It obtained writing authorization from the prospective employee or current employee allowing the employer to obtain a copy of the report;
• It will use the information for a "permissible purpose" only, this includes employment purposes;
• It will comply with the conditions for adverse action should adverse action be taken against the applicant; and
• Information from the consumer report will not be used in violation of any applicable Federal or State equal protection laws or regulations.

Once a CRA is engaged to conduct a consumer report, it must provide their employer clients with a copy of the Notice to Users of Consumer Reports: Obligations of Users Under the FCRA.

Step 2: Notice and Authorization from the Applicant

Next, an employer must inform the prospective employee or current employee that it might use information in his or her consumer report for decisions related to employment. The employer must also obtain written permission from the prospective employee or current employee and this must be in a clear and conspicuous manner.

In addition to the obligations above, if the employer wants an "investigative consumer report," as defined above, it must also inform the applicant that an investigative consumer report may be obtained. This must be done in a written disclosure that is mailed, or otherwise delivered, to the prospective employee or current employee not later than three days after the date on which the report is first requested. The notice must clearly and accurately disclose to the applicant in writing that an investigative consumer report may be made. This disclosure must include a statement informing the prospective employee or current employee of his or her right to request additional disclosures of the nature and scope of the investigation, and must include the A Summary of Your Rights Under the FCRA and that, upon the written request of the applicant made within a reasonable period of time after the disclosures required above the user must make a complete disclosure of the nature and scope of the investigation that was requested. Should an prospective employee or current employee contact the employer in writing, and request information about the nature and scope of the investigative consumer report, the employer must supply this information within five days of the date on which the employer received the prospective employee or current employee's request or the date on which the report was requested, whichever is later.

Step 3: Pre-Adverse Action Protocol

If an employer might use information from a consumer report, in whole or in part, to take an “adverse action” — it must give the prospective employee or current employee (1) a copy of the report; and (2) a copy of A Summary of Your Rights Under the FCRA before taking the adverse action.

If, however, the consumer report does not influence the employer's adverse action in whole or in part, the employer has no duty to forward a copy of the report of a summary of consumer rights to the applicant at the pre-adverse action stage.

The rights as explained in A Summary of Your Rights Under the FCRA include giving the prospective applicant or current employee the opportunity to contact the employer and the CRA to dispute or explain information in the report that the prospective applicant or current employee believes is inaccurate or incomplete to give the prospective applicant or current employee the opportunity to see the report that contains the information that is being used against them. If the report is inaccurate or incomplete, the prospective applicant or current employee then has the opportunity to contact the CRA to dispute or explain what is in the report.

Step 4: Adverse Action Protocol

If, after waiting the requisite amount of time, the employer decides to take an adverse action (i.e., deny the applicant's application for employment or terminate an employee) it must inform the prospective employee or current employee orally (though this is highly discouraged) or in writing, which can be electronically, of the adverse action and of the following, statutorily required information, that includes:

• The name, address, and phone number of the CRA that supplied the consumer report;
• A statement that the CRA that supplied the information did not make the decision to take the adverse action and cannot give any specific reasons for it; and
• A notice of the employee's right to dispute the accuracy or completeness of any information in the applicant's report and to get an additional free report from the company that supplied the credit or other background information if the applicant requests it within 60 days.

Takeaways

• Get Ready to Change Your Forms. Before January 1, 2013, when conducting criminal screens of applicants and employees, employers should start using the new FCRA Summary of Rights when they: (1) provide the form with required disclosures for investigative consumer reports; and (2) enclose it when they give the applicant or employee a "pre-adverse action" notice.
• Do not forget your state laws. Many states have their own laws governing this issue. Some are in line with the FCRA, however, some are not and have additional requirements for employers seeking to obtain background reports (e.g., California, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oklahoma, Oregon, Washington, and Vermont).
• Lastly, keep an eye on your state's laws on this issue, including "ban the box" laws that prohibit asking about criminal arrests on applications. New laws on this issue are popping up all the time. Take Vermont, for example, that passed Vermont Act No. 154, effective July 1, 2012, which added a new section to Vermont’s Fair Employment Practices statute prohibiting employers in Vermont from failing or refusing to hire or recruit; discharge; or for otherwise discriminating against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual’s credit report or credit history or even inquire about an applicant’s credit report or history unless the position of employment involves access to confidential financial information and/or if the position of employment involves access to an employer’s payroll information. Or Indiana, whose House Bill 1033, also effective July 1, 2012, restricts the types of criminal history information employers and CRAs can obtain from Indiana state court clerks and the types of criminal history information that CRAs can report to employers in background reports.

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Senate Bill 383 is an extremely employer-friendly piece of legislation that was introduced earlier this week in the Ohio state Senate. The bill seeks to overhaul the Ohio's employee-friendly employment discrimination laws, statutory and common law, and proposes the following non-exhaustive list of significant amendments:

1. Limits Definition of Employer and Excludes Managers and Supervisors

Currently, the definition of "employer" in Ohio means "any person acting directly or indirectly in the interest of an employer." Thus, unlike under Title VII, Ohio law, as interpreted by the Ohio Supreme Court, subjects managers and supervisors to personal liability. This interpretation not only tends to scare managers and supervisors in Ohio that decisions they make may render them personally liable, but it allows plaintiffs to go to state court with their claims and avoid federal court jurisdiction, where summary judgment motions tend to be viewed more favorably. If passed, S.B. 383 would change the definition of "employer" to do away of individual liability for managers and supervisors for discrimination, retaliation and harassment in Ohio.

2. Limits Liability for Temporary or Seasonal Employers

The proposed definition of "employer" would further limit covered employers to those who employ "four or more persons each working day in each of twenty or more calendar weeks in the current or preceding calendar year." This "twenty or more calendar weeks" language is new and potentially would provide a way for temporary and seasonal employers to limit their exposure under R.C. Chapter 4112.

3. Limit the Statute of Limitations to 365 Days

Currently, individuals have six years to file most discrimination and retaliation claims in Ohio including claims based on race, color, religion, sex, military status, national origin, disability, age, and/or ancestry. As for age, this is a little more complicated and, in some cases, individuals have either 180 days or six years, depending on which of the four, count 'em, four ways the plaintiff chooses to bring their age discrimination claim. S.B. 383 seeks to create a 365-day statute of limitations for all employment discriminations claims, including claims for promissory estoppel, breach of an implied contract, or intentional infliction of emotional distress. Should this pass, Ohio would go from having one of the longest statutes of limitations to one of the shortest.

4. Unification of Age Discrimination Claims

As indicated above, individuals have four different ways to bring age discrimination claims against employers under current law:

1.  R.C. 4112.14(B), which requires an individual to file suit within six years but limits remedies to wages and benefits, reinstatement, costs, and attorneys’ fees;
2. R.C. 4112.02(N), which requires an individual to file suit within 180 days and provides the full range of remedies, including compensatory and punitive damages;
3. R.C. 4112.05, which allows an individual to file an administrative charge with the Ohio Civil Rights Commission ("OCRC"), but precludes the individual from filing a civil lawsuit for age discrimination; and
4. R.C, 4112.99, the catch-all provision that provides an independent civil action to seek redress for any form of discrimination identified in Chapter 4112, including age discrimination.

S.B. 383 would do away with these four distinctions and include age among the other protected classes subject to the same procedures, remedies and single statute of limitation.

5. Election of Remedies

Currently, except for age discrimination claims, individuals can file an administrative charge alleging discrimination and/or retaliation and a civil lawsuit. S.B. 383 would extend the election of remedies provision that currently only applies to age claims to all discrimination claims. Thus, if passed, individuals would have to elect between filing an administrative charge with the OCRC or a civil lawsuit in court. They could not do both like they presently can in all but age cases. Should individuals choose to proceed with the OCRC, the proposed amendment also seeks to prioritize mediation and conciliation.

6. Exclusion of Those Working in a Ministerial Capacity

Currently, it is unclear whether employees employed in a ministerial capacity are entitled to protections under R.C. Chapter 4112. Earlier this year the United States Supreme Court ruled in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC that Title VII does not offer protection to employees working in a ministerial capacity. The proposed amendments to R.C. 4112.02 would make it clear that "religion" as a protected class excludes those working for religious organizations a ministerial capacity. This would clarify the split among Ohio courts and put Ohio in line with the Supreme Court's ruling on the issue in the Title VII context.

7. Faragher-Ellerth Defense to All Discrimination Claims

Currently, employers can raise an affirmative defense in hostile work environment cases that: (1) they exercised reasonable care to prevent and correct promptly any harassing behavior and (2) the plaintiff employee unreasonably failed to take advantage of the any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. If the Bill passes, this affirmative defense would apply to all types of discrimination, not just harassment, which did not result in an adverse, tangible employment action against the employee. The legislation would allow employers to raise an affirmative defense as long as it exercised reasonable care to prevent or promptly correct the alleged unlawful behavior and the employee failed to take advantage of any corrective opportunities provided by the employer or to otherwise avoid the alleged harm.

8. Statutory Cap on Noneconomic and Punitive Damages

While this issue has never been squarely addressed by the Ohio Supreme Court, noneconomic and punitive damages in employment claims arguably are capped by Ohio's tort reform statute, R.C. 2315.18 (noneconomic) and 2315.21 (punitive). With respect to noneconomic damages under R.C. 2315.18(B)(2), they cannot exceed the greater of two hundred fifty thousand dollars or an amount that is equal to three times the economic loss to a maximum of three hundred fifty thousand dollars for each plaintiff in that tort action or a maximum of five hundred thousand dollars for each occurrence that is the basis of that tort action. Pursuant to R.C. 2315.21, punitive damages are capped for tort claims based on the size of the employer. Under the statute, however, there are only two categories, "small employers", which are those employers that employ not more than one hundred persons on a full-time permanent basis (unless classified by manufacturing sector by the North American industrial classification system) and "large employers". R.C. 2315.21 prohibits a court from entering judgment for punitive damages in excess of two times the amount of compensatory damages. However, if the defendant is a small employer or individual, the court cannot enter judgment for punitive or exemplary damages in excess of the lesser of two times the amount of the compensatory damages awarded to the plaintiff from the defendant or ten percent of the employer’s or individual’s net worth when the tort was committed up to a maximum of three hundred fifty thousand dollars.

The proposed change in S.B. 383 would cap punitive and noneconomic damages in discrimination suits based on the size of the employer, but amounts available would be even more limited than those allowed under Ohio's tort reform. For example, noneconomic and punitive damages would be capped in discrimination claims as follows:

• Employers that employ 4 – 100 employees capped at $50,000;
• Employers that employ 101 – 200 employees capped at $100,000;
• Employers that employ 201 – 500 employees capped at $200,000;
• Employers that employ 501+ employees capped at $300,000.

It is unclear how this bill will fare in the legislature, but one thing is clear, Ohio employers should put its passage on their holiday wish lists.

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Election Day will soon be upon us, and with that comes some common questions from employers about what they must do regarding employees who take off work or arrive late to work to vote.

What is an Employer Prohibited from Doing? Ohio Revised Code §3599.06 prohibits employers from discharging or threatening to discharge an employee for taking a “reasonable amount of time to vote.” The law further prohibits employers from inflicting or threatening to inflict any injury, harm, or loss against an employee to induce an employee to vote or refrain from voting for or against any person, issue or question submitted to the voters.

What Is an Employer Required to Do? Ohio employers must give their employees "reasonable time" to vote. The law, however, does not define what constitutes "reasonable time". Nor does the law specify whether an employer can require an employee to apply for voting time off prior to Election Day or designate the hours the employee may miss work, though these types of provisions are not prohibited by the statute. To be on the safe side, it is advisable that employers provide employees leave to vote even when the employee are able to vote during non-working hours or establish policies defining how an employee can apply for voting time off or designate hours employees may miss work to vote.

Does An Employer Have to Pay an Employee for Time Spent Voting? The law also does not indicate whether an employer has to pay the employee for time off to vote. However, the Ohio Attorney General has weighed in and has construed the time off to vote law to require that pay for voting time is limited to salaried employees. What this means is that employers do not have to pay hourly, commissioned, or piecework employees for leave taken to vote. However, employers may not deduct a salaried employee’s pay for taking time off to vote. Such a deduction not only likely violates Ohio law but also would be a violation of the Fair Labor Standards Act.

What is the Penalty for Violating the Law? While there is no case where an employee has sued a former employer for discharging that employee for taking time off of work to vote, employers who discharge employees for taking leave to vote may be subject to a cause of action for wrongful discharge in violation of the public policy set forth in R.C. §3599.06.

In addition to a potential wrongful termination claim, the penalty for voting leave violations may include orders directing the employer to pay a fine of not less than $50 but not more than $500.
 

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Charlotte Beck had been employed with Buckeye Pipeline Services Company ("Buckeye") for over 16 years as a 12-hour operator. In 2009, however, Buckeye underwent a company-wide reduction in force. Buckeye created a "design team" to reform the organizational structure of the Company and implement a team-based leadership model that would be used going forward. The design team created a new performance evaluation system, which required at least two people with first-hand knowledge of the employee to rate the employee and cite specific examples of behaviors that supported the grade. Any employee who did not receive a rating of 60 points or higher would be terminated. Three members of the design team evaluated Beck and she received an overall score of 35 points. Beck was terminated from Buckeye, along with 139 other employees. A younger, male employee with less experience replaced Beck as a 12-hour operator.

Claiming that the design team's reliance on "subjective criteria" in selecting her for termination singled her out because of her age and gender in violation of Ohio law, Beck filed suit in Ohio federal district court. The district court granted Buckeye's summary judgment motion on the ground that Beck could not show that the company's decision to lay her off as part of a company-wide reduction in force was pretextual.

On appeal, the Sixth Circuit upheld the summary judgment decision. Noting that qualified individuals often lose their jobs as part of a legitimate reduction in force, the Sixth Circuit held "the use of subjective evaluation criteria does not by itself show discrimination, particularly in a reduction in force case." To establish that the employer's reliance on the reduction in force was pretextual, Beck relied on a favorable opinion provided by her direct supervisor. The problem, however, was that the supervisor, undoubtedly reluctant to be the cause of anyone losing their jobs, stated all of his subordinates were good employees and placed the decision squarely back in the hands of the design committee. When Beck's supervisor was deposed as part of the lawsuit, he stated that he disagreed with some of the design team's conclusions about Beck, but acknowledged that he did not share his contrary thoughts with the team when it was making its decision. Significantly, because this is often an issue in reduction in force cases, the Sixth Circuit also noted that the supervisor's "satisfaction with Beck's work under the old system at any rate does not prove she would succeed under the new system."

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Following up on my post on the subject, I had the chance to speak with Colin O'Keefe of LXBN regarding Casias v. Wal-Mart Stores, in which the Sixth Circuit Court of Appeals ruled that Wal-Mart's firing of an employee for medicinal marijuana use is lawful. In the brief interview I explain the background of the case, why the court arrived at the ruling it did and what lessons it holds for employers. 

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Following closely after the NLRB's first social media decision in Costco Wholesale Corporation (NLRB Case No. 34-CA-012421) just weeks ago, an ALJ for the Board has issued a mammoth 43 page decision in EchoStar Technologies (NLRB Case No. 27-CA-066726) striking down numerous employer policies that in his opinion unlawfully chilled employees' rights to engage in protected concerted activity.

This post takes a look at the policies challenged in the EchoStar decision and summarizes where employers stand now.

To understand the NLRB's recent decision in EchoStar, it is important to first understand where the NLRB is coming from. When reviewing employer policies, whether they be social media related or not, the Board and its ALJs focus on whether the challenged policy would reasonably tend to "chill" employees in their Section 7 rights, which include the right to discuss and complain about their issues such as wages, hours, and working conditions with other employees and to disclose, discuss and complain about those matters to labor organizations and to the public. Whether a particular employer policy would "reasonably tend to chill employees" in their exercise of their Section 7 rights is judged objectively by whether it is likely to have a chilling effect on Section 7 rights, even if the employer has never even enforced the policy.

Keeping this background in mind, let's go through each of the employer policies that were at issue in EchoStar to see where the ALJ came out and why.

EchoStar: Unlawful.  The ALJ found that a reasonable employee would read the prohibited action "disparaging" to intrude on protected conduct and struck down the policy in full. In essence, the ALJ accepted the NLRB General Counsel's argument that handbook’s “blanket” prohibition of employee “disparaging comments” … “fails to make exception for statements and comments that, although critical or harsh, may enjoy the ’[NLRA]’s protection”. This is consistent with the Costco decision where the Board struck down a broad prohibition against making statements that “damage the Company, defame any individual or damage any person’s reputation”. The ALJ, however, expressed that a policy could prohibit "malicious gossip" or "malicious statements."

EchoStar: Unlawful. Although the ALJ did not detail his reasons for striking down this policy, the General Counsel argued that the Handbook did not define what was considered "Company time" as opposed to "working time and there was no indication that any lawful limits were ever communicated to employees. Taking this cue, had the policy prohibited employees from engaging in social media activities during "working time" and narrowly defined working time in the context of their employment with EchoStar, the policy might have survived the ALJ's scrutiny.
 

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Sandra Williams was a sales associate for a timeshare company in Virginia Beach. After the completion of a difficult sale, Williams’s supervisor slapped her on the buttocks. Williams reported the slap to management and complained that it offended her and embarrassed her. Upper management directed human resources to investigate. After the investigation, the Company concluded that the supervisor’s conduct was inappropriate but not a violation of the Company’s harassment policy. It was the only such incident involving the supervisor, and even Williams acknowledged that it was not sexual in nature. As a result, the supervisor was admonished about the behavior.

Just prior to the complaint, the Company had begun investigating Williams’s attendance. Two months later, Williams failed to report for work or call in to report her absences as required by the Company’s policy, and as a result, the Company terminated her. Williams sued in federal court in Virginia alleging that her termination was in retaliation for her complaint about the celebratory slap.

The Court first concluded that the slap was not severe or pervasive enough to constitute a hostile work environment. Second, the Court concluded that the complaint was not protected activity and could not support a retaliation claim, even though the employer internally investigated the complaint. The Court held that, even when a complaint results in “intensive internal scrutiny,” it is not automatically protected activity under the law, especially where, as here, the complaining employee did not believe the behavior was sexual in nature. Because no reasonable person would believe that one incident was sufficient to establish a sexual harassment claim, the internal complaint was not protected activity, and Williams’s claim for retaliation failed. In addition, the Court noted that Williams’s claim failed because she could not dispute that she failed to report for work or call in and did not present a doctor’s excuse for the absences until after her termination.

Similar to the holding in this case, the Sixth Circuit Court of Appeals, which has jurisdiction over Ohio employers, has held that internal complaints that do not specifically complain about harassing behavior being racial or sexual in nature are not protected activity, even if internally investigated. Batuyong v. Gates, 337 Fed.Appx. 451 (6th Cir. July 06, 2009).

What are the key takeaways? This case reiterates the well-established principle that one isolated incident is not sufficient to establish a hostile work environment based on sex. More importantly, employers can take some comfort that by investigating complaints of alleged inappropriate behavior in good faith does not automatically turn the complaint into protected activity.

The case is Williams v. Ocean Beach Club LLC, No. 2:11-cv-639 (E.D. Va. Sept. 25, 2012).
 

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The United States Court of Appeals for the Sixth Circuit ruled in Casias v. Wal-Mart Stores, that the Michigan Medical Marijuana Act ("MMMA") does not regulate private employment and, therefore, did not protect Joseph Casias, a Wal-Mart worker authorized to use marijuana for medical reasons, from being fired after he failed a drug test.

Employers and the courts continue to wrestle with issues involving whether employers must accommodate medical marijuana use by their employees. On one hand, marijuana use is illegal under the federal Controlled Substances Act ("CSA") and, therefore, does not need to be accommodated under the federal Americans with Disabilities Act ("ADA"). However, 17 states currently have legalized some form or another of medical marijuana use: Alaska (1998), Arizona (2010), California (1996), Colorado (2000), Connecticut (2012), Delaware (2011), Hawaii (2000), Maine (1999), Michigan (2008), Montana (2004), Nevada (2000), New Jersey (2010), New Mexico (2007), Oregon (1998), Rhode Island (2006), Vermont (2004), Washington (1998) as well as the District of Columbia (2010). The language of each state's law can differ, and the courts therefore interpret these state law issues on a case-by-case basis. The Michigan statute is the most recent one to come under judicial review. Here, is the background of that case and how the Sixth Circuit came to the conclusion it did.

In 2008, Michigan voters enacted the MMMA by referendum to provide protection for the medical use of marijuana. It allows only a “qualifying patient” or a “primary caregiver” to whom the state has issued a registry card to use or administer medical marijuana and prohibits, in part, “disciplinary action by a business or occupational or professional licensing board or bureau” against a person to whom the state has issued a registry card for the use or administration of medical marijuana. The key word in the statute for purposes of the Casias case is "business" and here's why.

Casias started working at Wal-Mart in 2004 as an inventory control manager. He was later diagnosed with sinus cancer and an inoperable brain tumor. Due to his ongoing head and neck pain, he received a medical marijuana registry card and began using marijuana to manage his pain in the summer of 2009. Later that same year, Casias injured his knee at work, went to the hospital and was subjected to a standard drug test pursuant to Wal-Mart's policy. Prior to the test, Casias showed his card to the testing staff. Well, as you probably guessed, Casias tested positive for marijuana. He showed his shift manager his registry card, and informed his manager that he never consumed marijuana while at work or came to work high. Nevertheless, Casias was fired for failing his drug test.

Casias sued Wal-Mart for wrongful discharge for violating the MMMA. The U.S. District Court for the Western District of Michigan dismissed Casias' lawsuit finding that the word “business” in the statute does not regulate private employment actions and that the MMMA "contains no language stating that it repeals the general rule of at-will employment in Michigan or that it otherwise limits the range of allowable private decisions by Michigan businesses."

The Sixth Circuit agreed and held that the MMMA prohibits “disciplinary action by a business or occupational or professional licensing board or bureau” against a “qualifying patient.” Focusing on the key term "business," Casias argued that although the MMMA does not expressly refer to employment, the term “business," as used in the MMMA, was independent and expanded the MMMA's protections to private employers. In other words, Casias argued that Wal-Mart was a "business" and thus fell within the MMMA prohibitions which precluded “disciplinary action by a business or occupational or professional licensing board or bureau” against a person with a medical marijuana registry card.

Wal-Mart countered, arguing that the term "business" modified the phrase “licensing board or bureau,” and that it did not extend the MMMA's protections.

The Sixth Circuit agreed with Wal-Mart and expressly rejected Casias' proposed interpretation of the MMMA, which the Court found could prevent any employer in the state from disciplining a qualified patient who uses marijuana under the MMMA. The Sixth Circuit, siding with Wal-Mart, opted not to read the term “business” independently. Rather, it concluded that the word “business,” as used in the MMMA, modified the phrase “licensing board or bureau,” and that the MMMA “is simply asserting that a ‘qualifying patient’ is not to be penalized or disciplined by a ‘business or occupational or professional licensing board or bureau’ for his medical use of marijuana.” Therefore, because the term "business" merely described or qualified the type of “licensing board or bureau"; it did not refer to employment:

Based on a plain reading of the statute, the term "business" is not a stand-alone term as Plaintiff alleges, but rather the word "business" describes or qualifies the type of 'licensing board or bureau" .... "Read in context, and taking into consideration the natural placement of words and phrases in relation to one another, and the proximity of the words used to describe the kind of licensing board or bureau referred to by the statute, it is clear that the statute uses the word 'business' to refer to a 'business' licensing board or bureau, just as it refers to an 'occupational' or 'professional' licensing board or bureau. 

The Court further explained that adopting Casias' argument would create an entirely new protected employee class in Michigan and "mark a radical departure from the general rule of at-will employment in Michigan." Because the case was one involving statutory interpretation, the Court highlighted the importance of carefully crafting groundbreaking legislation like the MMMA, and held that the MMMA does not govern private employment actions. The Court went one and noted that other states including California, Montana, and Washington had also held that their states' similar medical marijuana laws do not govern private employment actions.

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In a case that vividly demonstrates how employers are vulnerable to insider cyber attacks, a recent federal court decision out of the Southern District of Ohio addressed the scope of federal statutes designed to address such activity. In Freedom Banc Mortgage Services, Inc. v. O'Harra, the plaintiff's complaint alleged that an employee began remotely downloading software programs on 27 of the employer's computers and five servers. Through these programs, O'Harra, with the assistance of others, allegedly was able to access the employer's employees' email accounts, deleted hundreds of email from these accounts, uninstalled the employer's security camera, deleted pictures that the camera had recorded, and monitored employee Blackberry usage, among other activities. As a result of these unauthorized intrusions into the plaintiff's computer system, the plaintiff's computers began to operate slowly and eventually, 22 computers and three servers became inoperable. The plaintiff alleged that it lost business, productivity, and revenue as a result of the damages to its computers and, in December 2010, ceased business operations.

Freedom Banc filed its complaint against O'Harra and her alleged accomplices alleging violations of the federal Computer Fraud and Abuse Act ("CFAA"), the Stored Communications Act ("SCA") and state law tort claims of trespass to chattels, conversion and conspiracy. In response, the defendants moved for dismissal. With respect to the CFAA count of the Complaint, the court rejected each of O'Harra's arguments that attacked the statute's applicability. First, O'Harra argued that the computers at issue were not "protected computers" within the meaning of the CFAA, but the Court concluded, as have virtually all courts that have addressed this issue, that any computer that is connected to the Internet is "protected" for purposes of invoking the CFAA. Next, O'Harra argued that for the CFAA to apply, the plaintiff must allege damages of at least $5,000 caused by a single unauthorized intrusion into a protected computer. Again, the Court had little difficulty rejecting this argument and found that the plaintiff's alleged damages of at least $5000 in the aggregate was sufficient to invoke the CFAA's protection.

The Court also permitted the plaintiff's state law tort claims to proceed. The Court concluded that the plaintiff's complaint sufficiently pleaded a trespass to chattels claim by alleging that O'Harra deprived plaintiff of the use of its computers and impaired those computers as to their condition and value. Similarly, plaintiff's complaint also alleged a cause of action for conversion by alleging that O'Harra downloaded software programs onto plaintiff's computers that gave them "complete access to and control over” plaintiff's email accounts and security camera, among other things, and by alleging that the defendants deleted hundreds of email messages from plaintiff's email accounts, deleted photographs from plaintiff's security camera, and continued to access and initiate contact with plaintiff's computers until they were ultimately rendered inoperable. Finally, the Court upheld the conspiracy count of the complaint based on the allegations that O'Harra conspired with her co-defendants in a "malicious combination" to gain unauthorized access to the plaintiff's computer systems.

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Employers adopting social media policies have to consider whether they would be struck down by the National Labor Relations Board (NLRB) if challenged as invalid under Section 7 of the National Labor Relations Act. Section 7 protects the rights of union, as well as non-union, employees to communicate at or away from work about terms and conditions of employment. Citing a desire to provide guidance to employers regarding workplace regulation of employee use of social media, the chief lawyer for the NLRB (its “General Counsel”) issued guidance reports in August 2011, January 2012 and May 2012 to show what sorts of social media policies the General Counsel believes violate Section 7. The NLRB considers but is not bound by the General Counsel’s guidance when issuing decisions. Until recently, the NLRB itself had not had occasion to issue a decision on a social media policy.

In Costco Wholesale Corporation (NLRB Case No. 34-CA-012421), the NLRB considered a social media policy for the first time. The NLRB invalidated portions of Costco’s policies and in doing so signaled that it will probably track closely with the General Counsel’s guidance when reviewing social media policies. That means a very aggressive review and the likelihood that policies which are not drafted narrowly and carefully will be struck down.

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Presume for a moment an employee complains to Human Resources that a co-worker's perfume makes her want to choke. The workplace sometimes brings us "closer" together and one worker's scent can be another worker's source of distraction or even discomfort. If the complaining employee's problem is just a matter of personal preference, then the employer has no legal duty to take action, but may want to explore a diplomatic way to resolve the dispute. On the other hand, a recent decision by the United States District Court for the Southern District of Ohio shows that, in some circumstances, this issue can result in a legal challenge.

In Core v. Champaign Cty. Board of County Commissioners, (S.D. Ohio No. 3:11-CV-00166), an employee sued the County under the Americans with Disabilities Act (ADA) and under Ohio disability discrimination law for not accommodating her request for a "fragrance-free" workplace policy. The employee suffered from severe asthma and chemical sensitivity to certain perfumes and other scents. She began experiencing difficulty breathing at work when co-workers in her proximity were wearing a perfume called "Japanese Cherry Blossom." According to the Complaint, her initial request that the employer ask employees to refrain from wearing that perfume went unheeded. Her symptoms became more severe and eventually she had to have emergency medical treatment.

Shortly after the employee sought medical treatment, co-workers began to mock her, including in Facebook posts making fun of her condition. She also alleges that employees began to wear the perfume intentionally around her and that the employer took no action to stop this conduct.

The employee presented a request to the employer signed by a nurse practitioner asking that co-workers be advised of the employee's sensitivity and that they be asked to avoid use of the perfume. The employer apparently communicated by email to employees asking that they not approach the employee personally, and instead communicate with her only by telephone or email. The employer also asked the employee to attempt to have face-to-face conversations with staff only in well-ventilated, open areas of the office.

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A lengthy and complicated new law enacted by the Ohio legislature and signed by Governor Kasich includes provisions that will make it easier for individuals with conviction histories to obtain employment and occupational licenses. Senate Bill 337 amends several Ohio statutes relating to collateral sanctions for criminal offenses by creating certificates of qualification for employment, reducing licensing restrictions for certain fields such as cosmetology, construction and security, and expanding courts' authority to seal criminal records. A collateral sanction is a penalty, disability, or disadvantage that is related to employment or occupational licensing as a result of the individual's conviction of, or plea of guilty to, an offense. It applies by operation of law in this state whether or not the penalty, disability, or disadvantage is included in the sentence or judgment.

One of the most important features of the new law is the mechanism it creates by which an individual who is subject to a collateral sanction may obtain a certificate of qualification for employment that will provide relief from certain bars on employment. The law also provides that an employer that knew of the certificate at the time of hiring will have immunity from liability as to a claim brought against it alleging harm due to the individual's alleged negligent hiring. In addition, an employer that willfully retains an individual who was hired based on a certificate of qualification for employment will only be liable for negligent retention if it is proved by a preponderance of the evidence that the person having hiring and firing responsibility for the employer had actual knowledge that the employee was dangerous, or had been convicted of or pleaded guilty to the felony, and was willful in retaining the individual as an employee after the demonstration of dangerousness or the conviction or guilty plea.

As it relates to occupational licensing, the law generally removes the disqualification of individuals for most criminal convictions that are not recent (either within one or three years depending on the licensing agency), crimes involving moral turpitude, or a disqualifying offense. The statute contains a comprehensive definition of "moral turpitude" that generally includes serious crimes of violence or sexual in nature. A "disqualifying offense" is defined as an offense that is a felony that has a direct nexus to an individual's proposed or current field of licensure, certification, or employment.

The final feature of the law that may have relevance to employers expands the definition of eligible offenders who can have criminal convictions sealed. Under existing law, only first offenders may apply for the sealing of their conviction record. Convictions of certain specified offenses, and related convictions in specified circumstances, do not count as a previous or subsequent conviction. The bill replaces the term "first offender" with "eligible offender," which is defined as anyone who has been convicted of an offense in this state or any other jurisdiction and who has not more than one felony conviction, not more than two misdemeanor convictions if the convictions are not of the same offense, or not more than one felony conviction and one misdemeanor conviction in this state or any other jurisdiction. Under both existing and the new law, convictions of certain specified offenses, and related convictions in specified circumstances, do not count as a conviction. As it relates to juvenile conviction records, the new law also removes sexual battery and gross sexual imposition from the list of offenses for which the records may not be sealed. Presumably, the relaxing of standards for sealing criminal records will render background checks for criminal convictions less reliable.

A copy of the Legislative Service Commission's full bill analysis can be found here. The law goes into effect on September 25, 2012 – 90 days after Governor Kasich's signature.

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Health care reform just got a clean bill of health from the United States Supreme Court. The Court today ruled on the constitutionality of the Patient Protection and Affordable Care Act ("PPACA"), and generally upheld the legislation in a 5-4 decision written by Chief Justice John G. Roberts. Roberts was joined in his opinion by the four justices who had been appointed to the Court by Democratic presidents. In an expected development, certain individual justices wrote and/or joined concurring and dissenting opinions as well. The Court upheld the individual mandate to purchase health coverage, concluding that the mandate is permissible under Congress’s taxing authority. However, the Court rejected the argument that the individual mandate was a valid exercise of the power of Congress under the Commerce Clause of the Constitution. It will be interesting to see whether this restrictive ruling on the Commerce Clause might come back to haunt the Congress and future presidents in areas unrelated to health care reform without regard to which political party is in power.

By way of a quick refresher, the Court considered four questions during oral arguments held earlier this year. The main issue was whether Congress had the power under the Constitution to impose the individual mandate to purchase health coverage. A second issue addressed whether other parts of PPACA had to be struck down if that mandate was invalidated. The third issue before the Court considered whether PPACA's expansion of Medicaid imposed undue coercion of the states (as discussed below, the Court surprised most observers with their decision on this issue). The fourth and final issue asked whether the above questions were ripe for adjudication at this time since the mandate is not yet in effect (this fourth issue was rejected by the Court in its opinion today).

Because the mandate is constitutional, the Court was not required to decide whether other parts of PPACA have to be struck. Subject to the possibility of congressional repeal (or amendment), the entire statute survives this courtroom brawl essentially as is.

The decision is not a complete win for the Obama administration. In a bit of a surprise, the Court upheld the expansion of Medicaid coverage contained in PPACA but concluded (not without dissent) that it was impermissible for the federal government to withdraw existing Medicaid funding from states that opt out of this expansion. No lower court decision had taken this position. The practical implications of this portion of the Court's opinion on the expansion of Medicare are as yet unclear (at least to this author).

The Court's decision today will have a profound impact on employers, the states and health care providers. Employers, many of which have been frozen in place while awaiting this decision, will have to move forward with plans to implement the provisions of PPACA that become effective in the near term (such as the uniform explanation of coverage) and in subsequent years (when plan design and coverage issues will have to be analyzed). Federal agencies charged with implementing PPACA already have issued regulatory guidance on certain provisions of the law, but much more guidance (including the refinement of previously issued interim guidance) is needed and anticipated. We will keep our clients and contacts aware of developments as they occur. There is much homework to do.

Today's decision clearly does not mark the end of the battle in this country over health care reform. Congressional Republicans as well as Mitt Romney, the presumptive GOP nominee for president, have stated loudly and frequently that their goal is to repeal PPACA in its entirety. Supporters of PPACA generally concede that refinements to the law will be needed. Health care reform remains a main issue of contention in the fall's presidential elections. Today's decision is certain to have an impact on the debate.

We will review the Court's opinion in detail (which, while lengthy, at least is not as long as the law itself), and will follow up with a more comprehensive analysis of its impact. In the interim, please contact us with any questions or comments you may have. Stay tuned.

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The Federal Motor Carrier Safety Administration ("FMCSA") has published another final rule which takes effect today, February 29, 2012. This rule addresses the drug use of commercial motor vehicles drivers, and the FMCSA aims to eliminate inconsistencies in at least three areas.

First, the final rule amends the physical qualifications for commercial motor vehicle ("CMV") drivers to clarify that drivers may not, under any circumstances, use Schedule I drugs and be qualified to drive a CMV. This change aligns the language with that used by the Drug Enforcement Agency ("DEA") in its regulations. The final rule now cites to 21 CFR part 1308, making it clear that the rule applies to the drugs and substances on the DEA's controlled substance schedules.

The prior rule did not differentiate between Schedule I and non-Schedule I drugs for purposes of the prescription exception, so the Agency amended §391.41 to clarify that the exception that allows a CMV driver to use a substance or drug if it is prescribed by a licensed medical practitioner, applies only to non-Schedule I prescribed substances, amphetamines, narcotics, or other habit-forming drugs.

Secondly, the FMCSA amends §§382.201 and 382.215 because it found the use of the term "actual knowledge" throughout certain sections of the rule was incorrect. The words "actual knowledge" have been replaced with the word "knowledge," clarifying that the relevant prohibitions refer to the knowledge of test results, not employer observation of prohibited conduct.

Lastly, prior to this final rule, §382.211 only prohibited drivers from refusing to submit to post-accident, random, reasonable suspicion, or follow-up drug or alcohol tests. The final rule amends this section to include pre-employment and return-to-duty testing as additional provisions. The final rule makes the regulation consistent with DOT-wide drug and alcohol testing rules.

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The Sixth Circuit's decision in Berryman v. SuperValu Holdings, Inc., clarifies that the "totality-of-the-circumstances" test used in hostile work environment cases does not have to be based on what the individually employee actually experiences, but rather what the individual employee is aware of.

In the case, eleven current and former SuperValu warehouse employees alleged that over a twenty-five year period, they were exposed to a racially hostile work environment that included vulgar graffiti, overtly racist comments by coworkers, and racially motivated pranks. The district court tossed out the employee's claims out finding that while the acts were reprehensible, they did not amount to a hostile work environment. The Sixth Circuit affirmed the lower court and in doing so clarified what can be considered in the "totality-of-the-circumstances" test.

By way of relevant background, to prevail on a hostile work environment claim, a plaintiff must show that his work environment was both objectively and subjectively hostile. In evaluating hostile work environment claims, courts look at the totality of the circumstances and consider things like the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee’s work performance.

Oftentimes plaintiffs want to rely on instances of discrimination/harassment that happened to other employees, but not to them personally. Whether or not the experiences of co-workers are relevant is a common dispute among counsel in defining the scope of discovery in these types of cases. On one end, plaintiffs typically argue that courts should consider all employees complaints in the aggregate to show a hostile environment, regardless of whether the individual plaintiff was actually aware of the other incidents or not. On the other, employers typically argue that courts should only consider the actual experience of the individual plaintiff.

The Sixth Circuit declined both approaches in favor of a middle-of-the-road approach and found that: "a plaintiff does not need to be the target of, or a witness to harassment in order for us to consider that harassment in the totality of the circumstances; but he does need to know about it." In coming to this conclusion, the court noted that an employer could create a hostile work environment by directing discriminatory acts or practices at a protected group of which the plaintiff is a member, and not just at the plaintiff personally. The decision, however, does make clear that a plaintiff does have to be aware of the allegedly discriminatory acts or practices directed at others in order to use such evidence in the plaintiff's individual case. Thus, for the plaintiffs to be able to use their collective experiences in the aggregate, they would have had to "marshal basic evidence to show that they were individually aware of the harassment experienced by other plaintiffs." Here they did not.

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We first introduced you to the Voluntary Compliance Settlement Program (VCSP), a program launched on the on the heels of the IRS announcing its three-year plan to increase audits of independent contractors (Announcement 2011-64), last September. In that post, we discussed the potential advantages and pitfalls of the VCSP. This post takes another look into the VCSP in light of the IRS's FAQs, which answers a lot of taxpayers' concerns but not all of them.

By way of background, the VCSP was designed to provide eligible employers partial relief from the federal employment taxes and penalties that typically result from misclassifying workers as independent contractors. The VCSP is supposed to work like an amnesty program. It offers eligible taxpayers a one-time chance to come forward and reclassify their improperly-classified independent contractors as employers for future tax periods with limited federal employment tax liability for the past nonemployee treatment. Employers accepted into the program pay an amount 10% of the employment tax liability (calculated at reduced rates) effectively equaling just over 1% of the wages paid to the reclassified workers for the most recent tax year – a substantial savings – due with the signed VCSP closing agreement to the IRS. The kicker… no interest or penalties and no audit on payroll taxes related to the reclassified workers.

Many taxpayers quickly lost faith in the VCSP when they learned that the IRS and the Department of Labor (DOL) entered into a Memorandum of Understanding (MOU) agreeing to share information and other data relating to worker misclassification. The MOU also provided for information-sharing agreements between the IRS and state taxing authorities and raised a huge red flag for employers: Is the IRS going to share my information with the DOL and/or state/local taxing authorities and open up a whole new can of worms for me?

Taxpayers Can Breathe a Little Easier, But Don't Go Getting Too Comfortable: Well, the answer to this all-important question, among 21 others, was provided in a FAQ sheet on the VCSP concerns. Some of the high points are:

• Despite the MOU, the IRS will not share information about VCSP applicants with the DOL or state agencies. So, while the IRS will share some information about employee misclassification with the DOL and state taxing agencies, it will not share applicant information.
• Taxpayers who apply to the VCSP but who are rejected will not automatically trigger initiation of a Federal audit. Mind you, taxpayers may be audited for something else, but not for applying for the VCSP.
• By signing the VCSP closing agreement, a taxpayer is not admitting liability for wrong during past years. The VCSP addresses future years only.

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On Wednesday, the NLRB General Counsel's Office issued its second report on social media cases that have been brought to it for advice by regional directors. Our take on the first Report can be found here.  As noted in the Board's press release which links to the Report, the Report covers 14 cases, half of which involve questions about employer social media policies. Five of those policies were found to be unlawfully broad, one was lawful, and one was found to be lawful after it was revised. The remaining cases involved discharges of employees after they posted comments to Facebook. Several discharges were found to be unlawful because they flowed from unlawful policies. But in one case, the discharge was upheld despite an unlawful policy because the employee’s posting was not work-related.

With respect to the discharge cases, the Board's press release notes that the Report underscores that "[a]n employee’s comments on social media are generally not protected if they are mere gripes not made in relation to group activity among employees." Indeed, as we have noted previously, the Board does appear to be gaining some consistency in this regard. Somewhat troubling, however, is the Board's continued reliance on whether and how co-workers respond to the Facebook post in determining whether the original post is entitled to Section 7 protections. Doing so seems like an easy vehicle for potentially transforming what really was a personal gripe without any obvious intent to initiate or induce coworkers to engage in group action, into what the Board views as concerted activity. On the other hand, the Board hopefully will continue to view negative co-worker responses as evidence of the lack of concerted activity.

With respect to the lawfulness of social media policies, the Board's press release notes simply that "[e]mployer policies should not be so sweeping that they prohibit the kinds of activity protected by federal labor law, such as the discussion of wages or working conditions among employees." Though the cases cited in the Report give employers some examples of permissible policy provisions, it is still lacking in more concrete general guidance about what is permissible. In particular, the Report fails to give a clear thumbs up or thumbs down to the effectiveness of a disclaimer in a social media policy that disavows any intent to restrict employees' rights to communicate with each other regarding terms and conditions of employment.
 

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The Federal Motor Carrier Safety Administration (“FMCSA”) and the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) hope there now are approximately four million fewer distracted drivers on the road. On November 23, 2011, Transportation Secretary Ray LaHood announced a final rule which specifically prohibits all interstate commercial truck and bus drivers from using hand-held cell phones while operating their vehicles.

The FMCSA and PHMSA created this joint rule in an effort to continue to curb distracted driving. "This rule represents a giant leap for safety. It is just too dangerous for drivers to use a hand-held cell phone while operating a commercial vehicle. Drivers must keep their eyes on the road, hands on the wheel and head in the game when operating on our roads. Lives are at stake," said FMCSA Administrator Anne S. Ferro.

FMCSA research shows that commercial drivers reaching for a cell phone are three times more likely to be involved in a crash or other safety-critical event, and dialing a hand-held cell phone makes a crash six times more likely.

Not only will the drivers be penalized for violations, but commercial truck and bus companies will also face a hefty fine if they allow drivers to use hand-held cell phones. Drivers who violate this rule will face federal civil penalties of up to $2,750 for each offense and disqualification from operating a commercial motor vehicle for multiple offenses. Commercial bus and truck companies could incur a maximum penalty of $11,000.

This rule is not the first of its kind. In September of 2010, FMCSA issued a regulation banning text messaging while operating a commercial truck or bus, and in February 2011, the PHMSA issued a companion regulation banning intrastate hazardous material drivers from texting.

Companies should update their company policies and handbooks to reflect these new rules. Failure to adopt and enforce cell phone policies could provide the basis for potential civil liability to operators beyond the civil penalties called for in the rule.

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Employers in the healthcare industry may find that they no longer have affirmative action obligations as of 2012 as a result of the National Defense Authorization Act, signed into law on December 31, 2011.

TRICARE is the Department of Defense healthcare program for active duty and retired military personnel and their families. Prior to the National Defense Authorization Act, the Office of Federal Contract Compliance Programs (OFCCP) took the position that hospitals, pharmacies, and other healthcare providers providing care under TRICARE contracts had affirmative action obligations as “subcontractors” pursuant to Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act. The National Defense Authorization Act expressly excludes hospitals, pharmacies, and other healthcare providers providing healthcare services to TRICARE participants from OFCCP jurisdiction, effectively overruling a 2010 Department of Labor decision holding that a hospital providing services under TRICARE was a federal subcontractor and related OFCCP guidance.

However, healthcare providers should not immediately abandon their federal affirmative action obligations without any other review of their contracts. It is possible that other contracts could subject them to affirmative action obligations (and OFCCP jurisdiction) as federal contractors or subcontractors, including those regarding contracts with the Veterans Administration, healthcare benefits for other federal workers, and receipt of Medicare Part C or D funds, which were not addressed by this legislation and which OFCCP has already asserted create affirmative action obligations.
 

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A manager's involvement in the disciplinary process isn't necessarily enough to make them a "supervisor" under the National Labor Relations Act, according to a recent NLRB decision.

In DirecTV, 357 N.L.R.B. No. 149 (Dec. 22, 2011)  the Board, in a 2-1 decision, held that DirecTV's "field supervisors" weren't actually supervisors as defined in the National Labor Relations Act. Section 2(11) of the NLRA defines supervisors as individuals who have certain authority with respect to other employees, including the ability to discipline or "effectively recommend" discipline for other employees. The issue arose following a representation election won by the union. DirecTV argued that the field supervisors were "supervisors" under the NLRA and that the field supervisors' pro-union activities during the pre-election period interfered with the employees' free choice in the election. DirecTV asked the NLRB to invalidate the election.

In addition to leading team meetings, answering their team members' technical questions, and examining their work, field supervisors had authority to issue verbal warnings to their team members and, using a separate process, to initiate other levels of discipline, including termination. This process involved a form that field supervisors completed with the relevant facts and, in the form, the field supervisor identified the discipline that he thought appropriate. Then the field supervisor's manager, the site manager, and human resources would review the form, and in some cases review the performance and disciplinary history of the employee to be disciplined and consult with the field supervisor before making a final decision. In the majority of cases, the field supervisor's recommended action would be taken.

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Many federal contractors and subcontractors use a calendar year for their written affirmative action plans (AAP's). That means their AAP's are typically being reviewed and revised shortly after January 1. Working with companies over the years to help them develop and revise AAP's and advising companies during OFCCP audits, we have come to appreciate the challenges for contractors in the process. Here are a few tips to keep in mind as you revise your AAP's:

1. It's Not Just "Boilerplate"

Too often, contractors revising AAP's simply "run the numbers" for the required statistical analysis and then put the plan back on the shelf. The narrative portions of the plan, sometimes referred to as "boilerplate," which include the contractor's good faith efforts to achieve goals and action plans for the coming year, are often given little or no attention. In fact, in an audit by the OFCCP, the agency is often more focused on these narrative portions of the plan than on the statistical analysis. Time should be taken to carefully review the narrative portions, especially the action plans. The narrative should reflect what has worked and what has not worked in good faith affirmative action efforts in the previous year. Where you have had success, make sure to mention that. Where efforts did not work as well as anticipated, draft the narrative to show the good faith efforts that were made. Most important, draft action plans that are specific, rather than general commitments.

2. Don't Forget the 12-Month Review

Contractors often put their primary focus on the required availability analysis which looks at the workforce as it exists at the beginning of the plan year. Don't forget that you are also required to analyze the personnel activity (hires, promotions, terminations, and compensation) for the 12-month period preceding the beginning of the plan year. The written AAP should include a brief analysis of that activity, making sure to reflect positive results and where results have not been positive, to reflect good faith efforts that have been made.

3. Don't Forget The AAP's for Protected Veterans and Disabled Persons

Too often, the AAP's for disabled persons and protected veterans are given very little attention in the annual review because they do not require any specific statistical analysis. However, note that the OFCCP has now proposed a rule that would require a statistical goal for disabled persons. Even though current regulations do not require a statistical analysis for veterans or disabled persons, the OFCCP has clearly shifted greater emphasis in compliance reviews to the AAP's covering those groups. Each annual revision of the AAP should include a review and revision of the AAP's for covered veterans and disabled persons. Include a discussion of any particular successes during the previous years and, to the extent possible, be specific in describing affirmative efforts to be taken in the following year.

4. Develop an AAP Calendar

When revising the narrative portions of your AAP's, be sure to calendar each specific commitment made, such as periodic reports to management, contacts to recruitment sources, etc. It is too often the case that the AAP is looked at only annually when it is revised, and the various commitments in the AAP for steps taken during the year are overlooked.

A carefully-prepared AAP can go a long way in an audit by the OFCCP. Making sure that the required statistical analysis is defensible and realistic is of key importance. But, the narrative portions of the AAP should be drafted carefully to reflect a genuine and realistic commitment to good faith efforts over the course of the following year. Doing that will reflect positively on the Company if the AAP is audited by the OFCCP. By contrast, if the OFCCP has the impression that the AAP is looked at only once a year when it is revised and the action plans and policies are not taken seriously, it will put your company in a poor light during an audit.
 

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The U.S. Department of Labor Office of Federal Contracts Compliance Programs (OFCCP) has proposed a new rule requiring federal contractors and subcontractors to set a goal to have 7% of their workforce be individuals with disabilities. Presently, federal contractors and subcontractors are only required to set percentage numerical goals for areas of their workforces where women and minorities are found to be underrepresented based on an "Availability Analysis" conducted under OFCCP regulations. The 7% goal for persons with disabilities proposed by OFCCP would apply to each job group in the contractor’s workforce. It is not based on any calculation by the contractor of availability but is rather based simply on OFCCP's estimate of the percentage of the overall workforce that is disabled.

The proposed rule also imposes a requirement that contractors invite applicants to voluntarily self-identify as an individual with a disability at the hiring stage and the pre-offer stage, and to conduct an annual anonymous survey of its employee's inviting them to identify themselves as a person with a disability. The rule would also require contractors to maintain recruiting and hiring data concerning persons with disabilities.

The proposed rule also requires contractors to develop and implement written programs for handling requests for reasonable accommodation and to engage in specific types of outreach and recruitment efforts to recruit individuals with disabilities, and to make mandatory job opening listings with the nearest One Stop Career Center as is currently required for recruiting veterans.

A link to the the OFCCP's related FAQ's can be found here.

The proposed rule is open for comment until February 7, 2012.  

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When the National Labor Relations Board (NLRB) lost its statutory authority to issue rulings because its normally five-person membership fell to two last week, President Obama made three recess appointments sparking a new controversy between Democrats and Republicans.

One reason the appointments have generated so much attention stems from New Process Steel, L.P. v. NLRB , 130 S. Ct. 2635 (2010), where the United States Supreme Court held that the five-member NLRB cannot delegate its authority to fewer than three members. Thus, a two-person board is not a quorum and is powerless to render decisions. Since Wilma Leibman's term expired in August 2011, the NLRB had been functioning as a three-member unit. The NLRB lost that three-person quorum when Craig Becker's term expired at the end of 2011.

Just days before Becker's term expired and as lawmakers were scheduled to leave on holiday break, President Obama nominated Democrats Sharon Block, a Labor Department Official, and Richard Griffin, General Counsel for the International Union of Operating Engineers who also serves on the board of directors for the AFL-CIO Lawyers, to the NLRB. Griffin is only the second nominee ever to come directly from a labor union. Becker, another controversial Obama recess appointee, was the first. Earlier in 2011, President Obama nominated Republican Terrance Flynn, an NLRB attorney, for appointment to the NLRB, but the Senate while in session did not act on the nomination.

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In light of the questions raised regarding the alleged inaction of various Penn State University coaches and officials stemming from the alleged sexual assault of a child by a former assistant football coach, we thought it might be beneficial to highlight the duty to report statutes in Ohio.

Ohio Rev. Code § 2151.421(A)(1)(a) states that a person acting in an official or professional capacity who knows, has reason to know, or has reason to suspect that a child under the age of 18 or 21, if mentally disabled, has suffered or faces a threat of suffering abuse or neglect, shall immediately report that knowledge to children services or a municipal or county peace officer. The duty to report applies to a number of professionals, including:

• attorney;
• physician (including a hospital intern or resident);
• dentist;
• podiatrist;
• practitioner of a limited branch of medicine;
• registered nurse, licensed practical nurse or visiting nurse;
• other health care professional;
• licensed psychologist;
• licensed school psychologist;
• independent marriage and family therapist or marriage and family therapist;
• speech pathologist or audiologist;
• coroner;
• administrator or employee of a child day-care center;
• administrator or employee of a residential camp or child day camp;
• administrator or employee of a certified child care agency or other public or private children services agency;
• school teacher;
• school employee;
• school authority;
• person engaged in social work or the practice of professional counseling;
• agent of a county humane society;
• person, other than a cleric, rendering spiritual treatment through prayer in accordance with the tenets of a well-recognized religion;
• employee of a county department of job and family services who is a professional and who works with children and families;

In addition to Ohio Rev. Code § 2151.421, Ohio has a general reporting statute. Ohio Rev. Code § 2921.22, states, "no person, knowing that a felony has been or is being committed, shall knowingly fail to report such information to law enforcement authorities." If a person fails to disclose information to law enforcement, they are guilty of failure to report a crime and may be charged with a misdemeanor.

Had these incidents occurred at an Ohio university, it is doubtful that reporting the incident up the chain of command would have been sufficient to avoid indictment. Professionals and officials covered under Section 2151.421 therefore should be mindful of their obligations under that statute to avoid potential prosecution. Furthermore, in light of the reputational damage that likely would follow an incident similar to the one at Penn State, employers of such professionals and officials would be wise to make sure that their staff understand these obligations and are counted on to comply with them.

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Just when I started to think that I might have the answers regarding the NLRB's obsession with social media, the NLRB starts changing the questions. Not that that is always a bad thing. Just ask Schulte, Roth & Zabel.

In Schulte, the charging party alleged that he was terminated for his role in employee discussions about the employer's allegedly unlawful overtime policy. Schulte, however, contended that it had terminated the charging party for referring to his job title as "fucktard" in response to a LinkedIn invitation from a supervisor in the firm's IT department in violation of the firm's electronic communications policy, which prohibited using the firm's electronic communication systems to communicate "obscene, defamatory, harassing or abusive" material to any person or entity associated with the company. (Sorry for the profanity, but I assume you already have clicked on our link to the General Counsel's Advice Memorandum, where the word is used twice.)

In his Advice Memorandum to the Regional Director, the Board's Associate General Counsel recommended dismissal of the charge since there was no way to argue that the charging party's use of that word was concerted protected activity and there apparently was no evidence that the employer had any knowledge of the employee unrest regarding the overtime policy. Consistent with Knauz BMW, the Advice Memorandum concluded that because the employer's policy was not enforced in a manner that restricted the charging party's Section 7 rights, the discharge was valid. Certainly, this portion of the Advice Memorandum is not surprising.

What was a little more unexpected (to me at least), however, was the General Counsel's Office's failure to go ahead and also consider whether the policy itself was overbroad. I mean, this decision comes directly on the heels of the ALJ's decision in Knauz BMW to find a similar policy -- requiring employees to be courteous and polite -- unlawful despite upholding a discharge for Facebook posts based in part on that policy. In Schulte, however, the Advice Memorandum simply states, "In any event, there is no allegation that the rule here is unlawful."

Huh? Don't get me wrong. I'm not looking this gift horse in the mouth, but for those of us looking for some semblance of consistency from the Board on these issues, the General Counsel's position in Schulte is a bit of a head scratcher. Granted, all of these cases are very factually dependent, but this Advice Memorandum not only seems inconsistent with Knauz BMW, it also seems contrary to the position the General Counsel's office took in the initial Facebook firing case, American Medical Response of Connecticut, Inc., where it alleged that policies prohibiting "disparaging remarks" about the employer violated Section 7 of the NLRA. Again, I welcome this favorable outcome for employers, but going forward, prudent employers should strongly consider including a disclaimer in their social media and electronic communications policies stating that those policies will not be enforced in a manner that would interfere with employees' rights to communicate regarding working conditions. Not a cure-all, for sure, but hopefully it will help the policies withstand NLRB scrutiny until the Board and its counsel's office find some consistency on these issues.

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If you don't know the answer to this question with absolute certainty, you had better go back and check your policy. In Cracker Barrel v. Cincinnati Insurance Company, a Tennessee federal court concluded that the employer's EPLI policy provided neither coverage nor even a defense to a Title VII action brought against it by the EEOC. Why? The policy in question defined a "covered claim" as "a civil, administrative, or arbitration proceeding commenced by the service of a complaint or charge, which is brought by any past, present or prospective employees." The court read this provision literally and concluded that because the EEOC was not an employee, the complaint brought by it on behalf of the company's employees was not a covered claim.

Regardless of the correctness of this decision, employers need to review their EPLI policies to see how they define a covered claim. If it is not clear that the policy covers both claims brought by and claims brought on behalf of employees, then it makes sense to go back to the insurance broker to obtain clarification from the carrier on whether the latter type of claim falls within the definition. Because claims brought by the EEOC and other governmental agencies can be among the most expensive to defend, it is important for employers to know whether they are getting what they think they are paying for.

Hat tip to Michael Fox at employerslawyer@blogspot.com.
 

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More and more these days it seems like the obligations of being a lawyer, husband, father, son, sports fan, etc, get in the way of blogging. As a result, I end up accumulating a number of worthwhile topics for blog posts that end up in the discard pile. Twitter helps keep the backlog to a minimum, but I really don't know how many of you actually follow me @briandhallesq (hint, hint). So, while I am by no means committing to make this a regular feature of Employer Law Report, I will now clear – in no particular order -- my backlog for the month:

According to a Wall Street Journal article, a recent lawsuit seeks a declaration from the New York Department of Labor that putting a GPS tracker on an employee's family car to uncover time sheet violations was a violation of the state constitution's guarantee against unreasonable searches and seizures. According to the lawsuit, the monitoring continued during evenings, weekends and a family vacation. This won't turn out well for the employer.

An Ohio appellate court has upheld a physician's non-compete agreement that prohibited him from engaging in a hematology or oncology practice in his former employer's "primary service area." This decision continues the Ohio trend of upholding physician non-competes and Ohio courts have repeatedly rejected the argument that covenants are not enforceable against physicians solely because they impair patients’ choice.

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The Internal Revenue Service (IRS) has developed a new program called the Voluntary Classification Settlement Program (VCSP) that permits taxpayers to voluntarily reclassify workers as employees for federal employment tax purposes. Taxpayers that choose to participate in the program and voluntarily reclassify workers as employees for future tax periods will only have to pay 10 percent of the employment tax liability that may have been due on compensation paid to the workers for the most recent tax year; will not be liable for any interest and penalties on the liability; and will not be subject to an employment tax audit with respect to the worker classification of the workers for prior years. Additionally, a taxpayer participating in the VCSP must agree to extend the period of limitations on assessment of employment taxes for three years for the first, second and third calendar years beginning after the date on which the taxpayer has agreed under the VCSP closing agreement to begin treating the workers as employees.

To participate in the program, the taxpayer must have consistently treated the workers as nonemployees, and must have filed all required Forms 1099 for the workers for the previous three years. The taxpayer cannot currently be under audit by the IRS, the Department of Labor or by a state government agency. A taxpayer that previously was audited by the IRS or the Department of Labor concerning the classification of the workers will only be eligible if the taxpayer has complied with the results of that audit.

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Speaking on July 27 to the Industry Liaison Group’s 29th Annual National Conference to an audience of human resources professionals for the nation’s top companies, the Office of Contract Compliance Director Patricia Shiu emphasized the OFCCP’s top initiatives. She stated that the OFCCP will focus on pay equity and compensation discrimination and affirmative action for military veterans and persons with disabilities. The OFCCP issued proposed rule-making establishing “benchmarks” for recruiting and hiring of veterans in April 2011 and is presently evaluating the comments it received. Shiu characterized those as benchmarks rather than quotas or ceilings.

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On July 7 and 19, 2011, the NLRB's Office of the General Counsel issued a series of three advice memoranda recommending the dismissal of unfair labor practice charges filed by employees who were disciplined for comments made on Facebook. In each of these charges, the employee alleged that their discipline violated Section 8(a)(1) of the National Labor Relations Act, but in each the NLRB's General Counsel's Office concluded that there was insufficient evidence that the employee engaged in concerted activity.

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Employer Law Report is pleased to share with you the launching of Porter Wright's latest blog – Employee Benefits Law Report – which we have created as a resource to help guide employers of all sizes through the complex administrative and legal challenges facing their employee benefit plans.

This blog – edited by my partners Ann Caresani and Rich Helmreich – will provide the latest information in a wide range of areas related to Employee Benefits including:

• ERISA and employee benefits litigation
• Health care reform
• Retirement plans
• Audits and correction
• Benefits issues related to mergers and acquisitions
• Employee Stock Ownership Plans (ESOPs)
• ERISA fiduciary compliance
• Health and Welfare Plans
• Nonqualified Deferred Compensation/Executive Compensation
• Tax-exempt/government employers

If you would like to subscribe to Employee Benefits Law Report and receive e-mails regarding blog updates, please visit the blog and enter your e-mail address. Alternatively, you may add www.employeebenefitslawreport.com to your RSS/XML feedreader.
 

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In earlier posts, we discussed the best time to mediate different types of employment or ERISA matters. Although some disagree, selecting a mediator to facilitate a settlement based on a meeting of the minds may be the most important part of the mediation process. Even though mediation is a party-driven process, the mediator's knowledge, skill, experience, style and ability to handle the type of individuals involved in the dispute has a substantial impact on the resolution of the dispute. With apologies to Kyra Sedgwick, the goal is to find The Closer.

In most private mediations, the parties and their counsel select the mediator, and bear the burden of selecting an appropriate person to mediate the dispute. In making a selection, there are a number of issues the parties may want to consider.

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Those of you have been reading Employer Law Report over the past six months may have noted an addition to our home page recently in the lower portion of the left column. There, you will find my most recent tweets on Twitter from @BrianDHallEsq. Sounds a bit pretentious, I know, but every usable combination of Brian D and Hall were already taken.

Twitter allows us to inform you about a lot of issues that we simply can't fit into this blog. It also allows us to get information out to you faster than we can on the blog. While the key to tweeting is brevity -- we can't use more than 140 characters in any tweet --we are able to link to an incredible array news, legal and government sources. In addition, Twitter is filled with knowledgeable human resources professionals and, yes, other labor and employment lawyers who we can "retweet" when they address topics we think you will find interesting.

So, what will you find on my Twitter feed if you follow me? Everything you see here on Employer Law Report, and more. In addition to the labor and employment legal news, I will also be tweeting about legal developments relating to our privacy as well as interesting news and events going on in Columbus and Ohio. I promise, however, I won't waste your time telling you what I had for lunch.
 

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On April 25, 2011, the Department of Labor's Office of Federal Contract Compliance Programs announced a proposed rule to increase the affirmative action obligations federal contractors and subcontractors owe to veterans. It was published in the Federal Register on April 26 to allow for a 60-day comment period and will likely generate significant discussion among both contractor and veterans groups.

Some of the changes simply clean up regulatory language which is no longer accurate and others clarify existing obligations. The most controversial changes, however, add some rather significant data collection, monitoring, recruitment and hiring obligations. As the DOL's news release summarized:

"The rule proposes requiring contractors to engage in at least three specified types of outreach and recruitment efforts each year. In addition, the proposed rule would require that all applicants be invited to self-identify as a "protected veteran" before they are offered a job. Increasing data collection on job referrals, applicants and hires, and requiring contractors to establish hiring benchmarks to assist in measuring the effectiveness of their affirmative action efforts also are proposed."

As we have previously reported, this Agency has become much more active under the Obama administration and previously indicated that this rule would be forthcoming. Unfortunately, even those businesses who are making substantial, good faith efforts to employ veterans may find the proposed recordkeeping and goal setting obligations unwieldy.

Those wanting a copy of the proposed rule can find it in the April 26, 2011 Federal Register or by going to this link. Porter Wright intends to file comments as an interested party in response to the proposed rule, so please let us know if you have any positive or negative input regarding the rule.

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Several days ago, I read the New York Times article reporting that the NLRB's Manhattan Regional Director was threatening to file a complaint against Thomson-Reuters for allegedly reprimanding an employee who had criticized management on Twitter. At the time, I flagged the article because I wanted to use it to highlight my -- emphasis on the word, MY -- views on the NLRB's recent assault on social media policies: When it comes to social media, it is time for cooler heads to prevail, both at the NLRB and within the employer community.

So, what happened at Thomson-Reuters? According to the article in the Times, the company on one of its Twitter outlets had invited employees to post suggestions on Twitter about how to make Reuters the best place to work. In response, an employee, who was also the head of the Newspaper Guild at Reuters, tweeted: "One way to make this the best place to work is to deal honestly with Guild members." The next day, her supervisor contacted her at home to advise her about Reuters policy of not saying things that would damage the company's reputation. Though Reuters denies that it disciplined the employee, she complained that she felt threatened and intimidated. A source at the NLRB apparently confirmed to the Times that it would be filing a complaint against Thomson-Reuters accusing the company of violating the employee's right to engage in concerted, protected activity with co-workers to improve working conditions.

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On Tuesday, the U.S. Supreme Court heard oral argument on Wal-Mart’s appeal of the Ninth Circuit’s en banc decision upholding the certification of a class action gender discrimination lawsuit in Dukes v. Wal-Mart Stores, Inc. As noted by a number of commentators (among them The Wall Street Journal, Forbes, The Christian Science Monitor, and CNN), the tone of the Court's questioning indicates that the Court is likely to rule in Wal-Mart's favor.

This appeal stemmed from a federal court's certification of a nationwide class of female employees of Wal-Mart who were allegedly subjected to discriminatory pay and promotion policies. The class seeks injunctive relief and money damages (back pay) for all women employed since December 1998 in positions ranging from entry-level hourly employees to salaried managers. The class certified in 2004 included 1.5 million women; it currently is estimated to include 3 million women. The district court and Ninth Circuit certified the class after concluding that statistics and sociological expert testimony could allow Plaintiffs to show that Wal-Mart's culture, when combined with its decentralized decision-making structure, resulted in discrimination against Wal-Mart's female employees. Those courts approved class certification despite (1) Wal-Mart's written policy of anti-discrimination, (2) evidence that there was no gender-based pay disparity at 90% of Wal-Mart's stores, (3) an admission by plaintiff's expert that he could not say whether discrimination was happening .05% or 95% of the time, and (4) a class that included at least 544 female store managers who would have been both victim and discriminator, under the plaintiffs' theory.

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Yesterday, a panel of the Sixth Circuit announced its decision in Lewis v. Humboldt Acquisition Corp, an ADA case in which the court upheld the position of prior panels requiring an ADA plaintiff to establish that his or her disability was the “sole reason” motivating an adverse employment action. As Mark J. Chumley of the excellent Management Rights Blog noted yesterday, this puts the Sixth Circuit in the distinct minority of the appellate courts to consider the standard of proof on causation in an ADA case:

“Of the ten circuits to consider the causation issue, eight apply a 'motivating factor' (or 'substantial cause') test, under which a plaintiff must only show that a disability was a motivating factor of the adverse employment action.

However, the current law in the Sixth Circuit is that a plaintiff must show that his or her disability was the 'sole reason' for the adverse employment action; this is sometimes referred to as the 'solely' standard.”

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In a scenario that frequently occurs in workplaces across the country, Linda Buck, the vice president of human resources at Proctor Hospital, was asked to terminate Vincent Staub based on information contained in a report from his supervisors that accused him of violating the terms of a “corrective action” disciplinary warning. Relying on this accusation and her own review of Mr. Staub’s personnel file, Ms. Buck decided to terminate Mr. Staub’s employment. Mr. Staub protested to Ms. Buck that his supervisors were hostile to his military obligations as a member of the U.S. Army reserves, but rather than follow up on Mr. Staub’s concern with his supervisors, Ms. Buck simply conferred with another human resources staff member and adhered to her termination decision. Mr. Staub sued Proctor under the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) claiming that his discharge was motivated by hostility to his obligations as a military reservist. His contention was not that Ms. Buck had any such hostility but that his supervisors did, and that their actions influenced Ms. Buck’s ultimate employment decision. (This type of case has been referred to as a "Cat's Paw" case, based on an Aesop's fable involving a cat, a monkey, chestnuts and fire. Justice Scalia provides more information at footnote 1 of his majority opinion.)

A jury found that Mr. Staub’s “military status was a motivating factor in [Proctor’s] decision to discharge him,” and awarded $57,640 in damages. The Seventh Circuit reversed, holding that Proctor was entitled to judgment as a matter of law because Ms. Buck had relied on more than just the supervisors' advice in making her termination decision.

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After a week of significant media attention and almost unprecedented levels of protest at the Ohio Statehouse, the Ohio Senate passed Senate Bill 5 by a one-vote margin – 17 to 16. The Bill will now go to the House of Representatives where it is expected to pass quickly, paving the way for the Governor to sign it into law. A number of significant amendments were made from the Bill as originally proposed, but in its final form, the Bill still makes major changes to the law of collective bargaining in the public sector.

The Major Changes

• S.B. 5 places significant restrictions on the subjects that can be brought to the bargaining table for public employees. Specifically, bargaining will not be permitted about health insurance benefits, employer assistance towards the employee share of pension contributions, privatization of public services, staffing levels, and certain other management rights.
• S.B. 5 prohibits strikes by all public employees. Previously, Ohio collective bargaining law prohibited strikes only by police officers, firefighters, and other specified employees whose jobs have a direct impact on public safety. S.B. 5 makes it illegal for all public employees to strike and imposes extraordinary penalties if public employees do strike. Striking employees can be terminated, and can be subjected to substantial financial penalties.
• S.B. 5 establishes a new procedure for dispute resolution in bargaining. Under existing law, if contract negotiations reach a stalemate, the parties typically first have a hearing before a neutral "fact-finder." The fact-finder issues recommendations for resolving the dispute, but either the union or the employer can reject those recommendations. In the case of police, firefighters, and other specified safety employees who are prohibited from striking, the dispute then goes to a hearing before another neutral person whose decision is binding. The theory is that since those employees do not have the leverage of the threat of a strike, there has to be a neutral person to break the deadlock in the bargaining. S.B. 5 eliminates the binding arbitration step and prohibits all employees from striking. In cases where bargaining reaches a stalemate, the fact-finding proceeding will be followed first. If either party rejects the fact-finder's report, the employer's last best offer and the union's last best offer will be presented to the legislative body (i.e., City Council in the case of a municipality) which will conduct a public hearing and then vote to accept either the last best offer of the union or the last best offer of the employer.

S.B. 5 places in the hands of public employers substantial leverage and control in collective bargaining. Supporters of the Bill say this is necessary to address what they consider to have been a system slanted in favor of unions, which has resulted in over-generous pay and benefits and unreasonable restrictions on employer rights. Opponents of the Bill claim that it places all leverage and control in the hands of the employer and thereby eliminates true collective bargaining. Opponents also claim that the true underlying agenda for supporters of the Bill is to weaken union influence and political power.

Our firm has represented municipal and other government employers in the collective bargaining process under existing law, and we certainly understand the argument that the current system is broken. Whether the dramatic changes in Senate Bill 5 will prove to be a fair and reasonable fix remains to be seen. It will be interesting to observe the ongoing expected opposition and any possible legal challenges to the law on constitutional grounds.
 

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Ohio Employment Practices Law:
Highlights from latest edition of "The" Book on Employment Law in Ohio
Wednesday, March 16, 2011
2:00 - 3:00 p.m. EST

Ohio Employment Practices Law - published by West - has become "the" important reference for Ohio employers. On Wednesday, March 16, 2011, editors Bradd Siegel and John Stephen will review highlights from the recently released 2010-2011 edition of this treatise that are most relevant for human resource professionals and in-house counsel, including the continued evolution of public policy claims; the clarification of pregnancy related obligations; and the practical impact of the ADAA upon employers.

Register Now!

Wednesday, March 16, 2011 from 2:00 p.m. - 3:00 p.m. EST

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The OFCCP has released a new directive – the Active Case Enforcement Directive (ACE)  – to replace the Active Case Management directive (ACM) which was rescinded by OFCCP in December 2010. The ACE procedures will result in more in-depth OFCCP audits and will greatly increase the chances of OFCCP making findings that are adverse to the companies they audit.

Under the ACE Directive, the OFCCP will conduct full desk audits of every contractor selected for a compliance evaluation. This is in contrast to the previous ACM procedure that required full desk audits only for every 25th contractor audited or for any contractor for which an abbreviated desk audit revealed indicators of potential class-wide, systemic discrimination. Under the ACE Directive, every 25th contractor audited will be selected for a full compliance review – desk audit, onsite review, and possible offsite analysis – regardless of the findings of the initial desk audit. This will generate far more full reviews than the old procedures, which required a full compliance review only of every 50th contractor or when there were indicators of class-wide or systemic discrimination.

At the beginning of every audit , OFCCP will contact the EEOC and State fair employment practices agencies to determine the nature, status, and outcome of any complaints filed against the contractor. The directive says OFCCP will expand this effort to also include gathering information from other federal enforcement agencies, such as OSHA and the Wage Hour Division, to determine if the employer has a history of violating other employment statutes that might be looked to as a possible indicator of discrimination.

Perhaps of greatest significance is the fact that OFCCP will now proceed to an onsite review where there are any "indicators of discrimination." In the past, other than doing an onsite of every 50th contractor, the agency did an onsite only where there were indicators in the desk audit of systemic or class-wide discrimination. Under the ACE Directive, an onsite will be triggered by indicators of any sort of discrimination. The Directive says that discrimination can be indicated by statistical indicators, anecdotal evidence, patterns of individual discrimination, patterns of systemic discrimination, patterns of major technical violations involving recordkeeping or failure to maintain an AAP, and indications of noncompliance with other labor and employment laws administered by other federal agencies. Stating that discrimination may be indicated by patterns of "major" recordkeeping violations or by non-compliance with other laws that have nothing to do with discrimination is a very aggressive and some might argue unfair approach. For example, the ACE directive says that a contractor's violation of wage hour laws can be an indicator of possible discrimination.

OFCCP has said that it intends to conduct fewer audits in the future but that those it does conduct will be more detailed and thorough. The procedures adopted in the ACE directive certainly confirm that when OFCCP calls on you for an audit in the future there is a far greater likelihood of a longer, more aggressive encounter with the agency.
 

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As we have been noting recently, the NLRB and its Acting General Counsel (AGC) have embarked on an aggressive campaign to increase NLRB influence and control over labor-management relations. At hearings on Friday, February 11, 2011 before the House Committee on Education and the Workforce, the employer community raised concerns about a number of those initiatives, including two recent AGC Memoranda, which are enforcement directives from the NLRB General Counsel to NLRB Regional Offices around the country. In GC 11-04, the AGC issued a controversial direction to the Regional Offices to include mandatory default language in settlement agreements. In GC 11-05, the AGC announced a significant change in the way the NLRB will proceed when issues brought before the NLRB could also be brought in front of an arbitrator under a labor contract grievance procedure.

Memorandum GC 11-04 instructs the NLRB's Regional Offices to include certain language in all settlement agreements over unfair labor practice charges. The new language says that if an employer fails to comply with any aspect of the settlement, the employer will automatically be deemed to have admitted all of the allegations in the underlying unfair labor practice complaint. This language means that employers entering into settlement agreements with the NLRB will have to be very cautious not to do anything that might be construed a violation of its obligations under the settlement agreement because violating the settlement will make the employer automatically liable for the underlying allegations.

Memorandum GC 11-05 revises the NLRB's long-standing practice of deferring to arbitration awards and grievance settlements. Up until now, if a union that represented an employee covered by a labor contract with a grievance/arbitration procedure filed a charge with the NLRB claiming unfair treatment, the NLRB would usually defer to the grievance arbitration procedure if the conduct complained about could be pursued under those procedures. In Memorandum GC 11-05, the AGC says that the NLRB's current policy is "overly deferential" and does not adequately protect employee rights. The AGC urges Regional Directors to investigate charge allegations and make a decision whether the charge has "arguable merit" before deferring to arbitration. In cases where an arbitration decision has already been issued, the NLRB Regional Directors are told to determine whether the parties presented to the arbitrator the statutory right that the charging party sought to enforce and whether the statutory right was incorporated into the arbitrator's decision. The Regional Director is also to consider whether the arbitrator correctly recognized the statutory principles and applied them in issuing his or her decision. Only then will the Board defer to the arbitrator's award. Also, the AGC urges Regional Directors not to defer to grievance settlements unless it is clear the parties intended for the settlement to resolve the unfair labor practice issues. Regional Directors are also encouraged to consider whether the settlement is "reasonable," whether it appears any fraud, duress, or coercion occurred and whether the respondent has a history of unfair labor practices or of violating settlement agreements.

All of the hurdles set out in Memorandum GC 11-05 will make it far less likely that the NLRB will defer to grievance arbitration procedures. This means that employers with union contracts can expect much more often to be required to battle before the NLRB regarding the very same issues that are being pursued under the union contract grievance arbitration procedures.
 

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Earlier this week, the National Labor Relations Board issued a press release announcing the settlement of the NLRB’s Complaint against American Medical Response of Connecticut, Inc. (AMR) in what has become known as the Facebook Firing case.

In that complaint, the Board alleged that that AMR maintained an overly broad handbook policy regarding blogging, Internet posting and communications between employees and had unlawfully terminated an employee pursuant to that policy after she had posted critical comments about her supervisor and responded to further comments from her co-workers. The press release notes that, among other things, AMR has agreed to revise its policy to ensure that it does not improperly restrict employees from discussing their wages, hours and working conditions with co-workers and others while not at work and that it would not discipline or discharge employees for engaging in such discussions. The exact details of the required policy revisions are not clear as of this date; nor is it certain that the NLRB will be issuing any further press releases regarding this case. The text of the press release is reprinted below.

PRESS RELEASE

Contact:
Office of Public Affairs
202-273-1991
publicinfo@nlrb.gov
www.nlrb.gov

A settlement has been reached in a case involving the discharge of a Connecticut ambulance service employee for posting negative comments about a supervisor on her Facebook page.
The NLRB’s Hartford regional office issued a complaint against American Medical Response of Connecticut, Inc., on October 27, 2010, alleging that the discharge violated federal labor law because the employee was engaged in protected activity when she posted the comments about her supervisor, and responded to further comments from her co-workers. Under the National Labor Relations Act, employees may discuss the terms and conditions of their employment with co-workers and others.

The NLRB complaint also alleged that the company maintained overly-broad rules in its employee handbook regarding blogging, Internet posting, and communications between employees, and that it had illegally denied union representation to the employee during an investigatory interview shortly before the employee posted the negative comments on her Facebook page.

Under the terms of the settlement approved today by Hartford Regional Director Jonathan Kreisberg, the company agreed to revise its overly-broad rules to ensure that they do not improperly restrict employees from discussing their wages, hours and working conditions with co-workers and others while not at work, and that they would not discipline or discharge employees for engaging in such discussions.

The company also promised that employee requests for union representation will not be denied in the future and that employees will not be threatened with discipline for requesting union representation. The allegations involving the employee’s discharge were resolved through a separate, private agreement between the employee and the company.

The National Labor Relations Board is an independent federal agency vested with the authority to safeguard employees’ rights to organize and to determine whether to have a union as their collective bargaining representative, and to prevent and remedy unfair labor practices committed by private sector employers and unions.
 

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Wednesday, February 16, 2011
11:30 a.m. - 1:30 p.m. Lunch will be provided.
Capital Club – 41 South High Street, 7th Floor
Columbus, Ohio

An employer’s human resources department can provide one-stop shopping for identity thieves, where they can find personnel records, benefits data, and payroll and tax records all in the same place. What would you do if you learned that this data had been compromised? Don’t get caught short  – learn what you can do to respond effectively to data breach intrusions, whether as a result of a lost laptop, criminal hacking, or other unauthorized access or use of this highly private and sensitive information about your employees.

Featuring:
Robert J. Morgan, Esq., Porter Wright Morris & Arthur LLP
Jeremy A. Logsdon, Esq., Porter Wright Morris & Arthur LLP
Donna M. Ruscitti, Esq., Chair, Porter Wright's Information Privacy and Data Security Practice Group

This is a complimentary seminar, however seating is limited. To reserve your spot at this program, please e-mail Deb Ballard at dballard@porterwright.com before February 14.
 

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Over the past few weeks, we have documented the NLRB’s efforts to expand worker rights through rule-making and General Counsel directives. On January 28, 2011, however, the Board went back to its traditional means of fashioning federal labor policy by issuing its decision in Parexel International, LLC., 356 NLRB No. 82 (January 28, 2011).  

In Parexel, the charging party had a conversation with a co-worker about whether he received a wage increase after he had left and then returned to work for the company. He indicated (apparently falsely) that in fact he had received a raise and so did his wife who also had left and returned. The charging party then went to her supervisor, repeated the tale from her co-worker and then suggested that her entire unit should quit and return so they could get raises. The supervisor then told management about the conversation, which resulted in the charging party being summoned to discuss the matter. The charging party reiterated her conversation with the co-worker and stated her belief that the company, which had a significant number of employees from South Africa, was favoring the South Africans when it came to wages. When questioned, the charging party denied having spoken with any of her co-workers regarding her concerns. A few days later, the employee was terminated.

Section 8(a)(1) of the National Labor Relations Act makes it illegal to terminate an employee for engaging in "protected concerted activity." One form of protected concerted activity is to talk to co-workers to raise issues of mutual concern about wages or other working conditions. The NLRB Judge (ALJ) in this case concluded that the company had not violated the National Labor Relations Act because the employee, who had not discussed her concerns with any co-workers, had not yet engaged in any protected activity. In reaching this conclusion, the ALJ noted:

In some respects, [the charging party’s] termination was a pre-emptive strike to prevent her from engaging in activity protected by the Act. See Compuware Corp., 320 NLRB 101, 102-103 (1995). However, I have not encountered any precedent for the proposition that I can find a violation on this basis without evidence that the alleged discriminate (sic.) had in fact engaged in concerted protected activity. Therefore, I decline to affirm the complaint on this basis.

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The U.S. Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) has issued a proposed rule that would require interstate commercial truck and bus companies to install electronic on-board recorders (EOBRs) to monitor their drivers' compliance with hours-of-service (HOS) requirements. EOBRs are devices attached to commercial vehicles that automatically record the number of hours drivers spend operating the vehicle. The proposed rule also would relieve interstate motor carriers from retaining certain HOS supporting documents, such as delivery and toll receipts, which are currently used to verify the total number of hours drivers spend operating the vehicle. Obviously, however, the EOBRs cannot record time spent by drivers doing non-driving activity such as loading and unloading a vehicle, which also factors into the drivers' HOS.

Under the proposal, interstate carriers currently using Records of Duty (RODS) logbooks to document drivers' HOS would be required to begin using EOBRs within three years following the effective date of the rule. Short-haul interstate carriers using timecards to document HOS would not be required to use EOBRs. Violations of the proposed rule would bring with them penalties of up to $11,000 for each offense.

Comments to the proposed rule may be submitted at http://www.regulations.gov, by fax to (202) 493-2251, or by mail or hand delivery to:

Docket Management Facility
U.S. Department of Transportation
1200 New Jersey Avenue, S.E.
West Building, Ground Floor Room W12-140
Washington, D.C. 20590.

All comments should include Docket Number FMCSA-2010-0167.
 

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Updating our previous posts on Thompson v. North American Stainless, the Supreme Court yesterday reversed the Sixth Circuit’s en banc decision holding that an employee who claims he was fired in retaliation for his fiancé's complaint of sex harassment had an actionable retaliation claim under Title VII. The Supreme Court reversed the Sixth Circuit’s decision in a 8-0 opinion with Justice Scalia writing the unanimous decision.

The facts are as follows: A woman filed a sex discrimination charge with the EEOC. Three weeks later, the employer terminated the woman’s fiancé, who also was employed by the company. The fiancé filed his own EEOC charge and, eventually, a lawsuit, alleging that his termination was in retaliation for his fiancé’s EEOC charge. In response, the employer argued, among other things, that there is no cause of action under Title VII for retaliation against associated third-parties. The trial court agreed and dismissed the case. The plaintiff appealed, and the EEOC filed an amicus (“friend of the court”) brief in support of associational retaliation claims. In a 2-1 decision, a three-judge panel of the Sixth Circuit reversed, holding that “Title VII prohibit[s] employers from taking retaliatory action against employees not directly involved in protected activity but who are so closely related to or associated with those who are directly involved, that it is clear that the protected activity motivated the employer’s action.” The entire Sixth Circuit (en banc) reversed the three-judge panel holding in a close 10-6 vote that there was no cause of action for third-party or associational retaliation.

Yesterday, the Supreme Court reversed the Sixth Circuit’s en banc decision, agreeing with the plaintiff that Title VII’s provisions prohibiting retaliation were broad enough to include associated third-parties. The Supreme Court reasoned that Title VII’s anti-retaliation provisions were intended to protect against any employer action that may dissuade a reasonable worker from making or supporting a charge of discrimination—specifically emphasizing that this is an objective standard. The Court reasoned that it was “obvious” that a worker might be dissuaded from making or supporting a complaint of discrimination if she knew that her fiancé might be terminated as a result. The Court reasoned that hurting the fiancé was the means by which the employer intended to harm the female employee making the complaint of discrimination. The Court warned that retaliation against a mere acquaintance would not meet this standard but declined to identify specific relationships that would and would not be covered—holding that outside of close family relationships it would depend on the circumstances of each case to determine whether the plaintiff was in the "zone of interest."

Retaliation claims have long been a thorn in the side of employers, who too often make the mistake of transforming a meritless discrimination claim into a viable retaliation claim by the way they treat an employee who remains in their employ after complaining of discrimination. The Supreme Court's 2006 decision in Burlington Northern & Santa Fe Ry. Co. v. White made it easier for employees to prove retaliation and yesterday's decision in Thompson expands the list of potential retaliation claimants. With retaliation claims already on the rise as demonstrated by the EEOC's recent statistics, it is more important than ever that employers thoroughly and impartially evaluate any disciplinary scenario before taking adverse action to ensure that the discipline is free of any retaliatory motivation.
 

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As expected, the NLRB has moved forward with initiatives that seem designed to make it easier for unions to successfully organize. The most controversial aspects of the proposed Employee Free Choice Act, including card-check recognition and mandatory arbitration in bargaining, seem to be dead in the water. But a union-friendly NLRB is pursuing initiatives administratively that will facilitate union organizing. 

Rule Making to Require Posting About Organizing Rights

The NLRB recently issued a Notice of Proposed Rule Making which would require all employers to post notices in the workplace advising employees of their rights to engage in union organizing. The notice would have to be posted prominently in the workplace and employers that communicate electronically with employees would be required to include the posting in an electronic communication The proposed mandatory organizing poster is very similar to one that is required for federal contractors and subcontractors. It gives a comprehensive explanation of employee rights to organize and restrictions on employer responses to organizing. 

A copy of the NLRB news release about the proposed rule, together with links to the Notice of Proposed Rule Making, which includes the full text of the proposed posting, and additional information, can be found here. 

The prospect of a mandatory prominent notice about union organizing in the workplace is good cause for every employer to evaluate its overall plan for response to possible union activity.

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Last week, a 43-page Dress Code Manual that UBS is piloting in a few of its Swiss branches was leaked to the press, resulting in a brief media feeding frenzy about the value of strict dress codes for employers.  Most, I think, would agree that devoting 43 pages to a dress code is a bit over the top. 

For those of you who are not so sure, media reports indicate that the Code addresses issues starting with hair length, style and color and running all the way down to toenail length – and hits everything in between.  That includes not only underwear visibility, but also style, color and quality.  Trust me when I say I have tried to find a copy of the Code on the internet, but have come up empty.  A couple of the media articles can be found here and here.  A quick look at the comments following both of these articles underscores the difference of opinion sparked by UBS dress code – though by my count more people seemed to find it humorous than not.

Though it is easy to poke fun at such a long and detailed dress code, it seems to me that the pendulum in many industries in fact may be starting to swing away from casual garb towards more traditional professional attire.  Perhaps the downturn in the economy has forced employers to focus on the impression their employees make on customers and clients.  Or, perhaps it is just a natural response to the fact that casual business attire for some workers has turned into ripped jeans and flip flops.  Regardless, strict dress codes are generally enforceable so long as they do not discriminate based on any protected class status;  generally, gender, religion, national origin and race are the ones that come up.  In addition, employers generally may also enforce policies against visible tattoos and piercings, but should be prepared to discuss modifications to such policies in response to religious accommodation requests.

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The Office of Contract Compliance (OFCCP), which enforces federal contractors’ and subcontractors’ affirmative action obligations, recently rescinded its 2003 ACM directive. The 2003 ACM or "Active Case Management" directive allowed for abbreviated desk audits where only the affirmative action plan and personnel data were reviewed. If no evidence of systemic discrimination was revealed (defined as discrimination affecting at least 10 employees or applicants), the evaluation would be closed. If such evidence was indicated, a full desk audit and possible onsite review would be launched. The ACM also mandated that a full desk audit be performed for every 25 contractors and a full onsite review for every 50 contractors.

Rescinding the ACM directive signals that desk audits may be more expansive in the future and that onsite reviews may become more common. However, the rescission may be just a formality. Many contractors found that some regional and local OFCCP offices had not been following the ACM directive for some time, but formally rescinding the ACM directive does signal that the agency intends to be more aggressive in its enforcement activity.  The OFCCP has yet to issue new procedures for desk audits and onsite reviews.

With a renewed focus on onsite reviews, the OFCCP will be able to expand its enforcement efforts to other areas of affirmative action, rather than just focus on what the statistics reveal.  For example, in an onsite review, the OFCCP can look at disabled accessibility issues, posting requirements, and interview workers.

We will update you if a new directive replacing the ACM is issued.

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On November 2, 2010, the NLRB issued a press release reporting that its Hartford, Connecticut, regional office had issued a Complaint alleging that American Medical Response of Connecticut, Inc., (“AMR”) had published an overly broad blogging and Internet posting policy that violated employee Section 7 rights, and then illegally fired an employee for negative posts about a supervisor.

As described in the Complaint, the AMR policy prohibited employees from making disparaging remarks when discussing the company or supervisors and from depicting the company “in any way” over the Internet without company permission. Such provisions, according to the NLRB’s Complaint, constitute a violation of 8(a)(1) of the National Labor Relations Act because they interfere with employees' right to engage in protected concerted activity under Section 7 of the NLRA. (The NLRB and courts typically interpret Section 7 as protecting employees’ right to discuss the terms and conditions of their employment with other employees or even non-employees.)  The NLRB also alleged that the employer illegally fired an employee pursuant to that policy for posting negative remarks about a supervisor on Facebook, which the NLRB said drew supportive remarks from her co-workers.

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Over the last week or so, two stories about drugs in the workplace caught my eye. First was the NY Times article on employer efforts to respond to the increasing use of prescription drugs in the workplace. The article appropriately addressed the conflict between employer needs to ensure a safe workplace and employee rights to privacy and the protections afforded by the ADA. As a result, some employers have begun testing employees for prescription painkillers and other prescription drugs and terminating employees that test positive. 

The second issue in the media this past week involved the disclosure that officials from the Houston Texans last month conducted a search of the team's locker room for evidence of performance enhancing drugs. Earlier this season, two Houston players had been suspended under the NFL's substance abuse policy. Surprisingly, neither the Texan players nor the NFLPA seem to have (at least publicly) complained about the search.  (You can read more about this story here.)

These two stories show the lengths to which employers are going to combat drugs in their workplaces. Before taking any drastic approaches towards addressing a drug problem in their workplace, employers would be wise to consult their labor and employment counsel to ensure that their approach is lawful.

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In an earlier post, we discussed the type of case that lends itself to pre-filing or pre-discovery mediation. But unless the key motivating factors needed for pre-suit or pre-discovery mediation are present, mediating employment cases after early, limited discovery provides parties with one of the best chances for expeditious resolution. It allows everyone to reduce the time and the costs involved to resolve a litigated employment dispute.

As lawyers, we know that it may be difficult or next to impossible to evaluate a party’s claims or defenses without some discovery. For an employee, the employer usually has the relevant documents and witnesses in its control. The employee’s counsel often recognizes the importance of serving requests targeted at key documents and deposing at least one key witness or company representative. This allows an employee to assess the risk of continuing litigation and shows that commitment to pursing evidence to support the claims.

For employers, deposing the employee is often critical to its defense and assessing the suitability of settling a case in a mediated process. This may be essential in “he said, she said” cases where witness credibility may be dispositive. An employer may also use the deposition to show an employee that litigation may be a long and difficult road; or that there are some issues that the employee had not anticipated. 

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On October 8th, the Huffington Post reported on what appears to be an ongoing and unfortunate trend of employers placing job ads specifying that applicants must currently be employed to be considered for open positions. This trend seems incredibly unfair to the millions of people who lost their jobs in the economic downturn, usually through no fault of their own. On the other hand, the trend is understandable for employers that are only now beginning to consider adding to their workforces after making do with additional overtime, temporary hires and various outsourcing solutions. The old adage that it is easier to look for a job while still employed definitely applies here -- as does the real estate analogy that makes us wonder what is wrong with the house that has been on the market for a long time. Hopefully, the economy continues its tentative turnaround and soon makes the conditions right for reversing this trend.

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On September 21, 2010, the Federal Motor Carrier Safety Administration ("FMCSA"), an agency of the U.S. Department of Transportation, announced a final rule banning commercial vehicle operators from texting messages while driving. An earlier post on this site described the notice of rulemaking. At the September 21st "National Distracted Driving Summit," FMCSA announced that the final rule will be published "soon" and will take effect 30 days after publication.

It is anticipated the final rule will track closely with the rule as originally proposed and will ban "texting," defined broadly to include generating and reading any sort of text message from an electronic device. The ban will not include using a cell phone, including to read, select, or enter a telephone number. The ban will apply anytime the driver is operating a commercial motor vehicle, including while the vehicle is temporarily stopped because of traffic, traffic lights, or for other momentary delays. The ban will not apply when the driver has moved the vehicle to the side of the road or parked safely. Drivers may be fined up to $2,750 and their employers up to $11,000 for violations. Drivers guilty of multiple violations will have their commercial licenses suspended.

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Late last month, we reported on some employment terminations in the health care industry that were prompted by some ill-advised Facebook postings.  Earlier this week, Dan Schwartz of the Connecticut Employment Law Blog noted another interesting situation brewing in his home state in the education field -- where a school superintendent faces potential termination of employment for postings to his Facebook page, which only his “friends” could access.  

In other words, the discussion was not open to be seen on Facebook by the general public.  Apparently, the superintendent engaged in an exchange with his “friends” about his first day on the job, which according to news sources, included sleeping until 10:00 a.m., browsing the Internet, and counseling an employee about either retiring or facing termination.   Unfortunately, one of the superintendent’s “friends” apparently forwarded the exchange to the school board, which was none too pleased. 

Noting that “[i]t seems that in all of the frenzy over social media, we are losing a bit of perspective,” Schwartz asks a number of valid questions:

Should the fact that someone's Facebook page is set to the highest "privacy" settings make a difference in how we look at issues of employee use of social media?

Are we overreacting to every Facebook post? 

What is the real difference between a posting like this and say, an e-mail sent out to friends?

What about the "water cooler" talk?

Is the fact that it is written down somewhere that significant?

As we suggested about a year ago when reporting on the Pietrylo v. Hillstone Restaurant Group lawsuit, each situation must be evaluated on its own merits.  While the virtual nature of Facebook posts certainly risks wider distribution than chitchat around the water cooler, employers need to ask themselves whether the employee intended through his or her privacy settings to place appropriate limits on the distribution of the post.  Once that context is evaluated, the employer can then take the next step of determining whether the post’s actual content really risks damaging the employer’s substantial interests or violates substantial company policies.  

In Pietrylo, you will recall, supervisory employees gained access to a private MySpace account on which employees apparently were saying unflattering things about their bosses.  Setting aside for the moment  the question of whether the supervisors had authorization to access the site,  there likely are few circumstances where an employer would have substantial interests justifying a termination decision when the discussion was restricted to the employees themselves  -- discriminatory or harassing comments being a notable exception. 

In Connecticut, by contrast, the alleged postings were made by the superintendent of schools -- not by a group of restaurant servers and cooks; the intended distribution, depending on how extensive his list of friends was, had potential to reach members of the local voting public instead of being contained within the workforce; and the content of the discussion was not entirely benign.  Where all of this fits in the spectrum between trivial and cataclysmic, I don’t know. But it is important that employers engage in this kind of analysis before pulling the trigger on a termination whenever an employee posts something on a social media site.

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In Branham v. Gannett Satellite Information Network, Inc., No. 09-6149, 2010 WL 3431617 (6th Cir. Sept. 2, 2010), the Sixth Circuit Court of Appeals held that an employer is not necessarily entitled to rely on a “negative certification” submitted by an employee's health care provider in denying a request for FMLA leave. 

The plaintiff-employee in Branham initially claimed that the absences for which her employment was terminated were related to a “serious health condition” within the meaning of 29 CFR § 825.113. Her employer responded by requesting that the employee produce a medical certification confirming her inability to work. However, the employer's request was not made in writing, it did not expressly provide the employee with 15 days to comply, and it did not expressly inform her that a failure to certify an FMLA-qualifying reason for the absence would result in a denial of the leave. These requirements for a proper request for medical certification are all set forth in 29 CFR § 825.305.

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We are starting to see an increase in the number of news articles reporting on health care facilities terminating employees for violating patient privacy on their facebook pages or other social media. 

Last December, one such incident made a fair number of headlines when a Mississippi hospital worker responded to a tweet from the Governor of Mississippi, Haley Barbour, regarding the state’s “dire fiscal situation” and soliciting ideas to trim expenses.  The employee responded with a tweet that said the Governor should “schedule regular medical exams like everyone else instead of paying UMC employees over time to do it when clinics are usually closed.”  The hospital terminated the employee on the ground that her tweet violated HIPAA because it disclosed that the Governor had been a patient at the hospital.

More recent reports suggest that health care employers have become even more aggressive in terminating employees who have compromised patient privacy on their social media pages.  For instance, in June, it was reported that a hospital in Oceanside, California had terminated five employees and disciplined a sixth for using social media to discuss hospital patients.  The hospital’s CEO is quoted as saying that its investigation had not yet uncovered any evidence that patient names, photographs, or similar identifying information was posted by these employees, but the investigation had yielded sufficient information to warrant disciplinary action. 

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There are times when parties want to avoid litigation as a means for resolving a dispute. Some employment disputes are particularly well-suited to pre-filing or pre-discovery mediation. For example, in a case where the reputation of an individual or an organization is at stake, there is a great chance that early mediation will result in resolution. A party faced with disclosure of damaging information and the unavoidable publicity that may result, often sees a resolution in mediation as the best option. Pre-suit mediation is also favorable to the party possessing the damaging information since once a lawsuit is filed, it has lost some of its leverage. These type situations are ideal for pre-suit or pre-discovery mediation.

Another time pre-filing mediation is particularly fitting is when the remedy sought involves little money and is relatively easy to implement. Cases involving failure to accommodate under the ADA, failure to offer leave under the FMLA, or single-party claims under the FLSA are some examples. Here, pre-suit mediation is practical.

Pre-filing mediation may also enhance the possibility of resolution in disputes where there is or may be an ongoing relationship. This is true, for instance, in cases involving failure to accommodate or to offer leave, where the parties may want to continue the employment relationship.

Still another opportunity for pre-suit or pre-discovery mediation is when parties lack the financial or emotional wherewithal to see a case through. The parties may be aware of weaknesses in their claims or defenses, may have less than ideal witnesses, or may want to avoid costly discovery. There are virtually limitless concerns parties may have, including, avoiding disclosure of confidential medical records, comparator information or financial data. Mediation in situations like these can be especially cost-effective.

As mediators and mediation advocates, we know that every day great minds meet to resolve problems in mediation. But when to meet may have significant impact on the likelihood of resolution, so when litigation is threatened or anticipated, decision makers and their counsel should consider whether pre-suit or pre-discovery mediation is appropriate. Decision makers should weigh the benefits of early mediation against the risk and uncertainty of going forward, and then explore the opportunities and benefits pre-suit mediation offers. 
 

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The Obama Administration has advanced various initiatives to strengthen OSHA enforcement efforts. The Severe Violator Enforcement Program (“SVEP”) is a draft OSHA directive expected to take effect in June, 2010. SVEP will replace OSHA’s current Enhanced Enforcement Program. SVEP will direct OSHA enforcement officials to take especially aggressive enforcement steps in four specific circumstances:

The four circumstances that will trigger SVEP enforcement are:

1. Fatality/Catastrophe

Circumstances involving a fatality or where three or more employees are hospitalized, and where one or more willful, repeat, or failure to abate citations are issued.

2. High-Emphasis Hazards

Circumstances involving one or more specified high-emphasis hazards where two or more willful, repeat violations or failure to abate citations are issued. Examples of high-emphasis hazards include: certain fall hazards, certain amputation hazards, combustible dust hazards, and certain airborne contaminant hazards.

3. Potential Release of a Highly-Hazardous Chemical (Process Safety Management)

Circumstances involving where three or more willful potential release of highly-hazardous chemicals, repeat, or failure to abate citations are issued.

4. Egregious Cases

All cases where OSHA issues citations under its “Egregious Case” policy, which applies to especially serious safety hazards for which OSHA opts to cite employers separately for every employee exposed.

The unfortunate employer subject to SVEP enforcement will face enhanced and more aggressive follow-up inspections by OSHA, possible nationwide inspections of other facilities that may have similar hazards, notice of citations to national headquarters, employee representatives and unions, issuance of regional and/or nationwide news releases, and more aggressive settlement terms in OSHA settlement agreements.

Worker safety should always be a primary concern, for many obvious reasons. But, initiatives like SVEP and the current efforts in Congress to increase OSHA financial penalties significantly are additional good reasons for all employers to be especially vigilant on matters of workplace safety compliance.

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On Tuesday, May 25, 2010, Representatives Phillips and Driehaus introduced in the Ohio General Assembly a bill that effectively would create a single definition of "employee" for purposes of Ohio workers' compensation, unemployment compensation, payroll taxes, minimum wage and other purposes. Presently, each statute contains its own test for determining whether an individual is an employee or an independent contractor, often resulting in conflicting results.

If passed, this legislation would create a single seven-factor test for evaluation whether an individual truly is an independent contractor.

For an individual to be an independent contractor under H.B. 523, all of the following factors would have to be met:

1. The individual has been and continues to be free from control and direction in connection with the performance of the service.
2. The individual customarily is engaged in an independently established trade, occupation, profession, or business of the same nature of the trade, occupation, profession, or business involved in the service performed.
3. The individual is a separate and distinct business entity from the entity for which the service is being performed or, if the individual is providing construction services and is a sole proprietorship or partnership, the individual is a legitimate sole proprietorship or a partner in a legitimate partnership.
4. The individual incurs the main expenses and has continuing or recurring business liabilities related to the service performed.
5. The individual is liable for breach of contract for failure to complete the service.
6. An agreement, written or oral, express or implied, exists describing the service to be performed, the payment the individual will receive for performance of the service, and the time frame for completion of the service.
7. The service performed by the individual is outside of the usual course of business of the employer.

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President Obama signed the “Jobs Bill” into law on March 18, 2010. Part of the Jobs Bill is the HIRE or “Hiring Incentives to Restore Employment” Act. The HIRE Act grants employers a tax exemption for their 6.2 percent Social Security (or FICA) payroll contribution for every new qualified employee hired between February 3, 2010, and before January 1, 2011, for wages paid beginning March 19, 2010.

A qualified employee is someone who has been unemployed for 60 days prior to accepting employment. Being “unemployed” means having worked less than 40 hours during the preceding 60-day period. To be qualified, the employee must not be hired to replace another employee unless the employee quit voluntarily or was fired for cause, which includes employees who were terminated as part of downsizing. Finally, a qualified employee must not be “related” to the employer as defined in the U.S. Tax Code.

In addition to the 6.2 percent exemption, employers may earn an income tax credit that is equal to 6.2 percent of paid wages, or up to $1,000, for every new qualified employee who is retained for 52 consecutive weeks. This credit will be taken on the employer’s 2011 income tax. To ensure eligibility for the income tax credit, the employer must ensure that the wages paid to any qualified employee during the last 26 weeks are at least 80 percent of what was paid to that employee during the first 26 weeks.

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As noted in a recent New York Times article, researchers have found that the number of unpaid internships has risen, likely due to employers' limited ability to provide new paying jobs and students' willingness to gain increasingly hard-to-come-by experience. However, officials from the Department of Labor have indicated that many unpaid internship arrangements violate federal law. Nancy Leppink, Acting Director of the DOL's Wage and Hour Division, stated: "If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law."

The Division utilizes the following six-factor test to determine whether an individual is an employee or a "trainee" under the Fair Labor Standards Act:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

See Advisory, Training and Employment Guidance Letter No. 12-09. Only if all of the above factors are met may an individual be considered a trainee, in which case he or she is not considered an employee and is not subject to the minimum wage or overtime requirements of the FLSA. Among others, it is often difficult for employers to meet the factor requiring that they derive no immediate advantage from the individual’s work.

Due to the increasing number of unpaid internships, the DOL is ramping up enforcement efforts and educating colleges and students regarding the law. Accordingly, employers offering such positions or thinking about doing so should carefully review the positions to make sure they are in compliance with the FLSA.

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Employers may want to pay attention to recently introduced H.B. 470. The Bill was introduced by Representative Stephen Dyer (D-43rd District) and co-sponsors Mark Okey (D-61st District), John Domenick (D-95th District), Raymond Pryor (D-85th District), and Robert Hagan (D-60th District) on March 23, 2010. H.B. 470 would create a cause of action against employers that discriminate against individual job applicants or employees because they smoke tobacco. If enacted, H.B. 470 would prohibit employers from refusing to hire individuals or otherwise discriminating against individuals with respect to the terms, conditions, and privileges of employment because they smoke tobacco. The bill does not impact an employer’s ability to establish policies prohibiting smoking “or smelling like tobacco smoke” during work hours.

The bill does not explicitly include any private remedies for the applicant who is not hired or the employee who is fired. Instead, any employer who violates this provision is subject to civil liability and is subject to escalating fines, including (1) $25,000 for the first offense, (2) $50,000 for the second offense, and (3) $100,000 for each subsequent offense. 

H.B. 470 is still in the early stage of the legislative process. However, we will continue to keep you updated if the bill gains any traction.

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The Federal Motor Carrier Safety Administration has issued a notice of proposed rulemaking that would permanently ban text messaging by commercial motor vehicle (CMV) drivers while operating in interstate commerce and to impose sanctions, including civil penalties and disqualification from operating CMVs in interstate commerce, for drivers who fail to comply with this rule. Additionally, motor carriers would be prohibited from requiring or allowing their drivers to engage in texting while driving.

The term "texting" is broadly defined to mean "manually entering alphanumeric text into, or reading text from, an electronic device." Texting would include, but not be limited to, short message service, emailing, instant messaging, a command or request to access a World Wide Web page, or engaging in any other form of electronic text retrieval or entry, for present or future communication.

The definition of texting would not include: (i) Reading, selecting, or entering a telephone number, an extension number, or voicemail retrieval codes and commands into an electronic device for the purpose of initiating or receiving a phone call or using voice commands to initiate or receive a telephone call; (ii) Using an in-cab fleet management system or citizens band radio; (iii) Inputting or selecting information on a global positioning system or navigation system; or (iv) Using a device capable of performing multiple functions for a purpose that is not otherwise prohibited in this rule. For purposes of the rule, the term "electronic device" includes, but is not limited to, a cellular telephone; personal digital assistant; pager; computer; or other device used to input, write, send, receive, or read text.

Finally, the proposed rule defines driving to include operating a commercial motor vehicle, with the motor running, including while temporarily stationary because of traffic, a traffic control device, or other momentary delays. Driving does not include operating a commercial motor vehicle with or without the motor running when the driver has moved the vehicle to the side of, or off, a highway and has halted in a location where the vehicle can safely remain stationary.

Comments (identified by docket number FMCSA–2009–0370) may be submitted on or before May 3, 2010, by any one of the following methods:

Federal eRulemaking Portal:
www.regulations.gov

Fax:
202–493–2251

Mail:
Docket Management Facility (M-30)
U.S. Department of Transportation
West Building Ground Floor, Room W12–140
1200 New Jersey Avenue, SE., Washington, DC 20590-0001.

Hand Delivery:
Same as mail address above, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is 202–366–9329.

A list of the states (19 to date) that currently prohibit texting while driving can be found at the following USDOT Web site: http://www.distraction.gov/state-laws.

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On March 29, 2010, the Ohio Bureau of Workers’ Compensation voted to adopt its new Drug-Free Safety Program (DFSP) in an attempt to prevent workplace injuries attributed to the use or abuse of drugs and alcohol. The new program will replace the current Drug-Free Workplace Program and the Drug-Free EZ Program as of July 1, 2010.

The DFSP extends eligibility to more employers and eliminates the current program’s participation limit of five years. Other features of the new program include:

• Two levels of participation – basic and advanced – which offers premium discounts ranging from 4% to 7% (the advanced level will require random drug testing of 25% of employees);
• The new program will allow some small discount stacking for group rated employers participating at the advanced level – specifically, a group rated employer is not eligible for the base DFSP discount, but is eligible for the incremental 3% discount if it participates in DFSP at the advanced level;
• One application period annually for private employers – May 31, 2010 for the current year and the last business day of April for subsequent years;
• Required employee education (1 hour annually) and supervisor training (2 hours annually); and
• Termination v. Second Chance Agreement – for the basic program level, employers can terminate for the first positive result but for the advanced program level, employers must provide a second chance agreement for the first positive result, except under certain circumstances.

Additional program information, including an application for interested employers, will be available April 2, 2010 at www.ohiobwc.com.

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Publicly traded companies need to remain vigilant to avoid employment-related retaliation against employees who may complain about company violations of accounting controls and possible violations of SEC related rules or regulations. In a whistleblower case under SOX, OSHA recently ordered Tennessee Commerce Bank to reinstate its former chief financial officer and pay him more than $1 million in back wages, interest, attorneys fees and compensatory damages.

Apparently fostering the Obama administration’s push for stricter enforcement of Department of Labor and financial industry regulations, an Assistant Secretary of Labor for OSHA issued this statement about OSHA’s order: “This case clearly shows the Department’s commitment to ensuring individuals are provided the protections and relief forwarded by the laws and sends a strong message that retaliatory actions will not be tolerated.”

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Following a year-long contentious debate, Congress finally passed the President’s top domestic agenda item: Health Reform.

Sunday, the House of Representatives passed the Senate version of the Health Reform Bill by a slim margin (three votes more than required) and no Republican support. The Bill contains broad reforms that make numerous significant changes to the ways in which healthcare is accessed, delivered and financed. Some of the noteworthy changes (and effective dates) for employers to consider are the following:

•  Employers with 200 or more employees that sponsor a health plan must automatically enroll all employees in the employer-sponsored plan. Employees may opt-out of the employer plan if they demonstrate they have coverage from another source. (January 1, 2014)
• Employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee equal to the lesser of $3,000 for each employee receiving a premium tax credit or $750 for each full-time employee. (January 1, 2014) (Note this provision may be modified in the reconciliation bill discussed below.) 
• Employers that offer coverage to employees must provide a “free choice voucher” to employees with incomes less than 400% of the federal poverty level (currently the federal poverty level is $10,830 for an individual, and $22,050 for a family of four) if that employee’s share of the premium exceeds 8% but is less than 9.8% of the employee’s income and the employee enrolls in a health plan through the newly created Exchange. The amount of the free choice voucher is the amount the employer would have paid for the employee under the employer-sponsored plan. Employer’s providing free choice vouchers are not subject to the assessment for employees that receive premium credits for coverage purchased through the Exchange. (January 1, 2014)
• Employers with 25 or fewer employees and average annual wages of less than $50,000 per employee will be eligible for a tax credit. The full amount of the tax credit is phased in over several years, and the tax credit phases out as firm size and average wages increase. (January 1, 2010) 
• Creates a temporary reinsurance program for employers that provide health coverage to retirees (55-64) not eligible for Medicare. The reinsurance program provides for payment of claims at 80% of eligible expenses incurred between $15,000 and $90,000. (June 21, 2010 through January 1, 2014) 
• Over-the-counter drugs will no longer qualify for reimbursement under a health reimbursement account or health flexible spending account. (January 1, 2011) 
• The tax on distributions from health savings accounts that are not used for qualified medical expenses increases to 20%. (January 1, 2011)
  Contributions to health flexible spending accounts will be limited to $2,500 (subject to certain adjustments). (January 1, 2011)
  Increases the Medicare Part A payroll tax to 2.35% on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing joint returns. (January 1, 2013)
  Tax deduction for employers who receive Medicare Part D drug subsidy payments is eliminated. (January 1, 2013)

The House of Representatives also passed a bill which includes a number of proposed amendments to the Health Reform Bill it approved on Sunday. Over the coming days, those amendments will be considered in the Senate through a process known as reconciliation, which allows bills to be approved based upon a simple majority vote (51) rather than the usual 60 vote super majority required in the Senate. The reconciliation process is likely to generate considerable controversy and debate and should be closely followed for any further modifications to the recently approved Health Reform Bill. 

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Ohio employers will want to pay close attention to H.B. 434, which was proposed by House Representative Kenny Yuko, D-Richmond Heights, last week. The Bill is similar in nature to the Worker Adjustment and Retraining Notification Act ( “WARN”), but goes further than the federal law in several respects. For example, the Bill would require an employer in Ohio laying off 25 or more employees in any 30-day period to give at least 90-days’ advance written notice of the layoff to affected employees, local workforce policy boards, and certain state departments and local elected officials. The notice period would be expanded to 120 days for employers planning to lay off 250 or more employees. Also, the penalties for violations include double back pay for all affected employees, as well as the full value of their employee benefits.

The Bill does contain exceptions similar to those found in WARN, including exceptions for temporary facilities, layoffs arising from “circumstances that were not reasonably foreseeable,” caused by “physical calamity, natural disaster, or act of war,” or where the employer can show that "notice would have blocked incoming capital which might have prevented the layoff.” 

H.B. 434 is still in the very early stages of the legislative process. However, because it would expand employer advance notice obligations in several respects beyond WARN’s requirements, it bears watching – and perhaps warrants a call to your State representative.  We will continue to keep you updated.

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On Monday, February 1, 2010, the U.S. Department of Labor (DOL) released its budget for the 2011 fiscal year. In a 95-page summary of the new budget, the DOL elaborated upon its plans for the approximately $14 billion it seeks in discretionary budget authority. According to the summary, the DOL will focus its efforts in 2011 on supporting reform of the Workforce Investment Act, rebuilding Worker Protection Programs, initiating a multi-agency legislative proposal to establish automatic workplace pensions, and boosting funds for unemployment insurance integrity efforts. From our perspective, however, the two most notable aspects of the 2011 budget are its provisions concerning employer misclassification of workers and paid family leave. 

The DOL proposes to devote $25 million to a joint Labor-Treasury Misclassification Initiative that will enable the agency to better detect, investigate, and prosecute employers who misclassify their workers, and to offer competitive grants to boost states’ incentives to address the problem. In addition, the DOL proposes to further limit the possibility of employer misclassification by:

1. requiring employers to demonstrate that their employees are classified correctly,
2. closing the safe harbor created by Section 530 of the Revenue Act of 1978, and
3. making misclassification of employees an explicit violation of the FLSA.  

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As you will recall from my earlier post, Congress and the President extended the COBRA subsidy, originally a part of the American Recovery and Reinvestment Act of 2009 (ARRA) (the stimulus bill), to individuals involuntary terminated through February 28, 2010 (from December 31, 2009) and the length of the subsidy to 15 months (from 9 months). 

This COBRA subsidy extension will require new notices be sent to individuals involuntarily terminated (and otherwise qualifying under ARRA as an “assistance eligible individual” (AEI)). These model notices were released yesterday, and, in many cases, AEIs must be notified by February 17, 2010. The Department of Labor revised its General Notice to reflect the COBRA subsidy extension. This notice is to be used for all AEIs who have not already received a general COBRA notice. The Department of Labor also issued a model Premium Assistance Extension Notice to be provided to:

1. Individuals qualifying as AEIs as of October 31, 2009 and individuals who experienced a termination of employment on or after October 31, 2009 and lost health insurance coverage (unless they were already provided a timely, updated General Notice). This notice must be provided by February 17, 2010.
2. a) Individuals whose original 9 months of COBRA subsidy ended prior to December 19, 2009 and who are still eligible for some portion of the extended 15 months of COBRA subsidy and (b) individuals whose 9 months of COBRA subsidy ends or ended after December 19, 2009. These individuals must be notified within 60 days of the termination of the 9 month COBRA subsidy period or, for individuals whose COBRA subsidy ended prior to December 19, 2009, prior to February 17, 2010. 

Both model notices are available at: http://www.dol.gov/ebsa/COBRAmodelnotice.html. In addition, the Department of Labor has updated its fact sheets, posters, and frequently asked questions available at: www.dol.gov/COBRA.

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As concerns about the potential scope of the H1N1 flu continue to grow, one question we keep hearing from clients is whether employees who believe they have contracted H1N1 in the workplace may have compensable workers' compensation claims. In the vast majority of cases, we believe the answer will be a resounding "No."

Ohio defines an occupational disease as:

"a disease contracted in the course of employment, which by its causes and the characteristics of its manifestation or the condition of the employment results in a hazard which distinguishes the employment in character from employment generally, and the employment creates a risk of contracting the disease in greater degree and in a different manner from the public in general."

Therefore, for instance, the office worker who contracts H1N1 because somebody in the next cubicle had it does not have a compensable claim. The situation is no different than the seasonal flu from year to year.

One likely exception to my general proposition come to mind:  healthcare workers, who by the nature of their work may be exposed to H1N1 in a greater and different manner than members of the general public. Childcare workers also may have an outside chance at establishing a viable claim. Even then, however, most healthcare and childcare workers will still have a difficult time proving actual causation; that is, that they actually contracted H1N1 as a result of their work rather than from a sick family member, at a restaurant or some other public place.

The H1N1 vaccine may also pose a potential risk if it ever becomes widely available. Workers who experience side effects from getting an H1N1 vaccine may claim they are entitled to workers' compensation benefits. In the absence of evidence that the employer actually required its employees to get vaccinated and demonstrated illness based on any known side effects, these claims should be rejected.

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Sports fans, you can breath easier about your fantasy football lineups -- Michael Vick is out of the doghouse with the U.S. Department of Labor, presuming he complies with a consent judgment. We had cautioned in an earlier post that Vick’s release from prison did not necessarily mark the end of his government obligations, given DOL allegations of ERISA violations. As explained in the DOL’s press release, the DOL’s complaint alleged that Vick and others improperly removed $1.35 million of pension plan assets to help pay the criminal restitution imposed on Vick after his conviction for unlawful dog fighting, and to help pay his attorney in his bankruptcy cases. Vick and his company, MV7 LLC, agreed to repay at least $416,461.10, pay a fiduciary to manage the plan until its termination, and pay a monetary penalty. The $933,539 difference between the amount alleged in the complaint and the repayment amount is not explained in the press release, though perhaps that is because Vick agreed to forfeit his share of the pension benefits. Vick can play football, but he is permanently barred from being an ERISA plan fiduciary.

Hopefully we don’t need to caution our readers to refrain from participating in unlawful dog fighting, and from “improperly removing” pension plan assets to buy their way out of trouble. But there is one sentence in both this press release and another press release about an Ohio mortgage broker that hits closer to home: “In fiscal year 2008, [DOL] achieved monetary results of $1.2 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.” If someone out there is essentially stealing well over $1.2 billion per year of employee money (since this is just the amount recovered), shouldn’t we be appalled at the systemic flaw that allows this to happen? But is that really what is happening, or do employers need to be more worried about how DOL is getting to this $1.2 billion per year figure? A significant portion of this large dollar figure is related to participant contributions that EBSA argues “were not timely contributed” to a benefit plan.

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"The most important thing you can do to prepare your business is to have a written plan."

The federal Department of Homeland Security, in conjunction with the Center for Disease Control (CDC) and the Small Business Administration (SBA), provides this advice to small businesses in its recently released, Planning for H1N1 Influenza: A Preparedness Guide for Small Business. The Guide suggests a seven step process for developing your written plan:

1. Identify a workplace coordinator
2. Examine policies for leave, telework, and employee compensation
3. Determine who will be responsible for assisting workers who become sick at the workplace
4. Identify essential employees, essential business functions, and other critical inputs required to maintain business operations should there be disruptions during the 2009 H1N1 flu outbreak
5. Share your pandemic plans with employees and clearly communicate expectations.
6. Prepare business continuity plans in case the H1N1 flu outbreak causes widespread absenteeism or other operations changes
7. Establish an emergency communications plan.

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You may have noticed a spate of recent articles and announcements indicating that “all federal contractors” will be required to begin using the federal government’s E-Verify system beginning September 8, 2009. Originally set to take effect on January 15, 2009, there have been three prior delays in implementing mandatory use of E-Verify for federal contractors. On August 26, however, a federal district judge rejected a request for further delay, so it appears the E-Verify regulations will actually go into effect on September 8. (See our recent blog post.) In light of this, current contractors should start thinking about how E-Verify will affect them – if at all.  

Even though many of the articles on this topic indicate that “all federal contractors” are required to start using the system on September 8, the reality is that not all contractors will be covered and that even covered contractors have time after September 8 to enroll and start using E-Verify. 

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When the Ohio Supreme Court agreed to hear the appeal in Allen v. Totes/Isotoner, it was widely expected that the Court would address the question of whether Ohio's pregnancy discrimination laws required employers to allow a woman who is breastfeeding to take unscheduled lactation breaks. Instead, a fractured court rendering five separate opinions (as well as the conclusion of Justice Lanzinger that she would have dismissed the appeal as having been improvidently accepted) dodged the question. 

The per curium opinion, which was joined in only by Justices Lundberg Stratton, O'Donnell and Cupp, upheld summary judgment in favor of Isotoner on the ground that Isotoner terminated Ms. Allen for what she agreed were unauthorized breaks from her work station. As a result, the per curium decision stated that it was unnecessary for the Court to address the issue of whether discrimination due to lactation was prohibited by Ohio's discrimination laws.

Justice O'Donnell then wrote separately in an opinion joined by Justices Lundberg Stratton and Cupp to emphasize his view that in light of the facts in the Allen case, any opinion of the Court on the question of whether "discrimination due to lactation" would have been an improper advisory opinion.

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Concerns about H1N1 Influenza are beginning to creep back into everyone's consciousness as summer is drawing to a close. The U.S. Department of Health and Human Services has issued updated guidance for businesses and employers, which can be found at:

CDC Guidance for Businesses, Employers, and Workplaces to Plan and Respond to 2009 H1N1 Influenza

Preparing for the Flu: A Communication Toolkit for Businesses and Employers

Employers should be ready to implement strategies to protect their workforces while ensuring continuity of operations. Most of the recommendations boil down to simple common sense:

1. Encourage workers who are sick to stay home (or go home if they've reported to work);
    
2. Encourage good hygiene in the workplace;
    
3. Prepare for increased numbers of employee absences due to illness in employees and their family members, and plan ways for essential business functions to continue;
    
4. Prepare for the possibility of school and daycare dismissal and closure; and
    
5. Encourage workers to get vaccinated.

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EFCA, as introduced in Congress in February 2009, includes sweeping changes to the rules for union organizing. (Please read our earlier blogs for further discussions on EFCA.)  The two most controversial original EFCA provisions are: (1) card-check recognition, which would allow unions to demand recognition rights based solely on union cards that they can pressure employees to sign through face-to-face interaction; and (2) mandatory binding arbitration to resolve impasse in first labor contract negotiations. The card-check provision has been especially controversial because it would result in unions obtaining bargaining rights without a secret ballot election. No doubt sensing that the general public favors secret-ballot elections, a number of moderate Democratic senators have begun to pull back support for card-check recognition as EFCA nears debate in the Senate.

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On July 15, 2009, the EEOC published “Understanding Waivers of Discrimination Claims in Employee Severance Agreements,” a document directed to employees facing layoffs. The publication is not apparently intended to change existing regulations, but rather to summarize the legal requirements for severance agreements under the ADA, Title VII, the Equal Pay Act, and, separately, the Age Discrimination in Employment Act.

As noted by the EEOC’s summary, in order to minimize the risk of potential litigation, many employers provide laid-off employees with optional severance agreements, by which employees may obtain certain compensation or benefits in exchange for releasing the employer from liability. The EEOC document specifically addresses the validity of such releases, and it is therefore useful reading for employers as well.

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Back in December 2007, we wrote about the NLRB's decision in The Guard Publishing Company, d/b/a The Register-Guard, 351 NLRB No. 70, which held that employees do not have a protected right to use employer email systems for solicitations or communications regarding union-related topics. In addition, the Board applied a new standard for determining when employers discriminatorily enforce email policies and, thus, violate Section 8(a)(3) of the NLRA. Specifically, as to the 8(a)(3) standard, the Board held that, in determining whether a policy had been discriminatorily enforced against the union, it looked to whether there had been "unequal treatment of equals."  Then, the Board upheld Register-Guard's enforcement of its email policy against an employee who was soliciting support for the union because there was no evidence that the company had permitted solicitation on behalf of other non-union groups (even though it had permitted various other personal uses of the email system, including personal solicitations for sports tickets and the like.) 

On July 7, 2009, however, the Court of Appeals for the D.C. Circuit refused to uphold the Board's conclusion as to whether the employer discriminatorily enforced its email policy but did not explicitly overrule the standard announced by the Board in December.   (On appeal, the union did not challenge the lawfulness of the email policy itself).   In short, the court held that the the company's discipline of an employee for using the email system to solicit employees to wear green in support of the union and to seek volunteers to help with the union's entry in a city parade violated 8(a)(3). Calling the distinction between organizational and personal solicitation a "post-hoc invention" that did not actually exist in the company's email policy, the court found that the company policy prohibiting non-work-related solicitations "made no distinction between solicitations for groups and for individuals."  Equally significant, the court noted that the company’s disciplinary warning" did not invoke the organization-versus-individual line drawn by the Board. To the contrary, the company told the employee in question to “refrain from using the Company’s systems for union/personal business.”

Because it is so fact-specific, the court's decision should not cause employers much concern.   In fact, the email policy at issue, which prohibited use of the company's communications systems “to solicit or proselytize for commercial ventures, religious or political causes, outside organizations, or other non-job-related solicitations,” would seem to be equally applicable to personal solicitations of a non-work nature as it is to organizational solicitations.   The good news here is that the court's decision does not disturb the underlying premise that employers may prohibit union access to its email system so long as it does so in a nondiscriminatory manner.  

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It's hard to believe that fewer than 10 years ago, there was widespread concern that our computers were all going to blow up and there would be anarchy in the streets. Since the clock struck midnight on January 1, 2000, we have seen an unprecedented technology boom that has had a widespread impact on the workplace. Remember the anxiety caused by cameras on our cell phones due to their impact on protecting trade secrets and our privacy in the locker rooms? Since then, we have grown comfortable with workers using laptops offsite though we still need to concentrate better on keeping track of them and what is on them!

Now, the social media craze -- Facebook, Linked-In, Twitter, etc. -- seems to be causing employers the most recent concern. As editor of employerlawreport.com, I have come to achieve a certain comfort level with social media, but I think that what primarily is keeping many employers up at night is fear of the unknown. That is why I'm going to summer camp! Starting this past Tuesday and running through the second Tuesday in August, I will be attending Social Media Summer Camp, a Columbus Business First initiative. The first session, "Social Media 101," provided a nice overview of everything that is out there and how businesses have been and could be using social media to market their services and products. The attractiveness of social media from a marketing perspective is often easy to see and hopefully we will be able to use some of what we learn at camp to improve our blog and to otherwise better communicate with our clients and friends.

In addition, I'm keeping my employment lawyer hat on to identify potential issues for employers that are encouraging their employees to "friend" others or to "tweet" or are attempting to regulate how and when they do it. This past Tuesday's session left me with one particular impression: Whether or not companies choose to use social media to foster their business, they would be wise to monitor the various social media outlets to make sure that others, including disgruntled and former employees, are not messing with their messages or creating unwanted ones.

So that's why I'm going to summer camp. I'm taking my laptop with me, but fortunately for all involved, I'm leaving my bathing suit at home.

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On June 29, 2009, the Supreme Court addressed a provocative question about the current state of workplace diversity in the United States. In the controversial Ricci v. DeStefano decision, the Court determined by a vote of 5-4 that only in very narrow circumstances can public employers engage in disparate-treatment discrimination to avoid violating the disparate impact provision of Title VII of the Civil Rights Act. In order to make a race-conscious preventative decision, an employer must have a strong basis in evidence that a given selection method was deficient and that discarding that method’s results is necessary to avoid creating a disparate racial impact.

Title VII protects employees from two types of discrimination based upon race, color, religion, sex, and national origin: intentional acts of discrimination (disparate treatment), and facially neutral policies and practices that have a disproportionate adverse effect on minorities (disparate impact).   If an employee makes a prima facie showing of disparate impact discrimination, the burden then shifts to the employer to prove that the practice in question is job related and consistent with business necessity. Even if the employer meets this burden, a plaintiff may still succeed by showing that the employer refuses to adopt an available alternative employment practice that has a lesser disparate impact and serves the employer’s legitimate needs. Ricci posed the question of under what circumstances an employer may take race-conscious action to avoid disparate-impact liability given this statutory scheme.

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Ever wonder if you can require an employee to split the costs of mandatory arbitration? The Sixth Circuit reinforced its 2003 en banc decision that allows for cost-splitting provisions in arbitration awards in the decision it issued Tuesday in the case of Mazera v. Varsity Ford Services, LLC et al. Of course, the court’s decision is not simply an affirmation that cost-splitting provisions are okay—rather, it is an affirmation that the validity of these provisions must be assessed on a case-by-case basis.

In this case, Omari Mazera was fired from his job as a car porter at Varsity Ford Services, LLC (“Varsity”). Mazera filed a lawsuit alleging that Varsity had discriminated against him on the basis of his race and disability; he also moved the district court to declare that the arbitration provision in Varsity’s employee handbook was unenforceable. 

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In a decision released May 15, 2009, the U.S. Court of Appeals for the District of Columbia upheld a Department of Transportation (DOT) regulation that requires employees who are returning to safety-sensitive duties after having completed a drug treatment program due to failing or refusing to take a drug test, to submit to return to duty and follow up testing under "direct observation" conditions. This decision and the regulation it upholds applies to employers in the aviation, rail, motor carrier, mass transit, maritime and pipeline industries that are subject to the DOT drug-testing regime. Under the regulation’s "direct observation" procedures, the employer must require a same-gender observer to “watch the urine go from the employee’s body into the collection container.” To comply, employees must raise their shirts above the waist and lower their clothing so as to expose their genitals and allow the observers to verify the absence of any devices that would permit the employee to cheat the test. 

Previously, the employer had the option to require direct observation, but this was not mandatory under the former regulation. Concerned that employers were reticent to require direct observation and in light of the rise in commercially available devices, such as the "Whizzinator," that enable people to cheat on their drug tests, the DOT promulgated this new regulation requiring direct observation for all return to work and follow up tests conducted under the DOT's auspices as of November 1, 2008.

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On May 18, 2009, Representative Rosa L. DeLauro, a Democrat from Connecticut, introduced the Healthy Families Act of 2009 (H.R. 2460) in the U.S. House of Representatives. The bill, which is largely the same as bills issued in prior sessions of Congress, would require employers with more than 15 employees to provide workers with up to 56 hours of paid sick leave each year. Under the bill, workers would accrue paid sick leave at the rate of one hour for every 30 hours worked, could begin using the paid sick leave after 60 days of employment, and could roll over unused sick leave into the next calendar year. Similar to the proposed Ohio legislation that was withdrawn before the 2008 November elections, employers would not be permitted to ask for written documentation of the need for leave until after the employee has missed three consecutive days.

Most of you will recall that last year's Ohio legislative proposal was withdrawn following political negotiations with Governor Strickland's office due to concern that the bill would devastate Ohio's business climate. While H.R. 2460 would not appear to disproportionately impact Ohio, it would impact more Ohio employers than the proposed Ohio legislation would have impacted since the Ohio law would not have required employers with 25 or fewer employees to provide paid sick leave. At a time when American businesses, particularly small businesses, are still reeling from the economic downturn, federally mandated paid sick leave -- while perhaps laudable in its intent -- looks like it will create more problems than it cures. The change in Presidential administrations and the make up of Congress, together with the concerns over the H1N1 flu virus, suggest that this might be the year that mandated paid sick leave passes. 

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We have been receiving more and more questions from human resources professionals asking how the ADA might impact their preparation for a potential pandemic flu. Now the EEOC has issued technical guidance on the topic, focused primarily on employers’ rights to make medical inquiries and require medical examinations of applicants and employees.  With respect to applicants, the EEOC notes that the ADA operates normally to preclude all disability-related questions and medical exams until after a conditional offer has been made.  With respect to current employees, who can be required to respond to medical inquiries or undergo medical exams only if they are job-related and consistent with business necessity, however, the EEOC recommended a model survey of employees that could be issued to all employees in preparation for a pandemic. The model survey is reprinted below:

ADA-Compliant Pre-Pandemic Employee Survey:

Directions:   Answer “yes” to the whole question without specifying the reason or reasons that apply to you.  Simply check “yes” or “no” at the bottom.

In the event of a pandemic, would you be unable to come to work because of any of the following reasons:
 

    If schools or day-care centers were closed, you would need to care for a child; 

    If other services were unavailable, you would need to care for other dependents;

    If public transport were sporadic or unavailable, you would be unable to travel to work,  and/or:

      If you or a member of your household fall into one of the categories identified by CDC as being at high risk for serious complications from the pandemic influenza virus, you would be advised by public health authorities not to come to work (e.g., pregnant women; persons with compromised immune systems due to cancer, HIV, history of organ transplant or other medical conditions; persons less than 65 years of age with underlying chronic conditions; or persons over 65).

Answer:   YES __________   NO __________
 

The EEOC’s guidance also clarifies its position that employers may enforce rules requiring employees to behave in a hygienically appropriate manner to avoid the spread of the flu, to wear personal protective gear such as face masks, and to require employees to work from home.
 

In a separate release cryptically titled “Employment Discrimination and the 2009 H1N1 Flu Virus (Swine Flu),” the EEOC reminds us that Title VII “prohibits employment discrimination on the basis of national origin, for example, discrimination against Mexicans.” The “guidance” states nothing else as it relates to Title VII. Presumably, the EEOC wants to remind employers not to direct any employment actions at workers of Mexican descent out of a fear or concern that they may be more likely to carry the H1N1 flu virus.

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More and more federal non-employment statutes, regulations and programs are coming with strings attached for human resources professionals to grapple with. For instance, who would have expected that the federal plan for rescuing troubled financial institutions would have anything to do with immigration, that the federal stimulus statute would include whistleblower provisions and changes to COBRA benefits laws, or that consumer protection laws would contain whistleblower provisions? Now comes the Customs and Border Protection's (CBP's) Customs Trade Partnership Against Terrorism (CTPAT) program, which grew out of September 11 to help improve supply-chain security, and its employment-related provisions. CTPAT is a voluntary partnership program between the private sector and CBP to secure the supply chain for products entering commerce in the United States. Many view CTPAT certification as the equivalent of an ISO certification, and it can be a significant marketing tool. Companies that want to obtain CTPAT certification, in addition to implementing various security measures, must meet certain minimum criteria for personnel security including background checks, reference checks, exit interviews, procedures for providing employee ID, keys and fobs etc. If you are a human resources professional in the transportation and logistics industry, you should check with the business or operations side of your organization to find out whether your company is planning to participate in the CTPAT program so that you can get a jump on aligning your employee security procedures with the program's requirements.

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Now that we have the first confirmed case of swine flu here in Ohio, it makes sense to dust off the guidance we received from the U.S. Department of Labor and the Center for Disease Control when the avian flu was prompting concerns about a pandemic flu in the United States. Thus far, the confirmed cases of swine flu in the United States appear to have been relatively mild, but employers nevertheless should prepare to do their part to reduce the threat of pandemic flu and to respond should their workplaces be hard hit.

Those employers who want to be ahead of the game if the outbreak becomes more widespread should review the attached handbook entitled Guidance for Preparing Workplaces for an Influenza Pandemic, which was prepared by OSHA back in 2007. The handbook contains common sense advice for all employers to help reduce the risk of spreading the disease. For most employers, the recommendations are not rocket science nor difficult to implement. They mostly involve encouraging sick employees to stay home, encouraging basic hygiene practices in the workplace, and encouraging "social distancing" (i.e. avoiding close contact and crowds of people). The handbook also sets forth more extreme recommendations for employers with a medium exposure risk because of frequent close employee contact with the general public and for employers with high exposure risk due to frequent close employee contact with infected individuals. For healthcare workers and employees, OSHA also issued a handbook in 2007, which can be accessed here.  If the CDC and/or OSHA issue any further guidance in light of this most recent flu outbreak, we will let you know.

Though, the risks of pandemic flu still are being downplayed at this point, employers may also want to revisit their disaster plans for continuing operations in case of widespread employee absences.

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Many executive compensation arrangements, including nonqualified deferred compensation plans, employment agreements, and equity compensation plans, are subject to strict deferral election and payment timing rules under Internal Revenue Code Section 409A. Failure to comply with these rules results in an employee incurring immediate income inclusion of amounts deferred, an additional 20% penalty tax on these amounts, and interest. The IRS and Treasury Department required all plans subject to Code Section 409A to be amended no later than December 31, 2008. More recently, the Department of Treasury and the IRS have issued proposed regulations that explain how to calculate amounts includible in income when Code Section 409A is violated and the resulting penalties and interest. The IRS also issued additional guidance that offers relief from these penalties in many circumstances if employers take corrective action by December 31, 2009.

Click here for complete alert.

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Back in February, Ohio Attorney General Richard Cordray announced a collaboration between his office and the Ohio Department of Job and Family Services, Ohio Department of Taxation, and Ohio Bureau of Workers’ Compensation to release and exchange confidential information to reduce the number of employers that are misclassifying workers as independent contractors. A report issued at the same time by the Attorney General's office estimated that the extent of annual costs to the state from worker misclassification totals $100 million in payments for unemployment compensation, more than $510 million in BWC premiums and almost $180 million in forgone state income tax revenues.

With the Ohio Attorney General's enforcement eye now focused on the costs of misclassification, it is important for Ohio employers to understand the potential consequences if they are found to have misclassified workers as independent contractors. First and foremost, they risk potential federal, state, and local taxes, fines, and penalties and workers compensation premiums and penalties. In addition, several multi-million dollar lawsuits have been brought against employers for failing to pay proper wages, including overtime, under the FLSA. Finally, employers with ERISA retirement and welfare benefit plans that do not contain "fail safe" provisions run the risk that misclassified workers will be found to be employees who are retroactively entitled to benefits under those plans. Alternatively, as to plans that do contain fail safe provisions, employers may need to redo the non-discrimination testing to make sure that each plan's tax-qualified status is not jeopardized by the omission of those employees. 

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On Tuesday, March 31, 2009, the IRS issued its Notice 2009-27 providing additional guidance under the American Recovery & Reinvestment Act of 2009 (“ARRA”) relating to premium subsidies for COBRA coverage. The Notice addresses a number of issues, including the question of who is eligible for the subsidy, the method for calculating the premium reduction, and the length of the entitlement to the subsidy. [View the notice here.]

Of particular interest to employers is the guidance concerning what will be considered an “involuntary termination” entitling persons to the premium subsidy. The IRS gives this broad definition: “An involuntary termination means a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee’s implicit or explicit request, where the employee was willing and able to continue performing services.” Although it is a mouthful, that sounds simple enough. But, further language in the guidance and some of the specific examples show that there is plenty of room for disagreement about what is an involuntary termination. Of particular interest is language saying that the government will consider a resignation to be an involuntary termination if the resignation is “due to employer action that causes a material negative change in the employment relationship for the employee.”

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The U.S. Department of Labor (DOL) has released four model notices for use by employers in connection with requirements of the American Recovery and Reinvestment Act (ARRA) (see Employment Law Alert – “Broad COBRA Changes in 2009 Stimulus Bill – What Should You Be Doing Now?” – March, 2009). The model notices are available on the DOL web site: http://www.dol.gov/ebsa/COBRAmodelnotice.html. Employers and plan administrators should use the model notices as a guide, but those notices will require customization to meet the circumstances of particular employers and plans. Also, in the Model election forms there is a technical error in the way the election period is described. The Model election forms state that an election must be made within 60 days of notice. In fact, COBRA regulations allow for elections within 60 days of the date of notice or the date that coverage will end due to the qualifying event, whichever is later. Employers and plans using the Model Notices as a guide should correct that error.

The DOL and Internal Revenue Service have posted on their websites answers to common questions regarding the COBRA changes: http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionER.html and http://www.irs.gov/newsroom/article/0,,id=204708,00.html.

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The Employee Free Choice Act, or EFCA, was introduced in Congress on March 10, 2009. The bill, introduced as H.R. 1409 and S. 560, is identical to last year’s bill. On February 26, we discussed the Secret Ballot Protection Act (see post here), which was proposed by Republicans as a preemptive strike against EFCA and which would prohibit employers from recognizing or bargaining with a union that had not won a secret-ballot election of employees. Democrat Joe Sestak, Congressman from Pennsylvania, has also introduced legislation targeting the relationship between unions, employees, and employers. Rep. Sestak introduced the National Labor Relations Modernization Act (NLRMA) (H.R. 1355) on March 5, 2009. 

The NLRMA mirrors many of the provisions of EFCA but does not include one key provision: the NLRMA does not contain the card-check provision that would eliminate employees' right to choose a union through a secret-ballot election. The NLRMA does, however, contain EFCA’s increase of damages for employers who commit unfair labor practices, a provision similar to EFCA’s regulating the timeline for negotiating the terms of an initial collective bargaining agreement, and a requirement that the parties submit to binding arbitration if they are unable to reach agreement. The NLRMA also contains a novel section—not included or addressed in EFCA or SBPA—which requires employers, following the setting of an election date, to notify unions of any campaign activity they intend to undertake and to allow unions equal access to employees.

Although EFCA is currently in the nation’s spotlight, there is considerable discourse among the public and Congress about the appropriateness of its card-check provision. If Congress becomes convinced that a card-check provision is not the right way to go, NLRMA or some other compromise bill might provide the consensus necessary to pass some sort of labor reform legislation. One thing seems clear. In order for any compromise to get the support or organized labor, it will have to include some means to make it easier for unions to organize workers and some provision for binding dispute resolution when bargaining a first labor contract. These are the things considered by unions to be key to their goal of increased union representation, a goal supported by the White House, by union supporters in Congress, and by the newly appointed Secretary of Labor. Employers should begin now to plan and take steps to prepare for what is certain to be a very concerted increase in union organizing activity.

Among the essential steps are manager training, designed to make managers especially aware of the likely changes in the law, but more important to make them aware of the specific arguments that are used by union organizers to get cards signed and the sort of manager behavior that will make it more likely those union arguments fail. Employers should also undertake a concerted review of policies and practices to be sure that they have in place those rules that make it more difficult for union organizing to succeed and more important, those policies that demonstrate to employees a commitment to effective communication, fundamental fairness, and genuine worker involvement.

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A termination within three months of an employee’s EEOC charge, combined with a claim that the employer increased its scrutiny of that employee after his charge was filed was enough to prevent summary judgment--even where the employer had refrained from terminating the employee at its first opportunity following his charge. Hamilton v. GE.

Jarrett Hamilton sued GE alleging that he was terminated in retaliation for filing an age-discrimination charge with the EEOC approximately three months earlier. He claimed that after he filed the charge, the company intensified its scrutiny of his work.  Of course, he filed the charge while on a 30-day suspension that had been agreed to after he had been terminated while under a Last Chance Agreement (LCA). The Company did not fire him when the first opportunity to do so arose after he filed the charge but later terminated him for what it said was unacceptable conduct, including refusing work directions from a supervisor and using “unacceptable foul and abusive language.”

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In a press release issued yesterday, the Equal Employment Opportunity Commission (EEOC) reports that, in its fiscal year 2008 (October 1, 2007 – September 30, 2008), there was a 15 percent increase in the number of employment discrimination charges filed against employers. The 95,402 charges filed are more than the number of charges filed in any other one-year period in the history of the agency. The greatest percentage increase was in age discrimination charges, up 28.7 percent from the previous year. Sex discrimination charges were up 14 percent, and race charges were up 11.2 percent. There was a smaller percentage increase in disability charges (9.7 percent), but with the recently-passed amendments to the Americans with Disabilities Act, employers will likely see a significant increase in disability charges in fiscal year 2009. 

The steep increase in discrimination charges was no doubt fueled, in part, by job losses in the beginning stages of the economic recession. The continued down-turn of the economy in the last quarter of 2008 and early months of 2009 makes it almost certain that the number of discrimination charges will continue to increase.

So what does all of this mean for you as an employer? To begin, it is far more likely that employers will be sued or will face discrimination charges as employees are laid off or face other adverse employment actions. An economic reduction-in-force will, very possibly, generate charges or lawsuits. All too often, employers do not exercise the care needed with the decision-making leading up to a reduction-in-force. Careful attention to the process and documentation in the early stages, however, can make legal challenges less likely to occur and can make those that are filed more easy to defend. 

As we’ve discussed before, employers should develop and document a sequential approach from the very earliest stages of the decision-making leading up to a reduction-in-force. Key steps in that approach include:

• Reorganizing or eliminating job duties; 
• Selecting the employees best-qualified to perform remaining job duties;
• Establishing criteria for termination or lay-off decisions that are based on legitimate business reasons;
• Documenting the selection criteria, procedure, and decisions;
• Conducting a statistical review to identify any disproportionate impact on protected class employees and, if a disproportionate impact is shown, carefully reviewing decisions to assure that they are supported by legitimate business considerations.

After these steps have been taken, the company should consider payment of severance to and securing signed release agreements from those who are terminated. It is a mistake, though, to presume that all terminated employees offered severance will sign release agreements and therefore give short shrift to the initial decision-making and documentation steps. All it takes is one terminated employee who refuses to sign a release and, instead, files a charge or a lawsuit to negate the savings of the reduction-in-force through the cost of defense, settlement, or an adverse judgment.

Even if your company is not currently in a reduction-in-force mode, careful attention to all employment decisions is essential to reduce the risk of discrimination charges. Things like frank and candid communication in performance reviews and active involvement by human resource personnel in all adverse employment actions can make it far easier to defend later decisions to terminate in a reduction-in-force. 

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The American Recovery and Reinvestment Act of 2009 (the “Act”) was signed by President Obama on February 17, 2009. This Act includes several significant changes to COBRA that employers will quickly need to address. 

The most immediate and notable impact will be a significant reduction in the COBRA premiums paid by certain employees whose employment is involuntarily terminated (and their spouses and dependents who are COBRA-entitled). These individuals can get a 65 percent government-paid subsidy toward their COBRA premiums. Employers are required to “front” the subsidy by paying the full premium and obtaining a reimbursement via a later payroll tax offset. The subsidy takes effect for COBRA coverage periods beginning after the February 17, 2009 enactment date (March 1, 2009 for most plans). 

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On January 29, the Lilly Ledbetter Fair Pay Restoration Act was the first bill signed into law by President Obama. As discussed in prior blog entries, the new law gives a employee or former employee the right to file a charge of discrimination within 180 days (or 300 days in some states, including Ohio) of their most recent paycheck. The Act overturns a U.S. Supreme Court decision holding that the statute of limitations started to run as soon as an employee received his or her first unfair paycheck. Under the new law, each new paycheck alleged to be discriminatory extends the statute of limitations for an additional 180 (or 300) days. 

The new law will significantly impair the ability of companies to defend claims about old pay decisions in federal court, especially for those employers who have forgotten or have not retained documentation as to why a given pay decision was made in the first place.

To read our client alert on this new law, click here.

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With the FMLA Final Regulations going into effect on Friday, January 16, 2009, we thought it would be a good idea to provide our readers with a single easy place to locate all of the new and revised forms provided by the Department of Labor.

New and Revised Forms:

WH-380-E Certification of Health Care Provider for Employee’s Serious Health Condition (PDF)

WH-380-F Certification of Health Care Provider for Family Member’s Serious Health Condition (PDF)

WH-381 Notice of Eligibility and Rights & Responsibilities (PDF)

WH-382 Designation Notice (PDF)

WH-384 Certification of Qualifying Exigency For Military Family Leave (PDF)

WH-385 Certification for Serious Injury or Illness of Covered Servicemember -- for Military Family Leave (PDF)

 These forms are also available at http://www.dol.gov/esa/whd/fmla/finalrule.htm

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Today the U.S. House of Representatives is expected to vote on and pass two controversial bills affecting employers. Both bills have the strong support of Democrats in Congress and the incoming Obama administration.

The “Lily Ledbetter Fair Pay Act,” which was defeated in 2007 due to a Republican filibuster in the Senate, would effectively and drastically extend the statute of limitations for discrimination claims related to disparate pay practices. Currently, employees are required to sue within 180 days (or, in certain circumstances, 300 days) after alleged discrimination takes place under federal law.   The Act would permit employees to sue for an unlimited number of past pay periods, however long ago they took place, so long as suit is initiated within 180 days of the most recent paycheck claimed to be discriminatory. The Act would overturn a 2007 decision by the United States Supreme Court based on existing law.

The “Paycheck Fairness Act” would amend the existing Fair Pay Act by requiring that employers allow their employees to share salary information with each other for purposes of rooting out gender discrimination. The Act would expressly prohibit employers from retaliating against employees who share such information, and it would make punitive damages available for the first time under the Fair Pay Act.

As both bills are expected to pass the House, it again falls on the Senate to protect employers from these attempts to placate unions and plaintiffs’ lawyers by curtailing employers' rights. The current makeup of the Senate, however, makes another filibuster unlikely, and both bills may be conveniently teed up for President Obama’s signature soon after his January 20 inauguration.

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On Monday, December 15, 2008, the City of Columbus modified its ordinances related to discrimination (Chapter 2331 of the Columbus City Codes). The modifications add five new protected classes to the employment discrimination ordinance: age, disability, gender identity or expression, familial status, and military status. 

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Numerous news reports suggest that President-Elect Obama will name California Congresswoman Hilda Solis (D. Cal.), who was a co-sponsor of the Employee Free Choice Act, as his administration’s Secretary of Labor. Both the SEIU and the AFL-CIO have issued press releases enthusiastically responding to this news. Those of you who are curious or wary about this selection may wish to visit her website at http://solis.house.gov

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As the economy takes a hit and the federal government considers bailouts, unions are chomping at the bit to get the organizing started. An SEIU (Service Employees International Union) internal email was leaked on CNN.com on Monday. In the email, SEIU employees disclose a specific plan to organize employees in the banking industry. The reason for targeting the banking industry? Because “the banking industry is now being infused with billions of dollars.” The email lists specific potential targets for future organizing efforts, including Fannie Mae, Freddie Mac, Chevy Chase/ B.F. Saul, BB&T, SunTrust, Bank of America/ Countrywide, Wachovia/ Wells Fargo, PNC Bank/ National City, and Citigroup. This list does not mean that SEIU will only target these banks. It is understandable that SEIU would target the biggest banks first—but other banks are surely to follow, especially if the union is welcomed by employees who are nervous about the future of their employment. 

As unions anticipate unprecedented changes to federal labor law that will make it far easier for them to organize workers (see EFCA post), economic uncertainty and federal bailouts are providing unions with precisely the talking points they need to convince employees that they are on uncertain ground without a union. As we have been discussing in our EFCA briefing sessions, it is important that employers in all industries develop a proactive strategy now that will protect them against union organizing campaigns in the future.

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The U.S. Department of Transportation’s (DOT’s) previously announced mandatory direct observation of specimen collection for return-to-duty and follow-up controlled substances test (see my October 28th post) has been stayed. The United States Court of Appeals for the District of Columbia Circuit has issued an administrative stay, which temporarily delays implementation of DOT’s direct observation requirement. As a result of the court-ordered stay, DOT has announced that direct observation by DOT-regulated employers for these two types of tests will remain optional and at the employer’s discretion. We will keep you posted on further developments.

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National banks may be missing out on a defense available to them against certain state-law employment claims brought by terminated bank officers. In particular, the National Bank Act (NBA) allows national banks to dismiss officers “at pleasure, and appoint others to fill their places.” This provision has been interpreted to mean that state-law tort and contract wrongful discharge claims by terminated bank officers are preempted and, thus, subject to dismissal. See, e.g., Boesch v. Champaign National Bank, Case No. 24014 at 6 (9th App. Summit Cty., June 30, 2008); Schweikert v. Bank of America, Case No. 06-2137 (4th Cir. April 1, 2008).

The NBA preemption defense applies, however, only when a bank’s board of directors makes the termination decision or delegates the authority to do so and then ratifies the decision. The board’s ratification need not occur before or on the termination date, but it needs to occur as promptly afterward as possible.

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Of course, no one can be certain of the exact workplace effects of Tuesday’s Presidential election results. But, at least one major change in employment law is pretty certain – and it is a change that all employers, large and small, in all industries, should be planning for now.

President-Elect Obama has stated clearly his support for the proposed Employee Free Choice Act (EFCA). His election, together with additional Democratic seats picked up in the Senate and Congress, make the passage of EFCA in 2009 a very strong likelihood. That will mean the most dramatic change in labor law in this country in decades.

As a reminder, there are two significant provisions of the EFCA: First, unions will be able to demand bargaining rights based solely on cards that they can pressure employees to sign face-to-face. The protection of a secret-ballot election will be taken away. Second, if labor negotiations between a union and employer for a first contract reach impasse, an outside arbitrator will dictate the terms of that key first contract.

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Beginning November 1, 2008, employers covered by the United States Department of Transportation’s controlled-substance testing regulations must conduct direct observation collection for “return to duty” and “follow-up” controlled substance tests. These regulations apply to employers governed by the Federal Highway Administration (such as private motor carriers), the Federal Railroad Administration (which regulates railroad operators), the Federal Aviation Administration (which regulates airlines and related industries), the Federal Transit Authority (which regulates companies doing business with mass transit providers), and the Research and Special Programs Administration (which regulates pipeline industries).

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News confirming that the engineer of the Los Angeles commuter train that crashed last week, killing more than 20 people, engaged in text messaging while on the job underscores the need for employers to consider policies banning employee use of cell phones while driving on company business. Though it remains to be seen whether the engineer was texting at the time of the crash, the proliferation of electronic devices, such as Blackberries, and their potentially addictive use is helping to make "distracted driving" an increasing problem on the road. Simply put, distracted drivers are becoming more dangerous to themselves, their passengers and other motorists. Although distracted driving is a public problem that is not unique to employers, employers must recognize that they likely will be the "deep pockets" should a distracted employee cause a car accident. In fact, if the distracted employee also is injured in the accident, a workers’ compensation claim is also a strong possibility.

Some states have enacted laws restricting cell phone use while driving. Ohio is not one of them. As a result, Ohio law enforcement presumably is not obliged to police distracted driving (except in obvious cases of erratic driving). Therefore, to help manage their potential liability from distracted driving, Ohio employers should strongly consider banning the use of cell phones, Blackberries and similar devices while driving on company business as well as from conducting company business on such devices at anytime while driving. Otherwise, whether as a result of employees texting friends while driving on company business or responding to an urgent e-mail from the boss while driving, employers risk potentially significant liability.

For such policies to work, however, employers and employees will need to work together to ensure that the electronic device policy is enforced in a way that respects the fact that the employee may not be able to instantaneously respond to work issues while they are driving.

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At a press conference this morning, the SEIU is announcing that it is withdrawing the paid sick leave mandate (Issue 4 -- the Ohio Healthy Families Act) from the November ballot. We will provide more information here as it becomes available.

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This afternoon, opponents of the Ohio Healthy Families were given a boost when Governor Strickland announced his opposition to the Ohio Healthy Families Act hours after discussions with business leaders and the SEIU failed(see article from today's Columbus Dispatch).

In his statement, Gov. Strickand states:

"While important members of the business community and SEIU participated in good faith discussions, it was, unfortunately, not possible to achieve a compromise acceptable to a sufficient portion of the business community and the proponents to cause its removal from the ballot. We regret that a reasonable compromise was not possible. This reality means that there will be a hard fought campaign centering on this initiative in the coming months. During that campaign, we call upon both sides to avoid portraying Ohio as unfriendly to business and economic development.

We also recognize it is important to make clear our thoughts on important public policy issues and today are announcing that we cannot support the paid sick-day ballot initiative. While we would hope that all Ohio businesses would make paid sick days available to their employees whenever possible, we believe that this initiative is unworkable, unwieldy and would be detrimental to Ohio's economy, and we will be opposing it and asking Ohioans to oppose it as a result."

In the coming months, we can expect an all out media blitz from both sides of this issue. As a result, the Ohio business community needs to understand how to legally and effectively communicate with their workforces so that they understand the detriments of this paid sick leave mandate. Just as important, because employers will not be able to reduce or eliminate other forms of leave in order to comply with the OHFA after enactment, all employers with at least 25 employees in Ohio need to begin the process of planning how they will comply with the OHFA, if it passes.

Check back here for any further developments. In addition, employers that are interested in joining the official statewide campaign against paid sick leave mandates should visit the Ohioans to Protect Jobs & Fair Benefits website.

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The Columbus Dispatch reported this afternoon that the Strickland administration is sending letters to about 500 business leaders in a final attempt to reach a compromise that would keep the Ohio Healthy Families Act off the Nov. 4 ballot.

In the letter, Gov. Ted Strickland and Lt. Gov. Lee Fisher urge the business community to engage in compromise discussions with the proponents of this Act and the legislature. As the letter states, if compromise language can be reached, the compromise bill would need to be crafted, passed by the legislature, and signed into law by September 5 – the last day to get the issue off of the November 4 ballot.

According to The Dispatch, enclosed with the letter are two documents: “Why a Compromise and Why Now?,” which provides further information to business leaders promoting a compromise solution that would remove this issue from the ballot this November, and “Principles of a Paid Sick Leave Act,” which outlines the administration’s position on this controversial topic.

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Mike’s February post described some key steps to keep in mind when faced with downsizing decisions. Here are few more:

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It may seem odd to include a statement in an employment application or offer that limits the time that an employee has to file legal claims that may arise later in the employment relationship. Recent case law, however, suggests that it is something that all employers should consider and decide if it is appropriate for their business and their employees.

In the last three years, a line of case law has developed in Ohio and the Sixth Circuit that allows employers to limit the time period by which employees must bring claims arising from their employment. The cases all involved employers that included in their employment applications a provision stating that, by signing the application and subsequently accepting employment, the employee agreed to bring all claims arising out of the employment relationship within a certain period of time—a time period that is shorter than statutory limits. Some of the applications stated that any claims had to be filed within a period of time as short as six months.

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Here is a brief outline of steps that should be included in any plan for implementation of a reduction-in-force:

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If your business model includes extensive use of independent contractors, you’re going to want to pay attention to the Ninth Circuit's decision in NLRB v. Friendly Cab Company, Inc., Case No. No. 05-73813 (9^th Cir., January 8, 2008). In the latest attack on the independent-contractor business model, the Ninth Circuit upheld an NLRB finding that the taxi drivers who leased cabs from Friendly Cab were not independent contractors but, in fact, were employees. The NLRB reached this conclusion despite the fact that, after making lease payments, the drivers kept all of their fares. Ordinarily, this factor – that the risk of profit or loss falls on the worker -- creates a "strong inference" of independent contractor status because the purported employer would have no incentive to control the means and manner of the drivers' performance. Nevertheless, the court deferred to the NLRB's conclusion that this inference was rebutted by other evidence that Friendly Cab, in fact, exerted significant control over the drivers and, as a result, found that Friendly Cab was obligated to meet and bargain with the drivers’ union.

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 From FedEx Corporation’s most recent 10Q filing comes the following:

“On December 20, 2007, the Internal Revenue Service (“IRS”) informed us that its audit team had concluded an audit for the 2002 calendar year regarding the classification of owner-operators at FedEx Ground. The IRS has tentatively concluded, subject to further discussion with us, that FedEx Ground’s pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of $319 million plus interest for 2002. Similar issues are under audit by the IRS for calendar years 2004 through 2006. We believe that we have strong defenses to the IRS’s tentative assessment and will vigorously defend our position, as we continue to believe that FedEx Ground’s owner-operators are independent contractors. Given the preliminary status of this matter, we cannot yet determine the amount or a reasonable range of potential loss. However, we do not believe that any loss is probable.”

With the IRS on its back and multiple class actions to defend, FedEx’s experience demonstrates the need for companies to consider very carefully their independent contractor arrangements to ensure that workers are properly classified. Given the IRS’s recent emphasis on this area, we suspect this is just the tip of a very large iceberg.

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