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Top labor and employment developments in April 2018

May 6th, 2018  |  Lisa Milam-Perez

By Lisa Milam-Perez, J.D.

In case you missed Employment Law Daily’s in-depth coverage, here’s a brief recap of some of the key developments in the L&E community for April (with a straggler or two from March):

APRIL AT THE HIGH COURT

FLSA exemptions needn’t be narrowly construed. With a dispute over a narrow FLSA exemption before it for the second time, a divided U.S. Supreme Court held that an auto dealership’s service advisors are exempt under FLSA, Section 213(b)(10)(A), which applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.” But the bigger story here—the implications of which may be seismic for wage-hour litigation—is the High Court’s overt rejection of the notion that exemptions to the FLSA are to be narrowly construed. It did so, Justice Ginsburg’s dissent decried in a footnote, without even “acknowledging that it unsettles more than half a century of our precedent” (Encino Motorcars, LLC v. Navarro, April 2, 2018, Thomas, C.).

Justices contemplate ‘travel ban’ v. 3. On April 25, the Supreme Court heard oral argument on the lawfulness of President Trump’s latest “travel ban,” the only matter on the Court’s final scheduled oral argument session of the Term. The case, Trump v. Hawaii (No. 17-965), reached the Justices after the Ninth Circuit affirmed the decision of a federal district court in Hawaii, which held that version three, like its predecessors, “plainly discriminates based on nationality,” and thus violates the Immigration and Naturalization Act (INA). The appeals court upheld the preliminary injunction blocking full implementation of the third travel ban (it had affirmed preliminary injunctions against the earlier versions as well). However, it limited the scope of the injunction to foreign nationals with a bona fide relationship to a person or entity in the United States. The Trump administration took the matter to the Supreme Court, arguing that the Ninth Circuit got it wrong. Oral argument addressed the scope of the president’s authority to suspend the entry of aliens abroad under the INA and beyond; whether Congress had already addressed the risks that the travel ban seeks to eliminate; whether the travel ban countermands the judgment of Congress; the Establishment Clause implications of the ban’s overwhelming focus on Muslim-majority countries (and the weight to be given President Trump’s anti-Muslim campaign statements in resolving the question); and whether the president’s executive action essentially establishes a new permanent immigration policy for the nation. From the questions posed by the Justices at oral argument, the Court’s conservative wing appeared sympathetic to the Trump administration’s arguments.

WHO’S AN “EMPLOYEE”?

California “gig” workers may be. In a highly anticipated decision—with outsized influence, given that it’s California, and potentially sweeping repercussions for “gig” workers—a unanimous California Supreme Court held that the generous “suffer or permit to work” definition of employee set forth in the state’s wage orders applies to the question whether a worker is an employee or independent contractor under state law. That definition is to be interpreted broadly, the state high court said, so that California’s wage protections cover all workers who would ordinarily be viewed as “working” in the hiring business. The state high court adopted the multi-factor “ABC” test used in a number of jurisdictions—a simpler, more structured test for distinguishing between employees and independent contractors. The ABC test places the burden on the hiring entity to establish that the worker is an independent contractor who was not intended to be included within the wage order’s coverage. To meet this burden, the hiring entity must establish each of the three factors embodied in the ABC test: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. Failing to prove any one of these criteria is enough to establish that the worker is an employee, and not an excluded independent contractor, for purposes of the wage order (Dynamex Operations West, Inc., April 30, 2018, Cantil-Sakauye, T.).

Church volunteers aren’t. Volunteers who helped to staff a church-affiliated-and subsidized buffet restaurant were not statutory employees, the Sixth Circuit found, reversing a bench trial verdict in favor of the DOL on its claims that the church and its televangelist pastor violated the FLSA’s minimum-wage requirements by utilizing churchgoers’ unpaid labor at “the Lord’s buffet.” The key factor: The church members did not expect to receive compensation and, as such, the economic realities test did not apply. As the appeals court explained, “a volunteer’s expectation of compensation is a threshold inquiry that must be satisfied before we assess the economic realities of the working relationship.” The court also found it irrelevant that the churchgoers ostensibly felt coerced by their pastor—who recruited them from the pulpit every Sunday— into volunteering their labor, as the DOL had argued, since “spiritual coercion” is not in the agency’s domain, a concurring opinion explained (Acosta v. Cathedral Buffet, Inc., April 16, 2018, Siler, E. Jr.).

Fox network contributor isn’t. A regular contributor for a Fox Business Network show who alleged she was raped and coerced into a long-term sexual relationship with a Fox anchor, and then blacklisted and defamed after she ended it, will not be able to proceed with her sexual harassment claims, a federal district court in New York ruled, because she was not an employee of the network under Title VII, the NYSHRL, or NYCHRL. She alleged that, although she was unpaid (and did not receive health insurance, sick pay, or vacation), the network and the anchor dictated her schedule and the terms of her appearance. She essentially was expected to be on-call, as a failure to respond would cost her future appearances. She had to wear her hair and her clothing in a manner in keeping with the “Fox look” and was given specific talking points, questions, and on-air responses. But the lack of compensation was fatal to her claim. The network covered her travel costs and the cost of doing her hair and makeup for appearances, but these benefits were merely “incidental.” Nor was the promise of compensation later, as part of a paid contract, sufficient to constitute a financial benefit, the court explained. The employee asserted that she was told multiple times that she would be considered for a full-time contract as a paid contributor, and those promises appeared to be nearing fruition until she broke off her allegedly quid pro quo relationship with the anchor, at which point her appearances dwindled. However, she could pursue failure-to-hire claims under federal and local law, as well as retaliation claims based on allegations she was blacklisted and denied further appearances (Hughes v. Twenty-First Century Fox, Inc., January 4, 2018, Pauley, W.).

UberBLACK limo drivers aren’t. Limousine drivers for UberBLACK are not employees of the ride-share service under the FLSA, a federal district court in Pennsylvania ruled. The court had issued a noteworthy decision in the case in September 2017, denying Uber’s motion for partial summary judgment on whether FLSA “on call” principles may extend to the gig economy and concluding that undisputed factual issues indicated that the time drivers spent logged into the UberApp could be deemed “predominantly” for the benefit of the employer rather than the employee. Here, though, the court held the drivers were not statutory employees. Applying the Third Circuit’s six-factor test, the court observed that under the terms of the driver addendum, UberBLACK drivers were considered independent contractors. Also, Uber did not exercise substantial control over the drivers. Their opportunity for profit or loss favored independent contractor status, as they could work as much or as little as they wanted to; they chose their own hours, and they could concentrate their efforts around peak times to capitalize on surge pricing. They were free to make money elsewhere by working for competitors or private clients, even while actively remaining online. Their investment in equipment or materials favored independent contractor status, as did the fact they could hire helpers. They purchased or leased their own expensive vehicles (the fact that Uber presented financing arrangements or offered insurance did not convert the company into a statutory employer). Also, the lack of “relationship permanence” with Uber weighed in favor of independent contractor status. While other factors suggested the drivers were statutory employees, under the totality of the circumstances, the court found they were independent contractors (Razak v. Uber Technologies, Inc., April 11, 2018, Baylson, M.).

CIRCUITS EXPAND DISCRIMINATION PROTECTIONS

Past salary can’t justify unequal pay. The Ninth Circuit sitting en banc held that an employee’s prior salary does not constitute a “factor other than sex” upon which a wage differential may be based under the Equal Pay Act’s “catchall” exception in 29 U.S.C. § 206(d)(1). This was true regardless of whether past salary was considered alone or in conjunction with other factors, the appeals court explained, expressly overruling its 1982 decision in Kouba v. Allstate Ins. Co. as inconsistent with the rule announced here. Based on the history and text of the EPA, “any other factor other than sex” is limited to legitimate job-related factors such as a prospective employee’s experience, education, or ability. Although prior salary might bear a “rough relationship” to these factors, it is an attenuated one, and its use “may well operate to perpetuate the wage disparities prohibited under the Act.” The opinion was authored by “liberal lion” Judge Stephen Reinhardt and released shortly after his death (Rizo v. Yovino, April 9, 2018, Reinhardt, S.).

ADEA disparate impact provision protects job applicants. Concluding that the ADEA’s disparate impact provision protects outside job applicants and not just current employees, a divided Seventh Circuit ruled that a 58-year-old job applicant may pursue a disparate impact claim based on a job posting with a “seven-year experience cap.” The appeals court said its reading of the statute is the better reading of the statutory text and more in keeping with the ADEA’s purpose, as well as 50 years of case law interpreting the ADEA and other employment discrimination statutes. It also “tracks” with the Supreme Court’s reading, in Griggs v. Duke Power Co., of nearly identical language of Title VII, which has been held to protect job seekers. “Moreover, we have not been presented with, and could not imagine on our own, a plausible policy reason why Congress might have chosen to allow disparate impact claims by current employees, including internal job applicants, while excluding outside job applicants,” the appeals court explained (Kleber v. CareFusion Corp., April 26, 2018, Hamilton, D.).

GENDER, TRANSGENDER DISCRIMINATION

Goldman Sachs class action gets green light. In an eight-year-old gender bias class action against Goldman Sachs, a federal district court certified a Rule 23(b)(3) class estimated to encompass 1,700-2,300 members on the women’s disparate impact and disparate treatment claims of discrimination in evaluation, compensation, and promotion. The court agreed with plaintiffs’ objections to a magistrate’s report and recommendation denying class status. Because individualized proof by Goldman Sachs would be required to rebut the claim that it maintained a “boy’s club” culture that discriminated against women, and considerations and intentions of individual managers or business units would “overwhelm” the common issues, the court denied certification on this claim (Chen-Oster v. Goldman, Sachs & Co., March 30, 2018, Torres, A.).

Transgender bus driver states bias claim. A federal court in New York held that a transgender female school bus driver plausibly alleged that she suffered an adverse action when her employer refused to reissue her a corrected medical certification form after her manager issued her a form using her former male name instead of her legal female name. That refusal resulted in her being suspended without pay for several months because she was unable to renew her commercial license. Her assertions that the manager made inappropriate comments based on her sex, and he and the company knew of her transgender status yet refused to change the form, also supported an inference of bias, the court held, denying the employer’s motion to dismiss her Title VII and state law claims of gender discrimination (Blair v. Brooklyn Transportation Corp., March 30, 2018, Irizarry, D.).

Transgender status protected, but no claim. Finding persuasive recent decisions by several circuits that have expanded Title VII protection to include discrimination based on transgender status and sexual orientation, and noting that the failure to conform to stereotype protection from Price Waterhouse has been expanded to include transgender persons, a federal court in Texas assumed that an applicant’s status as a transgender woman placed her under the protection of Title VII. But because she failed to show her employer discriminated against her because of her transgender status or failure to conform to sex stereotypes when it rescinded a job offer, the court granted summary judgment against her Title VII sex discrimination claim (Wittmer v. Phillips 66 Co., April 4, 2018, Rosenthal, L.).

No ADA claim based on gender dysphoria. A federal court in Ohio dismissed a transgender employee’s disability discrimination claims, finding Congress intended to exclude from the ADA’s protection both disabling and non-disabling gender identity disorders that do not result from a physical impairment, and the employee failed to allege her gender dysphoria was caused by a physical impairment. However, the court held she stated a claim for sex discrimination and sexual harassment, noting that transgender and transitioning status is protected by Title VII and state law and that she had alleged the employer treated her less favorably than its non-transgender employees on the basis of her transgender status (Parker v. Strawser Construction, Inc., April 25, 2018, Smith, G.).

Transgender military ban injunction stands. The nationwide preliminary injunction preventing the military from implementing President Trump’s ban on military service by openly transgender people will remain in effect, a federal district court in Washington announced, finding that each of the claims raised by the plaintiffs and the State of Washington remained viable. Further, said the court, “because transgender people have long been subjected to systemic oppression and forced to live in silence, they are a protected class,” and any attempt to exclude them from military service will be subject to strict scrutiny. The case goes forward on the issue of whether the ban is well-supported by evidence and entitled to deference, or whether it fails as an impermissible violation of constitutional rights. The court also declined to dismiss President Trump from the case, allowing claims for declaratory relief against him to go forward (Karnoski v. Trump, April 13, 2018, Pechman, M.).

Harassment, but not “same-sex harassment.” Conceding that a female gym teacher endured “repugnant” harassment at the hands of female coworkers in a public school athletic department, much of which was sexual in nature and included dozens of comments about female body parts, the Texas Supreme Court still held the harassment was not because of her gender, and she failed to state a sexual harassment claim under the Texas Commission on Human Rights Act (TCHRA). Nor could she make out a retaliation claim. A divided state high court reversed the court of appeals’ judgment (which had affirmed the court below) and dismissed the employee’s TCHRA claims. The decision is one for the hornbooks: a combined 100 pages of eminently quotable majority opinion and dissent, each applying different weight to a fairly egregious collection of facts—many salacious in nature—and applying different reasoning to those facts. Notable here, as to same-sex harassment law, was the majority’s objection to the dissent’s approach of replacing the female harasser with a hypothetical male, and to its undue focus on “the raunchy details” rather than the record evidence as a whole (Alamo Heights Independent School District v. Clark, April 6, 2018, Guzman, E.).

IN MOM NEWS …

Infants on Senate floor. An increasingly “woke” U.S. Senate unanimously agreed April 18 to allow senators to bring their infant children onto the Senate floor, if necessary, during votes. The Senate had previously banned all children from entering the Senate floor, which could have prevented senators who are new parents from executing their constitutional responsibility of voting on issues of national importance. S. Res. 463 says that any senator who has a son or daughter (as defined in the FMLA) under the age of one may bring the child onto the floor of the Senate during votes. The impetus for the rule change was Illinois Senator Tammy Duckworth, who a week earlier had become the first senator to give birth while in office. Duckworth thanked her colleagues “on both sides of the aisle, particularly those in leadership and on the Rules Committee, for helping bring the Senate into the 21st Century by recognizing that sometimes new parents also have responsibilities at work.” Duckworth added: the Senate is leading by example and sending the important message that working parents everywhere deserve family-friendly workplace policies.”

No space to pump breastmilk. April gave us one breastfeeding-rights case—still a novel cause of action—from a federal court in Arizona. It was brought by a Tucson Fire Department employee who struggled to find an appropriate place to express breastmilk at any of the stations to which she was assigned. FLSA Section 207, as amended by the Affordable Care Act, requires employers to provide “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public” for up to one year after the birth of a child. The employee claimed that the fire stations did not satisfy those requirements, nor did the employer have a policy or procedure in place for mothers needing to express milk. Indeed, the employer’s Equal Opportunity Programs Division determined that only nine of the department’s 21 fire stations complied with the FLSA’s requirements. However, the division noted that all of the stations had rooms that would be compliant with a lock on the door, and DOL regulations say there is more than one way to provide appropriate space, leaving questions of fact to resolve (and precluding summary judgment in the employee’s favor). The employee also was entitled to proceed on a Title VII sex discrimination claim based on her status as a lactating mother under the Pregnancy Discrimination Act, a claim for lost wages (she had to use of leave hours she would have otherwise cashed in), and a retaliation claim (Clark v. City of Tucson, April 24, 2018, Jorgenson, C.).

RELIGIOUS DISCRIMINATION, ACCOMMODATION

$5.1M penance for “Onionhead” coercion. After a three-week trial, a federal jury in Brooklyn has awarded $5.1 million in compensatory and punitive damages to 10 employees of United Health Programs of America, Inc., and its parent Cost Containment Group, Inc., finding that the workers had been coerced into engaging in religious practices of “Onionhead” or “Harnessing Happiness” in violation of Title VII, the EEOC announced on April 26. The employees were forced to engage in a variety of religious practices at work, including prayer, religious workshops, and spiritual cleansing rituals. These practices were part of a belief system called “Onionhead” or “Harnessing Happiness,” which involved chanting, praying, and discussions of matters such as divine destinies, the “Source,” purity, and blessings. Previously, the court found that Onionhead was indeed a religion, as employees were required to engage in praying and chanting in the workplace. The jury found the employer violated Title VII when it created a hostile work environment for nine of the workers and fired one employee who opposed these practices. The EEOC will seek injunctive relief to prevent future violations and to obtain back pay for the discharged employee for her wrongful termination.

Public employee’s “In Christ” emails. A state agency employee who was fired because he refused to stop signing his emails with “In Christ” can proceed to trial on his religious discrimination claims. The agency argued the email valediction was merely a personal preference, but it was undisputed it was connected to his belief that he must proclaim his faith in everything he does. The sincerity of his belief, however, was “less clear,” the court said. He only began using the valediction during his third month on the job and he never explained why he didn’t use it before; he didn’t use it when he signed his name; and his pastor testified that the valediction was not required. There also was evidence he began using the email valediction with the expectation that it would lead to discharge and a potential lawsuit. Nonetheless, his testimony concerning his faith and his commitment to proclaiming Christ in everything he did was sufficient to raise a jury question as to whether his use of the valediction was sincerely connected to religion. Moreover, the state agency could not show as a matter of law that it couldn’t provide the religious accommodation without violating the Establishment Clause. There was scant evidence the employee’s use of “In Christ” at the end of his work emails would lead the public to assume the agency was endorsing a religion (Mial v. Foxhoven, April 4, 2018, Strand, L.).

PRE-HIRE INQUIRIES

Target to pay $3.7M in background check suit. Target Corp. will pay out more than $3.7 million and provide substantial programmatic relief via reforms to its applicant screening process as part of a proposed settlement resolving class allegations that its use of criminal background checks “has resulted in thousands of qualified African-Americans and Latinos being denied jobs in violation of Title VII.” The plaintiffs alleged that the retailer’s practice had imported “the racial and ethnic disparities that exist in the criminal justice system into the employment process, thereby multiplying the negative impact on African-American and Latino job applicants.” More than 41,000 African-American and Latino applicants were denied jobs based on Target’s criminal history screening process from May 2008 to December 2016 alone, according to information produced by the retailer. Under the deal, class members would be given priority hiring for entry-level jobs and consideration for team lead positions; those who show they would not benefit from a Target job may be eligible for a monetary award of up to $1,000 in lieu of employment. $600,000 from the settlement will go to nonprofits that provide re-entry support to individuals with criminal records. In addition to cash awards to class members of up to $1.2 million, the settlement fund would provide up to $1.9 million in attorneys’ fees, as well as service awards to named plaintiffs.

Philadelphia salary inquiry ban partly banned. A Philadelphia ordinance prohibiting employers from making inquiries into a job applicant’s wage history was not backed up by a showing that such a ban would directly advance the municipality’s interest in reducing discriminatory wage disparities, a federal court held. The city had relied primarily on unsubstantiated conclusions insufficient to establish that prior wage history inquiries contribute to a discriminatory wage gap, the court found. Therefore, it invalidated a portion of the law as a violation of employers’ free speech rights and granted a preliminary injunction with respect to the inquiry portion of the ordinance. However, the ordinance’s prohibition against relying on wage history data did not implicate free speech concerns, so the court declined to grant a preliminary junction preventing enforcement of this provision (Chamber of Commerce for Greater Philadelphia v. City of Philadelphia, April 30, 2018, Goldberg, M.).

New York advances salary history ban. Meanwhile, New York Governor Andrew M. Cuomo advanced legislation on April 10 that would prohibit all employers who do business in New York State, public and private, from asking prospective employees about their salary history. The governor also released the state DOL’s report and recommendations, which found that a salary history ban will halt the compounding nature of the gender wage gap. The proposed legislation accepts and advances the DOL’s recommendation and builds on two executive orders signed by the governor last year that prohibit state entities from evaluating candidates based on wage history and require state contractors to disclose data on the gender, race and ethnicity of employees. This legislation broadens the scope of one of those executive orders to encompass all employers—not just state entities.

LABOR DEVELOPMENTS

John Ring takes helm at NLRB. By a vote of 50-48, the Senate on April 11 confirmed Morgan Lewis & Bockius partner John Ring to serve on the NLRB, bringing the Board to a full five-member complement. On April 12, President Trump designated Ring to serve as Board Chair. But he walks into a hornet’s nest. The Board’s inspector general concluded Member Bill Emanuel should not have been involved in the December 2017 Hy-Brand Industrial Contractors decision, which vacated the controversial Obama-era Browning-Ferris joint-employer decision. Consequently, the other Board members vacated the Hy-Brand decision, sparking even more internal discord and externally, more uncertainty in the employer community, which had hailed Hy-Brand as the Browning-Ferris killer. What followed, and continued into April, were more demands from the U.S. Chamber of Commerce and others for the inspector general to investigate the decision to remand and another Board member who allegedly leaked information about the remand. Perhaps Ring, having taken the reins of a Republican-majority Board, can restore normalcy and pursue the more business-friendly agenda that the employer community was expecting under the Trump administration.

Excelsior required more. The Eleventh Circuit held the NLRB’s Excelsior rule requires an employer to provide a union with all employee address information in its possession—not just home addresses—to facilitate the union’s ability to communicate with potential voters. Thus, it upheld the Board’s finding that an employer should have furnished the union with its employees’ P.O. Box mailing addresses in a pending union election, knowing that their home addresses were not likely to allow the union to reach employees by mail. The employer argued that under Excelsior, it only had to furnish home addresses, and the Board’s requirement that it furnish mailing addresses was a “newly articulated” extension of this rule. However, Excelsior never limited the production of address information solely to home addresses, the appeals court said, noting simply that the rule requires an employer to provide “complete and accurate” information as to names and addresses of eligible voters (Transit Connection, Inc. v. NLRB, April 13, 2018, Bartle, H.).

Teachers’ strikes bring wage gains. A small wave of red-state teachers’ strikes that began in West Virginia in early March continued into April (and May), with notable payoffs for their efforts. In West Virginia, 35,000 striking teachers shut down schools throughout the state for nine days and secured passage of a bill that gives them a 5 percent raise and a starting salary for new teachers of $43,000 by FY 2019. Then came Oklahoma, where tens of thousands protested over low teacher pay and gutted school budgets. (Education funding had been cut nearly 30 percent in the state in recent years, leaving 20 percent of school districts resorting to four-day school weeks.) The teachers, who had not received a raise in a decade, secured increases of about $6,000 per year, depending on experience, and an additional $20 million in school funding. (According to media reports, Oklahoma public teachers’ salaries rank lowest among the 50 states; West Virginia ranked 48th.) In the latest work stoppage, Arizona teachers moved on the state capitol to demand a 20-percent raise, with yearly increases to bring them in line with the national average. They also wanted the state to restore school funding to 2008 levels, among other demands. On May 3, the governor signed off on a 9-percent pay hike for the fall, and an additional 5 percent over the next two years, meeting the teachers’ 20-percent demand over four years. That the strikes were so successful was a big win for the labor movement nationally and for public employees in particular—a timely show of strength as public employee unions gird themselves for a significant loss of funding and political power, courtesy of the Supreme Court’s impending Janus decision, which most observers expect will strip public-sector unions of their right to request “fair share” fees from nonmembers.

DOL UPDATE

Tip pool rule. The Consolidated Appropriations Act (CAA), which passed in March, put an end to an ongoing controversy over the status of a proposed DOL tip rule and the underlying dispute over whether employers that don’t take the tip credit against the federal minimum-wage may be constrained by federal regulations that bar employers from including nontipped employees (among other workers from inclusion in mandatory tip pools. In 2017, the DOL had moved to pull back an Obama-era regulation extending this restriction to employers that pay their tipped employees the full minimum wage. But the 2017 rulemaking stirred controversy after reports surfaced that the DOL hid internal data showing that the rule, if enacted, would cost tipped workers some $4.6 billion in lost tips. (The point of contention: Employee advocates argued the employer would pocket the tips themselves, while Labor Secretary R. Alexander Acosta assumed that employers, if allowed, would distribute the tips among their employees.) At any rate, the omnibus spending package ended the logjam with a statutory compromise: The budget bill amended the FLSA to specifically provide that an employer may not keep employees’ tips for any purposes, in all circumstances—regardless of whether it takes a tip credit—and employers that do not take the tip credit can now include “back of house” (such as nontipped cooks and dishwashers) workers along with “front of house” (tipped) workers in a tip pool.

On April 6, the Wage and Hour Division (WHD) issued a Field Assistance Bulletin addressing the tip-credit rules pursuant to the changes enacted under the CAA. FAB 2018-3 explains the new requirements, as does a new fact sheet also issued by the agency. The DOL said it will begin using new enforcement tools to protect workers’ tips—including by recovering tips unlawfully kept by employers and imposing liquidated damages and civil monetary penalties as appropriate.

Pizzella on board. On April 12, the Senate confirmed Patrick Pizzella to serve as DOL deputy secretary by a strict party-line vote of 50-48. Prior to his confirmation, Pizzella was Acting Chairman of the Federal Labor Relations Authority; he also had served as DOL Assistant Secretary of Labor for Administration and Management under President George W. Bush. Pizzella faced staunch opposition by Senate Democrats over his past record working with convicted lobbyist Jack Abramoff in an effort to block new worker protections and allow companies on the Northern Mariana Islands, a U.S. territory, to operate under what Democrat Patty Murray (D-Wash.), ranking member of the Senate HELP Committee, deemed “sweatshop conditions.” But Pizzella has strong Republican support, and his nomination was well-received in the business community.

SUBMINIMUM WAGES UNDER FIRE

Senate Dems want info. Senator Elizabeth Warren (D-Mass.) and six of her Senate colleagues asked Labor Secretary Alexander Acosta for information on the DOL’s oversight and enforcement of employers that use 14(c) waivers to hire workers with disabilities and pay them less than the federal minimum wage. In an April 23 letter to Acosta, the senators also called for the phasing out of the waivers (which they contend are discriminatory) “in a responsible way.” The FLSA permits the DOL to issue certificates to eligible employers, allowing them to pay workers with disabilities a subminimum wage. According to public DOL data, employers held more than 1,700 14(c) certificates covering more than 150,000 workers eligible to receive a subminimum wage as of January 2018. But the senators decried past abuses of these waivers and sought data from the DOL regarding the extent to which it is providing necessary oversight in order to “prevent the mistreatment of and discrimination against workers with disabilities.” Reports of extremely low earnings—in some cases, well under a dollar per hour, Warren’s office said—and other disturbing abuses of 14(c) waivers have led to concern in the disability community, as well as policymakers on the state and federal level, that the waivers are both inherently discriminatory and create a high potential for abuse of workers with disabilities.

Illinois employer loses certificate. Notably, the next day, the DOL announced it had revoked the 14(c) certificate from an Illinois employer after a Wage and Hour Division investigation found nearly 250 workers with disabilities were being exploited. Rock River Valley Self Help Enterprises, Inc., located in Sterling, Illinois, had failed to timely perform appropriate wage surveys and to conduct proper time studies on all jobs performed by workers with disabilities, the DOL announced on April 24. The employer also tried to mislead and obstruct the WHD investigation by concealing relevant information, hiding work that the employer had not time-studied but had the workers perform, according to the agency. Moreover, on some weekends, Self Help purportedly paid workers with gift cards instead of wages. Given the nature of the violations, the DOL revoked the certification effective immediately and retroactively, and denied the employer’s pending applications to renew their certificates—without which it must pay all current workers at least the full federal minimum wage. The company also must pay back wages to all workers who performed work at the subminimum wage during the last two years.

Seattle ends subminimum wage. On April 2, the Seattle City Council passed a bill eliminating outright the subminimum wage for workers with disabilities (as well as other categories of workers within the city who have been exempted under state law from the state minimum wage). The measure ending what the city council called the “archaic practice” of allowing people with disabilities to be paid a subminimum wage passed by a unanimous vote. Bill sponsors pointed to one Seattle employer whose lowest paid worker on the subminimum wage provision was earning 36 cents an hour. The city council said that Seattle will be the first city to eliminate a subminimum wage for people with disabilities, and it follows the states of Vermont, New Hampshire, and Maryland, which have passed similar policies banning special wage certificates for disabled workers.

PROCEDURAL RULINGS

Opt-in plaintiffs not automatically dismissed. In “a question of first impression in every circuit,” the Eleventh Circuit ruled that individuals who opt into collective actions under the FLSA need only file a written consent to become a named party to the case. The court ruled that employees who opted into a collective action were not automatically dismissed from the case when the district court denied the named plaintiff’s motion for conditional certification. The decision came in an independent contractor misclassification wage case, which other individuals had opted in to by filing consents to become party plaintiffs, but the court had denied the plaintiff’s motion for conditional certification as untimely. The named plaintiff and each of the three opt-in plaintiffs believed they were party plaintiffs because the district court never dismissed their claims. The employer argued that the opt-in plaintiffs never formally became party plaintiffs, and that they effectively fell out of the case when the motion for conditional certification was denied, leaving only the named plaintiff as a party plaintiff.

The district court concluded that because the opt-in plaintiffs were never adjudicated to be similarly situated to the named plaintiff, they were never properly added as party plaintiffs. After the named plaintiff settled with the employer, the opt-in plaintiffs appealed the district court’s orders. The appeals court was tasked with deciding the status of the opt-in plaintiffs who filed written consents before the motion for conditional certification was filed. It concluded that the plain language of Section 216(b) supports the conclusion that those who opt in become party plaintiffs upon the filing of a consent, and nothing further, including conditional certification, is required. The opt-in plaintiffs were parties to this litigation and could appeal adverse judgments against them. The district court had erred in deeming them non-parties, which had the effect of dismissing their claims with prejudice (Mickles v. Country Club, Inc. dba Goldrush Showbar, April 18, 2018, Black, S.).

Amount in controversy counted at time of removal. The amount-in-controversy requirement is what is at stake in the litigation at the time of removal, the Ninth Circuit held, and where, as here, a plaintiff’s complaint at the time of removal alleges wrongful discharge resulting in lost future wages, those future wages are included. Because the amount at issue in an employee’s state-law suit against JPMorgan Chase Bank (JPMC) easily exceeded the $75,000 threshold for diversity jurisdiction, the appeals court found it could hear this appeal. The employee argued that in calculating the amount in controversy, the court could consider lost wages only for the period between her termination and JPMC’s removal of the action a little over a year later; thus, her lost wages would be less than $75,000, and the amount in controversy would not include lost earnings from after the removal. But the appeals court explained, “When we say that the amount in controversy is assessed at the time of removal, we mean that we consider damages that are claimed at the time the case is removed by the defendant.” The amount in controversy includes all relief claimed at the time of removal to which the plaintiff would be entitled if she prevails, said the court. In a concurrently filed unpublished opinion, the appeals court largely affirmed summary against an employee’s FEHA disability discrimination and other claims (Chavez v. JPMorgan Chase & Co., April 20, 2018, Bybee, J.).

IN THE NEWS …

Starbucks to conduct “implicit bias” training. Starbucks announced on April 17 that it will close its more than 8,000 company-owned stores in the U.S. during the afternoon of Tuesday, May 29, to train employees on “implicit bias, promote conscious inclusion, prevent discrimination, and ensure everyone inside a Starbucks store feels safe and welcome.” The training will be provided to nearly 175,000 employees and will become part of the onboarding process for new workers, the company said. The move came after two African-American men were handcuffed and arrested in a Philadelphia Starbucks—an incident that was videotaped and quickly went viral, sparking outrage. Starbucks CEO Kevin Johnson said of the decision that the company was “committed to being a part of the solution” to the issue of what some characterize as unconscious bias.

Ashley Judd sues Harvey Weinstein. Ashley Judd, one of the first women to come forward to expose Harvey Weinstein’s alleged years-long pattern of harassment and abuse of women, filed a lawsuit against the fallen film producer on April 30. Her complaint asserts claims of defamation, sexual harassment, and interference with prospective economic advantage, among others. Judd’s career was damaged after Weinstein made false statements about her because she rejected his purported sexual advances. The actor is asking the court to vindicate her rights and the rights of others who have been denied economic opportunities because they resisted improper sexual advances by those in positions of power. She pledged to donate any recovery she obtains to a charity that benefits women and works to combat sexual harassment and discrimination. Her Gibson, Dunn & Crutcher attorneys indicated they too will donate any attorney’s fees they recover in the case to charity.