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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.


Top labor and employment developments in March 2018

April 6th, 2018  |  Lorene Park

By Lorene D. Park, 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 March.

Some transgender individuals see gains in fighting discrimination:

First up, some in the transgender community may have cause to celebrate after a March 23 press release announced that President Trump has reversed course on his ban on transgender people serving in the U.S. military. After federal courts blocked the ban as unconstitutional, and following a memo and report by the Defense Secretary in consultation with the Homeland Security Secretary (as to the U.S. Coast Guard), which apparently fell short of fully supporting the ban, Trump revoked his August 25, 2017, Presidential Memorandum, “Military Service by Transgender Individuals.”

However, under the newly announced policy, there is a distinction between persons who are transgender and those diagnosed with gender dysphoria. Transgender persons are individuals whose gender identity differs from their biological sex. Gender dysphoria is a mental condition defined in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders that affects some transgender individuals. People with gender dysphoria are said to experience significant mental anxiety and distress because their gender identity differs from their biological sex. For those with a history or diagnosis gender dysphoria, the new policy disqualifies them from both entry and retention in the military.

The new policy also disqualifies transgender persons who require or who have undergone gender transition. However, transgender persons with no history or diagnosis of gender dysphoria, who are otherwise qualified for military service, “may serve, like all other Service members, in their biological sex.”

Senior staff attorney for the ACLU, Joshua Block characterized the policy as “transphobia masquerading as policy.”

Also in March, the Sixth Circuit affirmed that transgender individuals are protected by Title VII. The court found it “analytically impossible to fire an employee based on that employee’s status as a transgender person without being motivated, at least in part, by the employee’s sex.” The employer, a funeral home, fired its funeral director after she disclosed she was going to have sex-reassignment surgery and would no longer dress like a man under its dress code, which required public-facing male employees to wear suits and ties and public-facing female employees to wear skirts. The court also held that the Religious Freedom Restoration Act provided no relief to the company owner as continuing to employ the funeral director would not substantially burden his religious exercise (EEOC v. R.G. & G.R. Harris Funeral Homes, Inc.).

The Sixth Circuit now joins the Second and Seventh Circuits in holding that LGBTQ individuals may be protected by Title VII. The Eleventh Circuit has ruled that sexual orientation discrimination per se is not covered under Title VII, however.

Other significant federal appellate decisions this month included . . .

2d Cir.: NLRB’s bargaining order inappropriate given changed circumstances. Granting review of an NLRB order, the Second Circuit held that substantial evidence supported the Board’s findings that the manner in which an employer tried to dissuade employees from voting to unionize, including its reinstatement of holiday pay and demotion of a pro-union employee, violated the NLRA. Though most components of the Board’s order of remedial relief were enforced, the appeals court refused to enforce the bargaining order because the Board failed to properly account for changed circumstances during the two-year period between the unfair labor practices and its decision, particularly given the significant employee and management turnover and the importance of employees’ free choice (Novelis Corp. v. NLRB).

5th Cir.: DOL’s ‘Fiduciary Rule’ vacated. A final rule (the Fiduciary Rule) promulgated by the Department of Labor in April 2016 expanding the definition of “investment advice fiduciary” conflicts with the text of ERISA and the Internal Revenue Code and is unreasonable under Chevron and the APA, the Fifth Circuit has held. It not only departs from the common law definition without good reason, said the appeals court, but it also breaks with 40 years of established regulatory interpretation. Because its provisions are not severable, the rule was vacated in its entirety. Chief Judge Stewart dissented (Chamber of Commerce v. U.S. Department of Labor).

7th Cir.: Successor liability claim revived under ERISA. A successor may be liable for a predecessor employer’s withdrawal from a multiemployer pension plan under ERISA, as amended by the Multiemployer Pension Plan Amendments Act, ruled the Seventh Circuit, remanding for further consideration. The successor’s use of the employer’s intangible assets—its name, goodwill, trademarks, customer data, trade secrets, phone numbers, and websites—plus its retention of principals to promote the successor to customers, weighed heavily in favor of successor liability (Indiana Electrical Workers Pension Benefit Fund v. ManWeb Services, Inc.).

8th Cir.: NLRB determination that union ran exclusive hiring hall stands. The appeals court granted the Board’s application to enforce its ruling that a union furnishing labor for entertainment-venue employers ran an exclusive hiring hall in violation of the NLRA by, among other things, granting priority to its own members for job referrals and failing to remit certain bonuses for improper reasons (International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts, Local 151 v. NLRB).

10th Cir: Pecan ranch violated injunction against oppressive child labor. Children who gathered fallen pecans, ostensibly to donate to their church, were employees and not volunteers. The Tenth Circuit found that instead of working for their own personal reasons, they were coerced. Also, they were employees of a company that contracted with the grove owner, not of the church or an “independent contractor” hired to fulfill the contract. The court affirmed a ruling that the company and its president violated a 2007 injunction against oppressive child labor and an order to pay $200,000 to compensate the children (Acosta v. Paragon Contractors Corp.).

D.C. Cir.: Using election observer fired for brandishing toy gun didn’t taint election. The NLRB did not unreasonably discount two threats that an employer claimed tainted a union election—an alleged threat to call ICE if the union lost, and the union’s use of an election observer who had been fired four days earlier for threatening conduct involving an “airsoft” gun. Denying a petition to review the Board’s determination that the employer violated the NLRA by refusing to recognize the union, the D.C. Circuit held that absent evidence connecting the fired employee’s behavior to the election or to the union, or evidence that the union was responsible for ICE threats that could potentially coerce employees to vote for it, the Board did not abuse its substantial discretion in certifying the election results (Equinox Holdings, Inc. v. NLRB).

D.C. Cir.: T-Mobile violated NLRA by selectively bargaining on matters of its choosing. The D.C. Circuit in an unpublished opinion denied T-Mobile’s petition to review the NLRB’s decision that T-Mobile violated the NLRA, after receiving a decertification petition, by refusing to bargain with a union over a successor CBA but continuing to bargain on other matters of T-Mobile’s own choosing. Judge Sentelle dissented (T-Mobile USA, Inc. v. NLRB).

Sexual harassment cases continue to dominate headlines, including:

Trump not ‘above the law’: Defamation suit by sexual misconduct accuser proceeds. A New York state judge denied President Trump’s motion to dismiss or hold in abeyance (until the end of his term) a defamation suit by a woman who accused him of sexual misconduct in 2007, when she met with him seeking advice and employment opportunities after she was “fired” from The Apprentice. The court found no reason to delay a civil case concerning Trump’s purely private conduct just because he is president (Zervos v. Trump).

No sanctions claiming surveillance by Fox News in reprisal for harassment complaint. A federal court in New York refused to sanction a former Fox News commentator for a suit claiming federal wiretap and Stored Communications Act violations based on acts allegedly meant to punish her for filing a sexual harassment suit. The defense argued real individuals were behind the social media accounts she claimed were “sockpuppet” fronts by Fox, but the court refused to find her suit frivolous or in bad faith (Tantaros v. Fox News Network LLC).

$350K awarded to sergeant transferred 180 miles away after reporting sexual harassment. Applying a cat’s paw analysis, the Sixth Circuit held that ample evidence supported a jury’s finding that the Michigan Department of State Police was liable for the retaliatory transfer of a female police sergeant, sending her 180 miles from home after she reported sexual harassment by her supervisor (Mys v. Michigan Department of State Police).

Single same-sex incident of verbal threat, physical contact enough to survive dismissal. A male corrections officer’s claim that his male supervisor once massaged his shoulders and made sexually explicit and aggressive comments while doing so was enough to plausibly allege a Section 1983 harassment claim, given the coupling of unwanted physical contact with threatening verbal conduct (Perry v. Slensby).

Other noteworthy March decisions were off the beaten path:

Advertising ‘Lots of Mexicans’ ran afoul of Title VII. An employment agency violated Title VII by placing ads in a Chinese-language newspaper touting that it had “Lots of Mexicans,” since the ads unlawfully expressed a “preference” or “specification” for Mexicans or persons of Latino origin, a federal court in Illinois ruled, granting partial summary judgment to the state (State of Illinois v. Xing Ying Employment Agency).

Chinese parent company’s ‘pop-up’ screen may bind subsidiary. A user agreement with a noncompete, which appeared as a pop-up screen when a U.S. subsidiary’s employee used the Chinese parent’s IP platform, contained ambiguities in whether it applied to him or only to the parent’s Hong Kong employees, ruled a federal court in Michigan, allowing him to proceed on his claim that subsidiary breached the pop-up agreement by refusing to pay him for 24 months after his employment ended (Grant v. Johnson Electric North America, Inc.).

Employer may be liable for falling prey to W-2 phishing email. Refusing to dismiss negligence and breach of contract claims against an employer that provided confidential employee information in response to a phishing email, a federal court in North Carolina found the employees sufficiently alleged a duty to safeguard the information and a breach. Identity theft and deceptive trade practices claims also advanced (Curry v. Schletter, Inc.).

Fear that obesity could lead to other conditions supports regarded-as ADA claim. Under the majority view that obesity is an ADA impairment only if caused by an underlying physiological condition, a federal court in Illinois found that an applicant rejected for a safety-sensitive job due to obesity could not show an actual disability—but he could proceed on his ADA regarded-as claim because BNSF admitted it rejected him for fear that he would develop sleep apnea, diabetes, or heart disease, and suddenly become incapacitated (Shell v. Burlington Northern Santa Fe Railway Co.).

Putative class plaintiffs cite online employer reviews to show similarly situated others. Though a “close call,” a federal court in Louisiana conditionally certified an FLSA collective action by employees seeking unpaid wages and overtime from a labor contractor. They satisfied the limited preliminary burden of showing similarly situated employees by pointing to online reviews with similar complaints (Horton v. Global Staffing Solutions LLC).

Exotic dancers’ antitrust claims against strip club trade groups survive. Exotic dancers’ claims that industry trade groups for Ohio adult entertainment clubs unlawfully conspired to impose a “tenant system” on dancers survived a motion to dismiss antitrust and civil conspiracy claims. The claims are part of the dancers’ wage suit under the FLSA and Ohio law challenging their status as independent contractors and the club’s use of “lease agreements,” under which they have to pay $50 per night in “rent” to the clubs as purported “lessees” in order to perform there (Hogan v. Cleveland Avenue Restaurant, Inc. dba Sirens).

Agency enforcement actions that came to fruition in March included:

Motel managers go to prison for exploiting alien labor. Two motel managers were sentenced to a year and a day in prison for alien harboring for financial gain. The DOJ reported that they harbored an undocumented Indian national at a Super 8 Motel for over a year, during which he worked long hours performing manual labor. They promised to pay him but instead claimed to apply his pay to a debt he owed.

$1M in penalties after severe injuries at auto parts plant. OSHA announced that auto parts manufacturer Sunfield Inc. agreed to a settlement that includes a $1 million penalty and to hiring a safety and health coordinator to resolve violations found at an Ohio plant after two employees were severely injured by moving machine parts. The plant lacked adequate power press guarding and hazardous energy control procedures, said the agency.

Two years in prison and $749K in restitution for wage fraud. After a DOL investigation, a federal court in New Jersey sentenced a member of the International Longshoremen’s Association to prison time and ordered him to pay restitution for fraudulently collecting nearly $500,000 a year in pay. False timesheets credited him up to 16 hours of overtime each day when he actually spent as little as eight hours per week at the job site.

Pharmaceutical CEO gets a year and a day in prison over kickbacks. A federal court in Texas sentenced a former CEO of Pharmaceutical Technologies, Inc. (PTI), to one year and one day in prison for paying illegal kickbacks in an effort to steer pharmacy benefit plans to the company, the DOL announced. PTI agreed to pay over $8.5 million to avoid prosecution.

And finally, a couple of big settlements:

$45M settlement of equal pay suit against Family Dollar Stores. In a long-running and hard-fought class action alleging female Family Dollar Store managers were paid less than their male counterparts for the same work, a federal court granted final approval of a $45 million settlement (Scott v. Family Dollar Stores, Inc.).

$16.75M settlement preliminarily approved in FLSA suit against Kellogg. A federal court in Washington preliminarily approved a $16.75 million settlement in a suit by former territory managers and sales reps claiming Kellogg misclassified them as exempt and denied overtime in violation of the FLSA (Thomas v. Kellogg Co.).


Top labor and employment developments in February 2018

March 10th, 2018  |  Joy Waltemath

By Joy P. Waltemath, J.D.

In case you missed Employment Law Daily’s in-depth coverage, here’s a recap of some of the key developments in the L&E community for the short month of February 2018. Below are highlights, but you can access the full recap here:

At the Supreme Court

  • Janus argument reveals deep split among Justices. Will public-sector unions will be permitted to collect so-called “agency” or “fair-share” fees going forward?
  • SCOTUS denies Dodd-Frank protections to internal whistleblowers. Only whistleblowers who report to the SEC are protected against employment retaliation under Dodd-Frank, the U.S. Supreme Court unanimously ruled.
  • Yard-Man inferences can’t create ambiguity in CBA to find lifetime health benefits vesting. Responding to a certiorari petition, the Supreme Court reversed and remanded a Sixth Circuit decision that had held that the same Yard-Man inferences it once used to presume lifetime vesting of retiree health benefits could be used “to render a collective bargaining agreement ambiguous … allowing courts to consult extrinsic evidence about lifetime vesting.”
  • Justices take a pass on DACA injunction for now. The Supreme Court has declined the Trump Administration’s invitation to weigh in on its now-blocked revocation of the Deferred Action for Childhood Arrival (DACA) program before a final judgment.
  • Nationwide travel ban injunction to stand pending SCOTUS review. Dealing the latest blow to the Trump administration’s efforts to impose a travel ban, primarily on Muslim-majority countries, a divided en banc Fourth Circuit upheld a district court’s order imposing a nationwide preliminary injunction on the administration’s third iteration of the ban.”

At the DOL:

  • Amid proposed rescission, DOL again seeks more time on tip pool petition. The Department of Labor is seeking its seventh extension of time to file its response to the National Restaurant Association’s petition for certiorari, challenging a divided Ninth Circuit decision finding that the agency had acted within its authority when it promulgated the 2011 changes to its tip pool regulation. The DOL, meanwhile, had already published its new proposed rule that would allow employers to utilize mandatory tip-pools that include employees who do not traditionally receive direct tips (it would apply) only to employers that pay a full minimum wage and do not take a tip credit. If a tip credit is taken, then the sharing of tips between tipped and non-tipped employees is still prohibited. A firestorm erupted (and shows no signs of waning) when Bloomberg Law reported that the DOL purportedly intentionally omitted key data from its new rulemaking on tip pools.
  • Full Ninth Circuit to revisit DOL’s interpretation in dual jobs tip credit case. The Ninth Circuit has agreed to revisit the contentions of former servers and bartenders in a consolidated appeal that their employers improperly claimed the tip credit and failed to pay the required minimum wage.

In NLRB news:

  • Because Emanuel should have recused himself, NLRB vacates Hy-Brand. On February 26, the NLRB vacated its decision in Hy-Brand Industrial Contractors, Ltd., in which a 3-2 Board overturned the agency’s controversial “joint employer” ruling in Browning-Ferris Industries. The move came after the NLRB inspector general determined that new Board member William Emanuel was disqualified from participating in the case and should have recused himself from the proceeding.
  • Division of Advice finds no NLRA breach in high-profile Google firing. The NLRB General Counsel’s Division of Advice released an advice memorandum on February 15 regarding the much-publicized discharge of a Google software engineer following his invective about women in tech. In Google, Inc., the Division of Advice concluded that a Google software engineer was not engaged in protected activity when he wrote a memo questioning the tech giant’s diversity and inclusion initiatives.
  • NLRB soliciting briefs on whether misclassifying employees as independent contractors violates Section 8.

EEOC News

  • EEOC’s criminal background check guidance a substantive rule, APA notice-and-comment procedures apply. The Northern District of Texas denied a request from the state of Texas for a declaration that the state has the right to impose a categorical ban on hiring individuals with criminal felony convictions for certain state jobs. But it barred the EEOC from enforcing the guidance against the state of Texas until the Commission complies with the APA’s notice and comment rulemaking requirements.
  • EEOC ‘regarded as’ disability claims fail for therapist fired over concern she might contract Ebola. Declining to expand the ADA’s “regarded as” disabled definition to cover cases in which an employer perceives an employee to be presently healthy, with only the potential to become disabled in the future due to voluntary conduct, a federal court for the Middle District of Florida dismissed the EEOC’s claim that the employer unlawfully fired a massage therapist days before her trip to Ghana because she might become infected with Ebola.

In the Courts of Appeals

  • First Circuit: OSHA properly held general contractor liable for sole proprietor subcontractor’s safety breach
  • Second Circuit, en banc, says sexual orientation discrimination is ‘because of’ sex under Title VII
  • Sixth Circuit: Telecommuting for 10 weeks was reasonable accommodation for in-house attorney
  • Seventh Circuit: Jewish day school teacher was ministerial employee
  • Ninth Circuit: Officer’s claim she was terminated in part for extramarital affair revived
  • Tenth Circuit: Forced labor claims by immigration detainees may proceed as class


Sexual harassment roundtable slated for March 1 with complimentary CLE

February 23rd, 2018  |  Pamela Wolf

I am very pleased to be moderating a webinar, Sexual Harassment Roundtable: Practical Guidance for Employers, on Thursday, March 1, 2018 at 1:00 – 2:00 p.m. EST. Participants will be eligible for one complimentary CLE credit.

As most Labor and Employment practitioners know, sexual harassment continues to be a substantial and sticky workplace problem that has moved front and center with the rise of the “MeToo” movement. This one-hour webinar will focus on practical guidance for employers (and their inside counsel and outside attorneys). We have assembled an all-star panel of legal experts who will walk through the current landscape and discuss a wide range of topics, including:

  • Why sexual harassment remains a persistent workplace problem
  • The types of sexual harassment allegations that can be trickiest for employers
  • Pros and cons of using nondisclosure clauses in settlement agreements
  • How mandatory arbitration impacts sexual harassment claims
  • Best practices for preventing sexual harassment and handling allegations when they do arise

Please join me and our distinguished panel of attorneys as we discuss these issues and sort through real-life scenarios:

  • Brooke Colaizzi, Principal, Jackson Lewis, PC
  • Chris Bourgeacq, The Chris Bourgeacq Law Firm, PC
  • Brooke Colaizzi, Member, Sherman & Howard L.L.C.
  • Eric B. Meyer, Partner, Dilworth Paxson LLP

Click here to learn more about the panel and to register.


Top labor and employment developments in January 2018

February 8th, 2018  |  Kathy Kapusta

In case you missed Employment Law Daily’s in-depth coverage, here’s a recap of some of the key developments in the L&E community for January 2018.

Supreme Court:

“Tolled” means “stop the clock.” It was a slow month for the Supreme Court, which issued only one employment-related case in January, a procedural decision arising out of dismissed federal and state employment discrimination claims. In that case, the 5-4 Court held that 28 U.S.C. §1367(d), which says that the period of limitations for refiling state claims after they have been dismissed in a federal court action “shall be tolled while the claim is pending [in federal court],” stops the clock while the claim is in federal court, and it starts running again when the tolling period ends. Accordingly, an employee’s state-law claims that were dismissed from federal court after two and a half years and were refiled in state court 59 days later were timely, because the applicable statute of limitations for her D.C. law claims was suspended while her federal suit was pending. Employment lawyers see this decision benefitting plaintiffs. Notably, Chief Justice Roberts joined the liberal wing of the court in the majority opinion authored by Justice Ginsburg; Justice Gorsuch dissented (Artis v. District of Columbia, January 22, 2018, Ginsburg, R.).

Justices opt to stay out of joint-employer battle… The Court, however, was busy deciding what not to decide. On January 8, in an order issued without explanation, it denied the petition for certiorari filed in DirectTV, LLC v. Hall (16-1449), which sought review of a Fourth Circuit joint-employer ruling that the petitioners contend departed from every other circuit to have considered the issue.

… and will not scrutinize Mississippi’s controversial ‘religious freedom’ law. The Court also declined to take up challenges to Mississippi’s “Protecting Freedom of Conscience from Government Discrimination Act.” Signed into law in April 2016, H.B. 1523 was part of a trend of laws passed to insulate from liability religious organizations and persons not inclined to accept same-sex marriage as legitimate, even in the wake of the U.S. Supreme Court’s 2015 edict in Obergefell v. Hodges. The law goes a bit further than other state laws of its genre ostensibly to protect from “discriminatory action” by the government religious organizations and individuals who refuse to solemnize, celebrate, recognize, accommodate, or provide goods or services for a same-sex marriage or to same-sex-oriented individuals because of a sincerely held religious belief, or even a moral conviction, that marriage should be limited to the union of one man and one woman and sexual relations are properly reserved to such a marriage.

But will take up travel ban. The Court did, however, agree to review a Ninth Circuit ruling partially blocking the implementation of version three of the Trump Administration’s beleaguered “travel ban.” The Justices will resolve three questions presented in the administration’s petition for certiorari, as well as the question of whether the travel ban violates the Establishment Clause, a query posed in the State of Hawaii’s (and other respondents’) brief in opposition. This is the administration’s third try on a travel ban against foreign nationals from Muslim-majority countries.

Direct Supreme Court review of DACA injunction sought. Also in January, the Trump Administration asked the High Court to directly review a California district court’s preliminary injunction issued by a federal district court in California preventing the administration from ending the Deferred Action for Childhood Arrivals program. If granted, the Ninth Circuit would lose its chance to weigh in on interlocutory appeal before the Justices resolve questions at the heart of the case. The administration has already filed a notice of appeal asking the Ninth Circuit to review the January 9 ruling in Regents of the University of California v. U.S. Department of Homeland Security.

Federal Courts of Appeal:

First Circuit: $545K award stands for female firefighter’s sex-plus claim. Refusing to impose a more stringent standard for sex-plus claims (here sex plus sexual orientation) than required for traditional sex discrimination claims, the First Circuit affirmed a jury’s verdict and a judge’s front pay award in favor of a female firefighter who was subjected to “vile verbal assaults” and even had blood and brain matter flung at her by a coworker before she retired on disability due to post-traumatic stress disorder. Rejecting the employer’s contention that a more stringent evidentiary standard should have been applied (it allowed evidence regarding coworkers’ behavior at a union hall outside of work) and that the employee should have been required to identify a comparative class of homosexual male firefighters who had not been discriminated against, the court found this approach not only had “some rather obvious flaws,” but it has not been endorsed by the First Circuit and was in direct conflict with the text and jurisprudence of Title VII (Franchina v. City of Providence, January 25, 2018, Thompson, O.).

Fourth Circuit: EEOC’s EPA suit revived. Agreeing with the Third and Tenth Circuits, a divided Fourth Circuit found that the Equal Pay Act requires that an employer submit evidence from which a reasonable factfinder could conclude, not simply that its proffered reasons could explain the wage disparity, but that the proffered reasons do in fact explain the wage disparity. Further, observed the court, because the employer in an EPA action bears the burden of ultimate persuasion, once the plaintiff has established a prima facie case, the employer will not prevail at summary judgment unless it proves its affirmative defense “so convincingly that a rational jury could not have reached a contrary conclusion.” Turning to the case at hand, which was brought by the EEOC on behalf of three female employees alleging salary discrimination, the appeals court vacated summary judgment in favor of a Maryland state agency, finding that the EEOC established a prima facie violation of the EPA and that genuine fact issues existed regarding whether the pay disparity was due to factors other than gender (EEOC v. Maryland Insurance Administration, January 5, 2018, Keenan, B.).

B&B could not set in-kind value of employee’s housing at what guests pay. Reversing a grant of summary judgment against the FLSA claims of a bed and breakfast (B&B) employee who alleged she was not paid for all time worked or for all overtime owed, the Fourth Circuit explained that the lower court erred in finding that the parties’ agreement on hours worked exempted the employer from the FLSA’s other requirements for calculating the value of in-kind compensation. The case was remanded for the lower court to assess all “pertinent facts” and determine if the parties’ agreement was reasonable, and to make a finding on the reasonable cost of lodging and other in-kind benefits provided to the employee (Balbed v. Eden Park Guest House, LLC, January 25, 2018, Motz, D.).

Eighth Circuit: Panera can’t cap substantial bonus after performance had begun. Affirming a decision in favor of a group of Panera managers who sued their employer based on its attempt to cap the amount of the five-year bonuses they already had been promised, the Eighth Circuit found Panera could not modify its bonus offer in this way after performance had begun. As had the district court before it, the appeals court concluded that Panera’s promise to pay the bonus, which it put in writing when it asked managers to sign an employment agreement with a compensation plan that provided for the one-time bonus to be paid five years after execution, was an offer for a unilateral contract. Thus, imposition of the cap was an ineffective attempt to modify its unilateral contract offer (Boswell v. Panera Bread Company, January 5, 2018, Arnold, M.).

Tenth Circuit: Requiring use of vacation or swapping of days for Sabbath may violate Title VII. In a Title VII suit by two Seventh Day Adventists, who were fired for excessive absences after Kellogg’s new scheduling policy required they work every other Saturday, the Tenth Circuit refused the employees’ and amicus EEOC’s invitation to adopt a per se rule that a “reasonable” accommodation must completely eliminate the conflict between an employee’s religious practice and work requirements. Reversing the grant of summary judgment against their failure-to-accommodate claim, the court found a triable question on whether Kellogg reasonably accommodated them by requiring that, to avoid working on the Sabbath, they use vacation or other accrued time off or find a qualified coworker to swap schedules (Tabura v. Kellogg USA, January 17, 2018, Ebel, D.).

Other notable developments:

Sessions turns back clock on marijuana enforcement. In a January 4 memorandum, which he characterized as “a return to the rule of law,” Attorney General Jeff Sessions reversed course on federal marijuana enforcement policy, instead directing all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities, including the Controlled Substances Act. The memo wipes out earlier guidance, including a 2013 memorandum issued by then-Deputy Attorney General James M. Cole, which backed off of marijuana prosecutions—except in certain priority instances—in light of state ballot initiatives legalizing the substance for personal use in small amounts and providing for regulation of production, processing, and sale of marijuana. It also acknowledged, that outside those priority areas, the federal government has left it to state and local law enforcement to address marijuana activity via their own narcotics laws. Some 29 states and the District of Columbia have enacted laws governing the medical use of marijuana, and several states and the District of Columbia have enacted laws permitting personal consumption, several predating the Cole memorandum. Sessions’ new guidance casts doubt on the status of those laws in light of its reversal of federal enforcement policy and complicates matters for employers, who are already experiencing significant challenges managing employees who legally use marijuana for medical or recreational purposes under state laws.

NLRB GC wants to stay McDonald’s case. Following its upheaval on the joint-employer scene and a substantial tilt toward employers, the NLRB is asking an administrative law judge to stay proceedings in the high-profile McDonald’s USA, LLC, case in which the Obama-era Board had asserted that the fast-food giant is a joint employer of certain franchise employees. The new Republican General Counsel also cited his Board’s reversal of precedent on facially neutral workplace rules, policies, and employee handbook provisions.

DOL to use primary beneficiary test to decide when interns working at for-profit employers are subject to FLSA. In an announcement on January 5, citing the Ninth Circuit’s December 19, 2017, opinion in Benjamin v. B & H Education, Inc. expressly rejecting the DOL’s six-part test for determining whether interns and students are employees under the FLSA, the Labor Department clarified that going forward it would use the “primary beneficiary” test. The Ninth Circuit was the fourth federal appellate court to expressly reject the DOL’s six-part test. In its announcement, the DOL said that the agency will conform to these appellate court rulings by using the same “primary beneficiary” test that these appellate courts use to determine whether interns are employees under the FLSA. “The Wage and Hour Division will update its enforcement policies to align with recent case law, eliminate unnecessary confusion among the regulated community, and provide the Division’s investigators with increased flexibility to holistically analyze internships on a case-by-case basis.”