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Excluding employees from meetings, micromanaging, and other facially neutral conduct can show unlawful intent

May 20th, 2014  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

When it comes to nonverbal interactions, most supervisors know that threatening body language, touching, more-than-minor pranks, or adverse employment actions like termination can support discrimination, hostile work environment (HWE), or other claims under employment laws. But those same supervisors may think it is no big deal to merely watch an employee’s work extra closely, to exclude non-essential personnel from a meeting, or take other seemingly neutral actions. Courts do not always view it that way. Micromanaging could mean an employee needs guidance, but it could also mean a supervisor is looking for reasons to fire someone (perhaps in retaliation for protected activity). And excluding someone from a meeting, particularly if he or she typically attends such meetings, could be viewed as shunning an employee.

We are often told by courts that Title VII is not a general civility code. For this reason, facially neutral conduct may not be enough by itself to show a hostile environment, discrimination, or retaliation. However, nonverbal communication makes its way into employment litigation more than you know and, in the right context, even arguably neutral actions will suggest improper motives. Here are some examples.

The cold shoulder.  An employer should have the discretion to make routine decisions like where to place employee desks and who to include in meetings, right? The answer is “usually.” In several cases employees’ allegations of being excluded from meetings, moved away from coworkers, or otherwise isolated have supported HWE, discrimination, and retaliation claims. In one case, a federal court in Texas refused to dismiss the retaliation claim of an administrative assistant who was moved to a different desk area, left out of meetings in which she was previously included, and ignored by her supervisor after she was named as a witness in another employee’s discrimination suit (Slaughter v College of the Mainland).

Similarly, a federal court in Pennsylvania refused to dismiss the HWE and retaliation claims of a female manager who alleged that after she complained of unequal pay, her supervisor left her out of critical business meetings, canceled one-on-one meetings with her, and started directing questions to her subordinates instead of going directly to her (McSparran v Commonwealth of Pennsylvania). Clearly, timing and other circumstances matter.

Erasing an employee.  Removing an employee’s name from a company website or taking other actions that communicate he or she is no longer at the company, even though there has been no termination, can signal to a court that an employer intended to discharge the employee but was perhaps waiting until the timing would be less suspicious or it had a “legitimate” reason to do so. In such cases, the legitimate reason will likely be called into question, and the employer’s pre-termination actions could suggest pretext. Indeed, in a Texas case, an employer that removed an employee from its website and moved her personal belongings from a shared desk while she was on FMLA leave signaled to the court that it never intended to reinstate her and that her leave was a motivating factor in the decision to fire her upon return (Kendall v Walgreen Co).

Micromanaging. In many cases, employees provide evidence that a supervisor subjected them to greater scrutiny, asserting that the supervisor was looking for mistakes in order to paper the file and justify an adverse employment action that was really taken for an unlawful reason. For example, the Tenth Circuit recently reversed the dismissal of an attorney’s ADEA and Title VII claims based in part on evidence that her supervisor subjected older women to heavier workloads and greater scrutiny as compared to younger male attorneys (Ridgell-Boltz v Colvin).

Difficult assignments. Allegations that an employee was subjected to greater scrutiny for unlawful reasons often go hand in hand with allegations that he or she was given a heavier workload, more difficult assignments, or insufficient time to complete tasks. It is beyond dispute that being given difficult assignments or heavy workloads is just part and parcel of working in certain professions. But in some circumstances, it can appear suspicious. In a California case, evidence that a supervisor made a pilot’s job onerous by requiring him to report to a hangar that involved a 75-mile commute and to take a temporary assignment in Afghanistan — after the supervisor allegedly said he wouldn’t let the “senior guys” retire in place — supported the pilot’s age discrimination claim. The onerous assignments may not have been enough to show an HWE or constructive discharge, but they were evidence of discriminatory intent (Offield v Holder).

Enforcing policies. Discipline may not be facially neutral, but enforcing policies arguably is. Where employers face trouble is when they start enforcing policies that were previously ignored or when they enforce a policy inconsistently between employees. For example, whistleblower claims by a CVS manager survived summary judgment after a Tennessee court noted that he had been a model employee for 13 years but then, after he complained over the pharmacy dispensing out-of-date medications, he was terminated for a single violation of a “zero tolerance” policy that hadn’t even been reduced to writing (Walls v Tennessee CVS Pharmacy, LLC).

Key considerations

While it would be impractical, if not impossible, for employers to scrutinize every neutral action taken or business decision made by supervisors, certain actions deserve at least some special consideration because they appear on a regular basis in employment cases. As the examples above show, these often include “shunning” (usually isolation from coworkers or exclusion from meetings), micromanaging, assigning heavy or difficult workloads, or strictly enforcing policies. As to these actions, context is key when courts are deciding if they are merely the “ordinary tribulations of the workplace” or are something more. In particular, answers to the following questions can be determinative on questions of intent and pretext:

  • Is the exclusion from meetings, change in workspace, scrutiny, or heavy workload something new? If so, courts will look closely at what preceded the change to provide context (and possibly find pretext). For example, did the employee who is being excluded or scrutinized recently complain of what he or she believed was unlawful conduct?
  • Was the employee the only one being subjected to the action? If so, the question becomes why? Considerations may include the employee’s history, recent interactions with the decisionmaker, and any recent protected activities by the employee, such as FMLA leave, complaints of unlawful activity, or requests for accommodation.

Note that even if a court finds inconsistency or suspicious changes, discrimination or other claims will not necessarily succeed in the end. However, such considerations can go a long way in raising triable questions as to intent or pretext.

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Recent NLRB developments on the employee handbook front

May 15th, 2014  |  Lisa Milam-Perez  |  Add a Comment

By Lisa Milam-Perez, J.D.

Union and nonunion employers alike have had to keep a watchful eye on the NLRB in recent years. The agency has begun to forage on new turf — the ubiquitous employee handbook — as it seeks to unearth violations of employees’ protected rights under the NLRA. The Board has challenged a number of common handbook provisions, resulting in disparate holdings even under quite similar facts, and leaving confusion and consternation in its wake. Here’s a look at the latest developments on that front.

ALJ ignores GC. In late April, an NLRB law judge struck down a communications policy embodied in Kroger Co. of Michigan’s handbook. The challenged provision required employees, whenever they published “work-related information” online and identified themselves as Kroger employees, to include a disclaimer stating “the postings on this site are my own and do not necessarily represent the postings, strategies, or opinion of the Kroger Co. family of stores.” According to the ALJ, this requirement was a tedious enough burden on employees that it would dissuade them from exercising their protected statutory rights online. It was overbroad, the ALJ said, in that it applied to all manner of online communications in which work-related information was discussed, including Facebook postings.

Unfortunately for Kroger, it mattered little that, in drafting its policy, the company used language that was approved by the NLRB acting general counsel Lafe Solomon in a 2012 report on social media cases. The ALJ was unpersuaded by the GC guidance (which lacked precedential value). The ALJ also rejected Kroger’s argument that another regional director had settled charges against an employer by allowing it to maintain a policy nearly identical to the one here. “It simply does not matter what position a Regional Director took in a different case three years ago in order to settle that case,” the law judge said.

In another recent decision, an ALJ invalidated several overly broad handbook rules and found the employer’s attempt to repudiate them was insufficient. One faulty provision was an “inappropriate conduct” rule that barred disclosure of confidential company, customer, and employee information, including confidential information maintained in personnel files. This clause would lead employees to reasonably believe they were restricted from being openly critical of the employer’s treatment of its workers and from discussing wages, benefits, and related information with coworkers or union reps, the ALJ found.

Another rule directed employees to refrain from posting certain information and comments on the Internet. It was not restricted to confidential or even company information; it didn’t distinguish between protecting information about customers or company business (restrictions that would conceivably be lawful) and the sharing of other information; and thus it was inherently overbroad. Also problematic: It prohibited the posting of any information without the company’s prior approval.

Division of Advice OK’s at-will statements. The Division of Advice found nothing unlawful in a handbook provision that prohibited anyone other than the company’s senior vice president from modifying employees’ at-will employment status, or its express statement that “[n]o statement, act, series of events or pattern of conduct can change this at-will [employment] relationship.” The employees would not reasonably construe the policy to prohibit Sec. 7 activity, according to a recent advice memo. Taken in context, it was clear the at-will statement wasn’t aimed at employees’ protected conduct under the Act but rather, was meant to guard against lawsuits based on the contention that the handbook was an enforceable employment contract, according to the Division of Advice. Therefore, the clause did not conflict with potential attempts by employees to unionize.

This latest directive was good news for employers in light of ongoing concerns in recent years that the Board was levying a direct attack on at-will employment clauses. The controversy first erupted in February 2012, when a regional director filed a complaint contending that an at-will provision maintained by the Hyatt Hotels violated Sec. 7 rights. The problem, according to the complaint, was that employees had to acknowledge receipt of the provision, which essentially forced them to affirm that their at-will status could not be changed — leading them to reasonably believe they could never unionize. The at-will policy in question here, though, did not require employees to effectively waive their right to participate in future Section 7 activity.

Since that time, the General Counsel’s office has issued advice memoranda on several at-will employment clauses, deeming them lawful, and ALJs have considered and condoned numerous at-will provisions brought before them. The agency’s position (once seen as murky, at best, and as “a ruse” by at least one management lawyer) appears to have crystallized: At-will provisions are lawful as long as they don’t require employees to acknowledge their at-will status is unchangeable (and, consequently, that efforts to unionize thus would be futile). It should be noted, though, that in a February 2014 directive to regional directors, the General Counsel’s office mandated that all cases involving at-will provisions in employer handbooks must be submitted to the Division of Advice (unless they are otherwise resolved through extant advice memoranda) — signaling that careful scrutiny of such provisions may continue.

Board rejects numerous handbook policies. The fervor surrounding the NLRB’s scrutiny of employee handbooks arose while the agency was hampered by challenges to the legitimacy of Board members’ (and, to a lesser extent, the acting general counsel’s) appointments. Thus, the NLRB’s jurisprudence on the issue could be readily called into question. However, the Senate-sanctioned, five-member NLRB has now begun to field handbook cases that have percolated up from the regions, and its members have recently found a number of provisions unlawful on their face:

• A “standards of behavior” policy prohibiting “negative comment about our fellow team members” (including managers) and engaging in “negativity or gossip,” and requiring employees to “represent [the Respondent] in the community in a positive and professional manner in every opportunity” (Hills and Dales General Hospital);
• A bus company’s rules barring disclosure of “any company information,” including wage and benefit information; prohibiting employees from making statements about work-related accidents to anyone but the police or company management; prohibiting “false statements” about the company; barring participation in outside activities that would be “detrimental” to the company’s image, “discourteous or inappropriate attitude or behavior to passengers, coworkers, or the public,” and prohibiting employees from engaging in “disorderly conduct during working hours” (First Transit, Inc);
• A social media policy in an employee handbook which required that employees’ contacts with parents, school representatives, and school officials be “appropriate,” and also included a provision subjecting employees to potential discipline for publicly sharing “unfavorable” information “related to the company or any of its employees” (Durham School Services).

In addition, an employer last month agreed to rescind its nationwide social media policy to resolve an NLRB complaint alleging the policy interfered with employees’ rights to discuss terms and conditions of employment on social media. Under the terms of its settlement with the Board, the employer will mail notices advising employees that they will not be prohibited from using social media to discuss their terms and conditions of employment.

Board’s handbook approach condoned. Finally, the NLRB recently secured a ruling from the Fifth Circuit enforcing its order which found a nonunion employer had unlawfully maintained an overly broad confidentiality rule that barred discussions of “personnel information” outside the company. The rule would in effect, if not expressly, prohibit employees from discussing wage information, thus chilling their protected rights. The very existence of the provision was violation enough, the appeals court agreed, even absent evidence of enforcement.

Thus, the circuit court that had slapped the NLRB’s wrist in D.R. Horton, Inc v NLRB as the agency moved to invalidate employers’ mandatory arbitration agreements gave its seal of approval to the Board’s rejection of a nonunion company’s handbook rule in what, incidentally, had been a divided decision below. In fact, in his dissent, Member Hayes noted that the D.C. Circuit has been “particularly critical” of the Board’s failure to give a fair reading to employers’ confidentiality rules in their entirety and predicted that, were the case to go up before that court on review, “it will likely suffer the same rebuke.” The Fifth Circuit saw it differently, however.

Drafting tips for the wary. Where does this leave employers as they strive to fashion workable handbook policies that can survive NLRB scrutiny while simultaneously meeting the organization’s business needs? While it can be difficult to reconcile the various holdings in recent years, a few instructive principles emerge:
Context matters. As former Member Hayes noted, a particular handbook provision cannot be read in isolation, and the agency’s rulings are rife with examples of this principle in action. However, there is little sympathy for the “in context” defense if it would expect an employee to reconcile clauses, “when read together,” from far-flung pages of the handbook. An employer won’t fare well with claims that a broad confidentiality rule on page 3 is meant to apply only to a provision on protecting intellectual property discussed on page 16. If a particular policy must be placed in a remote location from its “context,” clearly reference and cite to the relevant provision that purportedly informs the intended meaning.
Prior restraint is a no-no. A general rule requiring employees to request permission before posting online communications constitutes unlawful interference. As Kroger Co. learned, a seemingly innocuous requirement (such as a straightforward disclaimer) may be seen as unduly cumbersome for employees in the eyes of a law judge.
“Ambiguous” equals “overbroad.” While ambiguous terms are often used to afford some wiggle room in enforcing a handbook rule, “ambiguity” often equals “overbroad” in the NLRB’s perusing eyes. Provide specific examples of the conduct that a particular rule is intended to proscribe (stressing, of course, that the examples are illustrative and not exhaustive). Extra points are awarded for noting exceptions — e.g., a statement that your confidentiality rule “is not intended to prohibit employees from discussing wages or any other specific terms and conditions of employment.”
Take “advice” with a grain of salt. As the Kroger Co case above makes clear, reliance on the General Counsel’s guidance when drafting handbook provisions isn’t foolproof.
No harbor is safe. The NLRB undoubtedly has sent mixed messages in the past on the utility of including safe-harbor provisions in employee handbooks. A savings clause, in theory, should shield your organization from Board charges, provided it makes clear to employees that you have no intention of interfering with their Sec. 7 rights. But such a provision must be drafted with care. One challenged handbook included a “freedom of association” policy expressly stating that management supported the right of employees to vote for or against union representation, without interference. But the provision “focused solely on union organizational rights,” the Board lamented, striking the clause because it failed to address “the broad panoply of rights protected by Section 7.” Truth be told, though, it’s not certain that even the most artfully drafted clause will have its intended prophylactic effect.

Facing a handbook charge? Finally, a few points to keep in mind when confronted with an NLRB enforcement action over an employee handbook provision:
Repudiate like you mean it. The NLRB expects employers to be emphatic when attempting to repudiate a problematic handbook policy. Quietly stripping the offending provision isn’t likely to placate the agency in enforcement proceedings. An employer must be timely and unambiguous in disclaiming the improper language, and upfront in notifying employees of the change.
“Tend to chill” is the test. An argument that none of your employees have actually interpreted your handbook provision as restricting their rights under the NLRA will be dead on arrival. Alas, that’s the frustrating nature of grappling with the NLRB. But the test is whether your handbook rule theoretically “would reasonably tend to chill” employees in the exercise of their rights, not whether it’s actually done so.
The rule’s the thing. Similarly, whether your organization has actually enforced a challenged handbook provision in a discriminatory or heavy-handed manner is irrelevant. Again, the “reasonably tend to chill” test applies. There need not be an aggrieved employee for the Board to take issue with the rule on its face.
Your case is unprecedented. Handbook cases remain relatively uncharted territory, and the Board’s law judges and regional directors are reaching independent decisions on a fairly blank slate. Don’t stake your litigation strategy on the presumption that your (arguably) identical facts will result in a similar outcome.
It ain’t over til it’s over. Employee handbook complaints typically arise in relation to an employee’s (or union’s) filing of an unfair labor practice complaint — very often in response to an unrelated gripe, at which point the agency will ask to see your handbook. So even if you manage to peacefully resolve the underlying dispute with your employee, that doesn’t mean you’ve squared things with the Board.

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Sixth Circuit decision is a road map for navigating telecommuting as a reasonable accommodation

May 14th, 2014  |  Joy Waltemath  |  Add a Comment

By Joy P. Waltemath, J.D.

In April, the Sixth Circuit reversed summary judgment for Ford Motor Co. on the EEOC’s claim that Ford had failed to reasonably accommodate its employee’s request to telecommute part-time to address flare-ups of her irritable bowel syndrome (IBS), a condition that can cause fecal incontinence (EEOC v Ford Motor Co). Ford fired the employee from her position as a resale steel buyer after she asked to telecommute for up to four days per week in an attempt to control her IBS symptoms.

Employers are particularly concerned that the Sixth Circuit walked back its earlier pronouncement that telecommuting was not a reasonable accommodation for most jobs; it found instead that “the class of cases in which an employee can fulfill all requirements of the job while working remotely has greatly expanded.” Despite some well-publicized retractions of the privilege, telecommuting is a growing phenomenon. Telecommuting reportedly has risen 79 percent between 2005 and 2012, according to the Census Bureau’s American Community Survey. Yet full-time employees who work from home at least half the time (and are not self-employed) make up only 2.6 percent of the American work force, or about 3.2 million workers. Regardless of employers’ legitimate concerns, the Sixth Circuit opinion can be read as a roadmap for how to handle telecommuting as a reasonable accommodation.

Don’t confuse attendance with physical presence

The Sixth Circuit majority found that the employee (here aided by the EEOC) had evidence that she was “otherwise qualified” for her resale steel buyer position either if “physical presence at Ford facilities” was not an essential job function or if she were provided with a telecommuting accommodation. In the majority’s view, Ford kept confusing physical presence with regular attendance, pointing out that given advances in technology and the evolving nature of work, the “workplace” is anywhere that an employee can perform her job duties.

Is face-to-face physical presence necessary? Clearly teamwork was critical, and Ford believed face-to-face interactions facilitate group problem-solving. But, in an approach that employers continue to find unsettling, the Sixth Circuit was unwilling to defer wholesale to Ford’s business judgment that her physical presence was essential. The employee had evidence that experientially seemed to ring true: She said even when she was on-site at Ford, “the vast majority of communications and interactions with both the internal and external stakeholders were done via conference call.” Plus, when she had to conduct site visits, she also was not physically present in Ford’s workplace.

Is telecommuting a reasonable accommodation?

Something the Sixth Circuit said that has caused a lot of consternation is that, since it first pronounced in 1997 that telecommuting was not a reasonable accommodation for most jobs, “the class of cases in which an employee can fulfill all requirements of the job while working remotely has greatly expanded.” Here it found the employee had enough evidence to create a genuine fact dispute over whether her job was one that could effectively be performed at least part-time from home.

Don’t confuse telecommuting with flex-time. Ford said that telecommuting could not be a reasonable accommodation because resale buyers had to “interact regularly with other team members and access information that was unavailable during non-core business hours.” But the court believed Ford was confusing flex-time with telecommuting. Here the employee had specifically requested the option to telecommute during normal business hours. Ford’s stated concerns did not depend on her physical presence in the office, but rather on her consistent availability during “core” hours. The court found that Ford lacked evidence that a telecommuting arrangement, as opposed to a flex-time arrangement, was inherently problematic.

Engage in the interactive process on telecommuting requests. Ford also argued that, given the employee’s prior absences, her request to telecommute for up to four days a week was unreasonable. To that, the court countered that it was Ford’s obligation to engage in the interactive process to explore alternative accommodations, especially where the employee indicated she would accept one or two days a week as an alternative. Plus, Ford could not use the employee’s past attendance issues as a reason to deny her an accommodation because her absences were related to her disability, flare-ups of her IBS.

Offer truly reasonable alternative accommodations. Employers are also likely to be troubled by the Sixth Circuit’s finessing of the fact that Ford offered, and the employee rejected, two alternative accommodations: moving her cubicle closer to the restroom and finding an alternative position “more suitable” to telecommuting. But the court found there was a genuine fact question as to whether those alternatives adequately accommodated the employee’s disability.

Merely moving her to a cubicle closer to the restroom did not fully accommodate her disability, stated the court, if during IBS episodes she had no control over her bowels for the time it would take to reach the restroom. Nor did the majority think it reasonable to expect an employee “to suffer the humiliation of soiling herself on a regular basis in front of her coworkers, merely because she could use Depends to contain the mess or bring a change of clothes to clean herself up after the fact,” it said, pointedly rejecting the dissent’s approach. As for Ford’s  offer to find her an alternate job that was more amenable to telecommuting, there was no guarantee that such a position would be forthcoming, the court remarked, and anyway, reassignment is only considered “when accommodation within the individual’s current position would pose an undue hardship,” and that was not the case here.

Lessons for employers

Employers can use the Sixth Circuit opinion as a roadmap to handling telecommuting accommodation requests:

  1. Treat every request for telecommuting as an accommodation seriously. At least in this circuit, the class of jobs for which telecommuting as an accommodation is per se unreasonable just got a lot smaller.
  2. Don’t confuse “physical presence in the workplace” with regular attendance. Telecommuting employees have to come to work every workday, just as do employees who work on-site. Regular attendance is a pretty much an essential job function for both. A request to telecommute is not a request for leave or extra time off. As for face-to-face communication, be honest: to how many meetings do participants dial-in? How much business (or teamwork, or problem-solving) is conducted by phone or email vs. face-to-face?
  3. Don’t confuse telecommuting with flex-time. Again, while telecommuting may include flexible hours, it certainly does not have to. If an employee’s availability during normal business hours is an essential job function, that fact does not necessarily preclude a telecommuting arrangement. Similarly, flex-time may also be a reasonable accommodation, whether an employee is on-site or working remotely. For purposes of investigating a reasonable accommodation, a certain level of precision is important.
  4. Engage in the interactive process on the accommodation request. No matter how off-the-wall an employee’s accommodation request appears initially, employers are only going to help themselves if they engage – carefully and without making promises – in the interactive process. Have a serious, good-faith discussion; this is even more important if the employee is trying to overreach. You want the equities in your favor.
  5. Make sure your alternative accommodations are not illusory. Moving the employee’s cubicle closer the restroom may or may not have been an illusory accommodation. What is “closer” to the restroom, anyway? If incontinence could result simply from standing up, would this truly have been a reasonable accommodation? Similarly, “finding an alternative position within Ford more suitable for telecommuting” may also have been illusory; there was no actual position ever offered. As for the dissenting judge’s suggestion that “Depends” and a change of clothes could make this alternative accommodation reasonable, it’s not a bad idea to consider the reasonableness of an accommodation by first asking how you might perceive it were it to be offered to your spouse or parent, and second by considering how it might play before a jury.

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House workforce committee holds hearing on union organizing of student-athletes

May 9th, 2014  |  Lisa Milam-Perez  |  Add a Comment

By Lisa Milam-Perez, J.D.

The House Education and the Workforce Committee held a hearing on Thursday, May 8 to explore the “troubling” consequences of a National Labor Relations Board (NLRB) regional director’s ruling that student-athletes are statutory employees under Section 2(3) of the National Labor Relations Act (NLRA) for collective bargaining purposes. Committee members heard testimony from higher education officials, labor law and antitrust attorneys, and a former student-athlete, all of whom pondered the implications of student-athlete unionization on both college athletics and college athletes. Absent from the hearing was testimony representing organized labor’s perspective on the ongoing controversy.

In March, an NLRB regional director in Chicago ruled that “grant-in-aid” scholarship players on Northwestern University’s football team were employees within the meaning of the NLRA, opening the door for the athletes to join the College Athletes Players Association (CAPA), a Steelworkers-backed union. According to Rep. John Kline (R-Minn), who heads up the House labor committee, the decision “represents a radical departure from longstanding federal labor policies.” The NLRB has agreed to take up Northwestern’s challenge to the regional director’s ruling. While the Northwestern players voted as scheduled in a representation election in late April, the ballots were impounded pending a resolution on their employment status by the Board.

Too many “tough questions.” In opening statements, Kline contended there were “tough questions” to be resolved before students and university administrators should be forced to face off at the bargaining table. “What issues would a union representing college athletes raise? Would a union negotiate over the number and length of practices? Perhaps the union would seek to bargain over the number of games. If management and the union are at an impasse, would players go on strike? Would student athletes on strike attend class and have access to financial aid? How would student athletes provide financial support to the union? Would dues be deducted from scholarships before being disbursed to students? Or are students expected to pay out of pocket?”

Not a sports franchise. “Baylor University is emphatically not a professional sports franchise,” said Ken Starr, President and Chancellor of the private, Christian institution. According to Starr, the decision marked “a fundamental paradigm shift with respect to the relationship between universities and their student-athletes.” The regional director’s approach to simply compare the time spent on academics to the time spent on athletics, applying “a rigidly wooden test drawn from the common law,” fails to recognize the players’ primary status as students — “an irreducible condition precedent to the entire relationship between the university and its student-athletes,” he noted — and instead relies on factors that “range widely both by student… and by institution.”

The decision, if affirmed by the Board, would “likely leave in its wake years of litigation with respect to the appropriate scope of bargaining” and also would beg questions as to the appropriateness of the bargaining unit, Starr said. Members of a team who have no grants-in-aid “could be subjected to the full panoply of rules negotiated by the exclusive bargaining representative” even while the union would owe no fair representation duty to those adversely affected by the outcome of negotiations. Also problematic, in his view, is the lack of a community of interest between the majority of team members and the handful of star athletes who realistically aspire to a future in professional sports and have an economic interest in the use of their images (an ongoing point of contention among the student-athletes).

The “complex legal questions” posed by a decision that student-athletes are employees “will likely take years to sort out,” according to Starr, and “a number of unintended consequences will likewise arise.” Because college athletics is not a profit center for the vast majority of colleges and universities, the decision could cut sharply into the financial and academic support that schools could provide their student-athletes, he said. Moreover, it would breed “uncertainty and instability across the higher education landscape,” Starr urged. The fact that the decision would apply only to private institutions, and implicitly exclude state schools, would create structurally significant disparities between various colleges and universities that compete with one another in intercollegiate athletics.

“Profound and unworkable.” As Seyfarth Shaw’s Bradford L. Livingston testified, the NLRB traditionally has distinguished between “individuals engaged in a commercial relationship and those that — while arguably falling into the most literal definition of ‘employee’ under Section 2(3) — nevertheless fall outside the Act’s reach due to the innately non-commercial nature of the educational relationship at issue.” Such was the case here, in his view, and the consequences of a contrary finding would be “profound and unworkable.”

And while it’s true that intercollegiate sports bring in big money for some universities, Livingston argued that “[r]evenue generation should not be determinative of the NLRA’s application to any particular student-athletes.” Many college teams generate little revenue but have significant costs. Paradoxically, those student-athletes would have even more reason to unionize, Livingston speculated, because they face the prospect that their programs could be cancelled — a concern not faced by athletes in revenue-generating sports. “Under the NLRA, the economics or profitability of the employer should be irrelevant.”

Livingston echoed concerns about the inherent conflicts presented by the limited jurisdictional reach of an NLRB finding that student-athletes are statutory employees. “[B]ecause most major college football programs are part of public institutions, the NLRB has statutory jurisdiction over only 17 of the roughly 120 colleges and universities that play major college football,” he noted. “In asserting jurisdiction, the NLRB’s rules would apply to these teams in ways inapplicable to more than eighty-five percent of their intercollegiate competitors. And those remaining 100 or so public institutions are subject to, where such laws exist, a variety of conflicting state statutes as to whether or not their public universities’ student-athletes could organize and, if so, over what subjects they could bargain collectively. The resulting patchwork of laws, differing collective bargaining agreements, and uneven terms governing student athletes would be unworkable,” Livingston testified.

Citing too the NLRB’s recent Specialty Healthcare decision and the agency’s nod to smaller, separate bargaining units, Livingston asserted, “[w]ith separate offensive and defensive coordinators, position coaches, playbooks, and game plans, a college would face an uphill battle in meeting its burden of proving that the remainder of the football team share an overwhelming community of interests if a labor union seek to represent just the team’s offense or defense. Likewise, offensive linemen, defensive backs or quarterbacks each may share their own separate community of interests. And because unions petition for bargaining units where they believe they can win an NLRB election, these types of units are inevitable.”

In a footnote to his prepared testimony, Livingston pointed out the broader implications of student-athletes as employees — including their corresponding rights under Title VII, the FLSA, the ADA, ERISA, and state laws. Among the myriad legal issues that would arise under these other employment statutes: “[A]are student-athletes ‘on the clock’ and entitled to compensation if a coach requires attendance in class or at study halls? If a player is late for practice and as a penalty must spend time in an extra study hall session, is that time compensable? Under the Americans with Disabilities Act, could a player with a doctor’s note be excused from practice, but still expect to play in the game? During the break between the Spring and Fall semesters when athletes are no longer receiving their scholarships, are they entitled to unemployment compensation? Could the EEOC challenge a university’s scholarship offers and acceptances under a disparate impact analysis? Could the EEOC challenge a failing grade in a class under disparate treatment analysis? If they are considered employees, would student athletes’ scholarships be considered taxable income that is subject to withholding and income tax, and if so, would it make a college education unaffordable for many current scholarship recipients?”

A “price-fixing cartel.” Andy Schwarz, a partner at OSKR, LLC, and economist who specializes in antitrust economics, approached the issue from a different angle. Noting the panel’s focus on the “unintended consequences of unionizing college football,” he asserted that “the biggest threat to college sports from collective action is the current price-fixing cartel called the NCAA. By price-fixing, I am focused on how the 351 Schools in Division I stifle healthy economic competition through collusion to impose limits on all forms of athlete compensation.”

“College football is big business,” Schwarz said, noting that “individual [college] athletic departments regularly generate more revenue than almost all NHL and NBA teams.” Yet, he asserted, the NCAA deliberately coined the term “student-athlete” specifically “to dodge legal responsibilities for athlete safety and medical expenses. In time, that term has also served to disguise its economic collusion.” The NCAA “devotes millions to investigate suspicions of possible market compensation while denying it has any legal responsibility to protect the heads or bodies of its athletes,” Schwarz said.

He also noted that 40 to 45 percent of all college football players “come from families with low enough means that they receive Pell Grants” and that, in some cases, “athletes qualify for food stamps.” However, Schwarz continued, “[b]ecause most athletes do not go on to work in the NFL, the current system denies more than 95 percent of college football players access to the four best earnings years of their sports careers.”

“Something far more valuable.” Bernard M. Muir, Stanford University’s athletic director, acknowledged that “the vast majority of our student-athletes will not go on to earn a living in professional sports careers.” But, he noted, while Stanford student-athletes do not receive salaries, “they receive something far more valuable — and that is an academic experience of the very highest quality, funded in many cases by scholarship support, that rigorously prepares them for leadership and success in the world.” Muir asserted that Stanford’s student-athletes are, first and foremost, students, and the beneficiaries of a rigorous, top-notch academic program. A number of Stanford student-athletes have gone on to earn master’s degrees, he noted.

A means to an end. “I was not an employee… nor did I want to be one,” said Patrick C. Eilers, a former student-athlete at Notre Dame and currently managing director of Madison Dearborn Partners. “I also worry about the unintended consequences of being deemed an ‘employee’ and what unionization could bring to college athletics.”

Nonetheless, he observed that the players’ impetus to join a union was “a means to an end, a vehicle if you will, to implement improvements to our collegiate athletic system.” And he supported the underlying goals that prompted their drive to seek collective bargaining — including mandated four-year scholarships, health and insurance benefits, stipends, and transfer eligibility. “I believe there is little debate about the necessary logical improvements,” Eilers said. “I believe the debate today should instead be focused on seeking the most effective vehicle to cause the implementation of these improvements.”

“Units of production.” Rep. George Miller, the House labor committee’s senior Democrat, responded to the hearing testimony from his traditionally pro-labor vantage point. “By banding together and bargaining, these athletes can win the kinds of things union workers have demanded and won across the country, including a say about avoiding serious injury on the job, medical benefits and security if something does go wrong, meaningful input into how they balance their work — in this case football — with their academic needs and other responsibilities, and the respectful treatment and care they so richly deserve,” Miller said. “Our nation’s talented college athletes have become units of production that are over-scheduled and over-worked, left without safeguards for their health and safety, and encouraged to put their education on a backburner in favor of their success on the field.”

More harm than good. “There is no question the legitimate concerns of student athletes must be addressed, but doing so at the collective bargaining table will do more harm than good,” said Kline. “Instead of treating student athletes as something they are not,” he continued, “let’s help ensure the real challenges they face are resolved… We share the concerns of players that progress is too slow, but forming a union is not the answer.”

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Employee pushes back against employer requirement that workers sign noncompetition agreements

May 1st, 2014  |  Ron Miller  |  Add a Comment

It is not an uncommon practice in today’s workplace for an employer to require employees to sign some sort of non-compete, non-disclosure, non-solicitation, or confidentiality agreement to protect its competitive position should a former employee secure employment with a competitor. However, in a recent case, Darr v Roberts Marketing Group, LLC, an employee challenged an employer’s requirement that he sign a noncompetition agreement as a condition of continued employment. More importantly, although the employee ultimately voluntarily left his employment, a Missouri Court of Appeals determined that he was still entitled to unemployment benefits because his resignation was with good cause attributable to the employer.

Noncompete agreement as condition of employment. The employee sold life insurance for his employer. Several months after he was hired, the employer announced that it would be implementing a new noncompete agreement for its employees. In addition to containing confidentiality and noncompetition provision, the new agreement required employees to pay all of the employer’s costs, expenses, and reasonable attorney’s fees required to enforce the agreement. There was also a waiver of any right to a jury trial; a severability clause; and a waiver of the application of the rule of strict construction against the drafter of the agreement. All employees were required to sign the noncompete agreement, and it was a condition of employment.

In a meeting with his direct manager and the company’s VP of sales, the employee stated that he was not inclined to sign the agreement and that he needed to speak with his attorney. In view of the employee’s hesitancy to sign the agreement, he was told that he could transfer to a marketing position as an accommodation. However, he declined because it would involve a less lucrative compensation structure. Moreover, eventually every position in the company would be required to sign the noncompete agreement. Ultimately, the employee was given a deadline in which to turn in the agreement. After the employee met with an attorney, he was advised that the agreement was unconscionable and told not to sign it.

When the employee next reported to work, he was escorted to the HR office. Fearing that he might be arrested for trespass, the employee voluntarily left the premises. He was later told that the employer regarded his leaving as job abandonment. The employee did not contact the employer or return to work.

Unemployment claim. But the employee did file a claim for unemployment benefits. Initially, a deputy determined that the employee was not disqualified from receiving benefits because he was not discharged for misconduct. Specifically, the deputy found that the employee had been discharged because he declined to sign the noncompete agreement and that his employer had changed his conditions of work. However, an appeals tribunal reversed the deputy’s determination, finding that the employee voluntarily left his employment without good cause attributable to the employer. The Labor and Industrial Relations Commission adopted the decision of the appeals tribunal. This appeal followed.

On appeal, the employee challenged the Commission’s determination that he left his employment voluntarily and subsequently disqualifying him from receiving unemployment benefits. The Missouri appellate court agreed with the employee that substantial record evidence compelled a finding that he left his employment to avoid having to sign the employer’s noncompete agreement, which, under the facts of this case, constituted good cause attributable to the employer.

Under Sec. 288.050.1(1) RSMo, a claimant is disqualified from receiving unemployment benefits upon a showing that the claimant left work voluntarily without good cause attributable to the work or the claimant’s employer. A claimant leaves work voluntarily if he leaves of his own accord rather than being discharged, dismissed, or subjected to a layoff. The determinative question is whether the employer or employee committed the final act that severed the relationship.

Good cause attributable to employer. Although the appeals court found that the employee left his employment voluntarily, the question was whether he had good cause, attributable to the work or the employer, remained open. Good cause has been interpreted to mean those circumstances that would cause a reasonable person in a similar situation to leave the employment rather than to continue working. Moreover, the employee must prove that he made an effort to resolve the troublesome situation before terminating his job.
In this instance, the appeals court determined that the message communicated to the employee was that February 1, 2013, was his last day to execute the agreement if he wished to keep his job. The objective reasonableness of the employee’s decision to leave his employment must be evaluated in terms of what he knew and what he reasonably believed on the morning of February 4, 2013, when left the employer’s premises for the last time.

Moreover, the court found that the Commission’s finding dramatically understated the scope and coverage of the agreement. Here, the proposed noncompete agreement was presented to the employee with an ultimatum that it be signed within a very short period of time, affording the employee a limited opportunity to review the agreement and seek legal advice. Further, the agreement would have placed numerous additional restrictions and burdens upon the employee’s ability to find and maintain new employment after leaving the employer.
The agreement would have required the employee to abide by its terms for at least three years, with the potential for up to three additional years from the date of any violation. Moreover, by its terms the agreement would have applied throughout the country and would have applied broadly to the employee’s future endeavors. Additionally, the employee would have been potentially liable for damages in contract far exceeding the ordinary measures of damages, as well as attorney’s fees and costs.

While the court did not expressly determine that the employment was unconscionable, it made clear that it had serious reservations about its enforceability. Nevertheless, the court concluded that applying the objective standard of a reasonable person confronting the same situation, here employee was faced with “external pressures so compelling that a reasonably prudent person would be justified in terminating his employment.” Whether the agreement itself was unenforceable remains for another day in a direct challenge to its provisions. Here, the employee met his burden of establishing both the reasonableness and the good faith of his actions.

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