In a 2012 survey, thirty-six percent of participating workers reported that they discuss politics at work. Of those, 23 percent had a heated discussion or fight with a co-worker, boss, or someone else higher up in the organization. Not surprisingly, then, a recent decision from a federal court in Pennsylvania has served up a reminder as to why allowing politics in the workplace may spell t-r-o-u-b-l-e for the employer. In Lucas v City of Philadelphia (No 11-4376), an African-American employee alleged that he was a surrogate for his supervisor’s hostility toward Barack Obama. The employee claimed that his supervisor made racist comments to him regarding Obama, made him listen to Rush Limbaugh, and made him a surrogate for Obama at work “where he took out his displeasures of what was going on in the political arena and the race arena.”
Around this same time, the supervisor spoke to the employee about violating city policy by failing to remain within five miles of the work area during lunch. He was subsequently suspended without pay for violating this policy three separate times. However, after a bout of anxiety landed him the hospital and then to early retirement, he sued the city alleging, among other things, that he was subjected to a hostile work environment because of his race.
“Weak at best.” The city first argued that the employee failed to show he suffered intentional discrimination. It pointed out that of the 14 employees the supervisor managed, eight were African American and the employee failed to prove that any other African Americans in his unit were subjected to the same treatment. Rejecting this argument, however, the court focused on the employee’s testimony that his supervisor repeatedly commented about his support for Obama because he was black, that he was Obama’s surrogate for his supervisor’s hostility over race and politics, and that the supervisor had a derogatory image of Obama on his computer. Despite finding that this evidence was “weak at best,” the court nonetheless concluded that a reasonable jury could find that the supervisor did, in fact, harbor some racial animus and treated the employee poorly due to his race.
Hyper-sensitive employee? The court also rejected the city’s contention that the supervisor’s allegedly discriminatory actions were merely instances in which he performed his supervisory duties and the employee unreasonably took offense. Noting that there could be some truth to this argument, the court observed that crediting the supervisor’s version of events, it would be inclined to agree that the employee’s interpretation of the conduct at issue was nothing more than the reaction of a hyper-sensitive employee. Crediting the employee’s version, however, the court noted that a reasonable jury could conclude that a similarly situated African American would have been detrimentally affected by the supervisor’s actions. Accordingly, the court allowed the employee’s race-based hostile work environment claim to proceed to trial.
When we think of “taboo” workplace topics, we instantly think of religion, race, and personal issues as subjects to avoid. However, as this opinion illustrates, allowing political incivility into the workplace can be costly for employers who may end up defending an employment discrimination claim as a result, despite evidence that may be “weak at best.”
Just in time for summer hiring season, a recent decision out of a federal district court in New York was a ray of sunshine for employers that offer college internship programs for budding professionals: the court rebuffed former magazine interns at Hearst Corporation in their attempt to pursue state-law wage claims against the company as a class. The ruling could mean that a once-promising cottage industry of class actions by unpaid interns has less growth potential than originally anticipated. However, employers ought not to assume that avoiding wage liability for unpaid interns will be a day at the beach.
Entry-level employees? The status of unpaid interns and their proper classification under the FLSA and other labor laws has been the focus of DOL enforcement efforts in recent years. In 2010, the DOL’s Wage and Hour Division issued Fact Sheet #71, laying out a six-factor test to guide employers in determining whether interns are statutory employees who must be paid minimum wage and overtime under the FLSA. That came on the heels of an Economic Policy Institute report contending that current regulations governing internships typically go unenforced and are in need of reform.
Unpaid internships are especially common in highly competitive, “glamorous” fields — publishing, film, fashion, sports — where job seekers are jockeying for a leg up. “Unpaid interns are becoming the modern-day equivalent of entry-level employees, except that employers are not paying them for the many hours they work,” said Adam T. Klein, an attorney with the New York plaintiff’s firm Outten & Golden, which represents the class in the Hearst case. The law firm contends that the use of unpaid interns often violates the FLSA and state labor laws, and that these workers are unfairly denied the standard benefits of employment and the protections of antidiscrimination laws.
In addition to the Hearst action, the firm has filed several other lawsuits on behalf of unpaid interns, including claims against film company Fox Searchlight and PBS’ Charlie Rose show. (A class certification decision is still pending in the Fox case, brought by an intern who worked for nine months on the movie Black Swan. The Charlie Rose suit, filed on behalf of nearly 200 interns, settled last December for $250,000.)
“These lawsuits will be hot,” said Michael J. Puma, a partner in the Philadelphia office of Morgan Lewis & Bockius, during a May 2012 conference when the complaints were just beginning to pick up steam. “These are kids who are just out of college, there are no jobs out there, they’re minimum wage claims — these are very sympathetic plaintiffs.” Puma predicted that the early spate of suits was a harbinger of more to come.
Not every plaintiff’s firm is chomping at the bit to take intern cases, it should be noted. Paul Lukas, a partner in the Minneapolis plaintiff’s firm Nichols Kaster who litigates class wage suits, sees little promise here. “The problem is you just can’t get a big enough class,” he said. “It’s not like an off-the-clock case where you’ve got a few hundred call center workers.” He also noted that interns are reluctant plaintiffs because they are so eager to secure a full-time job with the employer.
Early win. In response to the recession, Hearst had endeavored to reduce costs by decreasing headcount and expenses. Since 2008, the publisher had used more than 3,000 interns at 20 magazines. Some of the duties performed by the interns — answering phones, making deliveries, and organizing clothing and accessories, among other tasks — were also carried out by paid employees. In fact, several internal emails were unearthed that instructed staff to use interns instead of paid messengers as a cost-cutting measure.
A former Harper’s Bazaar intern filed suit, claiming that she regularly worked more than 40 hours per week at the magazine, and sometimes as many as 55 hours per week, without compensation. In July 2012, a federal court ruled the plaintiff could proceed with her FLSA claim against Hearst as a collective action, certifying a class of all unpaid interns who worked in the company’s magazines division since February 2009. The court rejected the company’s subsequent motion for reconsideration.
Other suits soon followed: a $50 million class action was brought by a former unpaid intern for Elite Model Management. An athletic department intern at Hamilton College filed a minimum wage claim (although he received a stipend, when broken down by hours worked, his pay came to less than $3 per hour). And earlier this month, a former photography intern for an arena football team filed suit on behalf of other unpaid staffers alleging willful violations of the FLSA as well as various claims under the Pennsylvania Minimum Wage Act.
Setbacks. In January, Hearst won a victory when the court disposed of claims that the publisher violated New York Labor Law (NYLL) by requiring interns to pay for college credit as a condition of their internship placement. The plaintiff representing this separate “deductions” class in the litigation was a former Cosmo magazine intern who had worked 32-36 hours per week one summer communicating with modeling agencies, selecting models, and attending casting meetings. She asserted that the tuition requirement amounted to an unlawful deduction from wages. But Hearst argued convincingly that the company gained no benefit from the interns’ paying tuition to their schools, and the students, in contrast, had received college credit. Another “insurmountable hurdle” for the interns: they did not receive payment, “or anything even arguably close,” that could constitute “wages” under the statute. As the court saw it, there can be no “deduction” that would implicate the NYLL if “there were no wages to begin with.”
Also in January, the Eleventh Circuit, in an unpublished decision, affirmed a grant of summary judgment to an employer in a minimum wage suit brought by three medical billing students who worked for the defendant company as part of a required school externship. They asserted that the externships were of little educational benefit and they were performing tasks for the company for which it benefitted economically. However, the appeals court observed that the interns received academic credit for the work, thus deriving a benefit in that they were now eligible to earn their degrees. Also, the employer’s paid staff had to spend time away from their own duties to train and supervise the interns’ work, causing the business to run less efficiently. As a result, the company saw little, if any, economic benefit from the interns’ efforts, the appeals court found.
Then, on May 8, the Hearst court denied the interns’ motion for partial summary judgment on the issue of whether they were employees under the FLSA and NYLL. Although the interns contended that Hearst had to satisfy all of the six factors set forth in the DOL’s test, Hearst urged the court to eschew a “rigid checklist” approach and argued for a “balancing of the benefits” and an evaluation of the economic reality of the relationship. Looking to the totality of the circumstances — the six factors articulated by the DOL among them — the court concluded that disputed fact issues meant a jury could find in Hearst’s favor.
Of greater significance, however: the court refused to certify the state-law class, concluding that the interns did not satisfy the commonality requirement under Rule 23(a)(2) and the predominance requirement of Rule 23(b)(3). With an eye to the Supreme Court’s decision in Wal-Mart Stores, Inc v Dukes, the court determined that the plaintiffs could not show anything more than a uniform policy by Hearst of utilizing unpaid internships. That alone could not resolve the liability issue, which turned on what duties the interns performed and what benefits they received during their internship, which varied greatly from magazine to magazine. There was a myriad of internship postings, manuals, and guidelines that set out different duties and training for each magazine. As such, the court would have to undertake an individualized analysis of the factors set forth by the DOL in distinguishing “interns” from “employees.” (The plaintiffs have recently asked the district court for permission to challenge the denial of their motions for class certification and summary judgment on interlocutory appeal to the Second Circuit.)
A failure notice to plaintiffs? “The Hearst ruling is clearly a significant obstacle for plaintiffs seeking to bring these cases on a class or collective basis,” said Will Anthony, a partner in the Hartford, Connecticut office of Jackson Lewis (and Employment Law Daily Advisory Board member). “It is, however, only a district court decision, and I doubt that it will cause plaintiffs’ counsel to stop bringing these lawsuits entirely,” he predicted. Yet, “its analysis and citation of the Supreme Court’s certification decisions should make plaintiffs’ counsel think twice before investing time and money on cases that may end up as single-plaintiff claims.”
While Anthony has always advised employers to be mindful of the case law and the DOL criteria in considering their interns’ status under the law, he noted that “if the case law starts to break significantly in favor of rejecting class claims in the context of an intern or other fact-intensive wage claim, companies may be willing to tolerate more risk of an adverse ruling regarding an individual intern in a single-plaintiff case.”
“At the same time,” Anthony pointed out, “we caution companies to remember that enforcement agencies do not typically have to satisfy standards for class certification and thus can proceed with across-the-board enforcement actions more readily than private attorneys can.”
Making the grade. Morgan Lewis’ Puma noted the difficulty of administering an internship program that would safely pass muster under the DOL’s criteria:
(1) The internship, even though it includes actual operation of the facilities of the employer, must be similar to training that would be given in an educational environment;
(2) The internship experience is for the benefit of the intern;
(3) The intern does not displace regular employees, but works under close supervision of existing staff;
(4) The employer that provides the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded;
(5) The intern is not necessarily entitled to a job at the conclusion of the internship; and
(6) The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
While no easy task, here are several pointers for meeting the mark:
• Interns should earn college credit for their efforts as part of a formal academic program at a college or university.
• Structure tasks around the intern’s academic goals, not the employer’s operations. “Grunt work” should be only rarely assigned.
• Afford the intern the chance to attain skills that are readily transferable to other employers within the industry, not skills or procedures that are unique to your organization.
• Cooperate closely with the educational institution, which should be providing careful oversight. Such scrutiny helps to demonstrate that the intern’s duties are educational, not merely operational, and that the internship is primarily academic in nature.
• Set a clear start and end date, perhaps tied to a school semester or break. Establish the duration before the internship begins, and don’t schedule it around the organization’s busy season or an employee downsizing.
• Don’t over-work your interns, even if they aren’t currently enrolled in classes. Generally, the intern should not be scheduled based on your productivity needs, but in accordance with the intern’s academic goals. (As a practical matter, you shouldn’t “need” an intern; if you’re so reliant on interns to get the work done that they are working extreme hours, then your interns are probably employees.)
• If unforeseen circumstances create a need for interns to fill in for regular employees, consider hiring them on a temporary basis. Make clear, however, that the intern is not being given a “tryout” for eventual full-time employment.
• The DOL six-factor test is based on an intern’s status according to the FLSA’s definition of “employee.” But state wage and hour laws apply too.
• In light of these considerable demands and caveats, consider whether an internship program is ultimately worth the risk and administrative burden.
In the end, it might just pay to pay. Says Puma: “I ask employers, ‘do you really want this headache? Couldn’t you just pay them minimum wage?’” Some companies have started to do just that, compensating their interns based on an hourly rate or modest per-semester stipend. In such cases — as our Hamilton College plaintiff instructs us — you’ll need to ensure that the stipend satisfies the minimum wage after calculating the intern’s hours worked, and that overtime is paid where due.
Labor officials representing several unions have hit the press recently with comments lamenting the Affordable Care Act. A once very quiet effort to persuade the Obama Administration to make changes is now being made very public. Here is a running tally of unions that have voiced, rather harshly, some concerns:
UFCW: “It makes an untruth out of what the president said – that if you like your insurance, you could keep it. That is not going to be true for millions of workers now.” Joe Hansen, President
Operating Engineers: “We’re concerned that employers will be increasingly tempted to drop coverage through our plans and let our members fend for themselves on the health exchanges.” David Treanor, Director, Health Care Initiatives
United Union of Roofers: “In the rush to achieve its passage, many of the Act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer-sponsored coverage could keep it. I am therefore calling for repeal or complete reform of the Affordable Care Act.” Kinsey Robinson, President
Teamsters: “We are going back to the administration to say that this is not acceptable.” Ken Hall, General Secretary-Treasurer, expressing the reality that if federal subsidies are available only for plans purchased through state exchanges, employers contributing to multiemployer plans will face tremendous economic pressure to stop contributing to multiemployer plans…. Many employers will feel the need to drop coverage and access the subsidies to remain competitive.
In an op-ed published in The Hill last week, UFCW President Hansen lays out the nagging problem facing many unions.
“… [A]s currently interpreted, the ACA would block these plans [multiemployer plans through which some unions bargain collectively to provide health care insurance for their members - often called “Taft Hartley Plans”] from the law’s benefits (such as the subsidy for lower-income individuals and families) while subjecting them to the law’s penalties (like the $63 per insured person to subsidize Big Insurance). This creates unstoppable incentives for employers to reduce weekly hours for workers currently on our plans and push them onto the exchanges where many will pay higher costs for poorer insurance with a more limited network of providers. In other words, they will be forced to change their coverage and quite possibly their doctor. Others will be channeled into Medicaid, where taxpayers must pick up the tab.
In addition, the ACA includes a fine for failing to cover full-time workers but includes no such penalty for part-timers (defined as working less than 30 hours a week). As a result, many employers are either reducing hours below 30 or discontinuing part-time health coverage altogether. This is a cut in pay and benefits workers simply cannot afford. For example, a worker making $10 an hour that has his or her schedule cut by six hours a week would lose $3,100 a year in income. With millions of workers impacted, this would have a devastating effect on our economy.
So far, the administration has not responded to the unions on their concerns, at least not publicly. The state insurance exchanges must be in place by October of this year so that they are ready for a January 1, 2014 launch. Time is running out.
If you’re thinking about ruling out a disability accommodation in advance as unreasonable, think individualized undue hardship assessment instead!
A recently released EEOC letter serves up a good lesson for employers that would rule out as unreasonable a potential disability accommodation in advance of any actual request for the particular accommodation. In this case, it was providing a written paper examination rather than a computer-based one and vice versa as an accommodation. According to the letter, such a request is reasonable in the sense that it’s feasible or plausible; the question of whether it would pose an undue hardship should be assessed individually after a request has been made.
The letter, signed by EEOC Legal Counsel Peggy Mastroianni, was submitted in response to an IRS request for comments regarding its “ADA Accommodations Request Packet,” which may be used by applicants with disabilities who may need a reasonable accommodation to take the IRS’ Special Enrollment Examination.
A third-party contractor administers the exam for the IRS and also processes any accommodation requests for the exam. In a footnote, Mastroianni pointed out that because the contractor is acting on behalf of the IRS, the agency is obligated to make sure the contractor is administering the exam and providing reasonable accommodations in compliance with federal law. While the Rehabilitation Act applies to reasonable accommodations requested from federal agencies such as the IRS, ADA standards are incorporated into the Rehab Act and thus apply in this scenario. As a result, the letter offers good technical guidance not just for federal employers, but for private-sector employers also.
Request not considered reasonable. Here, the contractor uses the accommodation request packet to collect information from an applicant with a disability about whether a reasonable accommodation is needed to take the exam. Of particular concern to the EEOC was this statement on one of the forms in the packet: “while a reader or scribe is a reasonable accommodation, providing a written paper exam for a computer-based test or a computer-based test for a written paper exam is a VERY difficult request to honor and is generally not considered reasonable.”
Undue hardship. According to Mastroianni, changing the format of the exam is “reasonable” in the sense that it is “feasible” or “plausible” — the legal standard that applies. To the extent the contractor was asserting that changing the exam format would be too difficult or expensive (i.e., it would impose an undue hardship), it is required to make this determination by considering various factors, which may include:
• the nature and cost of the accommodation;
• the contractor’s overall financial resources; and
• the impact of the accommodation on contractor’s operation.
Mastroianni therefore recommended that the contractor be instructed to conduct an individualized assessment, if it receives a request to change the format of the exam as an accommodation, to determine whether providing this accommodation would in fact cause significant difficulty or expense.
Don’t forget the hardship analysis. While the EEOC letter is not considered an official agency opinion, it highlights an important issue for employers and offers up good technical guidance. While it may seem reasonable to advise applicants and employees upfront that a particular type of accommodate is likely to be viewed as unreasonable, employers should put that conclusion to a real test — leaving out an individualized undue hardship analysis is risky.
“The NLRB is truly at an unprecedented place in its history; we’re being attacked politically, judicially, and legislatively,” said NLRB Acting General Counsel Lafe Solomon, speaking on Monday, May 20, at a plenary session of the Minnesota CLE’s Upper Midwest Employment Law Institute. The House passed a bill defunding the agency until the recess appointments issue is resolved. (A similar measure was introduced, with weaker prospects, in the Senate.) The House also passed a $50 million cut in the NLRB budget—on top of sequestration. Though chagrined by the onslaught, Solomon told the audience that the agency “will be conducting business as usual, even while fending off these attacks.”
As general counsel, Solomon serves under the Federal Vacancies Act, so the D.C. Circuit’s Noel Canning v NLRB decision invalidating President Obama’s recess appointments to the NLRB does not directly impact him (except for when he seeks injunctive relief in district court based on the Board’s delegated authority). Rather, “the most serious challenge is that when I issue a complaint, it’s obviously based on Board law, and people are attacking the law on which I base the complaint.” Exacerbating matters, of course, is the fact that there is no time limit for seeking to overturn a Board decision as invalid and that Board rulings are not self-enforcing.
“There are some very important decisions being challenged on the basis that the Board was invalid,” Solomon said. “There are interesting tangential, collateral attacks on us judicially. Some employers are going into the D.C. Circuit court seeking writs of mandamus against us. It’s unprecedented.”
Nonunion workers. In a subsequent conference session, Solomon delved more deeply into the agency’s substantive rulings and policy positions that have generated such alarm among employers, including nonunion companies that had assumed they were well outside the Board’s reach.
“I am often accused of applying the NLRB to the nonunion workforce in a novel way,” Solomon said. But, he pointed out, the notion of nonunion workers banding together to seek improvements in terms and conditions of employment “was embedded in the Act in 1935, and all Boards and GCs have enforced the law against nonunion employers… I would argue that the current Board and I have not done anything novel or unprecedented.”
Social media. On the other hand, Solomon noted, “I’ll be the first to acknowledge that when I issued a complaint in 2010 about a Facebook complaint, the world as I knew it changed.” He was alluding to the social media disputes taken up in recent years and his GC memos outlining his conclusions as to the lawfulness of various social media policies under the NLRA. “For us, it was a fairly straightforward application of the Act, although in a new context.”
Noting that “I have tried to be as transparent about my thinking as possible” by issuing memoranda, Solomon stressed that “not all social media conversations are going to be unlawful under the NLRA.” Specific evidence of concerted activity—before, during, or after the social media interaction—is needed. “The Board has never protected mere griping. You can also lose the protection of the Act even if there is concerted activity,” he continued. Solomon cited, for example, the case of a bartender who stated on Facebook that the bar watered down its drinks, that its customers were “rednecks,” and that he hoped they “choked on glass” on the way home. “We did not issue a complaint.”
As for enforcement activity regarding employers’ social media policies, Solomon said that he talks to HR groups regularly, where he found some concession to the fact that employers may have overplayed their hand in this area. “There was an admission early on that a lot of these policies were written very over-broadly and not with any consideration of the NLRA.”
“We try to look at these policies and the way that a worker would interpret them, and whether they would interfere with their rights under Section 7. We have issued complaints over some of these policies and some of them were found to be lawful.” He cited, for example, social media policies promulgated by Wal-Mart and Cox Communications.
“The safest way for employers to deal with it, from our perspective, is to give examples of what you can do and cannot do,” Solomon advised. A safe harbor clause articulating that the policy is not intended to interfere with rights under the Act is also advisable. On the other hand, he said, “a savings clause won’t work if you have all of these prohibitions for two or three pages and then at the end you reference Section 7 but don’t identify what Section 7 is.”
Trying to place the Board’s enforcement activity in this area in its proper context, Solomon reminded attendees more than once that “the NLRB does not solicit any charges; we only act on what complaints are filed with the office.” He also stressed the social media policy provisions that have passed muster, adding, “If I say there won’t be a complaint issued if you have a certain provision in a social media policy, you can take that to the bank. There won’t be a complaint issued for as long as I’m acting general counsel.”
At any rate, Solomon noted, the focus of social media policies has now shifted to the Board itself, which has begun to issue decisions on this issue. “I would interpret most of them as supportive of the same theories” that the GC’s office has espoused, Solomon said.
At-will employment. More recently, a dust-up arose over concerns that the agency was levying an attack on at-will employment clauses. The controversy erupted when one regional director filed two cases taking the position that specific at-will provisions violated Section 7 rights. In one case, the regional director construed the provision to mean that employees were required to waive their right to be anything other than an at-will employee.
“The at-will issue was interesting for me,” Solomon said, who was caught by surprise. “I do a lot of public speaking and I started going to conferences and people began attacking me for calling at-will employment statements unlawful.” So he issued a directive to regional directors that any “at-will” cases were to be vetted through the GC’s office to determine how to proceed. “Obviously, 93 percent of companies in the United States have at-will provisions! I wanted to make sure that we were doing something that we could defend, that made sense.”
Ultimately, Solomon issued a memorandum on four different at-will provisions. “In each of these, I said the provisions were lawful, and I refused to issue a complaint. It gives you four examples where you can rest assured, if you have a provision that is similar, there won’t be a complaint issued.”
Confidentiality. Employers’ concerns of late have focused on a Board holding that maintaining a blanket confidentiality rule, even as applied to internal workplace investigations, can unlawfully interfere with employees’ Section 7 rights. How can employers balance their obligations to avoid or investigate harassment (and other concerns), Solomon was asked.
“We are cognizant of the fact that there are legitimate business interests at stake,” he replied. “But you should identify what those business interests are. You have an obligation to have a harassment-free workplace. You need to protect proprietary information. You should write the confidentiality policy to specifically protect those interests that you need to protect, and not go further.”
“I don’t say this flippantly,” he continued, “but it is a price of doing business in this country that there are protections for workers’ rights.”