About Us  |  About IntelliConnect®  |  Contact Us

WK WorkDay Blog

Subscribe to the Employment Law Daily RSS Subscribe

First lawsuit filed against DOL’s new “persuader” rule

April 7th, 2016  |  David Stephanides  |  Add a Comment

The Arkansas Chapter of the Associated Builders and Contractors, Inc. and a coalition of other groups including the National Association of Manufacturers, have launched what is reportedly the first lawsuit challenging the Department of Labor’s controversial final “persuader rule.” The final rule narrows the “advice” exemption from reporting requirements under Labor-Management Reporting and Disclosure Act Section 203 when an employer uses an outside consultant to push back against a union organizing campaign. According to the complaint, the final rule upends 50 years of settled law on the meaning of “advice” and is contrary to “the plain language and stated intent of Congress to broadly exempt such advice from the reporting requirements of the LMRDA.” Among other challenges, the plaintiffs assert that the final rule violates the First and Fifth Amendment rights of their memberships.

The final rule, which is effective April 25 and applies to arrangements, agreements, and payments made on or after July 1, 2016, mandates certain disclosures related to third-party consultants (including attorneys) used by employers in crafting and delivering anti-union messages to workers. The DOL’s revised Form LM-10 (employer report) and Form LM-20 (agreement and activities report), with some exceptions, must be filed when an employer and a labor relations consultant make an arrangement or an agreement that the consultant will undertake efforts to persuade the employer’s workers to reject an organizing campaign or collective bargaining effort by a union.

Expanded reporting requirement. The Labor Department’s final rule revisions now require reporting of consultant activities involving both direct contact with employees with an object to persuade them, as well as the following categories of indirect consultant activity undertaken with an object to persuade employees:

  • Planning, directing, or coordinating activities undertaken by supervisors or other employer representatives, including meetings and interactions with employees.
  • Providing material or communications for dissemination to employees.
  • Conducting a union avoidance seminar for supervisors or other employer representatives.
  • Developing or implementing personnel policies, practices, or actions for the employer.

Exempt “advice” activities which do not trigger the reporting requirement are now limited to what the DOL called “those activities that meet the plain meaning of the term”: an oral or written recommendation regarding a decision or course of conduct.

Challenges to the final rule. The plaintiffs raise First and Fifth Amendment challenges under the U.S. Constitution, alleging that the final rule violates their members’ free speech and free association rights, and that it is void for vagueness under due process requirements. The final rule also infringes on the confidentiality of attorney-client communications and impermissibly invades the attorney-client relationship, which, according to the complaint, is “supposed to be protected” under LMRDA Sections 203(c) and 204. In addition, the Labor Department failed to “properly acknowledge the significant regulatory burdens associated with the challenged Rule and has violated the laws dealing with such burdens,” the plaintiffs contend.

The plaintiffs are asking the court for a preliminary injunction, declaratory relief invalidating the final rule, an order vacating the final rule and enjoining its implementation, and attorneys’ fees and costs.

Muting employer voices in union campaigns? Employers quickly criticized the final rule, which many see as tipping the balance toward unions. “DOL’s persuader rule is a clear attempt to chill employers’ First Amendment rights by placing onerous restrictions on their ability to receive advice and discuss the potential pros and cons of unionization with their employees,” ABC President and CEO Michael Bellaman said in a statement announcing the suit. “The rule will have a particularly disparate impact on small businesses that do not employ in-house legal counsel, and carries serious repercussions including possible jail time.” According to Bellaman, the DOL’s final rule “replaces clear-cut legal definitions with an indecipherable guessing game for both employers and advisors.” He says the final rule is aimed at silencing the voice of employers “by working hand-in-glove with the NLRB’s flawed ‘ambush election rule’ in a thinly veiled attempt by the administration to achieve the goals of its failed ‘card check’ proposal.” Associated ABC will be represented by its general counsel, Littler Mendelson P.C., and Cross, Gunter, Witherspoon & Galchus, P.C. in the case.

The lawsuit, Associated Builders and Contractors of Arkansas v. Perez, was filed in the Eastern District of Arkansas, the case is No. 4:16-cv-00169-KGB.

Add a Comment

Will SCOTUS decision in Tyson Foods case embolden federal agencies seeking relief for employees in systemic employment discrimination cases?

March 24th, 2016  |  Cynthia L. Hackerott  |  Add a Comment

Those following employment law developments well know that the EEOC and OFCCP are both aggressively pursuing systemic discrimination cases and, whenever possible, are not limiting their focus to a particular employer establishment or geographic region, but rather are investigating employers for violations on a companywide basis. Following U.S. Supreme Court’s 2011 decision in Wal-Mart Stores, Inc v. Dukes (94 EPD ¶44,193) the use of “formula relief” — i.e. relief based on representative statistical evidence— in assessing and awarding damages for large groups of aggrieved workers appeared to have suffered a severe blow. However, the U.S. Supreme Court’s ruling earlier this week in Tyson Foods, Inc. v. Bouaphake, a wage-hour case, provides some leeway for formula relief in certain circumstances.

As my colleague Ron Miller explained in his blog post on the Tyson Foods case, a divided Court ruled that a federal district court did not err in certifying (and maintaining) a class of Tyson employees who alleged that the employer failed to compensate them for time spent donning and doffing personal protective equipment. Because Tyson failed to keep records of this time, the employees primarily relied on a study performed by an industrial relations expert to determine the average time engaged in donning and doffing activities. The representative sample may have been the only feasible way to establish employer liability, the Court observed, in concluding that such evidence cannot be deemed improper merely because the claim is brought on behalf of a class. In contrast to Dukes, where the employees were not similarly situated, the employees in Tyson Foods, who worked in the same facility, did similar work, and were paid under the same policy, could have introduced the expert witness’ study in a series of individual suits. Of note, the Court also pointed out that the case presented no occasion for adoption of broad and categorical rules governing the use of representative and statistical evidence in class actions. Rather, the ability to use a representative sample to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.

No doubt, the EEOC and the OFCCP will take full advantage of Tyson Foods ruling. Indeed, in a directive (No 310) issued in July 2013, entitled, “Calculating Back Pay as a Part of Make-Whole Relief for Victims of Employment Discrimination,” the OFCCP specifically details the use of the “formula relief” model in calculating back pay in systemic discrimination cases. The Directive reflects the agency’s broad interpretation of the circumstances in which formula relief may be used. According to the OFCCP, formula relief is a way of approximating losses in circumstances in which it is unrealistic to attempt to compute individual losses with accuracy, such as:

  • When calculating individual back pay relief for numerous aggrieved individuals is difficult because complete information or documentation (i.e., timecards, payroll records, tax returns) is unavailable or missing;
  • When using the individual relief model to calculate back pay for each class member will likely cause significant delay or create an undue burden on individual class members to provide documentation to support their compensation and/or interim earnings ;
  • When the number of class members exceeds the number of employment opportunities that are available;
  • When the reconstruction of the employment decision is speculative (e.g., in the instance when there are no lines of progression), which makes it difficult for the CO to determine at what specific stage in the employment process the adverse action actually occurred, or any other situation in which (especially for jobs with few minimum qualifications) it would be impossible to determine which class members would have been hired absent discrimination; and/or
  • When the losses can be calculated on a class-wide basis from available data, as may be the case with compensation issues.

One question for future litigation is how broadly courts will construe which employees are “similarly situated” for the purpose of calculating formula relief. It’s a safe bet that the civil rights enforcement agencies will push for the broadest possible definition of the term “similarly situated.” How far the courts will allow them to go in this pursuit remains to be seen.

Add a Comment

Employees score win in use of statistical evidence to support wage-hour class certification

March 22nd, 2016  |  Ron Miller  |  Add a Comment

Handing a win to employees in wage-hour class action litigation, the United States Supreme Court ruled, in a 6-2 decision, that a district court did not err in granting certification of a class of Tyson Foods employees who alleged that the employer failed to provide overtime compensation for donning and doffing personal protective equipment (PPE). In this instance, the High Court concluded that the employees could show that an expert witness’ sample was a permissible means of establishing hours worked in a class action by showing that each class member could have relied on that sample to establish liability had each brought an individual action.

Because Tyson failed to keep records of this time, the employees primarily relied on a study performed by an industrial relations expert to determine the average time engaged in donning and doffing activities. The representative sample may have been the only feasible way to establish employer liability, observed the Court in Tyson Foods, Inc. v. Bouaphake, in concluding that such evidence cannot be deemed improper merely because the claim is brought on behalf of a class. A jury had awarded the class about $2.9 million in unpaid wages.

Representative evidence. The employees in this case sought to introduce the representative sample to fill an evidentiary gap created by the employer’s failure to keep adequate records. Unlike the plaintiffs in Wal-Mart Stores, Inc v. Dukes, where the employees were not similarly situated, the employees here, who worked in the same facility, did similar work, and were paid under the same policy, could have introduced the expert witness’ study in a series of individual suits. Thus, the High Court concluded that its ruling here was in accord with Dukes.

Moreover, the Court noted that this case presented no occasion for adoption of broad and categorical rules governing the use of representative and statistical evidence in class actions. Rather, the ability to use a representative sample to establish class-wide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.

Add a Comment

Proposed EEO-1 Report changes: Progress or folly?

March 17th, 2016  |  Pamela Wolf  |  Add a Comment

On March 16, the EEOC held a hearing on its proposal to revise the existing EEO-1 Report to include collection of pay data from employers with more than 100 employees. Although the EEOC has said that the new data would help the EEOC and the OFCCP in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces, the proposal quickly drew pointed criticism over its estimated recordkeeping burden, the usefulness of the massive data collection, and confidentiality. Yet others saw the proposed changes as an important path to narrowing the persistent wage gap.

The EEOC’s proposal, made in partnership with the OFCCP, would add aggregate data on pay ranges and hours worked to the form, in addition to the information already provided by private sector employers on race, ethnicity, sex, and job category. The new information would be reported across 10 job categories and by 12 pay bands and would not require the reporting of specific salaries of each individual employee. A White House fact sheet states that the proposal would cover over 63 million employees.

Amassing helpful data. This pay data collection purportedly would permit the EEOC to compile and publish aggregated data that will help employers in conducting their own analysis of their pay practices to facilitate voluntary compliance, the EEOC said. Both agencies would use this pay data to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination. The two agencies plan to develop statistical tools that would be available to staff to use the EEO-1 pay data for these purposes. They also anticipate developing software tools and guidance for stakeholders to support analysis of aggregated EEO-1 data.

Recordkeeping burden. One aspect of the proposal that has drawn criticism is the burden placed on businesses that would be required to complete a 3,360-cell spreadsheet. Seyfarth Shaw attorney Camille Olson, who testified on behalf of the U.S. Chamber of Commerce, pointed to the EEOC’s burden analysis, which she said was “completely lacking in any substance and has no basis in fact.” Olson leveled several criticisms about the recordkeeping burden estimated by the agency:

  • The EEOC suggests that a “revised form” with almost 26 times the number of data points to complete will impose no additional burden and cost 50 percent less than the previous form, which was approved in 2015.
  • The EEOC and its consultant admit that there was no testing of the form or the time that would take to complete it, but rather that it used “synthetic data” compiled from fictitious companies to produce an estimate of the time required to complete the new forms.
  • The EEOC refers to proposals by other agencies, which have never been completed and which have never been published, to sustain its estimate of burden.
  • The EEOC, through sleight of hand, arbitrarily eliminated from its analysis of the burden the time and effort required to submit data relating to more than 250,000 employer establishments. Under the EEOC’s proposal, employers will still be required to submit data for the 250,000 establishments that have been omitted from the Agency’s burden analysis. The EEOC simply ignores this fact.

Won’t fight discrimination. According to both Olson and SHRM Executive Janese Murray, this huge data collection effort will do nothing to help fight discrimination. Olson said that the EEOC failed to even offer any argument that the data submitted will be useful for any law enforcement or policy enhancement, laying out these particular points:

  • The laws that the EEOC enforces do not permit the consideration of broad aggregates of data from dissimilar jobs combined into artificial groupings. There can be no legal or enforcement use of this data. Indeed, the EEOC’s own compliance manual and its consultant recognize that these broad aggregations of data are essentially useless. Myriad federal courts have reached the same conclusion.
  • The EEOC is requiring the combining of completely dissimilar jobs to determine if there is pay discrimination. For instance, the proposed revised forms will require a reporting hospital to combine lawyers, doctors, nurses, and dieticians—all grouped as “professionals”—to somehow determine whether there are pay disparities based on gender, race, or ethnicity. No law permits comparisons of such diverse workers to prove discrimination.
  • In order to meet its own bureaucratic timetable, the EEOC will require employers to combine two distinct years of W-2 data to create a fictitious W-2 amount for employees. This combination of W-2 data over a two-year period will yield completely useless information. It does not take into account job changes, promotions, annual pay adjustments, different working conditions, or locations, or the many other factors that go into compensation.
  • The EEOC will require employers to collect and report the hours worked for all employees. While the EEOC suggests that it will not require collection of new information from employers, they have not addressed the critical fact that employers do not currently collect hours information for exempt employees. The EEOC suggests that employers may use a “default” number of 40 hours for each exempt employee. In the private sector, exempt employees regularly work more than 40 hours; thus the hours information would be inaccurate, and therefore, of limited use. A legitimate study before this proposal was published would have revealed that fact.

Confidentiality concerns. Both Olson and Murray also raised confidentiality concerns for the data submitted and the EEOC’s handling of that data. “SHRM and its members are very concerned about the confidentiality of the compensation data the EEOC proposes to collect,” Murray said. “The EEOC’s proposal would gather very specific compensation information by specific establishments, including very small establishments, using a web-based format …. reporting data in this manner will result in the reporting of individual, employee-level data. Our concerns are not just focused on protecting our companies, but also on protecting our employees, many of whom would not be happy if their personal pay information was widely disclosed as a result of a data breach of the EEO-1 reporting system.”

Murray also questioned the security of EEO-1 Reports emailed to the EEOC for batch uploading. “It goes without saying that this is obviously not a secure way to transmit large amounts of confidential information, yet EEOC’s proposal makes no mention of how the agency plans to revise its own protocols to ensure that employers can safely report their compensation information to the government,” Murray said. “SHRM and its members urge the EEOC to not move forward with the implementation of any compensation data collection tool until appropriate data security safeguards are developed, tested, and perfected to ensure protection of our employees’ pay data.”

Data would help narrow the pay gap. A group of Democratic Senators, led by Sen. Cory Booker (D-N.J.), saw the proposed changes to the EEO-1 Report much differently, underscoring the need for additional measures that would help narrow the pay gap that has been so detrimental to women. In a letter sent to EEOC Commissioners, the Senators said the EEO-1 proposal would help achieve that goal by:

  • Increasing public transparency on compensation.
  • Supporting employer efforts to self-monitor compensation practices.
  • Strengthening the EEOC’s enforcement efforts.

“The compensation data collected by the revised EEO-1 will give the public valuable insight into what the pay gap looks like both geographically and by industry,” according to the letter. “Employers will also benefit by, for the first time, being able to benchmark their performance versus their competition. They will also be able to empower their human resource departments to make data-driven changes to address any pay gaps that may exist within a firm. Equally important is that the new compensation data will strengthen the EEOC’s ability to investigate allegations of pay discrimination and better enforce existing law.”

Add a Comment

‘Good guy’ employers still get sued

March 10th, 2016  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

Much like Hollywood executives prefer scripts with a powerful bad guy and a happy ending for an underdog protagonist, media coverage of employment litigation often focuses on “bad” employers. But what happens when there is no “bad guy?” Well, more often than not, the case won’t make it to a jury because the court dismisses the claim as implausible or, after an exchange of information in discovery, the court grants summary judgment for the employer because there isn’t enough evidence to reach a jury. With either outcome, though, the employer still got sued, and still had to spend time and money investigating and defending itself. For example:

Employer eases employee back from maternity leave with part-time; still gets sued. In one case, a Missouri employer gave an employee 24 weeks of maternity leave in 2012. When she returned, she was granted her request to temporarily work only Monday through Thursday. In October 2013, she was asked to seek childcare for Fridays because the business needed her to return to full-time. Two months later, when she had failed to find childcare, the employer again postponed her return to full-time—until June 30, 2014. That month, though, she took FMLA leave due to a back injury, then extending her leave to the date she had previously planned a vacation, which went through July 23. When she didn’t show up on July 24 or 25, she was fired for unexcused absences and insubordination (she claimed she planned to take the whole week as vacation). She filed suit alleging retaliation for taking FMLA leave. Though the court found that the employer had a legitimate reason for firing her, and she failed to show that was pretext for retaliation, the employer likely paid a lot to get to that point (Disbrow v. Oticon, Inc.).

Employee encourages workplace banter, then complains about it. Evidence that an AutoZone store manager in Massachusetts encouraged sexual banter by joking about his own sexual proclivities eviscerated his claim that he suffered sex discrimination when he was allegedly mocked for his perceived sexual orientation. Furthermore, management took prompt remedial action by conducting an investigation and reprimanding the employees who engaged in the banter. His claims therefore failed as a matter of law (Tinory v. AutoZoners, LLC).

Employees refuse to accept a “reasonable” accommodation. In another case, a federal court in New York granted summary judgment for an employer that accommodated an employee’s metal hip and related limitations by offering an ergonomic chair, excusing tardiness, and permitting her to attend a medical appointment if she returned to work before the end of her shift (she wanted the rest of the day off). Noting that the ADA does not require an employer to grant the specific accommodation that a disabled employee desires, the court found no support for the employee’s failure-to-accommodate claim (Ward v. Concentrix Corp.).

Similarly, an employer sufficiently tried to accommodate an employee who cared for children with mental health problems and who also had seizures during which he blacked out. It relieved him of his driving duties and provided a flexible work schedule. However, there was no way it could guarantee, without undue burden, that he would never be left alone with residents (who would then be unsupervised should he have another seizure). The employee also failed to present evidence that there were vacant positions to which he could have been reassigned (the employer offered an open maintenance position but he declined). His ADA claim failed on summary judgment (Craddock v. Little Flower Children & Family Services of New York).

Zero-tolerance policies mean “zero” tolerance but employees claim otherwise. In a case out of Mississippi, a chef tripped in the kitchen and fractured her ankle. The clinic that took her x-ray also tested her blood and urine under the employer’s substance abuse policy and concluded that her blood alcohol content was above the employer’s cutoff and above the state’s legal limit. After she was fired under the employer’s zero-tolerance policy, she sued for discrimination under the ADA. Granting summary judgment for the employer, the court found that her fracture was not a “disability” under the Act and she failed to show that her termination under the policy was pretext for discrimination (Clark v. Boyd Tunica, Inc. dba Sam’s Town Hall and Gambling Hall).

In a case out of Tennessee, an employee who was fired after violating a zero-tolerance policy by repeatedly using the n-word—even in a meeting with an HR rep who asked her to stop—was not entitled to a new trial on her claim that she was actually fired in retaliation for reporting sexual harassment (the jury also found that the manager she accused of staring at her breasts was merely checking for a hidden cell phone—which she was known to hide against company policy). Note that this case made it all the way to trial, and the employer was denied its request for attorneys’ fees incurred in defending itself (Blackmon v. Eaton Corp.).

Employees clearly fired for poor performance or misconduct may sue anyway. Courts often explain that engaging in protected activity does not insulate an employee from being subject to termination or another adverse employment action for poor performance, policy violations, or other legitimate reasons. The same holds true for membership in a protected class. In the following cases, it was clear to the court that an employee was fired for a legitimate reason, but as in the cases above, the employees sued anyway, and the employers spent time and money answering the complaint, exchanging discovery, and filing (also arguing) a motion for summary judgment. Because there are so many of these cases, a brief sampling will have to suffice:

  • A Florida supervisor who posted Facebook pictures of his vacation fun at Busch Gardens and in St. Martin—while on medical leave—was fired, not in retaliation for his FMLA leave, but for poor judgment and social media policy violations (Jones v. Gulf Coast Health Care of Delaware LLC dba Accentia Health and Rehabilitation Center of Tampa Bay).
  • Fired for misusing a company fuel card for personal use, an operations manager could not show that a younger subordinate (who did the same thing but was not fired because he was less likely to understand company policies) was similarly situated, so the manager’s ADEA age discrimination claim failed (Carfagno v. SCP Distributors, LLC dba Pool Corp.).
  • An Alabama nurse assigned to ride on a special needs bus was fired after she was captured on videotape turning her head at a student’s suggestion so the student could hit another child in the face; she was not fired because of age discrimination. The younger bus driver who was not fired was not as culpable because the driver wasn’t tasked with watching over students while driving (Bailey v. Baldwin County Board of Education).
  • Caught sleeping on the job, an Arizona employee could not show that he was fired due to disability discrimination because he did not inform his manager that the sleeping incident was a medical episode, and there was no evidence that the manager knew of his disability or that disability was the real reason for the termination (Paolino v. U.S. Airways).
  • A university bursar in Pennsylvania who did not tell her employer she was pregnant (and was not yet showing) was fired not due to pregnancy discrimination but for poor performance because her email responses to student questions were hard to understand, inaccurate, and often used “texting” or instant messaging abbreviations for words that should have been spelled out (Laverty v. Drexel University).
  • Though a radio station employee signed a conflict of interest policy stating that the company was “entitled to its employees’ undivided loyalty” and that a conflict of interest might arise from an employee’s financial interest in a competitor, from using the company’s name to further an employee’s personal interest, or from diverting business opportunities, she recruited a radio personality for a separate TV show she developed, and she was quoted by media  as stating that television was the best place to do the show. After she was fired, she sued, but a federal court found “no evidence” that the termination over the conflict of interest was pretext for sex discrimination (Vaughn v. Radio One of Indiana, L.P.).
  • A mental health agency’s CFO fully investigated an HR director in response to an employee complaint and learned that the HR director failed to conduct legally required criminal background checks on a large number of employees, exempted himself from such checks, and allowed records to falsely reflect the checks were performed. Though the HR director’s claim that he was fired for reasons that violated federal law ultimately failed, the employer had to defend itself all the way through an appeal before the Fifth Circuit, which affirmed summary judgment for the employer (Miller v. Metrocare Services).

Takeaways. The cases above possibly represent employers’ worst nightmares in terms of doing everything they should, but still getting sued. There is always room for improvement, though, so employers should ensure they are doing the following:

  • Educate human resources personnel, supervisors, and decisionmakers on best practices and existing policies, emphasizing consistent enforcement.
  • Provide effective means for employees to lodge complaints.
  • Conduct prompt, thorough, and unbiased investigations of all claims of discrimination or harassment and document your efforts.
  • Take appropriate remedial action as necessary (ensure those measures are consistent with existing policy, past practice, and among individuals).

When done right, these practices can go far in proving, should litigation arise, that an employer truly was the “good guy.” However, despite best efforts, no employer is immune from suit—a bitter pill to swallow—so prepare for litigation in advance. For smaller companies that do not have in-house counsel, conduct research for local employment attorneys that might suit your needs. Have them review your policies and provide feedback. Also consider setting aside a budgetary “war chest” for potential lawsuits, or perhaps purchasing employment practices liability insurance.

Add a Comment