Studies reveal that clients, more than ever, want and expect great service from their outside counsel. On top of that, clients value lawyers who know and understand their business, as well their people and their policies. Clients also want lawyers who are trusted advisors and counselors.
Lawyers and law firms that take the time ask “How are we doing?” and take a proactive interest in helping clients achieve their goals and objectives add tremendous value to the relationship and build trust and loyalty with the client. Being a competent legal technician is simply not enough anymore in today’s competitive market place for legal services.
And what is the best way to achieve this type of relationship with clients? Go visit them. In fact, I recommend that partners visit their top four clients each year. Show you care. Ask smart questions. Listen, learn and respond appropriately.
Below is our Client Site Visit checklist, which offers practical guidance to lawyers who are interested in enhancing their relationships with top clients.
Before Your Visit
- Be very clear on your purpose for the Client Site Visit. Determine your objectives, which might include:
Thanking the client for past business
Enhancing your relationship with the client
Meeting individuals with whom you work for the first time
Learning more about the client’s business and industry
Determining ways the Firm can improve service
Resolving perceived problem areas
Learning about opportunities for new business
Learning about other firms the client uses
- Determine with whom you want to meet and spend time. Consider internal politics, both within the Firm and at your client’s company. Think about others who should be included beyond the person(s) with whom you work most closely.
- Determine where, when and for how long you want to meet. We recommend the client’s place of business, but you may want to consider a golf course, restaurant or private club.
- Ask for the meeting through a short letter or telephone call. Call our office if you would like an example.
- Do your homework:
Three-year billing and client/matter history
Research the client through Lexis/Nexis, Dun & Bradstreet, client’s web site, Martindale-Hubbell, etc.
Discuss your visit with other attorneys who have worked with the client
- Develop a list of specific questions you want to ask.
At Your Meeting
- Arrive early and dress appropriately.
- Start off the meeting with 5-10 minutes of introductory “small talk.” Show interest in your client and consider topics like hometown, law school, family, hobbies, etc. If you are meeting in the client’s office, notice your surroundings…family photos, artwork, etc. to help you with topics of conversation. Bottom line…establish a friendly rapport before you dive into your list of questions.
- When the time is right, begin asking your pre-determined questions. Listen carefully. Let the client do the talking. Take copious notes.
- Let the client set the pace and tone of the meeting. Be sensitive to non-verbal cues.
- Remember that you are there to learn about the client, show interest in his/her objectives and how the Firm can improve service and add value to the relationship.
- Keep in mind that you are not there to “sell” legal services or talk about the Firm. That will happen naturally during the course of the meeting and your follow up plan.
- Do not overstay your welcome. Be aware of any obvious signals that it’s time for you to leave.
- At the conclusion of your meeting, thank the client for his/her time and assure him/her that you will respond to any issues raised during your conversation.
After Your Visit
Follow up is absolutely essential!! If you don’t plan to follow up, don’t bother visiting the client in the first place.
- Send a brief “thank you” note the day after your meeting.
- Calendar a specific day to follow up with a telephone call, another meeting or whatever you agreed to do at your Site Visit.
- Make sure all appropriate individuals at your client’s company are on all appropriate mailing lists for law alerts, seminar invitations, etc.
- Develop a client-specific action plan based on what you learned at the meeting. This might involve a formal proposal for services, a follow up visit at a later time or a pro-active program to further enhance the Firm’s relationship with the client.
- Find other ways to keep in touch with the client. Sending an article of interest or an occasional e-mail are good ways to stay “on the radar screen.” Hand-written notes are very effective and take little time.
- Strive to become more than a legal technician in the eyes of your client. Work to become a counselor or trusted advisor to your clients.
Each year, the National Center for Employee Ownership updates its employer stock litigation review (the ESOP and 401(k) Plan Employer Stock Litigation Review 1990–2016). Over the last 12 months, there has been a significant decline in litigation on this front, with only 21 new cases reaching the court, by far the fewest in recent years. Seventeen dealt specifically with Employee Stock Ownership Plans, but only a few provided significant new guidance. Most dealt with legally non-controversial issues, such as distributions errors, attempts to set up ESOPs in companies with just one or two participants, and other administrative matters.
There were, however, some important decisions.
Standards of Review under the Dudenhoeffer Doctrine
The most important developments were in how the Supreme Court’s rulings on the Fifth Third v. Dudenhoeffer (Np. 12-751, U.S., June 25, 2014) would affect litigation. In that case, the Court dismissed the presumption of prudence for investing in employer stock that had long been the standard with a new pleading standard that required plaintiffs to plead a plausible alternative course of action for trustees that would not end up hurting more than helping. The standard clearly was designed with public companies in mind, but in two cases, it was applied by the courts to private companies, albeit in a very limited way. In public companies where prior decisions under the prudence presumption were remanded, the new standards have proven challenging for plaintiffs.
A number of cases were remanded after the ruling. In Tatum v. R.J. Reynolds Tobacco Co., No. 1:02-cv-00373-NCT-LPA (M.D.N.C, Feb. 18, 2016), a district court ruled for R.J. Reynolds, saying the fiduciary actions were reasonable under any standard of review. Similarly, in In re Lehman Bros. Sec. & ERISA Litig., No. 1:08-cv-05598-LAK (S.D.N.Y., July 10, 2015), the court ruled against the plaintiffs, this time saying they had failed to meet the heightened pleading standards that the Dudenhoeffer ruling set out. In Pfiel v. State Street Bank and Trust, No. 14-1491 (6th Cir., Nov. 10, 2015), the Sixth Circuit dismissed a claim by plaintiffs from GM arguing that GM stock should not have been an option in the company’s 401(k) plan, saying the efficient market theory provided that trustees could not be expected to outguess the market as to whether a particular stock is overpriced at any time. The Supreme Court declined to review the case in Pfiel. State Street Bank & Tr. Co., No. 15-1199 (U.S., cert. denied, June 27, 2016). The same logic was used to rule for the defendants in Coburn v. Evercore Tr. Co., N.A., No. 1:15-cv-00049-RBW (D.D.C., Feb. 17, 2016), with the court specifically rejecting the argument that a fiduciary should have known from publicly available information alone that a stock’s price was “over or underpriced.”
Amgen Inc. et al. v. Steve Harris (U.S. no. 577, Jan. 25, 2016) presented a more complex scenario. The Supreme Court for the second time reversed the Ninth Circuit’s decision on the prudence of continuing to hold employer stock in Amgen’s 401(k) plan. The Ninth Circuit on remand said that the fiduciaries should have removed Amgen stock, which would have the same effect on the market as disclosure of the potentially adverse information. The Supreme Court ruled that a plausible argument could be made along these lines, but “the facts and allegations supporting that proposition should appear in the stockholders’ complaint. Having examined the complaint, the Court has not found sufficient facts and allegations to state a claim for breach of the duty of prudence.” The Supreme Court said that the complaint needs to claim an alternative action that “a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.” The district court can now decide it if wants to allow the stockholders to amend their complaint.
The Dudenhoeffer ruling was also extended to private companies in two cases, also with unfavorable results for plaiintiffs. In Allen v. GreatBanc Trust Co., No. 1:15-cv-03053 (N.D., Ill., October 1, 2015), the court dismissed a lawsuit against GreatBanc Trust in its role as a fiduciary in an ESOP transaction at Personal-Touch Home Care in a valuation case. The Court referred to the Dudenhoeffer Supreme Court case in ruling that “absent an allegation of special circumstances regarding, for example, a specific risk a fiduciary failed to properly assess, any fiduciary would be liable for at least discovery costs when the value of an asset declines. Such a circumstance cannot be the intention of Rule 8(a), or Dudenhoeffer. An allegation of a special circumstance is missing in this case—in fact, we know absolutely nothing about the financial situation of Personal-Touch.”
In Hill v. Hill Brothers Construction Co., No. 314-CV-213SAA (N.D. Miss., Sept. 11, 2015), a district court dismissed the plaintiff’s claims of a breach of fiduciary duty by the plan’s trustees, holding that plaintiffs had not shown that, under Dudenhoeffer there was an alternative action that “a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the [plan] than to help it.” The court noted that although Dudenhoeffer applied mostly to public companies, “that does not necessarily preclude the application of the alternative action pleading standard to closely-held entities.”
Two cases came to different conclusions about financial disclosure requirements. Murray v. Invacare Corp., No. 1:13-cv-01882-DCN (N.D. Ohio, 8/28/15 found that there was a duty to disclose, but In re BP P.L.C. Sec. Litig., No. 4:10-MD-2185 (S.D.-Tex, Oct. 30, 2015) found there was not.
Other Decisions of Interest
In Harper v. Conco ESOP Trs., No. 3:16-CV-00125-JHM (W.D. Ky., July 7, 2016), a district court ruled that employees of the bankrupt company Conco could not sell their stock for at least three years. The court affirmed a bankruptcy court’s ruling that was meant to give the company an opportunity to reorganize.
In Chesemore v. Fenkell, No. 14-3181, 14-3215, 15-3740, (7th Cir., July 7, 2016), the Seventh Circuit ruled that Alliance Holdings’ CEO David Fenkell had to indemnify the trustees of Trachte Building Systems. Trachte’s ESOP trustees, the courts argued, were controlled by Fenkell, thus making him a cofiduciary. The decision is at odds with rules for cofiduciary liability with the Eighth and Ninth Circuits.
In Perez v. Mueller, No. 13-C-1302, (E.D. Wis., May 27, 2016), a district court ruled that the Department of Labor could not make a blanket claim of privilege to prevent discovery of individual documents in an ESOP valuation case.
Finally, in Precise Systems Inc. v. U.S., No. 14-1147C (U.S. Court of Federal Claims, July 28, 2015), the court ruled that Precise Systems Inc. did not qualify for a service-disabled veteran-owned small business set-aside program. The company issued two “series” of common stock (A and B). Each share had one vote. A qualifying individual owned over 51% of the total voting shares. The ESOP shares, however, had an additional right pertaining to voting on a dividend and had a dividend preference. The company argued that they were the same class of shares, but the court agreed with the SBA and Office of Hearings Appeals rulings that they were two classes and, therefore, Precise Systems did not qualify.
During the 1980s and 1990s “big box” retail locations popped up all over the United States. In the past few years, however, a number of larger chains, including Sears, Kmart, Circuit City, and Sports Authority, to name a few, have closed or announced that they will be closing their doors. The question remains: what can and should be done with an empty big box location?
While it would be easiest to replace one big box tenant with another, three main hurdles exist to this approach. First, some big box retailers may choose to just “go dark” and continue to pay the rent at the location in order to maintain market share. Second, many big box leases include clauses prohibiting the landlord from leasing space to a tenant’s competitors even after the tenant has vacated. Third, and most significantly, abandoned big box buildings in popular retail locations likely already have other successful big box retailers nearby, thus limiting the pool of potential new tenants for that space. As a result, very often the space will need to be demolished or repurposed, adapted, and redesigned.
Adaptive reuse and redesign of abandoned big box retail locations requires property owners, developers, and financiers to get creative and be committed in pursuing reuses that fill the specific retail needs of their geographic markets. The large space may need to be subdivided and leased to multiple tenants. Adaptive use of large retail spaces requires vision, foresight, a deep understanding of the local retail market, and the marketing expertise to find alternative categories of tenant. Potential tenants for adapted big box locations are those that can take advantage of some of the features of these abandoned stores, such as large open spaces, ample parking and a centralized location close to major transportation routes. Some of these alternative reuses of big box locations include: apartments/condominiums, hospitals/health care clinics, museums, churches, commercial gyms, and offices.
Like owners and developers, municipalities also have an important part to play in redevelopment of abandoned big box locations. Municipalities must be flexible and utilize any number of tools at their disposal to ease the development costs and bureaucratic burden to the reuse and adaption of abandoned locations. One municipal tool that could minimize the barriers to reuse is the creation or revision of local zoning ordinances to incentivize reuse and ease some of the financial development hurdles. This process may include rezoning of the area in question to allow for residential, office and light industrial, instead of strictly commercial uses. Second, the municipality could create a tax incremental financing district to make a potential redevelopment more financially attractive or viable to potential developers. Finally, the municipality or its community development authority could acquire title to the abandoned property to utilize for its own purposes (such as a school, library or community center) or to better control and manage redevelopment and associated financial incentives.
In summary, one size does not fit all. Rather, the dilemma of what to do with an abandoned big box retail location often requires all involved (the leasing, design, finance and legal teams, as well as the municipality) to think outside of the box and be flexible, thoughtful and creative in crafting an individualized plan and solution tailored to that particular locale.
©2016 von Briesen & Roper, s.c
FAR Council Issues Final Rule, DOL Issues Final Guidance on Fair Pay and Safe Workplaces (“Blacklisting”) Executive Order, Effective October 25, 2016
Yesterday, the Federal Acquisition Regulations Council (“FAR Council”) and the U.S. Department of Labor (“DOL”) issued its Final Rule and Guidance implementing the Fair Pay and Safe Workplaces Executive Order (the “Order”), commonly referred to as the “blacklisting” rule. In total, the Final Rule, Guidance, and accompanying commentary totaled nearly 900 pages, responding to nearly 20,000 comments on the Proposed Rule and Guidance released earlier this year. Some of our previous posts on the Order and the Proposed Rule and Guidance can be found here and here. This post will highlight the notable changes and clarifications made in the Final Rule and Guidance as well as key takeaways for federal government contractors.
The Final Rule is effective on October 25, 2016. This is earlier than anticipated and dramatically shortens the time for contractors to prepare to comply with the Order and its implementing regulations. That being said, as discussed below, the Final Rule also phases in a number of the disclosure and compliance obligations, lessening the initial burden of the implementation.
Phase-In of Labor Violation Disclosure Requirements
One of the overarching concerns raised during the notice and comment period was the enormous burden the Order would place on the contracting community. In an effort to lessen that burden, the Final Rule and Guidance announced a phased implementation of the disclosure obligations. The phase-in has two key components.
First, the Order and the Proposed Rule contain a three-year look back for covered violations. Recognizing that contractors have not been cataloging covered labor violations prior to the issuance of the Order, the Final Rule only requires contractors to look back one year for reportable violations when the rule becomes effective. The look-back period will increase each year by one year until October 2018, when it will become a three-year look back.
Second, the Final Rule also limits which contractors must make labor law violation disclosures in the first six months following the effective date. Contractors will not be required to disclose labor law violations until April 24, 2017, unless the contractor is responding to a solicitation for a contract valued at $50 million or more after the effective date of the Final Rule. For most contractors, this provides an additional six-month window to prepare for the implementation of the disclosure obligations.
The phase-in of disclosure obligations does not just impact prime contractors. The Final Rule also included a lengthier phase-in for subcontractor disclosure obligations. Subcontractors must begin disclosing labor violations for solicitations issued after October 25, 2017, one year after the effective date.
A Pause on The Disclosure of “State Law Equivalent” Violations
When the Proposed Rule was released, the Proposed Guidance stated that a supplement would follow containing a list of which state-law equivalents for the 14 enumerated federal laws require disclosures of violations under the Order. To date, no list has been released. The Final Rule and Guidance acknowledge this and state that the DOL will release a comprehensive list of state laws that are covered by the Order. This listing will be subject to notice and comment before it becomes effective. In the meantime, only the 14 federal labor laws listed in the Proposed Rule and in the Order, along with state OSHA plans, are covered by the rule.
Minor Clarifications on Scope of Violations
Overall, despite numerous comments and criticisms, the DOL declined to substantively modify its list of covered labor violations in the Final Guidance. Thus, the list of administrative merits determinations, arbitral awards, and civil judgments remain exceptionally broad and sweeping.
Although the DOL declined to narrow its definition of a violation, the Final Guidance does contain some minor modifications that broaden the definition of a violation. For example, the definition of administrative merits determination in the Proposed Guidance did not include violations of the anti-retaliation provisions of the Occupational Safety and Health Act (“OSHA”) or the Fair Labor Standards Act (“FLSA”). The final rule clarifies that these were unintentionally omitted from the Proposed Guidance and are now included in the Final Guidance. Additionally, the Proposed Guidance limited “determination letters” from the DOL Wage and Hour Division to letters outlining violations of Sections 6 and 7 of the FLSA (minimum wage and overtime). In the Final Guidance, the DOL has clarified that this was unintentionally narrow, and that the Final Guidance includes determination letters finding any FLSA violation.
Assessing A Subcontractor’s Responsibility – Removing The Burden From The Prime
One highly controversial aspect of the Proposed Rule was the burden placed on the prime contractor to perform the same type of responsibility determination of covered subcontractors’ labor violations that the government will perform on prime contractors. In response to numerous comments, the Final Rule has modified the process for assessing a subcontractor’s violations, largely removing the burden from the prime contractor.
Instead, starting October 25, 2017, under the Final Rule, covered subcontractors will submit their list of labor violations to the Agency Labor Compliance Advisor (“ALCA”). The ALCA will then perform an assessment of the disclosed violations and make a recommendation. The prime contractor must make the ultimate decision as to responsibility. If the subcontractor disagrees with the finding of the ALCA, it can raise the dispute with the prime contractor.
Clarification of Assessment Process of The Labor Compliance Advisors
The Proposed Rule and Guidance introduced a new government official into the contracting process, the ALCA. There was substantial controversy surrounding this new role, particularly the potential disparate application of the Order between agencies and perhaps even within agencies. The Final Rule and Guidance provides additional details regarding the process by which federal agencies and departments will assess a contractor’s labor violations. Moreover, the Final Rule and Guidance recognizes the need for guidelines and training for the ALCAs.
The Final Rule and Guidance states that the ALCA will have three days to assess labor violations disclosed by a contractor. Although the contracting officer is permitted to give the ALCA additional time, the contracting officer may make his or her own assessment of responsibility without the recommendation of the ALCA. The ultimate responsibility for making a responsibility determination will remain with the contracting officer, not the ALCA. The ALCA’s role is to “assesses the nature of the violations and provide analysis and advice.”
The Final Guidance also clarifies the process the ALCA will follow during his or her assessment. The ALCA will first review all of the violations to determine if any are “serious, repeated, willful, and/or pervasive.” Then, the ALCA “weighs any serious, repeated, willful, and/or pervasive violations in light of the totality of the circumstances, including the severity of the violation(s), the size of the contractor, and any mitigating factors that are present.” Finally, the ALCA provides written analysis to the contracting officer.
Public Dissemination of Disclosures
The Proposed Rule and Guidance noted that information submitted to the contracting agency would be publicly disseminated. Despite numerous comments criticizing this proposed provision, the Final Rule and Guidance declined to remove this requirement. However, the Final Rule and Guidance provided clarification as to how this public dissemination will work in practice. Pursuant to the Final Rule, the following information will be publicly disclosed based upon the contractor’s violation submissions: (1) the law violated; (2) the case identification number or docket number; (3) the date of the decision finding a violation; and (4) the name of the body issuing the judgment.
The contractor will input this information into the System for Award Management (“SAM”). From SAM, the information will be made available to the public through the Federal Awardee Performance and Integrity Information System (“FAPIIS”). The Final Rule clarified that while the four enumerated data points must be made public, the contractor has the choice as to whether any additional documents provided by the contractor to demonstrate its responsibility and mitigation efforts shall be made public.
With the Final Rules and Guidance published, it is more important than ever that contractors begin preparing for the implementation of the Order and its regulations. Contractors have two months before the effective date of the Final Rule, and while certain obligations will be phased-in, contractors will need time to prepare for compliance.
Contractors should start cataloging any violations during the past six months that constitute covered violations as well as any evidence of mitigation efforts taken as a consequence of the violations. Because complaints and charges alleging violations of the 14 federal laws covered by the Order, a central official of office should be designated to coordinate the collection of this information (concerning both past and future violations) and a central repository for it. Contractors should view the ability quickly to provide a comprehensive list to the contracting officer as a competitive advantage, as competitors may not be prepared to do so in a timely manner.
Additionally, if the ALCA makes an inquiry concerning the disclosed violations, contractors should be prepared to advocate, with appropriate evidence, why certain violations are not willful, repeated, pervasive or severe. For instance, the contractor could point to its size or the number of employees in the organization. It can also identify measures taken by the contractor to address the issues raised in the violation. It will be important that these disclosures be vetted by a central authority within the organization.
In addition to preparing to report labor violations, contractors should also work internally to reduce and mitigate the risk of future violations. This can be achieved by: (1) developing and implementing effective policies and training; (2) auditing compliance; (3) adopting a robust internal complaint mechanism; (4) developing alternative dispute resolution processes; and (5) undertaking early case assessment and management. Taking these proactive measures can help lessen the impact of future compliance by reducing the number of violations that must be reported.
While the National Labor Relations Board’s (NLRB) decision this week in the teaching assistants’ case caught most of the headlines, the very same day the Board also issued two important rulings defining appropriate bargaining units at Catholic universities.
In cases arising at Seattle University (a Catholic university operated by the Jesuit order) and Saint Xavier University (a Chicago-area Catholic university founded by the Sisters of Mercy), the Board determined that faculty teaching theology and religion were exempt from the coverage of the National Labor Relations Act (NLRA) and therefore must be excluded from the petitioned-for bargaining units.
At Seattle University, the Service Employees International Union, Local 925, sought to represent a bargaining unit comprised of all non-tenure eligible faculty at the university other than those teaching nursing and law. At Saint Xavier, the Illinois Education Association (IEA-NEA) petitioned to represent all part-time faculty at the university other than those teaching at the School of Nursing.
In reaching its decision, the Board retraced its torturous reasoning in Pacific Lutheran University, 361 NLRB 157 (2014), in which it sought to avoid the U.S. Supreme Court’s ruling in NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979). In that case, the Supreme Court instructed that the NLRA must be construed to exclude teachers in church-operated schools because to do otherwise “will necessarily involve inquiry into the good faith of the position asserted by the clergy-administrators and its relationship to the school’s religious mission.” The court concluded that the Board’s assertion of jurisdiction over teachers in church-operated schools would give “rise to entangling church-state relationships of the kind the Religion Clauses sought to avoid.” For the Board to engage in such inquiry would violate the First Amendment.
In Pacific Lutheran, the Board purports to follow the teaching of Catholic Bishop but instead formulates the following seemingly non-compliant test: “[T]he Act permits jurisdiction over a unit of faculty members at an institution of higher learning unless the university or college demonstrates, as a threshold matter, that it holds itself out as providing a religious educational environment, and that it holds out the petitioned-for faculty members as performing a specific role in creating or maintaining the school’s religious educational environment.”
In both the Seattle and Saint Xavier cases, the Board agreed that both universities identify themselves as “providing a religious educational environment,” thus meeting the first part of the two-part test. However, in both cases, the Board concluded that only the faculty in Seattle’s Department of Theology and Religious Studies and School of Theology and Ministry and Saint Xavier’s Department of Theology met the second part of the test. Therefore, those individuals could not be part of the bargaining unit.
In his dissents in each case, NLRB Board Member Phillip A. Miscimarra lays bare the clear conflict between the Pacific Lutheran decision and the Supreme Court’s decision in Catholic Bishop. “My colleagues and I are not permitted to write from a clean slate regarding this issue. It is governed by NLRB v. Catholic Bishop of Chicago, where the Supreme Court rejected the Board’s assertion of jurisdiction over ‘lay teachers’ at church-operated schools, which the Board had attempted to justify on the basis that the schools were ‘religiously associated’ rather than ‘completely religious.’” The Supreme Court held that the Board could not exercise jurisdiction over teachers in church-operated schools based on “abundant evidence” that doing so “would implicate the guarantees of the Religion Clauses.”
And as Miscimarra points out in dissent, the decision reached by the Board in these two current cases actually proves his point. “In other words, my colleagues draw the precise distinction—between faculty members who teach ‘religious’ subjects, on the one hand, and those who teach ‘secular’ subjects, on the other—that the Supreme Court rejected as entailing the type of ‘inquiry’ that, by itself, may impermissibly impinge on rights guaranteed by the Religion Clauses.” That impingement necessarily results, Miscimarra writes because “[l]engthy reflection is not needed to recognize that it will often be impossible to determine whether faculty members at religiously affiliated schools who ostensibly teach ‘secular’ subjects nonetheless perform a ‘specific role in creating or maintaining the school’s religious educational environment.’”
One would expect that both of these cases will be appealed, particularly because, as Miscimarra points out, the D.C. Circuit Court of Appeals reads Catholic Bishop in an entirely different fashion than does the Board. In University of Great Falls v. NLRB, 278 F.2d 1335 (D.C. Cir 2002), that court articulated a three-part test under Catholic Bishop. Under its test, the Board has “no jurisdiction over faculty members at a school that (1) holds itself out to students, faculty and community as providing a religious educational environment; (2) is organized as a nonprofit; and (3) is affiliated with or owned, operated, or controlled, directly or indirectly, by a recognized religious organization, or with an entity, membership of which is determined, at least in part, with reference to religion.”
The issue of whether students may be considered employees for purposes of organizing under the National Labor Relations Act has been a hotly contested issue over the past decade. On August 23, 2016, the Board reversed itself again and held that certain students at Columbia University are able to organize under the NLRA.
For many years, students who provided teaching and other services to their college or university in the course of their studies were not considered employees for the purposes of organizing under the NLRA. Adelphi University, 195 NLRB 639 (1972); The Leland Stamford Junior University, 214 NLRB 621 (1974). The Board long held that the relationship between graduate students and their university was primarily that of a student and not a statutory employee.
In 2000, the Board reversed its position and held that students may in fact qualify as employees under the Act. New York University, 332 NLRB 1205 (2000). Four years later, holding that students have a “primarily educational, not economic, relationship with their university,” the Board reversed itself again and returned to holding that students were not employees under the Act. Brown University, 342 NLRB 483 (2004).
Yesterday, three members of the Board voted to reverse Brown University and held that students at Columbia University may organize under the Act. In doing so, the Board observed that there were several public universities where students were represented by labor unions and that there was no empirical evidence that collective bargaining by student assistants would harm the educational process.
Who knows how long the Columbia University decision will remain the law. Much will likely depend on who wins in November. Stay tuned!
© Copyright 2016 Murtha Cullina
The Department of Labor and FAR Council have released, for publication tomorrow, final guidance and regulations implementing Executive Order 13673: Fair Pay & Safe Workplaces (also colloquially referred to as the Blacklisting Executive Order.)
We are in the process of digesting the almost 1000 pages of regulations, as well as an amendment to the Executive Order itself, and will be back with an in-depth analysis and our insights soon, so stay tuned.
Jackson Lewis P.C. © 2016
Join NAMWOLF at the 2016 Annual Meeting & Expo in Houston, Texas. The Annual Meeting is a great opportunity to increase your participation and relationships with NAMWOLF Law Firm Members. All attendees further benefit by attending CLE sessions specific to Law Firm Member practice areas, which provides greater insight into each Law Firm Member’s experience and capability to handle complex legal matters.
The NAMWOLF Annual Meeting & Law Firm Expo is a three-day conference providing unique opportunities to connect corporate counsel from Fortune 1000 companies and minority and women owned law firms. The conference features NAMWOLF’s signature event, the Law Firm Expo, which provides an opportunity for In-House Counsel to meet with the Nation’s top minority and women owned law firms in a relaxed networking environment. We provide top notch continuing legal education and networking.
FOR MORE INFORMATION
Visit www.namwolfmeetings.org for the conference schedule, room block information, and registration information.
In the past few years, Democratic members of Congress have introduced several decidedly pro-employee bills, none of which have yet passed, but which may be impacted by the elections in November. Such bills were first introduced in the 113th Congress when Republicans controlled the House of Representatives and Democrats controlled the Senate. Versions of these bills were reintroduced in the 114th Congress, although Republicans control both the House and the Senate. The November election not only will decide the next President, but also may change the balance of power in both houses of Congress.
Healthy Families Act
Would allow employees of an employer with 15 or more employees to earn 7 days of sick time per year after 60 days of employment.
113th Congress: Introduced to the House and Senate on March 20, 2013. Co-sponsored by 134 Democrats in the House and 23 Democrats in the Senate.
114th Congress: Introduced to the House and Senate on February 12, 2015. Co-sponsored by 145 Democrats in the House and 31 Democrats and 2 Independents in the Senate.
Family and Medical Insurance Leave Act
Would create a trust fund within Social Security to collect fees and provide compensation to employees on FMLA.
113th Congress: Introduced to the House and Senate on December 12, 2013. Co-Sponsored by 101 Democrats in the House and 6 Democrats in the Senate.
114th Congress: Introduced to the House and Senate on March 18, 2015 with 134 Democrats co-sponsoring in the House and 20 Democrats and 1 Independent co-sponsoring in the Senate.
Family and Medical Leave Enhancement Act
Most recent version of this Act would extend FMLA coverage to employees at worksites with 15-49 employees, including part-time workers. The Act would also protect (1) parental involvement leave to participate in school activities or programs for children or grandchildren and (2) parental involvement leave to care for routine medical needs including: (a) medical and dental appointments of an employee’s spouse, child, or grandchild, and (b) needs related to elderly individuals, such as nursing and group home visits.
A version of this bill has been introduced to Congress each session since 1997.
The most recent version was introduced to the House on June 16, 2016 with 7 Democrats co-sponsoring.
Following the elections later this year, employers should be on the lookout for versions of these bills being reintroduced, potentially in a political climate where they have a stronger chance of passing.
For-profit beauty school chain Marinello Schools of Beauty was sued for allegedly defrauding the federal government through embellished and often falsified claims of enrollment, post-graduate employment, and entitlement to federal funding. Marinello officials stated they “strongly and categorically” deny the allegations made in the suit, calling them “utterly false” and adding that the settlement did not constitute an admission of wrongdoing. However, the U.S. Department of Education’s decision to bar the schools from accessing taxpayer money in the form of federal financial aid funds crippled Marinello’s financial position and forced the closure of all 56 U.S. campuses earlier this year. The whistleblowers’ settlement of $11 million represents a success for taxpayers and the students with outstanding federal loans who otherwise would not have been able to seek compensation from the schools post-closure.
The Marinello School of Beauty was founded in 1905 and later accredited by the National Accrediting Commission of Career Arts. Over time Marinello grew to an operation of 56 schools throughout several states including California, Connecticut, Kansas, Massachusetts, Nevada, and Utah. Following the U.S. Department of Education’s recent decision to rescind Marinello’s access to federal funding all campuses were forced to close on February 4, 2016. The government’s funding proved critical to Marinello campuses; without federal aid, Marinello was short on cash, enough to halt operations altogether and create difficulty for taxpayers to recover any part of the $51 million in federal financial funds Marinello collected in the 2014-2015 school year alone. Not only did federal aid enable the schools to enroll and train thousands of students, it also incentivized Marinello to lure more students into the school to claim government funds by any means necessary. According to the whistleblowers, the scope of the school’s alleged transgressions ranged from the falsification of high school diplomas of new entrants to encouraging false reports of income on students’ federal financial aid applications. The U.S. Department of Education also alleged that despite charging several thousand dollars for books and supplies, Marinello failed to provide students with requisite training equipment.
In a press statement regarding the settlement Marinello Beauty Schools claimed that “[d]espite all the false accusations and baseless litigation, which were also maliciously made against Marinello’s shareholders and former management, what little resources that were left had to fight these claims were exhausted and there was no choice other than to settle.” As part of the recovery for this False Claims Act lawsuit, the six former employees who brought the case to the government’s attention will receive a larger share of the $11 million settlement (25%-30%) while the rest returns to the U.S. government. Although only a small proportion of the total amount of money Marinello received under fraudulent pretenses, the $11 million settlement represents whistleblowers’ success in recovering money from the schools themselves rather than from taxpayers.
© 2016 by Tycko & Zavareei LLP