Category: Labor & Employment

Taco Bell Employees Likely Are Not Celebrating Their “Victory” in California Meal and Rest Period Class Action

More than a few media sources have reported on the March 10, 2016 wage-hour “victory” by a class of Taco Bell employees on meal period claims in a jury trial in the Eastern District of California.  A closer review of the case and the jury verdict suggests that those employees may not be celebrating after all — and that Taco Bell may well be the victor in the case.

The trial involved claims that Taco Bell had not complied with California’s meal and rest period laws. The employees sought meal and rest period premiums and associated penalties for a class of employees that reportedly exceeded 134,000 members.

Now, it is certainly true that, at trial, a class of employees prevailed on a claim that Taco Bell did not comply with California meal period laws for a limited period of time (2003-2007), when Taco Bell reportedly provided employees with 30 minutes of pay when they were not able to take meal periods, rather than the full one-hour of pay provided for by California law.

And it is certainly true that the class of employees was awarded approximately $496,000 on that claim.

But as it appears that there were more than 134,000 employees in the class, a few punches on the calculator show that, on average, each employee would receive approximately $3.

Perhaps more importantly, while it may have lost on that one claim, Taco Bell prevailed on the remaining claims in the case where the class alleged that Taco Bell had violated both meal and rest period laws as to its employees, including a claim that Taco Bell had not provided meal periods in compliance with the law for a period of approximately 10 years (2003-2013).   That claim alone likely would have resulted in a jury verdict of several million dollars had the employees prevailed on it.  But they did not.  Taco Bell did.

In other words, in a case where the employees were presumably asking a jury for several millions of dollars for alleged violations dating back to George W. Bush’s first term as President, they were only awarded approximately $496,000.

In the grand scheme of a class action, where employers must constantly weight the costs of litigation with the benefits of settlement, that is a small sum.  It is likely an amount Taco Bell gladly would have paid to settle the case.  In fact, one would have to speculate that $496,000 is likely much less than the amount Taco Bell actually offered the employees and their attorneys to resolve the case in mediation or otherwise.

So while the media may be reporting that this is a “victory” for Taco Bell employees, those employees, who will receive $3 each on average, may not see it that way.  Instead, they may well be questioning the lead plaintiffs and their attorneys about how much Taco Bell offered at the settlement table, if it was rejected, and why.

(And before anyone responds, “But the employees’ attorneys will get their attorneys fees,” we’re talking about the recovery for the employees themselves. If the real victors in the case are the attorneys, that’s another issue, isn’t it?)

Article By Michael S. Kun of Epstein Becker & Green, P.C.

©2016 Epstein Becker & Green, P.C. All rights reserved.

NIOSH Issues Suggestions to Help Workers Adapt to the Time Change

Spring is in the air and with it comes the time change to account for daylight savings.  Do not forget to set your clocks forward one hour this Sunday, March 13, 2016 or at least be ready for your smart devices to change their time spontaneously.

However, according to NIOSH, the time change can create real risks to workplace health and safety:

It can take about one week for the body to adjust the new times for sleeping, eating, and activity (Harrision, 2013). Until they have adjusted, people can have trouble falling asleep, staying asleep, and waking up at the right time. This can lead to sleep deprivation and reduction in performance, increasing the risk for mistakes including vehicle crashes. Workers can experience somewhat higher risks to both their health and safety after the time changes (Harrison, 2013). A study by Kirchberger and colleagues (2015) reported men and persons with heart disease may be at higher risk for a heart attack during the week after the time changes in the Spring and Fall.

Employers are encouraged to remind workers of the upcoming time change and that it can have effects on the mind and body for several days following the change.  NIOSH suggests that employees should consider reducing demanding physical and mental tasks as much as possible the week of the time change to allow oneself time to adjust.  See all of NIOSH’s guidance here.

Article By Matthew Linton of Holland & Hart LLP

Copyright Holland & Hart LLP 1995-2016.

Sick Leave and Minimum Wage Update: Oregon, Vermont, Santa Monica

On Wednesday, Oregon Governor Kate Brown signed into law legislation that increases that state’s minimum wage from $9.25 to up to $14.75 by 2022, the highest of any state.  The first increases go into effect on July 1, 2016.  Under SB 1532 [PDF], minimum wage rates vary based upon the employer’s location, as set forth in the table below.  Beginning in 2023, the rate will be indexed to inflation.  The Commissioner of the Bureau of Labor and Industries has been charged with adopting rules for determining an employer’s location.

Oregon, Vermont, Santa Monica

In addition, Santa Monica, California quietly passed a law raising the minimum wage and mandating paid sick leave starting July 1, 2016, adding to the regulatory maze for employers with employees in California.  As currently written, Santa Monica’s sick leave law tracks San Francisco’s (arguably the most generous sick leave law in the nation), in that it does not contain an annual accrual or use cap.  Instead, employees are allowed to accrue paid sick leave at the rate of one hour for every 30 hours worked, up to 40 hours (if the employer has 1-25 employees in Santa Monica) or 72 hours (if the employer has 26 or more employees in Santa Monica).  If the employee reaches that cap, then uses some sick leave, the employee begins accruing leave again, up to that cap.  In addition, employees are entitled to roll over all accrued, unused sick leave to the next year. As with the San Francisco ordinance, this creates difficulties for employers who wish to front-load a predetermined amount of sick leave (a practice that is permissible under California and many other sick leave laws).  Of note, the City has established a working group to review and recommend technical adjustments to the adopted ordinance.  The sick leave law goes into effect on July 1, 2016.

The Santa Monica law also establishes a minimum wage for employees who work at least two hours per week in Santa Monica.  Large employers—those with 26 or more employees in Santa Monica—must pay a minimum wage of $10.50/hour beginning on July 1, 2016, increasing annually to $15.00/hour on July 1, 2020.   Small employers—those with 25 or fewer employees in Santa Monica—must pay a minimum wage of $10.50/hour beginning on July 1, 2017, increasing annually $15.00/hour on July 1, 2021. Beginning July 1, 2022, and each year thereafter, the minimum wage will increase based on Consumer Price Index (CPI).   The working group is also reviewing the minimum wage portion of the law.

Finally, Vermont is on the verge of becoming the fifth state (following California, Connecticut, Massachusetts and Oregon) to require private employers to provide paid sick leave for employees.  All that is left is for Governor Shumlin to sign the legislation [PDF], which he is expected to do.  Vermont’s sick leave law differs somewhat from laws in other jurisdictions in that 1) it only requires paid sick leave for employees who work an average of at least 18 hours/week, 2) employees accrue sick leave at a rate of one hour for every 52 worked (one hour for every 30 worked is the most common rate of accrual) and 3) it allows employees to use leave to accompany a parent, grandparent, spouse or parent-in-law to long-term care related appointments.

In addition, the law has a stepped approach for implementation.  First, for small employers (those with 5 or fewer employees) the law does not go into effect until January 1, 2018; the effective date for all other employers is January 1, 2017.  Second, through December 31, 2018, employees may only accrue and use up to 24 hours of paid sick leave per year; beginning January 1, 2019, that amount increases to 40 hours per year.

Article By Shennan Harris of Squire Patton Boggs (US) LLP

© Copyright 2016 Squire Patton Boggs (US) LLP

California DFEH Announces Guidance to Employers Regarding Transgender Rights in the Workplace

Individuals who identify as transgender are protected under California’s Fair Employment & Housing Act (Cal. Govt. Code §12940)(“FEHA”).  FEHA protection was extended in 2012 to include gender identity and gender expression categories, and defines “gender expression” to mean a “person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.”  Transgender worker rights have received increased attention in recent months as employers attempt to put into place compliant procedures that are sensitive to transgender workers.

On February 17, 2016, the California Department of Fair Employment and Housing (“DFEH”) issued guidelines on transgender rights in the workplace.  As this cutting edge area of law continues to develop, employers would be wise to follow the DFEH common sense recommendations which are summarized below:

Do Not Ask Discriminatory Questions

Finding the right employee can be a challenge for employers.   Interviews of prospective candidates can provide helpful insight as to whether the particular candidate is right for the position.  Employers may ask about an employee’s employment history, and may still ask for personal references and other non-discriminatory questions of prospective employees.  However, an employer should not ask questions designed to detect a person’s sexual orientation or gender identity.  The following questions have been identified by the DFEH as off-limits:

  • Do not ask about marital status, spouse’s name or relation of household members to one another; and

  • Do not ask questions about a person’s body or whether they plan to have surgery because the information is generally prohibited by the Health Insurance Portability and Accountability Act (HIPAA).

Apply Dress Codes and Grooming Standards Equally

The DFEH reminds employers that California law explicitly prohibits an employer from denying an employee the right to dress in a manner suitable for that employee’s gender identity.  Any employer who requires a dress code must enforce it in a non-discriminatory manner.  For example, a transgender man must be allowed to dress in the same manner as a non-transgender man.  Additionally, transgender persons should be treated equally as are non-transgender persons.

Employee Locker Rooms/Restrooms

According to the DFEH, employees in California have the right to use a restroom or locker room that corresponds to the employee’s gender identity, regardless of the employee’s assigned sex at birth.  Where possible, employers should provide an easily accessible unisex single stall bathroom for use by any employee who desires increased privacy.  This can be used by a transgender employee or a non-transgender employee who does not want to share a restroom or locker room with a transgender co-worker.

Summary

It is important to note that FEHA protects transgender employees and those employees who may not be transgender, but may not comport with traditional or stereotypical gender roles.

The DFEH’s guidance reminds California employers that a transgender person does not need to have sex reassignment surgery, or complete any particular step in a gender transition to be protected by the law.  An employer may not condition its treatment or accommodation of a transitioning employee on completion of a particular step in the transition.

Ultimately, while not the binding authority, the DFEH’s message is clear—employers should avoid discriminatory conduct, apply procedures consistently, and follow transgender employee’s lead with respect to their gender identity and expression.  The DFEH guidelines are consistent with the Equal Employment Opportunity Commission’s interpretation that Title VII prohibits discrimination based on sexual orientation and gender identity.

Article By Anne Cherry Barnett of Polsinelli PC

© Polsinelli PC, Polsinelli LLP in California

Trump Trump Trump Trump Trump Trump Everywhere All the Time, Including in Workplace

Ddonald trum larry kingonald Trump has become part of the national conversation. Not a single day goes by now without Mr. Trump filling up at least one news cycle.  His recent success reminds me of a fantastic exchange in Private Parts when a researcher is explaining Howard Stern’s improbable success to the infamous Pi … let’s just call him Phil Vomitz:

Researcher: The average radio listener listens for eighteen minutes. The average Howard Stern fan listens for – are you ready for this? – an hour and twenty minutes.

Phil Vomitz: How can that be?

Researcher: Answer most commonly given? “I want to see what he’ll say next.”

Phil Vomitz: Okay, fine. But what about the people who hate Stern?

Researcher: Good point. The average Stern hater listens for two and a half hours a day.

Phil Vomitz: But… if they hate him, why do they listen?

Researcher: Most common answer? “I want to see what he’ll say next.”

Not surprisingly, not a single day also goes by without a workplace water-cooler (or better yet, chat room) conversation about Mr. Trump (or any of the other presidential candidates.) It can run the spectrum from some friendly banter among co-workers, to a serious dialogue about the issues facing this country, all the way to a heated disagreement coupled with threats of violence.  And it begs the question: how can employers respond to employee political speech in the workplace?  This post addresses that issue.

Few Laws Exist Protecting Employee Political Speech in Private Workplaces

Generally private employers can take adverse actions against employees based on their political speech, unless (i) the employer operates in a state or city that specifically protects employees against discrimination because of political speech, or (ii) the employees are subject to a collective bargaining agreement that does the same.  (The story is quite different for public sector workers, but we do not address them here.)

Many workers live in jurisdictions that provide at least some protection against political speech discrimination – typically in the form of protecting an employee’s political activities, expressions and/or affiliations.  But those laws come in all shapes and sizes, so employers must proceed carefully before banning political speech or disciplining an employee.  For example, Washington D.C.’s human rights law limits its reach to actual or perceived political affiliations only, while Seattle’s law is a bit broader, extending to one’s “political ideology.”  Wisconsin protects those declining to attend a meeting or to participate in any communication about political matters.

More often than not, these laws protect workers from discrimination because of their political activities outside instead of inside the workplace.  For example, with limited exceptions, Colorado law prohibits employers from firing someone because of their lawful off-duty activities, which includes engaging in political speech, and it also prohibits employers from making any rule prohibiting employees from engaging or participating in politics or running for office.  New York’s law protects employees engaging in certain “political activities” outside the workplace, during off hours, but it contains an exception where the employee’s activities would create a “material conflict of interest related to the employer’s trade secrets, proprietary information or other proprietary or business interest.”

There is no federal law that specifically protects employees from discrimination or retaliation because of their political activities, affiliations or expressions.  And the First Amendment is not much of a help as it only protects a person’s right to free speech from government interference, not from interference by private employers.

Therefore, unless you live in a jurisdiction that protects you, if the boss overhears you in the cafeteria campaigning for Team Trump or going haywire for Hillary, he or she can generally send you packing.

Political Speech May Invoke the Protections of Other Laws, However

Of course, it’s a bit more complicated than the above analysis indicates, and will only become more so as the primary, and then general election, season unfolds.  To explain, consider the following hypothetical.

Employees A and B are talking in the break room about the upcoming Democratic debate.  Employee A says to Employee B that Hillary is the only candidate who can deliver on increasing the minimum wage, and “maybe they’ll stop underpaying us here if that happens.”  Employee B disagrees emphatically, placing his bet on Bernie Sanders as the only viable candidate to get the job done, and eventually the conversation turns uncomfortably vocal such that Employee C, an older Hispanic woman, cannot help but overhear Employee B comment to Employee A that he fully expects Hillary Clinton to play the female victim card to stave off criticism about her e-mail scandal.  Employee D, who supervises Employees A, B and C, chimes in and enthusiastically sides with Employee B stating that women always do this, and that Employee A should really stop griping about her wages if “she knew what was good for her.”  Employee E, a senior executive, then gets in on the conversation by professing his love for Trump, including by echoing his views on immigration and in particular, Mexican immigrants, and then he goes on to say that he thinks Hillary is just too old to assume the Commander in Chief Position.  Meanwhile Employees F, G, and H are sitting there stunned with their turkey sandwiches in hand, saying to themselves “awwwwwkward!”

This hypothetical, drawn directly from The Cat in the Hat Comes Back: Workplace Edition, shows that while the employer doesn’t necessarily have a political speech problem on its hands, it may instead have sex, age, race and national origin discrimination and/or NLRA interference complaints coming its way – just from one spirited election-related conversation in the break room.  Yes, politically-related conversations often invoke passionate feelings on both sides of the aisle on issues ostensibly about public policy, but they also often touch on issues that may relate to someone’s membership in a protected class, leaving employers vulnerable to discrimination and other claims.

Potential Employer Responses to Political Speech in the Workplace

As we head into Super or SEC Tuesday and the (17-month+ long!) election season plods along, you should be asking yourself what level of political discourse do you want in your workplace.  Do you want everyone to keep their political opinions to themselves or do you want to encourage robust debate or somewhere in between?  Discussion of politics and campaigning in the workplace puts you on tricky terrain, and may lead to conflict among your employees and thus, wherever you fall on this spectrum, consider addressing these issues in your code of conduct or in your handbook, including more specifically in your anti-discrimination/harassment, complaint reporting, non-solicitation/distribution and social media and electronic use policies.  In doing so, remain mindful of certain laws like the state and local laws mentioned above and the National Labor Relations Act, which restrict your ability to limit certain politically-based conversations/activities in the workplace.

If you will tolerate political discussions in the workplace, consider whether it’s necessary during this election season to conduct workplace professionalism training seminars for all staff members to reduce the likelihood that a healthy debate will turn into a contentious or inappropriate one.  Or consider distributing an election-focused one-pager with helpful talking points.  For example, it may remind employees that a politically-laced, yet well-intentioned conversation, even between the best of friends, can quickly turn contentious, and thus, even though you are not banning such conversations, you are asking your employees to think twice before engaging in one.  Or if the employees do engage in such a conversation, they should be sensitive to others’ beliefs and should not pressure anyone into discussing politics at work.  It also should remind them to utilize your complaint reporting mechanisms if a problem does arise from such a conversation.

Overall, employers should aim for outcomes where employees can engage in a dialogue about important issues, whether in person or electronically, during non-working hours while remaining respectful of others’ points of view and aware of key discrimination and labor laws.  Employees should also understand that they may be subject to discipline for failing to meet your standards of conduct regarding political discourse.  Taking this approach should allow employers to create realistic workplace social conditions, maintain employee morale, and reduce their exposure to a lawsuit.

Article By Michael S. Arnold of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Lady Murderface and Protected Activity Under NLRA

national labor relations boardHave you seen the story about “Talia Jane”?  I am not sure what qualifies as “going viral” (although I bet my kids do), but since I heard about it, this story may indeed be “viral.”  See, e.g., Here and here.

In a nutshell, Talia used to be a customer-service agent at Yelp.  On February 19, she published a very lengthy “open letter” to Yelp’s CEO on a blog. In her blog post, Talia Jane complains about how she and her fellow low-level employees are struggling to make ends meet.

So here I am, 25-years old, balancing all sorts of debt and trying to pave a life for myself that doesn’t involve crying in the bathtub every week. Every single one of my coworkers is struggling. They’re taking side jobs, they’re living at home. One of them started a GoFundMe because she couldn’t pay her rent. She ended up leaving the company and moving east, somewhere the minimum wage could double as a living wage.

The post is as much a commentary about the inadequate minimum wage in San Francisco (and its high cost of living) as it is a complaint about her (perceived inadequate) pay at Yelp.  Her post is full of snark. (For example, Talia Jane writes:  “According to this website, you’ve got a pretty nice house in the east bay. Have you ever been stranded inside a CVS because you can’t afford to get to work? How much do you pay your gardeners to keep that lawn and lovely backyard looking so neat?”)

She was fired later that day, although Yelp is not publicly saying why. Assuming the reason for her termination was the blog post, does Talia Jane have a claim that under the National Labor Relations Act (NLRA) she was engaging in protected activity?

As the National Labor Relations Board (NLRB) states on its website, the NLRA “gives employees the right to act together to try to improve their pay and working conditions, with or without a union. If employees are fired, suspended, or otherwise penalized for taking part in protected group activity, the National Labor Relations Board will fight to restore what was unlawfully taken away.”

Again, from the NLRB website, the inquiry will involve three questions:

Is the activity concerted?

Generally, this requires two or more employees acting together to improve wages or working conditions, but the action of a single employee may be considered concerted if he or she involves co-workers before acting, or acts on behalf of others.

Does it seek to benefit other employees?

Will the improvements sought – whether in pay, hours, safety, workload, or other terms of employment – benefit more than just the employee taking action?  Or is the action more along the lines of a personal gripe, which is not protected?

Is it carried out in a way that causes it to lose protection?

Reckless or malicious behavior, such as sabotaging equipment, threatening violence, spreading lies about a product, or revealing trade secrets, may cause concerted activity to lose its protection.

Since 2011, the NLRB has dedicated much time to addressing companies’ social media policies in the non-union context.  For the most part, it has expanded the definition of concerted activity in social media.  See, e.g., Hispanics United of Buffalo, Inc. v Carlos Ortiz, NLRB No. 3-CA-27872 (Sept. 2, 2011), aff’d 359 NLRB No. 37 (Dec. 14, 2012) (holding that five employees engaged in protected concerted activity by posting Facebook comments that responded to a co-worker’s criticism of their job performance); Costco Wholesale Corp., 358 NLRB No. 106 (Sept. 7, 2012) (invalidating a company’s electronic posting policy that prohibited employees from making statements that “damage the Company…or damage any person’s reputation,” because it could chill employees’ willingness to engage in their right of concerted activity); Three D, LLC v. N.L.R.B., No. 14-3284 (2d Cir. Oct. 21, 2015) (holding that employees’ endorsement of former employee’s claim on social networking website that employer had erred in tax withholding was concerted activity protected by NLRA).  Still, employers may discipline or even terminate employees for personal rants and insults on social media that do not engage other employees.

Talia Jane knew that her post might cost her job.  (After she tweeted her blog post to the world – from her “Lady Murderface” twitter handle – she followed up with this tweet:  “might lose my job for this so it’d be cool if u shared so i could go out in a blaze of…..people knowing why i got fired?”)  In fact, given Lady Murderface’s expressed desire to work in media, I think it is a safe bet she wanted to get fired.

But back to the question at hand: what happens if Talia Jane makes a claim against Yelp?  Although we don’t know all the facts, it could be a close call.

Is the activity concerted? On the one hand, there was no “concerted activity.”  Talia Jane was acting alone.  On the other hand, Talia Jane arguably was acting not only on her own behalf but other low-level Yelp workers struggling to make ends meet.

Does it seek to benefit other employees? To the extent she is advocating for higher pay generally, yes.

Is it carried out in a way that causes it to lose protection? If the answer to the first question does not doom her, Talia Jane could run into problems here.  While ranting about the lack of training, poor retention, and inadequate pay, Talia Jane writes:

Speaking of that whole training thing, do you know what the average retention rate of your lowest employees (like myself) are? Because I haven’t been here very long, but it seems like every week the faces change. …  Do you know how many cash coupons I used to give out before I was properly trained? In one month, I gave out over $600 to customers for a variety of issues. Now, since getting more training, I’ve given out about $15 in the past three months because I’ve been able to de-escalate messed up situations using just my customer service skills. Do you think that’s coincidence? Or is the goal to have these free bleeders who throw money at angry customers to calm them down set the standard for the whole company?

I have never called Yelp to complain, but if I ever do, I guess I should look for a cash coupon.  Who knew Yelp’s customer-service team was full of “free bleeders [who] throw money at angry customers”?

My hunch is that Talia Jane won’t make a claim — I doubt she wants her job restored — and instead will ride this wave of publicity to a job she finds more satisfying.  Nevertheless, this case serves as an important reminder regarding the potential landmines that social media presents to employers.  Employers and their counsel should approach disciplinary decisions involving social media with caution, and should make sure that any decisions focus on activity that is not protected under the NLRA.

Article By Scott McConchie of Sherin and Lodgen LLP
© 2016 SHERIN AND LODGEN LLP

Dave & Busted? Reductions in Employee Work Schedules May Not Negate Employer’s ACA Health Coverage Mandate

Under the Affordable Care Act (ACA), employers with at least 50 full-time employees (“FTEs) must generally offer qualifying health insurance to all employees who work at least 30 hours or more per week. A company that fails to satisfy this so-called “employer mandate” faces the possibility of significant penalties under the ACA. As a result, the ACA amplifies many risks for companies with respect to their employment classifications and the delivery of health care benefits to their employees.

ACA Implications for Employers

In response to these uncertainties, some employers have gone so far as to reduce the hourly work schedules of some employees to less than 30 hours per week to avoid any additional costs under the ACA employer mandate.  In what is believed to be a case of first impression, the plaintiffs in Marin v. Dave & Buster’s, Inc., S.D.N.Y., No. 1:15-cv-036081 challenged their employer over the reductions to their work schedules by filing a class action suit in federal court in May 2015. Specifically, current and former employees alleged that Dave & Buster’s, the national restaurant chain, violated the protections under Section 510 of the Employee Retirement Income Security Act (“ERISA”) by intentionally interfering with their eligibility for benefits under the company’s health plan. They also claimed damages for lost wages and demanded the restoration of their health coverage, as well as reimbursement of their out-of-pocket medical costs.

In response to the lawsuit, Dave & Buster’s filed a motion to dismiss and argued that the plaintiffs’ ERISA Section 510 claim failed as a matter of law because there was no guaranteed “accrued benefit” over future health insurance coverage for hours not yet worked.  On February 9, 2016, the United States District Court for the Southern District of New York denied the company’s motion to dismiss.  The court found that the complaint “sufficiently and plausibly” alleged enough facts to support a possible finding that Dave & Buster’s intentionally interfered with the plaintiffs’ rights to receive benefits under the company’s health plan. The court noted that the complaint referenced specific e-mails and other communications that the plaintiffs allegedly received when their work schedules were reduced, as well as public statements by senior executives and disclosures in the company’s securities filings, which overtly explained that the workforce management protocols were instituted to thwart the potential impact of the ACA on the company’s bottom line.

While the decision on the motion to dismiss does not necessarily mean that the employer will ultimately lose, it does signal the court’s willingness to allow the plaintiffs to develop their legal theories in subsequent court filings. One can also question the impact to the court, at least initially, of the company’s open and obvious disclosures about its reasoning for reducing the employees’ work schedules.  Based on the strong wording of the court’s ruling, however, these obvious and seemingly bold statements certainly did not help the company’s request for an early exit from this case.  As a result, the court may eventually allow robust discovery which could, of course, be cumbersome and expensive for the company.

Takeaways for Employers

In light of this case development, companies that are subject to the ACA employer mandate should review their compliance strategies now to address any risks with their employment classifications and the delivery of future health care benefits to their FTEs, and also take heed in the manner as to how they communicate any reductions in employees’ work schedules.

Article By W. Andrew Douglass & Brian M. Johnston of Polsinelli PC

© Polsinelli PC, Polsinelli LLP in California

Dave & Busted? Reductions in Employee Work Schedules May Not Negate Employer’s ACA Health Coverage Mandate

Under the Affordable Care Act (ACA), employers with at least 50 full-time employees (“FTEs) must generally offer qualifying health insurance to all employees who work at least 30 hours or more per week. A company that fails to satisfy this so-called “employer mandate” faces the possibility of significant penalties under the ACA. As a result, the ACA amplifies many risks for companies with respect to their employment classifications and the delivery of health care benefits to their employees.

ACA Implications for Employers

In response to these uncertainties, some employers have gone so far as to reduce the hourly work schedules of some employees to less than 30 hours per week to avoid any additional costs under the ACA employer mandate.  In what is believed to be a case of first impression, the plaintiffs in Marin v. Dave & Buster’s, Inc., S.D.N.Y., No. 1:15-cv-036081 challenged their employer over the reductions to their work schedules by filing a class action suit in federal court in May 2015. Specifically, current and former employees alleged that Dave & Buster’s, the national restaurant chain, violated the protections under Section 510 of the Employee Retirement Income Security Act (“ERISA”) by intentionally interfering with their eligibility for benefits under the company’s health plan. They also claimed damages for lost wages and demanded the restoration of their health coverage, as well as reimbursement of their out-of-pocket medical costs.

In response to the lawsuit, Dave & Buster’s filed a motion to dismiss and argued that the plaintiffs’ ERISA Section 510 claim failed as a matter of law because there was no guaranteed “accrued benefit” over future health insurance coverage for hours not yet worked.  On February 9, 2016, the United States District Court for the Southern District of New York denied the company’s motion to dismiss.  The court found that the complaint “sufficiently and plausibly” alleged enough facts to support a possible finding that Dave & Buster’s intentionally interfered with the plaintiffs’ rights to receive benefits under the company’s health plan. The court noted that the complaint referenced specific e-mails and other communications that the plaintiffs allegedly received when their work schedules were reduced, as well as public statements by senior executives and disclosures in the company’s securities filings, which overtly explained that the workforce management protocols were instituted to thwart the potential impact of the ACA on the company’s bottom line.

While the decision on the motion to dismiss does not necessarily mean that the employer will ultimately lose, it does signal the court’s willingness to allow the plaintiffs to develop their legal theories in subsequent court filings. One can also question the impact to the court, at least initially, of the company’s open and obvious disclosures about its reasoning for reducing the employees’ work schedules.  Based on the strong wording of the court’s ruling, however, these obvious and seemingly bold statements certainly did not help the company’s request for an early exit from this case.  As a result, the court may eventually allow robust discovery which could, of course, be cumbersome and expensive for the company.

Takeaways for Employers

In light of this case development, companies that are subject to the ACA employer mandate should review their compliance strategies now to address any risks with their employment classifications and the delivery of future health care benefits to their FTEs, and also take heed in the manner as to how they communicate any reductions in employees’ work schedules.

Article By W. Andrew Douglass & Brian M. Johnston of Polsinelli PC

© Polsinelli PC, Polsinelli LLP in California

Medical Marijuana Need Not Be Accommodated by New Mexico Employers

New Mexico employers are not required to accommodate an employee’s use of medical marijuana, according to the federal district court in New Mexico. In dismissing an employee’s discrimination lawsuit, the Court recently ruled that an employee terminated for testing positive for marijuana did not have a cause of action against his employer for failure to accommodate his use of medical marijuana to treat his HIV/AIDS. Garcia v. Tractor Supply Co., No. 15-735, (D.N.M. Jan. 7, 2016).

New Employee Terminated For Positive Drug Test 

When Rojerio Garcia interviewed for a management position at a New Mexico Tractor Supply store, he was up front about having HIV/AIDS. He also explained that he used medical marijuana under the state’s Medical Cannabis Program as a treatment for his condition upon recommendation of his doctor.

Tractor Supply hired Garcia and sent him for a drug test; Garcia tested positive for cannabis metabolites. He was terminated from employment. Garcia filed a complaint with the New Mexico Human Rights Division alleging unlawful discrimination based on Tractor Supply’s failure to accommodate his legal use of marijuana to treat his serious medical condition under New Mexico law. 

No Affirmative Accommodation Requirements in New Mexico’s Medical Marijuana Law

Garcia argued that New Mexico’s Compassionate Use Act (CUA), which permits the use of marijuana for medical purposes with a state-issued Patient Identification Card, should be considered in combination with the state Human Rights Act, which, among other things, prohibits employers from discriminating on the basis of a serious medical condition. He argued that the CUA makes medical marijuana an accommodation promoted by the public policy of New Mexico. Accordingly, Garcia asserted that employers must accommodate an employee’s use of medical marijuana under the New Mexico Human Rights Act.

The Court disagreed. It stated that, unlike a few other states whose medical marijuana laws impose an affirmative obligation on employers to accommodate medical marijuana use, New Mexico’s law did not. Consequently, Garcia did not have a claim under the CUA.

The Court then rejected Garcia’s arguments that his termination violated the Human Rights Act. The Court found that Garcia was not terminated because of, or on the basis of, his serious medical condition. He was terminated for failing a drug test. The Court stated that his use of marijuana was “not a manifestation” of his HIV/AIDS, so Tractor Supply did not unlawfully discriminate against Garcia when it terminated him for his positive drug test. 

Court Rejected Public Policy Arguments 

Garcia argued that the public policy behind the state’s legalization of medical marijuana meant that employers should be required to accommodate an employee’s legal use of marijuana. The Court rejected the argument, noting that marijuana use remains illegal for any purpose under federal law. It stated that if it accepted Garcia’s public policy position, Tractor Supply, which has stores in 49 states, would have to tailor its drug-free workplace policy for each state that permits marijuana use in some form.

The Court also relied on the fact that the CUA only provides limited state-law immunity from prosecution for individuals who comply with state medical marijuana law. However, Garcia was not seeking state-law immunity for his marijuana use. Instead, he sought to affirmatively require Tractor Supply to accommodate his marijuana use. The Court stated that to affirmatively require Tractor Supply to accommodate Garcia’s drug use would require the company to permit conduct prohibited under federal law. Therefore, the Court ruled that New Mexico employers are not required to accommodate an employee’s use of medical marijuana.

What This Means For Employers

The Tractor Supply decision is consistent with rulings from courts in other states that have similarly ruled that an employer may lawfully terminate an employee who tests positive for marijuana. Although Garcia may appeal this decision, it is difficult to imagine that an appellate court will overturn it as long as marijuana use remains illegal under federal law, and state law does not require a workplace accommodation.

In light of this decision, take time now to review your drug-free workplace and drug testing policies. Make certain that your policies apply to all controlled substances, whether illegal under state or federal law. Clearly state that a positive drug test may result in termination of employment, regardless of whether the employee uses medical marijuana during working hours or appears to be “under the influence” at work. Communicate your drug-free workplace and testing policies to employees and train your supervisors and managers on enforcing the policies in a consistent and uniform manner.

Article By Little V. West of Holland & Hart LLP
Copyright Holland & Hart LLP 1995-2016.

Groundhog Day: Declaring Impending Death of Massachusetts Noncompetes

or the last three years, we have reported on legislative efforts to ban noncompetes in Massachusetts. You can see a sample of those reports here and here. Thus far none of those efforts have been successful. Here again in 2016, legislative efforts to ban noncompetes promise to continue in Massachusetts, with one commentator declaring, “This is the year.”

Our job as business lawyers is to advise clients on how widely varying state laws affect their ability to use noncompetes, then they can make their business decisions from there. Different businesses take very different views on noncompetes, as those seeking to ban them in Massachusetts have learned. Therefore, our job does not drive any particular policy position on noncompetes. However, I have observed that opponents seem quick to share stories about stories about seeming extreme noncompetes (certainly they exist but good luck enforcing them) and/or declare noncompetes’ ongoing decline (they’re not) and/or say they have a negative impact on the economy (I’m still waiting for proof of what the impact may be, pro or con) – none of those things always supported by facts and data.

The above-linked commentator has “heard” that noncompetes have prevented 19 year olds from switching employment at summer camps. I have not seen that, directly or indirectly, and it seems that it would be difficult even in a pro-enforcement state like Ohio to enforce such a noncompete. But it certainly makes a nice story, even if it may jeopardize the support of the summer camp trade association for the legislation.

The commentator also talks about the “stifling effect” noncompetes have on the Massachusetts economy, though I do not see any data supporting that conclusion. I am no economist either, but my first result in a Google search lists Massachusetts as the 6th best economy among states in the last quarter of 2015. Just think how highly the state would be ranked if its economy were not stifled.

Maybe this is the year for Massachusetts; we will see. In any event, we will continue to watch developments by state, some of which will be pro-enforcement and some of which will not, and keep you posted on how it affects your businesses.

Article By William A. Nolan of Barnes & Thornburg LLP

© 2016 BARNES & THORNBURG LLP