Handbook Wars – Common Sense Returns NLRB Overhauls Standard for Legality of Work Rules

We have noted many times over the years how the NLRB’s zeal to review employer policies, or more correctly, fragments of employer policies, for lawfulness has led to nettlesome issues that rarely, if ever, involve actual employees.  The results have been absurd and have raised an entire cottage industry of attacks on language by unions and vetting of employer policies for lawfulness.

This may be ending.  As we noted yesterday, the NLRB issued a significant decision that will have far-reaching implications for both unionized and non-unionized workplaces.  In Boeing Company, 365 NLRB No. 154 (2017), the Board established a new standard for evaluating whether facially lawful workplace rules, policies or employee handbook provisions unlawfully interfere with employees’ exercise of Section 7 rights.  In so doing, the Board placed in doubt the applicability of scores of decisions issued in the 13-years since Lutheran Heritage, 343 NLRB 646 (2004), was decided.  We previously identified this issue as a case that the NLRB would revisit once a new majority was installed.

“Reasonably Construe” Standard

For the last 14 years the Board evaluated whether an employee would “reasonably construe” the language of a work rule to prohibit the exercise of NLRA rights.  If it did, then the rule—regardless of whether it actually restricted Section 7 activity—was found unlawful.  Applying this standard, an inconsistent line of cases developed.  Take, for instance, a sampling or recent decisions concerning “civility in the workplace.”  A rule prohibiting “abusive or threatening language to anyone on Company premises” was lawful, while a rule restricting “loud, abusive or foul language” was not.  And, as noted, a policy or fragment of a policy could be found unlawful even if there was no evidence that employees read the policy or were even aware of its existence.  It was, in terms of the NLRA, a victimless crime.

Policy Considerations Behind Abandoning The Lutheran Village Standard

The new three member Board majority (Miscimarra, Kaplan and Emmanuel) decided to change this standard because employers were often held to an impossible standard of precision in drafting language in which they would need to foresee any potential impact on any Section 7 right, regardless of how remote.  An employer would have to foresee the future, which the majority characterized as requiring “perfection that literally is the enemy of the good.”  The Lutheran Heritage standard has been criticized as unworkable by many in the employer community, and by various Board members over the years.  So it is not surprising that that a new standard was on the agenda.

New Balancing Test

The Board abandoned the singularly-focused and vague “reasonably construe” standard, in favor of a new balancing test, which would consider the impact of the rule on NLRA rights and an employer’s business justification for the rule.  Going forward,  in order to provide greater clarity and certainty to all parties, the Board indicated it would categorize the results of future decisions in three ways:

  • Category 1: Lawful rules because (i) when “reasonably interpreted,” the rule does not prohibit or interfere with the exercise of NLRA rights or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.  Examples of these types of rules include the no-camera requirement in the Boeing case, where the employer supported its rule with multiple business and security justifications.  The Board also found that a rule requiring employees to have “harmonious interactions and relationships” in the workplace, and other rules requiring employees to abide by basic standards of civility would be categorically lawful.
  • Category 2: Rules warranting individual scrutiny on a case-by-case basis.
  • Category 3: Unlawful rules because they would prohibit or limit NLRA-protected conduct, and the adverse impact is not outweighed by legitimate business justifications (e.g., a rule prohibiting discussion of wages or benefits with another).

The Board proceeded to use this new framework to find that Boeing’s policy restricting the use of camera-enable devices was justified in light of the employer’s security concerns.  As it does in every case in which it overrules precedent and/or sets a new standard, the Board weighed whether to apply this new test retroactively, and decided to apply the standard to all pending cases in whatever stage.

Impact of this Decision

It will be some time before the full impact of the decision will be felt as rules are evaluated under the new standard.  However, the fact Lutheran Heritage was overruled likely will inhibit unions from attacking employer policies as the forum for these sorts of claims is less receptive.

Because the Board will evaluate the purpose for the rule, employers should consider clearly articulating the reasons for a rule in the policy.

Also, employers may feel less constrained by the thicket created by the previous standard; however, the true impact of Boeing likely will be felt once the host of pending cases work their way through ALJs and the Board under this new paradigm.  Only then will employers understand how the Board’s new categories will work.  We will keep you posted…there is sure to be more to follow.

© 2017 Proskauer Rose LLP.
This post was contributed by Mark Theodore and Joshua S Fox of Proskauer Rose LLP.
For more on the NLRB go to the National Law Review’s Labor and Employment Practice group page.

Social Hosts Beware: “One More for the Road?” May Be a Bad Idea

The company was hosting its annual holiday party.  The company had arranged to hold the event that Saturday night in a hotel ballroom.  Moods were festive, especially because the company’s profits were up about 10%.  Because he enjoyed doing it and served as a freelance bartender in his spare time, one of the company’s new sales employees, Tom Collins, was helping to tend bar.

Much of the company’s success that year was attributable to the efforts of Johnny Walker, V.P. of Sales, who, for understandable reasons, was in a celebratory mood.  When he, at about 11 p.m., bellied up to the bar for a fourth round, Tom couldn’t help but notice that Johnny, normally the epitome of self-control, seemed more than a little impaired.  Tom said to Johnny, “Mr. Walker, with all due respect, don’t you think that it may be time to slow down?  In fact, given the hour, I’ll be happy to arrange a ride to take you home.”  Johnny, now irritated, replied “Tom, you make an excellent highball, but I’d be grateful if you’d mind your own business, OK?”  Tom did as he was asked and poured Walker another drink.  With that, Johnny, armed with another scotch and soda, disappeared into the crowd.

The next morning, Tom, to his shock, learned that Johnny had gotten into his Volvo to drive home and promptly collided with another driver.  The other driver, as a result, was seriously injured and remained hospitalized in a coma for about nine months.  He then died.

Candy is dandy, but liquor is quicker, so be careful out there . . .

May an employer with employees in North Carolina, in appropriate circumstances, be held liable for the malfeasance of its employees and, specifically, be held liable as a “social host” because one of its employees served alcohol to a person when the employee knew or should have known that the person was drunk and would soon be driving on public roads and might hurt or kill someone?

Absolutely.  The doctrine of “social host liability” was first declared in North Carolina about 25 years ago.  The North Carolina Supreme Court, in the 1992 case of Hart v. Ivey, ruled that the plaintiffs had stated a valid claim when they alleged that various defendants had been negligent in throwing a party at which beer was served to an 18-year-old, under circumstances in which the defendants knew or should have known that the young man was intoxicated at the time he was served, that he would drive a motor vehicle from the party, and that he was likely to injure someone.

The court wrote that it had not been able to find a North Carolina case dealing with similar facts, but concluded “that the principles of negligence established by our decisions require that we hold that the plaintiffs .  .  . have stated a claim.”  The court emphasized that it was not recognizing a new claim, but was merely applying the established elements of negligence to find that the plaintiffs stated claims recognized by law.

What had the plaintiffs claimed?  Only:

  • That “the defendants served an alcoholic beverage”;
  • To a person they knew or should have known was under the influence of alcohol; and,
  • That the defendants knew that person would shortly thereafter drive an automobile.

The court’s conclusions in Hart, if you think about them, aren’t surprising:

If proof of these allegations were offered into evidence, [then] the jury could find from such evidence that the defendants had done something a reasonable man would not do and were negligent.  The jury could also find that a man of ordinary prudence would have known that such or some similar injurious result was reasonably foreseeable from this negligent conduct.  The jury could find from this that the negligent conduct was the proximate cause of the injury to plaintiffs.

Sadly, the court later had occasion to encounter just such a claim brought by the estate of a man killed by an employee who had attended a party for a retiring supervisor at the home of an officer of the employer.  In the 1995 case of Camalier v. Jeffries, the employer sponsored the party and hired a catering company to help with food and drink service and another company to handle parking arrangements.  The catering company and a company that it hired supplied all of the bartenders at the party.

The employee downed three or four gin and tonics and then decided to leave, and was taken by van to his car.  He then drove his car into an automobile whose driver suffered serious injuries and then died of the injuries about nine months later.  Within two hours after the time of the accident, a blood sample was drawn from the employee showing that his blood-alcohol concentration was well over the legal limit.

In ruling on the case, the North Carolina Supreme Court reiterated the elements of “social-host liability” that it had declared in Hart.  In Camalier, the defendant company and one of its officers dodged liability, but only because the evidence was insufficient to show that they knew or should have known that the employee was hammered when he was served alcohol at the officer’s home.

The court observed that there was no question that the defendant employer and its officer caused alcohol to be served to the employee and knew or should have known that the employee would be driving an automobile after the party.  Thus, the first and third factors set forth in Hart were not in dispute.  But the court also found that the predicted evidence didn’t show that either the employer or the officer knew or should have known that the employee was drunk when he was being served.

The impaired employee who caused injury in Camalier had been served by a vendor hired by the employer rather than by an employee of the defendant employer.  It appears that North Carolina’s appellate courts have not yet held an employer liable as a “social host” based on the actions of an employee, but the circumstances in which a court may do so are not difficult to imagine.  Such liability can arise from an employer-hosted event at a restaurant, country club, pub, or similar establishment.  The location will not matter and a court is likely to find employer liability if there is proof that an employee, under circumstances intended to promote the interests of the employer, served alcohol to a person when the employee, or its representative, knew or should have known that the person was intoxicated and would soon be driving and that a third-party was injured as a result.

The Supreme Court of New Mexico, addressing such an issue, highlighted the principles of employers’ and employees’ liability as “social hosts” where the host purchases liquor and causes it to be served to a guest and, as a result, a third person is injured.  In the 2011 case of Delfino vs. Griffo, employees of a pharmaceutical company, in the course of their employment, entertained a physician’s employee in several restaurants.  The guest consumed considerable alcohol, became very intoxicated, departed in her car, and shortly thereafter caused a fatal accident.

The New Mexico court, discussing liability as a “social host,” observed:

Social hosting need not occur in a home; one may host in a bar or restaurant where the actual delivery of alcoholic beverages to the guests is performed by a licensed server.  Factors that are key to determining whether one is a social host in a public establishment are whether the alleged social host exercised control over the alcohol consumed by the guests; whether the alleged social host convened the gathering for a specific purpose or benefit to the alleged social host, such as promoting business good will; and whether the alleged host intended to act as ‘host’ of the event, meaning arrange for the service of and full payment for all food and beverages served to the guests.

The New Mexico court found, based on the facts of the Delfino case, that the employer was a “social host” for the drunk driver and, in such capacity, the employer could be sued and held liable.

Bring your carrier along for the ride . . .

Employers may consider purchasing general liability insurance to insure them against losses arising from the provision of alcohol by their employees to an intoxicated driver who then causes injury or death.  A typical general liability insurance policy includes a business liability provision that will pay for damages arising from causing or contributing to the intoxication of a third party, so long as the insured entity is not in the business of manufacturing, distributing, selling, or furnishing alcoholic beverages.  Employers can also buy a one-time special event policy if their current insurance doesn’t provide that kind of coverage.

Employers may also try to insulate themselves from “social host” liability by hiring professional caterers or bartenders who maintain such general liability insurance coverage, so that the employer, if it encounters a “social host” liability claim, may at least try to pass the liability to the caterer’s or bartender’s insurance carrier.

Employers should bear in mind, however, if tragedy occurs and litigation ensues, that it is the employer—not the insurance company—that will be sued, and that having insurance does not mean that the employer is immunized from liability.  It means only that the insurance carrier may have to pay if the employer is found liable (or, more likely, if the employer convinces the carrier to pay a pre-trial settlement to enable the employer to avoid an embarrassing lawsuit).  Moreover, a policy’s limits of liability are not always high enough to cover all claims.  The amount of liability can exceed the limits, in which case the employer, if held liable as a “social host,” can, to one degree or another, be on its own to pay a settlement or judgment.

Conclusion

One useful tip for employers who want to celebrate with their employees and host social events at which alcohol is served is to limit the access to alcohol, such as by setting limits on how much or how long alcohol is served at the event.  You can’t mandate good judgment, but you can decide how much temptation you’re willing to pour.

 

© 2017 Ward and Smith, P.A..
This post was written by Grant B. Osborne of Ward and Smith, P.A..
Read more Labor and Employment News on the National Law Review’s Labor and Employment Practice Group page.

Insurance Coverage in the Post-Weinstein Era

With new headlines involving sexual harassment and other inappropriate sexual conduct continuing to emerge on a daily basis, insurance coverage for claims that might emerge is something every company should consider.

Recently, media reports have discussed settlements of shareholder derivative claims against members of the boards of directors and other senior executives of public companies. These settlements illustrate both the type of corporate liability that can ensue from allegations that a company turned a blind eye to, or otherwise failed to prevent, sexual misconduct allegations, causing financial and reputational harm to the organization, and the critical role insurance can play in protecting companies and their executives against such claims.While reports indicate that one or more of the settlements is being funded entirely from insurance proceeds, it is unclear whether the settlement proceeds will be coming from D&O insurance or EPLI insurance, or both. D&O insurance is intended to cover corporate mismanagement claims but typically contains some form of employment practices liability exclusion. EPL insurance is intended to cover employment practices liability claims but may not cover management liability claims arising from allegations of sexual harassment. This creates a potential gap in coverage that could have serious consequences.

D&O and EPLI policies are not standard and contain different wording and exclusions.

WHAT TO DO?

In this environment, it behooves corporate management of every company to understand the scope of insurance coverage for sexual harassment and management liability claims and to ensure that appropriate coverage is in place without coverage gaps.

Here is what policyholders should do: comprehensively review all relevant corporate insurance programs to determine what coverage is in place for sexual harassment claims of any variety, and for claims arising from corporate actions that might be necessary in the wake of an issue or claim, such as claims of wrongful termination and defamation.

Policies to be reviewed should include CGL, EPL, D&O and E&O.

Determine whether coverage gaps exist and if so, consider enhancing coverage to ensure proper protection.

Understand what needs to happen in terms of notice to insurers in the event of a claim or knowledge of circumstances that might lead to assertion of a claim.

And be aware of the potential for coverage before agreeing to any payments or settlements that might preclude or limit coverage.

© 2017 Proskauer Rose LLP.
This post was written by Seth B Schafler of Proskauer Rose LLP.
Learn more at the Insurance Law Page on the National Law Review.

Oregon Expands Effort to Achieve Equal Pay

This month, Oregon joined a number of other states, including California, Massachusetts, Maryland, and New York by strengthening existing equal pay laws. The new law, the Oregon Equal Pay Act of 2017 (“OEPA”), has three (3) central components:

  • Applying equal pay protections to disparities based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age;
  • Curbing an employer’s ability to obtain or rely upon an applicant’s prior compensation to determine his or her current compensation; and
  • Changing and substantially limiting the defenses available to employers sued for alleged equal pay violations.

The bulk of the OEPA’s substantive provisions is effective January 1, 2019.

Broadening Scope of Equal Pay Protections

The OEPA prohibits disparities in “wages or other compensation” between employees performing work of a “comparable character” based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age. Work is of a “comparable character” if it requires “substantially similar knowledge, skill, effort, responsibility and working conditions [.]” This is a substantial expansion of prior law, which only applied to sex-based pay disparities.

The OEPA also limits an employer’s ability to rely upon prior compensation by:

  • Making it unlawful to seek information about an applicant’s or employee’s compensation history; and
  • Prohibiting employers from screening job applicants or determining compensation based on a prospective employee’s current or past compensation.

However, these pay history restrictions do not apply “during a transfer, move or hire of [an] employee to a new position with the same employer.”

Limited Defenses to Equal Pay Claims

Under prior Oregon law, an employer could defend a sex-based pay disparity by demonstrating that it was based on (a) a seniority or merit system, or (b) good faith factors other than sex.

However, under the OEPA an employer can only pay differential wages for work of a comparable character if the disparity is attributable to “a bona fide factor that is related to the position in question and is based on” one or more of the following:

  • A seniority system;
  • A merit system;
  • A system that measures earnings by quantity or quality of production;
  • Workplace locations;
  • Travel, if travel is necessary and regular for the employee;
  • Education;
  • Training; or
  • Experience.

The employer must also demonstrate that the factor(s) creating the pay disparity account for the entirety of the differential.

Potential Limits on Remedies

In addition to back wages, employees bringing claims under the OEPA may also seek compensatory and punitive damages. However, the law limits remedies against employers that take specified steps to achieve pay equality.

Under the OEPA, a court “shall” disallow an award of compensatory or punitive damages if the employer shows that within three (3) years of the employee bringing the OEPA claim, the employer conducted a good faith equal pay analysis that: (a) was “[r]easonable in detail and scope in light of the size of the employer”; (b) related to the protected class at issue in the action (e.g., sex, age, race, etc.); and (c) “[e]liminated the wage differentials for the plaintiff and [] made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.”

What This Means for Employers

Because the bulk of the OEPA changes are not yet effective, now is the time for employers to commence their compliance efforts including:

  • Reviewing job applications to ensure they do not seek prior compensation information;
  • Auditing compensation data to identify protected class-based disparities, if any. If this analysis reveals disparities, employers can avoid or limit future claims and damages by eliminating any identified differentials;
  • Training managers and human resources professionals regarding the permissible considerations when making compensation decisions, and how to document such decisions;
  • Revising employee job descriptions to ensure they reflect the substantive distinctions between positions – i.e., the fact that jobs are not of a “comparable character” is reflected in job descriptions; and
  • Revising employee reviews on which compensation decisions are based to ensure they reflect the considerations that are permissible grounds for a pay disparity under OEPA.
This post was written by Brian K. Morris of Polsinelli PC.

 

New York City Tells Fast Food Employees: “You Deserve A Break Today” By Enacting New Fair Workweek Laws

Earlier this week, New York became the third major city in the United States to enact “fair workweek” laws aimed at protecting fast food and retail employees from scheduling practices that are perceived by the employees to be unfair and burdensome.   Following the lead set by San Francisco and Seattle, New York has adopted a series of new laws aimed at enhancing the work life of fast-food and retail employees.  By eliminating certain scheduling practices commonly used by fast food and retail employers, the New York Legislature seeks to protect these employees from unpredictable work schedules and fluctuating income that render it difficult for them to create budgets, schedule child or elder care, pursue further education, or obtain additional employment.   These new laws include the following provisions:

  • Fast food employers must now publish work schedules 14 days in advance;
  • If fast food employers make any changes to an employee’s schedule with less than 14 days’ notice, the employer must pay the employee, in addition to the employee’s normal compensation,  a bonus payment  ranging from $10 to $75 depending on the amount of notice provided of the change;
  • Before hiring new employees, fast food employers must first offer any available work shifts  to current employees, thereby enabling part-time employees desiring more work hours the opportunity to increase their hours worked and, accordingly, their income, before the employer hires additional part-time employees;
  • Fast food employers may no longer schedule an employee to work back-to-back shifts that close the restaurant one day and open it the next day if there are less than 11 hours in between the two shifts.  However, if an employee consents in writing to work such “clopening” shifts, the fast food employer must pay the employee an additional $100;
  • Fast food employees may ask their employers to deduct a portion of their salary and donate it directly to a nonprofit organization of their choice (This provision is a victory for unions as fast food employees can now earmark money to a group that fights for their rights, and the employer has to pay it on their behalf); and
  • Bans all retail employers  from utilizing  “on-call” scheduling that requires employees to be available to work and to contact the employer to determine if they are needed at work.
This post was written by John M. O’Connor of Epstein Becker & Green, P.C.

What Was Your Prior Salary? No Longer Question You Can Ask When Hiring in New York City

Last month, the New York City Council approved legislation that bars employers from asking prospective hires to disclose their past salary. In passing the measure, New York City joins Massachusetts (see our post here), Puerto Rico and the city of Philadelphia in banning the question from job interviews and on applications. (Also see our post here regarding a recent Ninth Circuit decision addressing pay history.) The law, known as Introduction 1253-A, makes it illegal for any employer or employment agency in New York City to ask about an applicant’s salary history, including benefits, or search any publicly available records to obtain any such information. The measure, aimed at tackling pay inequity, is intended to stop perpetuating any discrimination that women or people of color may have faced in the past and to end wage disparities between men and women. A study released earlier this month by the National Partnership for Women & Families, a Washington, DC-based advocacy group, shows that women in New York State earn 89 cents for every dollar that men are paid. The pay gap is wider among minority women, the study found. African American women in New York earn 66 cents for every dollar paid to non-Hispanic white men. Latina women earn 56 cents for every dollar.

Labor Law HiringThe measure only applies to new hires, not to internal job candidates applying for a transfer or promotion given that their salary information may already be on file. It also excludes public employees whose salaries are determined by collective bargaining agreements. There are certain exceptions built into the bill whereby employers can consider salary history, including the hiring of internal candidates for different positions, workers who are covered by a collective bargaining agreement or employees who voluntarily give their salary history during an interview.

New York City Public Advocate Letitia James, who co-sponsored the bill last year, said the primary focus of the bill is to promote greater transparency in the hiring process. Although it doesn’t require employers to do so, James said the bill suggests to businesses that they post salaries for jobs instead of relying on workers’ past salary.

The City’s Commission on Human Rights will investigate and enforce the measure, imposing a civil penalty of no more than $125 for an unintentional violation or up to $250,000 for an intentional malicious violation. Those figures are in line with other forms of discrimination — including race, disability and sexual orientation bias — for which the commission issues fines.

Fatima Goss Graves, president-elect of the National Women’s Law Center, said in an email that the measure “stands to transform the way that companies operate around the country,” she said. “So many companies operate in multiple jurisdictions. If a company changes its practices in New York, it is likely to also make changes around the country.” I think what we’ll see is companies that do business in New York City just eliminate that from their applications entirely,” she said. “This will have wide-ranging influence.” Meanwhile, nearly 20 states, the District of Columbia and two cities (San Francisco and Pittsburgh) have introduced legislation that includes a provision against salary history information, according to data from the NWLC.

The new legislation is expected to go into effect later this year, or 180 days after Mayor de Blasio signs the bill.  Employers in New York City need to review their applications and standard job questions to ensure they remove any questions about past salaries.

Yelling at Your Smartphone Could Get You Fired!

Schrage describes how adaptive bots enable devices to learn from each encounter they have with humans, including negative ones, such as cursing at Siri or slamming a smartphone down when it reports about one restaurant, though the user was searching for a different eating place. Faced with repeated interactions like this, the bot is likely to be adversely affected by the bad behavior, and will fail to perform as intended. As companies leverage more of this technology to enhance worker productivity and customer interactions, employee abuse of bots will frustrate the company’s efforts and investment. That can lead to reduced profits and employee discipline.

Employees are seeing some of this already with the use of telematics in company vehicles. Telematics and related technologies provide employers with a much more detailed view of their employees’ use of company vehicles including location, movement, status and behavior of the vehicle and the employees. That detailed view results from the extensive and real time reports employers receive concerning employees’ use of company vehicles. Employers can see, for example, when their employees are speeding, braking too abruptly, or swerving to strongly. With some applications, employers also can continually record the activity and conversations inside the vehicle, including when vehicle sensors indicate there has been an accident. It is not hard to see that increased use of these technologies can result in more employee discipline, but also make employees drive more carefully.

Just as employers can generate records of nearly all aspects of the use of their vehicles by employees, there surely are records being maintained about the manner in which individuals interact with Siri and similar applications. While those records likely are currently being held and examined by the providers of the technology, that may soon change as organizations want to collect this data for their own purposes. Employers having such information could be significant.

As Mr. Schrage argues, making the most of new AI and machine learning technologies requires that the users of those technologies be good actors. In short, workers will need to be “good” people when interacting with machines that learn, otherwise, it will be more difficult for the machines to perform as intended. Perhaps this will have a positive impact on the bottom line as well as human interactions generally. But it also will raise interesting challenges for human resource professionals as they likely will need to develop and enforce policies designed to improve interactions between human employees and company machines.

We’ll have to see. But in the meantime, be nice to Siri!

Jackson Lewis P.C. © 2016