Tag: labor

For Whom the Class Tolls: “No Piggybacking Rule” Does In Would-Be Class in Ongoing Wal-Mart Saga

In 2011, the United States Supreme Court issued its landmark decision in Wal-Mart Stores, Inc., v. Betty Dukes, et al., decertifying a putative class of approximately 1.6 million current and former female Wal-Mart employees who claimed gender discrimination in wages and promotions in violation of Title VII. 564 U.S. 338 (2011).  The Court reversed the Ninth Circuit’s affirmation of class certification and determined the plaintiffs failed to meet the class “commonality” standard set out in Federal Rule of Civil Procedure 23. Id. at 349-60. The Dukes decision set in motion a number of spinoff regional cases, one of which – barring another grant of certiorari to the high court – met its end somewhat anticlimactically, when the Eleventh Circuit issued its August 3, 2017 order in Love, et. al. v. Wal-Mart Stores, Inc. No. 15-15260.

The Love plaintiffs included a sub-group of the Dukes plaintiffs who worked in the southeastern United States. These holdover Dukes plaintiffs were able to refile their claims because of the requirement that federal court discrimination plaintiffs first file with the Equal Employment Opportunity Commission. This rule effectively tolled the statute of limitations during the pendency of Dukes. But critically, under the Eleventh Circuit’s “no piggybacking rule”, tolling is limited to individual claims only, not class claims, which has also been adopted by the Fifth and Sixth Circuits.  The Love court previously left little room for argument when it noted in a 2013 order that “[t]he Eleventh Circuit categorically refuses to toll the limitations period for subsequent class actions by members of the original class once class certification is denied in the original suit.”  Thus, on October 16, 2015 the individual named plaintiffs and Wal-Mart settled and jointly filed a “stipulation of voluntary dismissal.”

On November 6, 2015, the Love appellants, made up of unnamed members of the would-be class, filed a motion to intervene solely to appeal the dismissal of class claims. This motion was denied 13 days later as moot, which, to make matters worse for the appellants, took them outside of their 30-day deadline to appeal the October 16 stipulated dismissal. The Eleventh Circuit thus found the appeal jurisdictionally barred, providing a rather sudden end to the winding multi-year litigation.

In light of this tangled and technical history, employers and their counsel should be sure to understand the differences in treatment of class actions and individuals under the relevant rules, regulations, and statutes. Though it can be tempting to move immediately to the standard substantive arguments against numerosity, commonality, typicality, and adequacy of the proposed class, the Wal-Mart cases show that knowing your way around the procedural thicket is another useful skill in avoiding or minimizing the cost of class litigation.

 This post was written by Kelly J. Muensterman of  Polsinelli PC.

[1] https://www.supremecourt.gov/opinions/10pdf/10-277.pdf

[2] http://hr.cch.com/eld/LoveWalmart080317.pdf

[3] Salazar–Calderon v. Presido Valley Farmers Ass’n, 765 F.2d 1334 (5th Cir.1985) and Andrews v. Orr, 851 F.2d 146 (6th Cir.1988)

[4] 2013 WL 5434565, at *2.

 For more legal analysis check out the National Law Review’s homepage.

California Employers Face New Notice Requirement for Domestic Violence, Sexual Assault, and Stalking Time Off

The California Division of Labor Standards Enforcement (DLSE) has published a new form that must be added to the growing list of documents that employers are required to provide to employees at the time of hire.

The new form refers to employees’ rights under California Labor Code Section 230.1 relating to protections of employees who are victims of domestic violence, sexual assault, and/or stalking. Last October, we notified California employers about this new law amending Section 230.1, Assembly Bill (AB) 2337. The amended law requires employers with 25 or more employees to provide an employee with written notice of his or her rights to take time off for the following purposes:

  1. “To seek medical attention for injuries caused by domestic violence, sexual assault, or stalking.
  2. To obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence, sexual assault, or stalking.
  3. To obtain psychological counseling related to an experience of domestic violence, sexual assault, or stalking.
  4. To participate in safety planning and take other actions to increase safety from future domestic violence, sexual assault, or stalking, including temporary or permanent relocation.”

The law requires employers to provide the notice “to new employees upon hire and to other employees upon request.”

As we reported previously, employers were not required to distribute this information until the California Labor Commissioner published a form employers could use to comply with the law. The law gave the Labor Commissioner until “on or before July 1, 2017” to develop and post the form.

As required by AB 2337, the Labor Commissioner’s office recently released the notice. The DLSE has made both an English and Spanish version of the notice available on its website. The notice also contains information on employees’ rights to reasonable accommodation and to be free from retaliation and discrimination.

Finally, the new law clarifies that employers that do not use the Labor Commissioner’s notice may use an alternative that is “substantially similar in content and clarity to the form developed by the Labor Commissioner.”

This post was written by Christopher W. Olmsted and Hera S. Arsen of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
Read more legal analysis on the National Law Review.

Take a Screen Shot of This: Supervisor Unlawfully Interrogated Employee Through Text, NLRB Says

Texting has become one of the most common ways  people communicate. Despite its prevalence, however, texting can raise serious concerns for employers, particularly when such communication takes place between a supervisor and employee in the context of a union election.  A recent National Labor Relations Board (NLRB) case makes that point clear. In RHCG Safety Corp and Construction & General Building Laborers, Local 79, the Board held that a coercive text message from a supervisor to an employee could serve as evidence that an employer unlawfully interrogated employees concerning their union support.

This decision echoes other NLRB decisions holding that an unlawful interrogation does not need to be face-to-face to be in violation of the National Labor Relations Act (NLRA). The Board has held that such unlawful interrogation can occur over a phone call, a written job application form, and now, it seems, via a short text message containing 40 characters.

The case arose in the context of a union election. During the union’s campaign, an employee texted his supervisor asking if he could return to work after a leave of absence. The supervisor responded, by text message, “U working for Redhook or u working in the union?” (Redhook is how RHCG Safety is known.) The Board found that by juxtaposing working for the employer with working in the union, the supervisor’s text strongly suggested that the two were incompatible. The Board accordingly ruled that the text constituted an unlawful interrogation and violated Section 8(a)(1) of the NLRA.

Significantly, the NLRB found that for purposes of determining legality, it doesn’t matter whether the message actually coerced the employee, so long as the interrogation was coercive in nature. To this end, the Board found certain facts weighed in favor of making the text coercive in nature. First, the employee was not an open union supporter at the time of the interrogation. Second, the supervisor did not communicate to the employee any legitimate purpose for asking if he was working in the union. Finally, the supervisor didn’t provide the employee with any assurances against reprisals.

This case suggests that seemingly offhanded communications between supervisors and employees may be determined to be coercive, interrogative, and in violation of the NLRA. Employers should consider their communication policies and train supervisors on methods of communicating with employees, particularly during a union election.

Read more legal analysis at the National Law Review.

This post was written by Minal Khan of  Barnes & Thornburg LLP.

Defendants’ Timing Defense to DTSA Claims Faces Mixed Results

With the law’s first anniversary in the rear view mirror, defendants have established a viable defense to claims arising under the Defend Trade Secrets Act (“DTSA”) – a plaintiff may be precluded from bringing a claim under DTSA if it only alleges facts that show acts of misappropriation occurring prior to May 11, 2016 (the date of DTSA’s enactment).   In the last few months, four different courts have tackled this “timing defense,” and defendants raising it in motions to dismiss DTSA claims have encountered mixed results.

In Brand Energy & Infrastructure Servs. v. Irex Contr. Grp., No. 16-cv-2499, 2017 U.S. Dist. LEXIS 43497 (E.D. Pa. Mar. 23, 2017), a Pennsylvania federal court rejected the defendants’ attempt to invoke the timing defense because the plaintiff’s amended complaint alleged various times after the enactment of the DTSA that the defendants “used” the plaintiff’s alleged trade secrets.  The court also noted the plaintiff’s inclusion of allegations in the amended complaint showing that “to this day, the defendants continue to ‘obtain access to [its] confidential and proprietary business information ….”  Based on this pleading, the court held that the plaintiff could pursue its DTSA claim.  Similarly, in AllCells, LLC v. Zhai, Case No. 16-cv-07323, 2017 U.S. Dist. LEXIS 44808 (N.D. Cal. Mar. 27, 2017), a California federal court denied the defendants’ motion to dismiss a DTSA claim because “even if [defendants] copied and thus acquired the alleged trade secrets before May 11, 2016, [the plaintiff] has sufficiently alleged that there was at least use of the trade secrets after that date.  Hence, the Act applies.”

In Molon Motor & Coil Corp. v. Nidec Motor Corp., No. 16-cv-03545, 2017 U.S. Dist. LEXIS 71700 (N.D. Ill. May 11, 2017), a plaintiff’s DTSA claim survived dismissal, overcoming the defendant’s argument that “no acts occurred after the effective date of the Act.”  The court held that the plaintiff’s allegations regarding the inevitable post-enactment disclosure of its trade secrets to the defendant by its former employee were sufficient to state a plausible DTSA claim:  “[i]f it is plausible that some of the alleged trade secrets maintain their value today, then it is also plausible that [defendant] would be continuing to use them.”  The court noted, however, that further discovery would be needed to determine whether post-enactment disclosure of the trade secrets was in fact inevitable.

By contrast, a California federal court granted a defendant’s motion to dismiss where a complaint lacked sufficient allegations regarding the timing of the alleged appropriation in Cave Consulting Grp., Inc. v. Truven Health Analytics Inc., No. 15-cv-02177, 2017 U.S. Dist. LEXIS 62109 (N.D. Cal. Apr. 24, 2017).  In Cave, the plaintiff alleged that the defendant acquired trade secrets and used them in a 2014 client meeting, but that conduct predated the enactment of the DTSA.  The court held that plaintiff had failed to make any “specific allegations that defendant used the alleged trade secrets after the DTSA’s May 11, 2016 enactment.”  Because the plaintiff failed to allege that any “postenactment use occurred,” the plaintiff had not stated a plausible DTSA claim.

These decisions illustrate that the likelihood of success of the timing defense largely is a matter of drafting, and provide an important takeaway for both sides of a trade secrets dispute. A plaintiff should be mindful in drafting its pleading to include factual allegations showing that the defendant’s misappropriation occurred (or inevitably will occur) after DTSA’s enactment.  The defendant, on the other hand, should carefully scrutinize the complaint to determine whether a timing defense applies.

This post was written by Jonathan L. Shapiro by Epstein Becker & Green, P.C..

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.

Business and Employee Groups Oppose Merger of OFCCP with EEOC

President Trump’s 2018 budget, released on May 23, proposes to merge the Office of Federal Contract Compliance Programs (OFCCP) with the Equal Employment Opportunity Commission (EEOC) by the end of FY 2018.  The proposed merger purports to result in “one agency to combat employment discrimination.”  The Trump administration asserts that the merger would “reduce operational redundancies, promote efficiencies, improve services to citizens, and strengthen civil rights enforcement.”

Both business groups and employee civil rights organizations have opposed the measure, albeit for different reasons.  The OFCCP is a division of the U.S. Department of Labor, while the EEOC is an independent federal agency.  Although both deal with issues of employment discrimination, their mandates, functions and focus are different.  The OFCCP’s function is to ensure that federal government contractors take affirmative action to avoid discrimination on the basis of race, color, religion, sex, national origin, disability and protected veteran status.  The OFCCP, which was created in 1978, enforces Executive Order 11246, as amended, the Rehabilitation Act of 1973, as amended, and the Veterans’ Readjustment Assistance Act of 1975.  The EEOC administers and enforces several federal employment discrimination laws prohibiting discrimination on the basis of race, national origin, religion, sex, age, disability, gender identity, genetic information, and retaliation for complaining or supporting a claim of discrimination.  Its function is to investigation individual charges of discrimination brought by private and public sector employees against their employers.  The EEOC was established in 1965, following the enactment of Title VII of the Civil Rights Act of 1964.

Business groups oppose the OFCCP’s merger into the EEOC due to concerns that it would create a more powerful EEOC with greater enforcement powers.  For example, the OFCCP conducts audits, which compile substantial data on government contractors’ workforces, while the EEOC possesses the power to subpoena employer records.  Combining these tools could provide the “new” EEOC with substantially greater enforcement power.  Civil rights and employee organizations oppose the merger, believing that overall it would result in less funding for the combined functions currently performed by each agency.

The budget proposal is consistent with the Trump administration’s goal to reduce costs and redundancies through a reorganization of governmental functions and elimination of executive branch agencies.  In light of opposition from both employers and employees, however, the measure lacks a powerful proponent; as a result, it is unlikely that the administration will succeed in effecting a combination, at least as it is currently proposed.

This post was written by Salvatore G. Gangemi of Murtha Cullina.

Trump’s Actual Impact on OSHA

In November, we attempted to look into the crystal ball to see what potential impact the new Trump administration could have on the Occupational Health and Safety Administration (OSHA). Here are some of results so far, which on the whole, are favorable to employers who suffered under the “regulation by shaming” mantra of past Assistant Secretary of Labor David Michaels.

  • Budget Cuts – As predicted, on May 5, President Trump signed a spending bill that cuts the labor department’s discretionary spending budget by $83 million. This could limit some of OSHA’s enforcement efforts.

  • Recordkeeping as a Continuing Violation – The Volks rule, which was enacted by OSHA last December as a last minute rule in response to a loss, suffered through an adverse decision in the federal courts. The new rule established that an employer has a continuing duty to create accurate records of work-related employee injuries and illnesses. This effectively changed the statute of limitations for recordkeeping violations from six months to five years and six months. On April 3, President Trump signed a joint congressional resolution under the Congressional Review Act that overturned this rule. The law is now back to the original intent of Congress that the statute of limitations for all OSHA citations is six months. This is a significant win for employers who can focus their time on current substantive safety issues instead of reviewing documents for accuracy from up to five years ago.

  • Union Representatives in OSHA Inspections of Non-union Facilities – As mentioned in the prior post, I predicted that interpretation letters could change with the new appointment of the secretary of labor. One of the most controversial of these letters was the 2013 Fairfax memo regarding walkaround rights during an OSHA inspection. The memo stated that during an OSHA inspection of a non-union facility, a union representative could be designated as the employees’ “personal representative” even without representation election or voluntary recognition of the union as the exclusive representative of the employees. This was being challenged in court and then OSHA rescinded the Fairfax memo and agreed to revise the Field Operations Manual (FOM) for its inspectors to reflect the same change on April 25, 2017. The lawsuit was then dismissed as moot since OSHA rescinded the controversial memo. The letter was viewed as an overstep by OSHA into the area of labor relations covered by the NLRB, since it appeared to be motivated by giving unions more access to non-union employers for organization efforts rather than to assist in a safety inspection. This is another win for employers.

So far, the progress has been good for employers. We will just have to wait and see how other issues develop, including the electronic recordkeeping rule and non-discrimination standard (which limits blanket post-accident drug tests), which is being challenged in two separate lawsuits, as well as the silica standard, which is being challenged in court. The DOL has to decide how strongly it will defend these rules in court which will have a significant impact on how the courts may rule. Stay tuned for updates.

IRS Tax Treatment of Wellness Program Benefits

Business people doing yoga on floor in office

The IRS Office of Chief Counsel recently released a memorandum providing guidance on the proper tax treatment of workplace wellness programs. Workplace wellness programs cover a range of plans and strategies adopted by employers to counter rising healthcare costs by promoting healthier lifestyles and providing employees with preventive care. These programs take many forms and can encompass everything from providing certain medical care regardless of enrollment in health coverage, to free gym passes for employees, to incentivized participation- based weight loss programs. Due to the wide variation in such plans the proper tax treatment can be complicated. However, the following points from the IRS memo can help business owners operating or considering a wellness program evaluate their tax treatment.

First, the memo confirmed that coverage in employer-provided wellness programs that provide medical care is generally not included in an employee’s gross income under section 106(a), which specifically excludes employer-provided coverage under an accident or health plan from employee gross income. 26 USC § 213(d)(1)(A) defines medical care as amounts paid for “the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,” transportation for such care, qualified long term care services, and insurance (including amounts paid as premiums).

Second, it was made clear that any section 213(d) medical care provided by the program is excluded from the employee’s gross income under section 105(b), which permits an employee to exclude amounts received through employer-provided accident or health insurance if it is paid to reimburse expenses incurred by the employee for medical care for personal injuries and sickness. The memo emphasized that 105(b) only applies to money paid specifically to reimburse the employee for expenses incurred by him for the prescribed medical care. This means that the exclusion in 105(b) does not apply to money that the employee would receive through a wellness program irrespective of any expenses he incurred for medical care. 26 CFR 1.105-2.

Third, any rewards, incentives or other benefits provided by the wellness program that are not medical care as defined by section 213(d) must be included in an employee’s gross income. This means that cash prizes given to employees as incentives to participate in a wellness program are part of the employee’s gross income and may not be excluded by the employer. However, non-money awards or incentives might be excludable if they qualify as de minimis fringe benefits (ones that are so small and infrequent that accounting for them is unreasonable or impracticable). 26 USC § 132(a)(4). The memo gives the example of a t-shirt provided as part of a wellness program as such an excludable fringe benefit, and notes that money is never a de minimis fringe benefit.

Fourth, payment of gym memberships or reimbursement of gym fees is a cash benefit, even when received through the wellness program, and must be included in gross income. This is because cash rewards paid as part of the wellness program do not qualify as reimbursements of medical care and cannot be a fringe benefit.

Fifth, where an employee chooses a salary reduction to pay premiums for healthcare coverage and the employer reimburses the employee for some or all of the premium amount under a wellness program, the reimbursement is gross income.

These points laid out in the IRS memo provide a solid foundation for understanding the tax treatment of workplace wellness programs and should be kept in mind by business owners deciding how to structure new wellness plans for their employees, or ensuring the tax compliance of existing plans.

Let’s Talk Turkey: Wage/Hour and Other Laws to Feast on Over Thanksgiving

We all know that employers do not receive “time off” from applicable employment laws during the holidays. To avoid unnecessary holiday headaches, be mindful of the following issues as you conduct your workplace holiday staffing and planning.

Comply with your Policies and Collective Bargaining Agreements

Remember to abide by the applicable holiday provisions of your policies, agreements, or collective bargaining agreements. Pay for unworked time on recognized holidays; how time worked on holidays is computed or paid; and eligibility requirements for receipt of holiday pay are often a matter of policy or contract. Breaching such provisions—or disparately enforcing them—can give rise to a claim, charge, or grievance.

Think Beyond your Holiday Policy—Comply with Wage Laws

Be mindful of wage payment laws when you are planning office closures to ensure that you do not run afoul of state requirements governing the time, frequency, and method of paying earned wages. Also, remember that time worked on a holiday should be counted as “hours worked” for purposes of overtime laws, regardless of whether you provide a holiday premium or other benefit.  Further, be careful about making deductions from exempt employees’ salaries for time off around the holidays so as not to jeopardize the exempt status—a company closure for the holidays is not listed among the Department of Labor’s enumerated instances of proper reasons to make deductions under the salary basis rules of the Fair Labor Standards Act.

No Break from Meal and Rest Period Laws

Even if your employees are frantically setting up holiday displays or assisting eager consumers on Black Friday, provide meal and rest periods in accordance with state law. Many states require that employers provide meal and break periods, and the frequency and timing of such periods are often dependent upon the total number of hours worked in a day. For instance, Illinois employers must allow a meal break for employees working 7.5 continuous hours or longer within 5 hours of starting work; New York’s Department of Labor guidelines specify requirements for a “noonday” meal period between 11:00 a.m. and 2:00 p.m., with additional meal periods for shifts extending into specified evening hours.

Also, while bona fide meal breaks of a sufficient duration can generally be unpaid, beware that restrictions, duties, or parameters on such breaks might run afoul of your state’s law and can make a meal period compensable.

A “Blue” Christmas

If your business has operations in one of the few states that impose “Blue Law” requirements for business operations on holidays, then be aware of obligations or restrictions that might apply. For instance, if you operate in Massachusetts, then you might be required to obtain a local permit and/or be subject to extra pay or other standards for employees working on a holiday. In Rhode Island, you might be subject to an overtime pay rate on holidays or other requirements.

Be sure to check your state and local laws to confirm applicable standards.

Accommodate Observation of Holidays Due to Religious Beliefs

Finally, remember that Title VII of the Civil Rights Act of 1964 and many state or local laws require employers to reasonably accommodate employees’ sincerely held religious beliefs, unless doing so would cause an undue hardship. “Religion” can include not only traditional, organized religions such as Judaism, Islam, Christianity, Hinduism, and Buddhism, but also sincerely held religious beliefs that are new, uncommon, not part of a formal church or sect, or only held by a small number of people.

Thus, while your company may be closed on Christmas Day, you may need to allow an employee time off to celebrate a religious holiday that your company does not recognize. Businesses can accommodate in the form of time off, modifications to schedules, shift substitutions, job reassignments, or other modifications to workplace policies or practices.

Ford UAW Workers Defy Logic Of Ricky Bobby With New Tentative Agreement

If you ain’t first, you’re last. Not so, say the Ford UAW workers whose bargaining committee recently reached a new tentative agreement with Ford. While Ford was the last to reach a tentative agreement with the UAW, if the membership ratifies the tentative agreement, the UAW workers at Ford stand to receive a better overall deal than their counterparts at Fiat Chrysler and GM. Highlights of the tentative agreement with Ford include:

  • Investment of $9 billion in the U.S. by Ford over the life of the agreement;

  • $8,500 ratification bonus along with a $1,500 profit-sharing prepayment;

  • Entry level employees can progress to the Tier 1 wage rates within 8 years; and

  • $70,000 retirement incentive for eligible employees.

As with the ratification process for Fiat Chrysler and GM, the UAW membership at Ford will now be asked to vote in the coming days to approve the tentative agreement. The fact that the Ford tentative agreement is already better than the tentative agreements with Fiat Chrysler and GM should aid in the ratification process. Additionally, the UAW has already seen firsthand what works and what does not when it comes to seeking ratification of a tentative agreement in the current automotive climate.

While the bargaining process at Ford seems to be headed in the right direction, GM is still waiting to announce the ratification of its tentative agreement with the UAW. Despite a majority of the hourly production workers supporting the tentative agreement, a majority of the skilled-trades workers voted “no.” Based on the UAW’s constitution, the UAW is required to meet with the skilled-trades members to hear their complaints. Those meetings began this week. We will have to wait and see if the UAW attempts to go back to the bargaining table based on the issues raised by the skilled-trades workers.

Article By Michael W. Groebe of Foley & Lardner LLP

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