Category: Labor & Employment

Department of Labor Revises Conflict Disclosure Requirements for Labor Union Officials

Barnes & Thornburg LLP‘s Labor and Employment Law Department recently posted in the National Law Review an article about the United States Department of Labor’s Office of Labor-Management Standards adopted a final rule revising the information that union officials must disclose on Form LM-30, the Labor Organization Office and Employee Report.:

 

 

On Oct. 26, 2011, the United States Department of Labor’s Office of Labor-Management Standards adopted a final rule revising the information that union officials must disclose on Form LM-30, the Labor Organization Office and Employee Report. The new rule reverses the rule published by the agency in 2007 that significantly expanded the financial disclosure requirements of union officials. Effective Nov. 25, 2011, union officials are now required to disclose only payments and interests that involve “actual or likely” conflicts between the official’s personal financial interests and his or her duties to the union. The DOL explains that such conflicts include “payments, interests and transactions involving the employers whose employees the union represents or actively seek to represent, vendors and service providers to such employers, the official’s union or the union’s trust and other employers from which a payment could create a conflict.” The new rule applies to reports required by union officials with fiscal years beginning on or after Jan. 1, 2012.

Use of Form LM-30 for reporting purposes began in 1963 pursuant to Section 202 of the Labor-Management Reporting and Disclosure Act. Although the reporting requirements for Form LM-30 were significantly expanded in 2007, the DOL had issued a non-enforcement policy in 2009 that allowed filers to use either the 2007 expanded version of Form LM-30 or the 1963 version of the Form to disclose potential conflicts.

© 2011 BARNES & THORNBURG LLP

Q&A / Fee Disclosure Requirements Top the List of Issues Facing Retirement Plan Sponsors

 Recently posted in the National Law Review an article by  f Much Shelist Denenberg Ament & Rubenstein P.C.  Much Shelist spoke toNorman D. Schlismann (Senior Managing Director) and David H. Dermenjian (Senior Vice President) in the Retirement Plan Advisory Group about current issues facing 401(k) plan sponsors.

 

In today’s turbulent economy, 401(k) defined-contribution plans are under the microscope. Plan participants and government agencies are scrutinizing every element of retirement plans, paying special attention to the fiduciary responsibilities of plan sponsors and the fees being paid to their service providers. As a diversified financial services firm, Mesirow Financial provides a broad range of asset management, investment advisory, broker-dealer and consulting services to institutions and private clients worldwide. Much Shelist spoke toNorman D. Schlismann (Senior Managing Director) and David H. Dermenjian (Senior Vice President) in the Retirement Plan Advisory Group about current issues facing 401(k) plan sponsors.

Much Shelist: What have been some of the primary effects of the economic crisis on employer-sponsored retirement plans and 401(k) plans in particular?

David Dermenjian: Perhaps the greatest effect of the global economic situation is that everyone—from individual plan participants to plan sponsors, investment fund managers and regulatory officials—is looking more closely at fund performance, employee education and the administrative and other costs associated with these plans. This is quite understandable; over the past several years, virtually every retirement plan has experienced at least a temporary decline in value.

Individual plan participants, including employees and executives, tend to focus on the range of funds available in their plans, as well as fund performance and minimizing costs. Plan sponsors are typically interested in ensuring that they are fulfilling their fiduciary responsibilities and limiting potential liability. Government regulators want to protect individuals against unnecessary losses by stepping up their use of audits and investigations to uncover and correct potential irregularities in financial reporting, self-dealing or the occasional misuse of employee contributions. Ultimately, all of these steps are being taken in pursuit of the same goal: to help employees make wise decisions regarding their retirement assets and preserve value to the maximum extent possible.

Norm Schlismann: Education is the centerpiece of these efforts. By providing in-person counseling and seminars, online webinars and printed materials that clearly describe the various fund options, rules and fees, employers can help employees make more informed decisions, and plan sponsors can be sure they are meeting their fiduciary obligations.

One example of how education can help is in the area of target-date retirement funds. Typically, these funds are built around an estimated retirement year, say 2030. As the target date approaches and participants near their expected retirement, the fund will shift into a more conservative investment mode, often moving assets from stocks into bonds and money market instruments. What many people don’t realize, however, is that target-date funds may appear to be similar but are actually based on different assumptions. A “to-date” fund assumes that participants will withdraw all of their assets upon retirement, whereas a “through-date” fund assumes that smaller withdrawals will occur over time, perhaps on a monthly basis. Since through-date funds assume that assets will remain in the fund even after retirement, they may take a more risky approach to investment allocations.

MS: Fee disclosures have received significant attention of late. Briefly, what are they?

DD: The concept of fee disclosures has been floating around for a while, but the final rule—described under ERISA Section 408(b)2—will go into full effect April 2012. Under the rule, retirement plan fiduciaries must ensure that “reasonable fees” are being paid to providers for “reasonable services.” Fiduciaries must also obtain information sufficient to enable them to make informed decisions about the costs associated with these providers and must disclose this information to plan participants.

Typical information contained in a disclosure includes benchmarking data (comparing the fees associated with a particular fund or retirement plan to other, similar funds or plans) and fee structures. It’s important to note that higher fees are not necessarily unreasonable. Some providers offer a higher level of service—one-on-one employee counseling, real-time access to complete fund reports, etc.—which can justify the higher costs to participants.

NS: Clarity and transparency are the watchwords of disclosures. For this reason, disclosures should often include information beyond simple fee information. For example, disclosures should also include an assessment of the independence of—and potential conflicts between—service providers, as well as possible conflicts between service providers and fiduciaries. Revenue sharing and finders fees are typical areas of concern.

MS: To that point, what is the difference between a plan fiduciary and a service provider?

NS: Plan fiduciaries are individuals or groups of individuals who use their own judgment in administering and managing the plan or who have the power to actually control the plan’s assets. Service providers, on the other hand, execute the instructions of plan fiduciaries; they may include plan recordkeepers, administrators, custodians, advisors and other financial or investment professionals engaged to operate retirement plans or provide guidance with respect to the plans.

In some cases, a service provider may also act in the role of a fiduciary. For example, a broker-dealer, whose responsibility to the client for suitability and appropriateness of a recommendation ends the moment a sale is made, could be considered a service provider but not a fiduciary. A registered investment advisor, who may be involved in the recommendation of a particular investment option to the plan and who may continue to provide guidance over the life of an investment, is considered both a service provider and a fiduciary.

MS: Where can plan sponsors find the information they need to make proper disclosures?

DD: That’s the $64,000 question! While it is getting easier to obtain this information, plans and their cost structures have grown more complex over the years. Understanding exactly what the data is telling you, vis-à-vis your own plans, can be difficult. This is where the assistance of experienced financial professionals is critical.

In terms of accessing information, the trend today is toward a more open plan architecture, which makes it easier to find the required data. Similarly, a number of third-party providers offer benchmarking data and analytics. Other companies, such as Fi360, offer a more comprehensive range of resources, tools and training to help fiduciaries fulfill their duties.

However, as we’ve already noted, it is often in the best interests of fiduciaries to obtain the services of an experienced investment advisor and fiduciary consultant. In doing so, independence is probably the most important consideration. Consultants should also have proven tools and procedures that enable them to conduct a fiduciary audit (including a detailed analysis) and provide evidentiary documentation in the process.

MS: How do I know if I need this type of fiduciary audit?

NS: The easy answer is that all plan sponsors need information, and they need to fully understand how that information applies to their unique combination of employer-sponsored retirement plans and services. That said, a number of companies—especially small and mid-sized businesses—have let their plans go “dormant” over the years, acting as if nothing has changed. If you can’t clearly articulate your fiduciary process, then you probably don’t have one! And, you are probably at greater risk of failing a Department of Labor audit of your plan.

Plan sponsors may also be concerned about the cost of a consultant. However, the money spent on the services of an experienced consultant is often considerably less than the savings recouped once the plan sponsor has actionable information. The likelihood increases over time that your retirement plan is spending too much on administrative and management fees. We advise plan sponsors to benchmark their plans against comparable averages annually and benchmark against other providers in the market every few years.

The bottom line? Plan sponsors are in a better position to fulfill their fiduciary responsibilities, and lower costs mean that more money is preserved in participants’ accounts—which can result in improved returns over time.

For more information on this topic, contact Norm Schlismann (nds@mesirowfinancial.com) or Dave Dermenjian (dhd@mesirowfinancial.com).

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Under professional rules, this content may be regarded as attorney advertising.

© 2011 Much Shelist Denenberg Ament & Rubenstein, P.C.

"The Sins of the Father": Third Party Retaliation Claims Allowed to Proceed

Recently posted in the National Law Review an article written by Ralph A. Morris of Schiff Hardin LLP about third-party retaliation claims :

A recent Texas federal court decision has further expanded the bases for Title VII retaliation claims against employers. In Zamora v. City of Houston, Christopher Zamora, a Houston police officer, alleged that the Houston Police Department demoted him in retaliation for the filing of a charge with the U.S. EqualEmployment Opportunity Commission (“EEOC”). In this case, however, the charge was not filed by Christopher Zamora, but by his father, Manuel Zamora, alleging that he, Manuel Zamora, had been discriminated against by the Department.

Earlier this year, in Thompson v. North American Stainless, LP, the United States Supreme Court permitted an employee’s Title VII retaliation claim to proceed where the employee’s fiancee had earlier filed an EEOC charge. The Court held that a Title VII retaliation claim could stand where the employee is subject to an adverse employment action because a co-worker to whom the employee is “closely related” engaged in protected activity.

The Supreme Court decided Thompson while the Zamora case was pending in the U.S. District Court for the Southern District of Texas. After the Thompson decision was issued, the Zamora court reversed its prior determination that dismissed Christopher Zamora’s claim. The court concluded that under Thompson, Mr. Zamora’s retaliation claim could proceed based on his father’s filing of an EEOC charge. Thus, under Zamora, in addition to a fiancee, a parent-child relationship satisfies the “closely related” test enunciated by the Supreme Court in Thompson.

Retaliation charges and lawsuits typically are more challenging to defend because the employee’s burden of proof is not as difficult to meet, as compared with a charge of discrimination. Thompson and Zamora now place an additional burden on employers by holding that employees themselves do not necessarily need to engage in the protected activity to have standing to sue for retaliation. These decisions may have a greater impact on employers that make it a practice to hire family members and friends of existing employees than on those with anti-nepotism policies.

The Supreme Court refrained from identifying a fixed class of relationships for which third-party retaliation claims are viable. Future cases will have to decide how far retaliation claims will be expanded: whether, for example, partners involved in a romantic relationship but who are not engaged, or familial relationships more distant than parent and child, are sufficiently close so as to fall within the zone of protection. Employers can help reduce the risk for these types of claims by reviewing their EEOC and anti-retaliation policies and ensuring that managers are trained and educated on compliance.

© 2011 Schiff Hardin LLP

IRS Announces Retirement Plan Limitations for 2012 Tax Year – Most Limits Increased

Recently posted in the National Law Review an article written by Alyssa D. Dowse of von Briesen & Roper, S.C. regarding the cost of living adjustments for the 2012 tax year:

The Internal Revenue Service (“IRS”) has announced the cost of living adjustments for the 2012 tax year, which affect various dollar limitations for retirement plans. The IRS increased many of these limitations for the first time since 2009. Some limitations remain unchanged. The following chart highlights many of the noteworthy limitations for the 2012 tax year.

Plan Limit

2011

2012
Social Security Taxable Wage Base $106,800 $110,100
Annual Compensation (Code Section 401(a)(17)) $245,000 $250,000
Elective Deferral (Contribution) Limit for Employees who Participate in 401(k), 403(b) and most 457(b) Plans (Code Sections 402(g), 457(e)(15)) $16,500 $17,000
Age 50 Catch-Up Contribution Limit (Code Section 414(v)(2)(B)(i)) $5,500 $5,500
Highly Compensated Employee Threshold (Code Section 414(q)(1)(B)) $110,000 $115,000
Defined Contribution Plan Limitation on Annual Additions (Code Section 415(c)(1)(A)) $49,000 $50,000
Defined Benefit Plan Limitation on Annual Benefit (Code Section 415(b)(1)(A)) $195,000 $200,000
ESOP Distribution Period Rules—Payouts in Excess of Five Years (Code Section 409(o)(1)(C)) $985,000

$195,000

 $1,015,000

$200,000
Key Employee Compensation Threshold for Officers (Code Section (416(i)(1)(A)(i)) $160,000 $165,000

Plan sponsors should review employee communications and update such communications as appropriate based on the 2012 cost of living adjustments. Other cost of living adjustments can be found on the IRS  website: http://www.irs.gov/retirement/article/0,,id=96461,00.html.

©2011 von Briesen & Roper, s.c

 

 

Hooters Sues Competitor over Alleged Trade Secrets Theft after Top Executives Fly Away

Recently posted in the National Law Review an article by Eric H. Rumbaugh, Luis I. Arroyo and Steven A. Nigh of Michael Best & Friedrich  LLP regarding  misappropriating its trade secrets and other confidential business information following the departure of several Hooters executives:

 

Hooters of America LLC has sued a competitor in Georgia Federal Court for allegedly misappropriating its trade secrets and other confidential business information following the departure of several Hooters executives to Twin Peaks Restaurants.

Hooters’ complaint alleges that former vice president of operations and purchasing, Joseph Hummel, gained unauthorized access to Hooters’ computers and took trade secrets and other confidential information. Specifically, Hooters claims that around the time of his departure, Hummel downloaded and transferred confidential sales figures, employee training and retention strategies and purchasing information to his personal e-mail account. The suit also accuses Hummel of additional unauthorized access of private business information following the termination of his employment.

Hummel, as well as Hooters’ former Chief Executive Officer and its general counsel, left the beach-themed restaurant franchise to join up with Twin Peaks, which operates a mountain lodge-themed restaurant chain featuring an all-female wait staff. Hooters contends that Hummel’s alleged theft has allowed Twin Peaks to hit the ground running in its efforts to open 35 restaurants in the next decade, several of which are planned for markets with Hooters restaurants.

The case illustrates the potential damage that departing employees, particularly those with access to sensitive information, can wreak on an employer. Hooters has already taken one step towards protecting itself; before Hummel left, he signed a confidentiality agreement requiring him to return all confidential and proprietary information to Hooters. In addition to confidentiality agreements, employers should consider having their top executives or other employees with access to sensitive information sign non-competition agreements. Moreover, most states’ trade secret statutes require businesses to take steps that are reasonable under the circumstances to protect their confidential information in order to preserve the trade secret status of that information. Accordingly, employers should consider implementing electronic security measures beyond just login credentials; limiting the number of employees who are authorized to access confidential information; and regulating employees’ ability to take information off company premises.

Next, when key employees depart, and especially when they depart for a competitor, businesses should consult with counsel immediately, and before examining (and arguably damaging) electronic evidence. Departing employees who take information often leave a shockingly obvious electronic trail; but that trail can be lost quickly if not preserved, or inadvertently destroyed if improperly accessed.

Lastly, businesses engaging talent, and especially talent that comes from a competitor, cannot be too careful or too forceful in making sure that the incoming talent does not make, retain or transfer any copies of information from their previous employer. Businesses engaging talent that acted improperly on the way out can quickly embroil their new employers in costly and risky litigation.

© MICHAEL BEST & FRIEDRICH LLP

Creating a Social Media Policy

Posted on October 18, 2011 in the National Law Review an article by Brian J. Moore of Dinsmore & Shohl LLP regarding the importance of employers having a social media policy:

It is essential for employers to develop a social networking policy, especially in light of the many legal issues that may arise. Employers must consider the many goals that the policy intends to cover, such as:

  • Protecting the company’s trade secrets, confidential, proprietary and/or privileged information;
  • Protecting the company’s reputation;
  • Protecting the privacy of employees; and
  • Establishing guidelines for whether use of social networking sites during working hours is permitted, and if so, under what circumstances.

Employers must also consider the parameters in developing a new policy, such as:

  • Urging employees to go to human resources with work-related issues and complaints before blogging about them;
  • Setting forth the potential for discipline, up to and including termination, if an employee misuses social networking sites relating to employment;
  • Establishing a reporting procedure for suspected violations of the policy;
  • Enforcing the policy consistently and with regard to all employees;
  • Reiterating that company policies, including harassment and discrimination policies, apply with equal force to employees’ communications on social networking sites;
  • Reminding employees that the computers and email system are company property intended for business use only, and that the company may monitor computer and email usage; and
  • Arranging for employees to sign a written acknowledgment that they have read, understand and will abide by the policy.

As seen is the October 14th issue of Business Lexington

© 2011 Dinsmore & Shohl LLP. All rights reserved.

EEOC and Cracker Barrel Sign National Mediation Agreement

Recently posted in the National Law Review an article by U.S. Equal Employment Opportunity Commission regarding Cracker Barrel Old Country Store signing of a National Universal Agreement to Mediate:

WASHINGTON – Cracker Barrel Old Country Store, Inc. and the U.S. Equal Employment Opportunity Commission (EEOC) today announced the signing of a National Universal Agreement to Mediate (NUAM) to streamline the handling of employment discrimination claims.

With the signing of this agreement, Cracker Barrel joins more than 200 national and regional private sector employers, including several Fortune 500 companies, who have made similar arrangements with the EEOC. This agreement provides the framework for both organizations to informally resolve any workplace issues that may arise from time to time through Alternative Dispute Resolution (ADR) rather than through a traditional lengthy, formal EEOC investigation or potential litigation. The NUAM includes all Cracker Barrel locations.

“Nationwide mediation agreements like this are a classic win-win,” said Nicholas Inzeo, Director of the EEOC’s Office of Field Programs. “NUAMs are a non-adversarial and efficient way for companies to handle discrimination charges using the EEOC as a partner and advisor. EEOC mediation encourages a positive work environment, and the company saves time and money. Everyone benefits. We are gratified that a major employer such as Cracker Barrel has joined the growing ranks of companies that are making use of this innovative system.”

Cracker Barrel Vice President and General Counsel Michael J. Zylstra said, “Cracker Barrel is committed to providing a fully inclusive workplace, where diversity is welcomed and everyone is treated with courtesy and respect. This innovative agreement builds upon our existing policies and procedures to effectively and fairly resolve employee concerns and demonstrates our shared goal to create a bias-free workplace. We look forward to developing an even stronger relationship with the EEOC.”

Under the terms of the NUAM, any eligible charges of discrimination filed with the EEOC in which Cracker Barrel is named as an employer/respondent will be referred to the EEOC’s mediation unit. The company will designate a corporate representative to handle all inquiries and other logistical matters related to potential charges in order to facilitate a prompt scheduling of the matter for EEOC mediation.

Expanding mediation is a key component of the EEOC’s efforts to improve operational efficiency and effectiveness. The EEOC has entered into 233 national and regional Universal Agreements to Mediate (UAMs) with private sector employers, including several Fortune 500 companies. Additionally, EEOC district offices have entered into 1,743 mediation agreements with employers at the local levels within their respective jurisdictions. Since the full implementation of the EEOC’s National Mediation Program in April 1999, more than 136,000 charges of employment discrimination have been mediated, with nearly 70 percent being successfully resolved.

Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) was established in 1969 in Lebanon, Tenn., and operates 604 company-owned locations in 42 states. For more information, visit www.crackerbarrel.com.

The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC and its mediation program is available on its web site at www.eeoc.gov.

Second Circuit Finds that Employers May be Obligated to Accommodate a Disabled Employee's Commute

Posted in the National Law Review an article by attorneys James R. Hays, Jonathan Sokolowski and James R. Hays of Sheppard Mullin Richter & Hampton LLP regarding disabled employees and employers requirements to assist them:

 

The Second Circuit Court of Appeals has held that under the Americans with Disabilities Act (“ADA”) and the Rehabilitation Act, employers may be required to assist disabled employees with their commute.

In Nixon-Tinkelman v. N.Y. City Dep’t of Health & Mental Hygiene, No. 10-3317-cv, 2011 U.S. App. LEXIS 16569 (2d Cir. N.Y. Aug. 10, 2011), plaintiff Barbara Nixon-Tinkelman (“Plaintiff”), who has cancer, heart problems, asthma, and is hearing impaired, brought suit under the ADA and the Rehabilitation Act alleging that the New York City Department of Health & Mental Hygiene (“Defendant” or “DOHMH”) failed to reasonably accommodate her disability. Specifically, following her transfer from Queens to Manhattan, Plaintiff requested that DOHMH accommodate her commute by transferring her back to an office location closer to her home in Queens. DOHMH ultimately denied Plaintiff’s request.

The Southern District of New York dismissed Plaintiff’s complaint on Defendant’s motion for summary judgment, finding that activities which “fall outside the scope of the job, like commuting to and from the workplace, are not within the province of an employer’s obligations under the ADA and the Rehabilitation Act.” However, on appeal, the Second Circuit faulted the district court’s holding, explaining that certain circumstances may require an employer to provide commuting assistance to a disabled employee, and furthermore, that providing such assistance is not “inherently unreasonable.” Accordingly, the Second Circuit remanded the case to the district court, and tasked it with engaging in the “fact-specific inquiry” necessary to determine whether it would have been reasonable to provide Plaintiff with a commuting accommodation. On remand, the Second Circuit directed the district court to consider the following factors: (a) Defendant’s total number of employees; (b) the number and location of Defendant’s offices; (c) whether other positions exist for which Plaintiff was qualified; (d) whether Plaintiff could have been transferred to a more convenient office without unduly burdening Defendant’s operations; and (e) the reasonableness of allowing Plaintiff to work from home without on-site supervision.

In addition to the above-listed factors, the Second Circuit also noted that the district court should have contemplated whether transferring Plaintiff “back to Queens or another closer location, allowing her to work from home, or providing a car or parking permit” would have accommodated her needs.

Nixon-Tinkelman serves as a reminder to employers that they must carefully assess all requests for reasonable accommodations from disabled employees. Although employers are not required to provide the specific accommodations employees may request, they must nevertheless work with employees to determine what reasonable accommodations, if any, can be made.

Copyright © 2011, Sheppard Mullin Richter & Hampton LLP.

NLRB Delays Implementation of Mandatory Notice Posting Rule

Recently posted in the National Law Review  an article regarding the NLRB postponing the date for employers to post notices informing employees of their rights to join a union  by Aaron J. Epstein of Andrews Kurth LLP:

 

Last week, the National Labor Relations Board (NLRB) postponed the effective date for its rule requiring most U.S. employers to post workplaces notices informing employees of their rights under the National Labor Relations Act (NLRA), including the right to join a union. The NLRB published the new rule on August 31, 2011, and initially set an effective date of November 14, 2011. However, in the face of two lawsuits challenging the validity of the new rule, and citing the need to conduct enhanced education and outreach, the NLRB has delayed the effective date until January 31, 2012.

Below is a brief overview of the new rule and the steps employers must take to comply.

To Whom the Rule Applies

The notice posting rule applies to all employers covered by the NLRA, whether or not they have a unionized workforce. NLRA coverage is intentionally broad and reaches almost all private sector employers. In the case of retail businesses, the NLRB’s jurisdiction covers any employer with a gross annual volume of business of $500,000 or more. The NLRB’s non-retail jurisdictional standard extends to most other employers. It is based on the amount of goods sold or services provided by an employer out of state, called “outflow,” or goods or services purchased by an employer from out of state, called “inflow.” Under this standard, any employer with an annual inflow or outflow of at least $50,000 is subject to the NLRA.

What the Rule Requires

The NLRB’s new rule dictates that employers post an 11-inch-by-17-inch notice detailing employee rights under the NLRA in a conspicuous place where other notifications of workplace rights and employer policies and rules are customarily posted. Employers are required to take reasonable steps to ensure that the notice is not altered, defaced, covered, or otherwise rendered unreadable. Additionally, employers who post personnel policies or workplaces notices on a company intranet or internet site must also post the NLRA notice on those sites, or they can provide a link to the notice on the NLRB’s website with the title “Employee Rights Under the National Labor Relations Act.”

Copies of the notice, in English and Spanish, are available at www.nlrb.gov or at any of the agency’s regional offices. The notice must be posted in English and in another language if at least 20 percent of employees are not proficient in English and speak the other language. The NLRB will provide translations of the notice, and of the required link to the NLRB’s website, in the appropriate languages. If a workforce includes two or more groups, each constituting at least 20 percent of the workforce, who speak different languages, an employer must post the notice in the language spoken by the larger group, and then may either post the notice in the language(s) spoken by the other group(s) or, at the employer’s option, distribute copies of the notice to those employees in their language(s). If such an employer is also required to post the notice electronically, it must do so in each of those languages.

Failure to Comply with the Rule

Failing to post the notice may, in and of itself, be treated as an unfair labor practice and subject an employer to remedial measures. The NLRB may also extend the six-month statute of limitations for filing a charge involving other unfair labor practice allegations against the employer. Finally, if an employer knowingly and willfully fails to post the notice, the failure may be considered evidence of unlawful motive in an unfair labor practice case dealing with other alleged violations of the NLRA.

© 2011 Andrews Kurth LLP

Medical Marijuana User Not Protected from Termination

Recently posted in the National Law Review an article by Darren A. Feider  of Williams Kastner regarding medical marijuana and employment:

A developing exception to Washington law of employment at will is the tort of wrongful termination in violation of public policy. This narrow exception was recently tested in Roe v. TeleTech Customer Care, 171 Wn.2d 736 (2011), when a new hire employee asserted that her employer had violated Washington public policy for terminating her for a positive drug test for marijuana.

In Roe, the new hire claimed to suffer from migraine headaches, causing chronic pain, nausea, blurred vision and sensitivity to light. Her physician prescribed medical marijuana and she smoked it four times a day, but ingested it only at home. She was offered a position as a customer service representative contingent on a background check and a drug screening. After failing the drug screening, the new hire informed her supervisor she had been prescribed medical marijuana. Her supervisor informed her that use of medical marijuana violated the company drug policy and terminated her employment during the training phase. She sued the company for wrongful termination in violation of public policy. The trial court dismissed the claim, finding that medical marijuana merely provided an affirmative defense to criminal prosecution under Washington state drug laws but did not imply a civil cause of action in employment. She appealed.

On appeal, the Roe court recognized that the voters of Washington had provided a defense to caregivers and physicians who prescribed marijuana to those with certain illnesses such as the new hire. That statute, however, did not provide protection for employment and specifically noted that the law did not require any accommodation of on-site use of medical marijuana.

The Roe court had focused on the language of the medical marijuana statute which only discussed protecting health care providers. The court also emphasized that there was no evidence that the statute provided employment protection or prohibited an employer from discharging an employee for medical marijuana use. The court found that the statute did not support a broad public policy that would remove all impediments to authorized medical marijuana use or forbid an employer from discharging an employee because she used medical marijuana.

The Roe court also recognized that Washington patients have no legal right to marijuana under federal law, which has the effect of establishing that there is not a broad public policy that would require an employer to allow an employee to engage in illegal activity.

The take-aways from the Roe decision are that Washington courts will move cautiously in expanding the scope of legal protections for employees. Washington courts will not attempt to graft on an expansion of the public policy tort claims. The Roe decision also emphasizes that employment in Washington is at will and that any public policy exceptions are narrowly construed.

© 2002-2011 by Williams Kastner ALL RIGHTS RESERVED