Category: Labor & Employment

“OK, Boomer!”: Not Okay In the Office

As recently highlighted by the New York Times, a new phrase emblematic of the real or perceived “War Between the Generations” has gone viral: “OK, Boomer!”  The phrase, popularized on the Internet and, in particular, Twitter by Generation Z and Millennials, has been used to dismiss baby boomers’ thoughts and opinions, sometimes viewed by younger generations as paternalistic or just out of step.

And, the phrase isn’t just living in Twitter feeds and the comments sections of opinion pieces.  There is “OK, Boomer!” merchandise and, just last week, a 25 year-old member of the New Zealand Parliament used the phrase to dismiss a fellow lawmaker’s perceived heckling during a debate about climate change.

While many may find “OK, Boomer!” a harmless way to point out generational differences, the phrase’s popularity could lead to problems once it creeps into the workplace.  Age (over 40) is a protected category under both California law (i.e., the Fair Employment and Housing Act) and federal law (i.e., the Age Discrimination in Employment Act).  Whether the speaker is well-intentioned or not, dismissive attitudes about older workers could form the basis of claims for discrimination and/or harassment.  And, as one radio host recently opined, the phrase “OK, Boomer!” may be regarded by some as an outright slur.

Generation Z and Millennial employees understand that using derogatory or dismissive comments related to gender, race, religion, national origin, disability and sexual orientation are inappropriate.  Yet, for some reason, some may not have made the leap with regard to insidious/disparaging comments about a co-worker’s age.  Given the prevalence of age discrimination lawsuits, employers should take heed and consider reminding their workforce about the impropriety of this and other age-related phrases, and train their employees to leave the generation wars at the door.

© 2019 Proskauer Rose LLP.

For more on employment discrimination see the National Law Review Labor & Employment law page.

U.S. Women’s National Soccer Team Wins Class Certification in Equal Pay Fight

A federal court has ruled that the U.S. Women’s National Soccer Team’s (USWNT) equal pay claims under Title VII of the 1964 Civil Rights Act can move forward as a class action, as opposed to myriad individual cases.

As part of its decision, the court also allowed the USWNT’s Equal Pay Act (EPA) case to proceed as a collective action.

Factual background

Earlier this year, the USWNT players filed a complaint in federal court against their employer, the USSF. The lawsuit alleges that USSF violated the EPA and Title VII by, among other things, paying the women’s team less than the men’s team for doing equal work.

Equal Pay Act and Title VII Legal Frameworks To Prove Wage Discrimination

To win their EPA case, the USWNT must first prove a prima facie case under the EPA. The team can do so by showing:

  • the employer pays different wages to employees of the opposite sex;
  • the employees perform equal work on jobs requiring equal skill, effort, and responsibility; and
  • the jobs are performed under similar working conditions

If the USWNT establishes a prima facie case, the burden shifts to the USSF to establish one of four affirmative defenses: (1) that the pay difference is due to a seniority system, (2) a merit system, (3) a system that measures quantity or quality of production, or (4) “any factor other than sex.”

If the USSF makes this showing, the USWNT can still win if it shows that the USSF’s justification for the pay disparity was a pretext.

Title VII also makes it illegal to discriminate based on sex in pay and benefits, which is why the USWNT is also suing USSF under this law. Title VII prohibits discrimination in compensation and other terms and conditions of employment, so it has a broader reach than the EPA (and also outlaws, among other things, discrimination based on race, religion, and other protected characteristics).

The USWNT Argues That, Despite Their Better Results, They Are Paid Less For Equal Work

The USWNT’s complaint contains evidence and statistics supporting their argument that the USSF has unlawfully paid them less than the men’s soccer team. For example, the complaint alleges:

The USWNT is the preeminent women’s soccer team in the world and has contributed to the finances and reputation of the USSF at least as much as the USMNT. The complaint lists three World Cup titles (which is now four titles), four Olympic gold medals, and asserts that the USSF revised its projected earnings for 2016 from a net loss of $429,929, to a net gain of $17.7 million, because of the successes of the USWNT, particularly at the 2015 World Cup.

The USSF pays the women’s team less than the men’s team, despite requiring players on both teams to perform the same job duties that require equal skill, effort and responsibilities performed under similar working conditions. The complaint states that the women’s team players spend more time practicing, playing, and promoting the USSF than the men’s team does; indeed, from 2015 to 2018, the USWNT played in nineteen more games than the USMNT.

In addition, the complaint asserts that from 2013 to 2016, the USSF paid USWNT players $15,000 for trying out and making the World Cup team. Yet the USSF paid USMNT players $55,000 for making the team.

Similarly, in 2014, the USSF paid the USMNT more than $5.3 million in bonuses after their World Cup loss in the Round of 16. While in 2015, the USSF paid the USWNT only $1,725,000 in bonuses after they won the World Cup.

Finally, the USWNT received less favorable training and travel conditions, as well as reduced marketing for their games. For example, in 2017, USSF chartered private planes for USMNT travel at least seventeen times, but zero times for the USWNT.

USSF’s Potential Defenses

To rebut these claims, the USSF might argue that its legitimate, non-discriminatory reason for paying USWNT players less than USMNT players is that the men’s team generates more revenue for USSF than the women’s team, which accounts for the difference in pay.  The USSF denies the allegations in the USWNT’s complaint.

According to a report, however, this may not be accurate. That is, between 2016 and 2018, USWNT games generated about $50.8 million, compared with $49.9 million for USMNT games.

Currently, player compensation is not directly linked to money generated by the team in ticket sales, brand deals, and other promotional activity. The USWNT’s complaint refers to 2016 negotiations with the USSF in which the USWNT’s union offered to enter a revenue-sharing model. Under this model, player compensation would increase in years in which the USSF derived more revenue from USWNT activities and decrease in years when it earned less from USWNT’s activities. USSF rejected the offer, according to the complaint.

© 2019 Zuckerman Law

ARTICLE BY Eric Bachman of Zuckerman Law.
For more employment and other litigation outcomes, see the National Law Review Litigation & Trial Practice law page.

Ohio District Court Delivers Win For Pizza Drivers

Following the guidance set forth in the U.S. Department of Labor (DOL)’s Field Operations Handbook, the U.S. District Court for the Southern District of Ohio recently ruled in favor of pizza delivery drivers and in the process confirmed the standard for reimbursement of vehicle expenses under the FLSA.

In Hatmaker, et al., v. PJ Ohio, LLC, et al., the court granted summary judgment in favor of pizza delivery drivers who incurred costs to “purchase, maintain and operate” their vehicles, and alleged that because they were not paid “their actual expenses or the IRS standard business mileage rate,” they were effectively paid less than minimum wage. According to the decision, the defendant employer operated 73 Papa John’s locations, and paid the plaintiff delivery drivers at or near the minimum wage. The parties filed cross-motions for summary judgment, and the court ruled in favor of the delivery driver employees.

The DOL’s anti-kickback regulation prohibits arrangements that “shift part of the Employer’s business expense to the employees . . . to the extent that it reduce[s] an employee’s wage below the statutory minimum.” For example, as the DOL has explained, if the employer requires that an employee provide his or her own equipment or tools, the FLSA is violated “in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid.” As the court explained, “[i]n the pizza delivery context, the cost associated with delivering food for an employer is a ‘kickback’ to the employer that must be fully reimbursed, lest a minimum wage violation be triggered.”

The DOL recognizes that tracking delivery employee expenses is a potentially cumbersome task. Enter the Field Operations Handbook (FOH), which affords employers the option of either tracking and reimbursing delivery drivers for their actual delivery expenses (such as “gasoline, oil and other fluids, vehicle parts, auto repair and maintenance, registration costs, licensing and taxes”) or simply reimbursing delivery drivers at the IRS standard business mileage rate.

The defendant employer in this case neither tracked and reimbursed drivers’ actual expenses nor reimbursed drivers at the IRS standard rate. Thus, the plaintiff delivery drivers argued that they received less than the FLSA minimum wage. The employer argued that the FOH is not entitled to any deference and that it is based on outdated IRS publications. Moreover, the employer asserted that the IRS daily rate does not pertain to reimbursements under the FLSA.

The court found that while the FOH was not entitled to Chevron deference, Skidmore deference was appropriate, as the FOH is “one of the ‘interpretations, opinions and explanatory Guidelines’ of the Department of Labor, to which a court ‘may properly resort for guidance’…”

Based on the DOL’s guidance, the court explained that employers may not “guess” or “approximate” employee expenses, because some employees would inevitably receive less than the minimum wage. Echoing the FOH, the court held that the “the proper measure of minimum wage compliance for pizza delivery drivers is to either (1) track and pay delivery drivers’ actual expenses or (2) pay the mileage reimbursement rate set by the Internal Revenue Service.”

So, the court concluded, employers may defeat summary judgment by showing “that they tracked and paid actual expenses and paid an amount equal to the minimum hourly wage rate plus actual expenses.”

The decision in Hatmaker provides a roadmap for employers of delivery drivers engaged in similar wage and hour litigation, which have become prevalent across the country. Employers of food delivery drivers or other employees who are required to provide their own tools or equipment may wish to review their practices and policies to ensure compliance with the FLSA.

© 2019 BARNES & THORNBURG LLP

More on employee rights under FLSA, see the National Law Review Employment & Labor law page.

OFCCP Issues Supplemental CSAL – Were You Selected For A New VEVRAA Focused Review?

On November 8, 2019, OFCCP released its Corporate Scheduling Announcement List (“CSAL”) Supplement.  The list identifies 500 establishments selected for the new VEVRAA focused review compliance evaluation.  In 2018, OFCCP announced that it would be conducting focused reviews during which it would target its analysis on contractors’ compliance with  Executive Order 11246 (the “EO”) (equal employment opportunity regardless of race, color, religion, sex, sexual orientation, gender identity, or national origin); Section 503 of the Rehabilitation Act (“Section 503”) (equal employment for individuals with disabilities), or the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) (equal employment for protected veterans).

OFCCP has already commenced Section 503 focused reviews, but this is the first time the agency has scheduled VEVRAA focused reviews.  In its November 8, 2019 announcement, OFCCP also shared that it has created a VEVRAA focused review webpage “[t]o help contractors prepare for the upcoming reviews.”  The agency touts the resource as providing “best practices, protected veteran resources, answers to frequently asked questions, and other compliance assistance resources.”

Contractors are advised to review the Supplemental CSAL (available online) to see if they have been selected for a VEVRAA Focused Review and, if so, review the current and proposed VEVRAA Focused Review scheduling letters to prepare for their upcoming compliance evaluation, and consult with counsel as necessary.

© 2019 Proskauer Rose LLP.

ARTICLE BY Guy Brenner of Proskauer Rose LLP.
For more OFCCP actions, see the National Law Review Government Contracts page.

Employer Concerns with Employee Substance Abuse and Drug Use: A Q&A with Caroline J. Berdzik of Goldberg Segalla

With headlines and staggering statistics extolling the impact of the opioid epidemic ripping through the United States, and marijuana (medical and recreational) legalized and decriminalized and a patchwork of state, federal and municipal laws across the country; employers dealing with employee substance abuse and drug use issues have a lot of things to consider. Caroline J. Berdzik, a partner with Goldberg Segalla and chair of the firm’s Labor and Employment and Health Care Groups,  focuses on counseling employers on human resources and employment matters, and was kind enough to share her thoughts on the thorny issues of employers navigating employee substance abuse and drug use.  Read on for more insight and ideas on  how employers should proceed when an employee demonstrates some indication of substance abuse, what the concerns are for employers, and some thoughts on how to move forward keeping in mind changing attitudes on addiction and the laws that may apply.

Can you outline some of the dangers employers face when employing an individual who is struggling with addiction?

Unfortunately, substance abuse addiction and its ramifications cannot avoid the workplace. There is an acknowledgment that this is not an issue that has social or economic boundaries, anyone from highly compensated executives to hourly employees may struggle with addiction. Addiction can take many forms including alcohol abuse, opioid dependency, or the use of other illegal or legally prescribed substances. Employers need to be concerned about legal issues when dealing with an employee who is struggling with addiction. It may be difficult to confirm that an employee has an addiction as they may try to hide it and depending on the circumstances, there may be limits of how far an employer can pry into these concerns.

Once the problem is confirmed, some consideration needs to be given as to whether the employee can continue to do their job while working through addiction. If they are unable to perform their job responsibilities, there are options or reasonable accommodations available to the employee or employer (i.e., leave of absence for treatment). Other components to consider include the availability of drug and alcohol testing permitted under the law in their specific jurisdiction; whether the employee’s conduct has violated any company policies; and if the behaviors associated with the employee’s addiction is negatively impacting the quality of their work and interactions with co-workers, supervisors, clients, and others outside the workplace.

What are some of the issues employers must consider when discussing an employee’s addiction problems with an employee? What are the concerns, especially since addiction can be difficult to identify? 

Employers need to be very careful in this regard. Generally, potential addiction is brought to an employer’s attention through observation or by reports from other employees, supervisors, clients, or even customers. If alcohol is the issue, it may be difficult to detect when someone is under the influence, particularly if the consumption is during non-working hours and if the employee is merely coming to work hungover―as opposed to being intoxicated on the job. If the suspected addiction involves drugs (e.g., whether legal or illegal), there are states that don’t allow for reasonable suspicion testing and some states that make it virtually impossible to test at all. Additionally―depending on the nature of the drug―it may also not show up in the drug test depending on when the test is done.

Many times, this is a difficult conversation to have with an employee since they will most likely deny having any issue because they don’t want to jeopardize their income or employment prospects. Employers need to be careful not to potentially run afoul of the Americans with Disabilities Act (ADA) and other state anti-discrimination laws when discussing a suspected substance abuse problem. Merely perceiving the employee as having a disability can open the employer up to legal risk. Therefore, it is critical to proceed with caution and consult internally or externally with legal counsel and human resources on how to best handle the situation.

How does the legality of the substance the employee is addicted to impact the employer’s actions?  For example, an employee addicted to legal opioid painkillers vs. an employee who is addicted to cocaine or other illegal substances?

The laws are greatly evolving in this area, particularly with respect to cannabis. More and more states have legalized medical marijuana and recreational marijuana. With respect to alcohol, it’s legal to drink alcohol as long as the individual is of age; however, alcohol abuse can cause just as many problems as an employee struggling with a substance abuse problem.

While it may seem easier to take certain actions when managing employees with addictions to other substances (e.g., opioids and cocaine), there are still considerations that come into play. For example, employers in some states cannot take actions against employees based on what activities that they do during off-duty hours.

Irrespective of the legality of the substance, the employer needs to focus on whether the employee is impaired at work or at work functions (e.g., on a business trip, attending a conference, meeting with clients, etc.). They also need to consider the impact of those behaviors on the individual, the company, and anyone else involved. Employers also need to be cognizant of the laws in their jurisdictions and the policies the company may have regarding the use of alcohol and drugs in the workplace. If someone is a current user of an illegal substance, there is typically no protection afforded to them under the ADA or similar anti-discrimination laws. However, if an employee can tie their addiction to an underlying mental health disorder, it becomes murkier. For employees who are recovering drug addicts or alcoholics, there is likely more protection afforded under anti-discrimination laws.

The key thing for employers to remember is to not make any knee-jerk decisions when evaluating these issues. Employers should take time to fully analyze the circumstances before taking any action and determine what legal obligations, if any, it may have to try to accommodate employees.

What legal requirements come into play when human resources intervene with an employee struggling with addiction?  For example, can this be a situation where the ADA applies?

The ADA is typically something that would come into play when dealing with an employee struggling with addiction. Human resources should consult with legal counsel while navigating through this type of issue. There are a myriad of laws that are intertwined that could potentially be relevant including the federal Family Medical Leave Act, as well as other state or local counterparts. In many circumstances, the employer may need to provide a reasonable accommodation to assist an employee struggling with addiction. Best practices may dictate this type of documented discussion with the impacted employee, even without a legal requirement to do so.

Attitudes toward addiction are changing with addiction increasingly being seen as a disease that should be treated without judgment–how does this shift change an employer’s reaction to employees with addiction issues?

As these issues become more prevalent, including the revelation that they impact individuals at higher level positions at companies, employers are increasingly willing to work with employees to get them the help they need. I have seen an uptick in counseling calls where employers are genuinely concerned about their employees’ well-being and want to find ways to assist them. However, I have seen situations where employers have gone above and beyond to work with a struggling employee and the employee failed to help themselves with the assistance being offered.

Rates of prescription opioid abuse are skyrocketing. How is this worrisome trend affecting employers, and are there any proactive steps employers can take?

Opioid use is a very serious problem impacting the workplace. Employers are well advised to have employee assistance programs (EAPs) in place. They should also have open-door policies to encourage employees to come to human resources to seek help for their addiction.

Many thanks to Caroline J. Berdzik of Goldberg Segalla for sharing her thoughts and insights on this complicated, yet increasingly relevant employment law issue.

Copyright ©2019 National Law Forum, LLC

More employment law issues on the National Law Review Labor & Employment page.

Seventh Circuit: ADA Does Not Prohibit Discrimination Based on Future Impairments

On October 29, 2019, railway operator Burlington Northern Santa Fe Railway Company (“BNSF”) prevailed before the United States Court of Appeals for the Seventh Circuit – which covers Illinois, Indiana, and Wisconsin – in a case in which the company argued that its refusal to hire an obese candidate due to an unacceptably high risk that the applicant would develop certain obesity-related medical conditions incompatible with the position sought did not violate the Americans with Disabilities Act (“ADA”).

Ronald Shell applied for a job with BNSF as a machine operator position.  Per its standard practice when the applied-for position is safety-sensitive, as was the heavy equipment operator position sought by Shell, BNSF required him to undergo a medical examination.  During the medical examination, the examiner determined that Shell’s body mass index (“BMI”) was 47.  BNSF had a practice of refusing to hire individuals with a BMI higher than 40 for safety-sensitive positions.  In Shell’s case, the employer expressed concern that his obesity, although not causing any present disability, would cause Shell disabilities in the future, such as sleep apnea, diabetes, and heart disease.  BNSF asserted that this risk was significant because a sudden onset of any of these conditions could be catastrophic for a heavy machine operator.  BNSF therefore did not place Shell in the position.

Shell sued, arguing that he was “disabled” under the ADA’s definition of that term because BNSF had “regarded him as” having a disability.  The ADA not only protects individuals who are actually disabled or have a record of being disabled, but also protects individuals who have been subjected to an adverse employment action because of an actual or perceived physical impairment, whether or not that impairment substantially limits a major life activity.  Shell argued that by refusing to hire him based on the risk of future disabilities that he was at risk of as a result of his obesity, BNSF essentially treated him as though he currently had those conditions.

The Court ruled that the ADA does not protect non-disabled employees from discrimination based on a risk of future impairments.  The Court cited precedent from the Eighth Circuit, where BNSF also faced challenges to its practice of refusing to hire obese applicants due to the risk of future impairments.  The Eighth Circuit, like the Ninth and Tenth Circuits, also has held that the statutory language of the ADA does not protect non-disabled individuals who have a risk of disability in the future.

Of note, Shell also argued at the trial court level that his obesity constituted an actual disability, rendering BNSF’s refusal to hire him based on this characteristic a violation of the ADA for this reason as well.  However, as you may recall from our blog post from earlier this year, just a few months ago, the Seventh Circuit addressed this argument in another case, Richardson v. Chicago Transit Authority, and held that obesity, by itself, is not a disability for purposes of the ADA unless it is caused by an underlying physiological disorder.  Shell did not present any evidence in his case of such an underlying disorder, and thus could not, therefore, claim that he was actually disabled.  Notably, the federal appellate courts are split on this issue, which may tee it up for consideration by the United States Supreme Court in the future.  In contrast, among the appeals courts that have addressed the issue of future disabilities, all have agreed, thus far, that the ADA’s reach does not extend to potential or likely future disabilities of currently non-disabled individuals.

© Copyright 2019 Squire Patton Boggs (US) LLP

For more ADA litigation, see the National Law Review Labor & Employment law page.

PTSD Compensation for First Responders without Associated Physical Injury Revisited by Ohio Legislature in New House Bill

With the recent proliferation of mass shootings and other deadly incidents, several states have taken on the issue of allowing mental and/or emotional impairments caused by post-traumatic stress disorder (PTSD) to be a compensable workers’ compensation condition for first responders without the requirement of a physical injury.

In June 2019, House Bill 80, the budget bill for the Ohio Bureau of Workers’ Compensation, included such a proposal. After the bill passed the House, the Senate stripped the policy provisions on the mental-only diagnosis issue out of the proposed budget. Senate leaders indicated while there may be a reason for a special circumstance, it should be studied and debated separately from the workers’ compensation budget. In July 2019, leadership vowed to consider the legislation later in the year.

True to their word, the issue was revived in September 2019 by Representative Thomas Patton. House Bill 308 reintroduced the issue of PTSD coverage for first responders exposed to traumatic events in the course and scope of their employment. Two hearings on the bill have already occurred, most recently on Oct. 22, 2019. Proponent testimony was offered by several organizations and individuals. The statements reiterated concerns first responders are not able to pursue avenues for compensation under the law set forth by the Supreme Court of Ohio in Armstrong v. John R. Jurgensen Co. Interestingly, one of the organizations offering proponent testimony was the Ohio State Medical Association.

The business community remains opposed to any legislation that would allow for a “mental-mental” avenue for claimants. Rob Brundrett, director of public policy for the Ohio Manufacturers Association, provided testimony on House Bill 80 earlier this summer. Beyond merely the increased cost to employers, if a mental-only diagnosis were allowed, Mr. Brundrett noted the potential expansion of workers’ compensation beyond first responders could be required.

“If we erode the physical-injury requirement for peace offers, firefighters, and emergency medical workers, it may be difficult to justify not doing the same for other professionals who seek equal treatment,” Mr. Brundrett said in his testimony.

How such a proposal would be funded is also a concern of employers. Mr. Brundrett, who is closely following House Bill 308, has indicated that several discussions in the Senate have occurred in recent weeks on a potential bill that would provide PTSD coverage for first responders outside of the Bureau of Workers’ Compensation system. This proposal would, of course, be the preference of the business community.

While passage of this issue in the past has been unsuccessful, the August 2019 mass shooting in Dayton and its impact on first responders may result in this bill moving through the legislature. Dinsmore’s workers’ compensation group will continue to monitor this bill, as its passage would have a profound impact on employers.

If you wish to see the proponent testimony and follow the bill, you can obtain more information here.

© 2019 Dinsmore & Shohl LLP. All rights reserved.

For more on mental health, see the National Law Review Health Law & Managed Care page.

Can You Spy on Your Employees’ Private Facebook Group?

For years, companies have encountered issues stemming from employee communications on social media platforms. When such communications take place in private groups not accessible to anyone except approved members, though, it can be difficult for an employer to know what actually is being said. But can a company try to get intel on what’s being communicated in such forums? A recent National Labor Relations Board (NLRB) case shows that, depending on the circumstances, such actions may violate labor law.

At issue in the case was a company that was facing unionizing efforts by its employees. Some employees of the company were members of a private Facebook group and posted comments in the group about potentially forming a union. Management became aware of this activity and repeatedly asked one of its employees who had access to the group to provide management with reports about the comments. The NLRB found this conduct to be unlawful and held: “It is well-settled that an employee commits unlawful surveillance if it acts in a way that is out of the ordinary in order to observe union activity.”

This case provides another reminder that specific rules come into play when employees are considering forming a union. Generally, companies cannot:

  • Threaten employees based on their union activity
  • Interrogate workers about their union activity, sentiments, etc.
  • Make promises to employees to induce them to forgo joining a union
  • Engage in surveillance (i.e., spying) on workers’ union organizing efforts

The employer’s “spying” in this instance ran afoul of these parameters, which can have costly consequences, such as overturned discipline and backpay awards.

© 2019 BARNES & THORNBURG LLP

For more on employees’ social media use, see the National Law Review Labor & Employment law page.

National Football Players Association Joins Forces with the National College Players Association in Effort to Market Name, Image and Likeness Rights for Student Athletes

The National Football League Players Association (NFLPA) has announced a partnership with the National College Players Association (NCPA) to jointly explore the marketing and licensing of all college athletes and how they can be paid for the use of their name, image and likeness through the NFLPA’s licensing affiliated entity, REP Worldwide.

Seeking to maximize the value of California’s Fair Pay To Play Act, recently signed into law by California Governor Gavin Newsom, which has empowered California student-athletes to seek financial opportunities relating to the marketing of their name, image and likeness beginning in January 2023, NFLPA Executive Director DeMaurice Smith stated, “We are proud to partner with the NCPA and offer the services of REP Worldwide to offer all athletes the same world class service that NFL players receive. For the first time, a legislature has indicated that these students have rights just like everyone else and we support this continuing movement towards fairness. Regarding the NFLPA’s new partnership with the NCPA, Smith added, the new relationship

“will explore opportunities for merchandise, gaming and other officially licensed products. We will also review how recent developments impact television broadcast revenues in pursuit of fairness.”

Ramogi Huma, former UCLA Bruins linebacker and current NCPA Executive Director, commented as well. “I am grateful that college athletes will finally have representation that cares only about fairness for the athletes.” He continued, “We are on the right side of history and invite the NCAA’s commercial partners to join us. It’s time to embrace a new beginning.”

Despite the announcement of the partnership, the potential relationship between these two entities and college athletes is still unclear.

While representatives of the NFLPA and NCPA continue to express their future role as one of “representation,” college athletes as a group are not viewed as employees and are neither unionized nor legally recognized as a collective group. Neither the National Labor Relations Act nor the Fair Labor Standards Act recognizes student-athletes within their definition of employee.

How and if, the NFLPA, Rep Worldwide and the NCPA can represent all college athletes and serve as their collective voice in exploring group marketing opportunities is a question that remains to be answered.

Jackson Lewis P.C. © 2019

For more on sports representation, see the National Law Review Entertainment, Art & Sports law page.

AB 1291 Forces California Cannabis Companies To Sign “Labor Peace Agreements” With Unions, But Statute May be Unconstitutional

 

On October 12, 2019, Governor Newsom signed Assembly Bill 1291 (“AB 1291”) into law, which requires companies to sign a so-called “labor peace” agreement with a union or risk losing their cannabis license; thereby, strengthening already union-friendly statewide cannabis law. AB 1291 was supported and endorsed by various unions, including the United Food and Commercial Workers Western States Council, a 170,000-member branch representing thousands of cannabis workers. This bill, as well as other California statutes and local laws, signals a growing insistence by state and local regulators that employers doing business in California accept pro-union requirements. However, many of these new pro-union laws, including AB 1291, may be unconstitutional.

The main takeaways of AB 1291 are as follows:

  1. Effective January 1, 2020, California cannabis license applicants must sign so-called labor peace agreements with a union within 60 days of their 20th hire or risk losing their cannabis license.
  2. Employers and business associations seeking to challenge AB 1291, and other similar state or local union-related ordinances, are encouraged to speak with experienced labor counsel to discuss their options.
  3. Employers seeking to comply with AB 1291 and sign labor peace agreements should conduct due diligence on the labor unions they are considering entering into negotiations with. Not all unions are the same. Additionally, businesses should be thoughtful about what they agree to put into a labor peace agreement to satisfy the requirements under California’s cannabis laws. For example, these agreements are frequently mistakenly referred to as “neutrality agreement.” Neutrality agreements typically contain a commitment from the employer to remain “neutral” through a union organizing campaign. In contrast, AB 1291 does not use the term “neutral(ity)” and, thus, arguments can be made that strict “neutrality” is not required under the statute and may not need to be included in the labor peace agreement. Thus, employers should speak with experienced labor counsel before negotiating labor peace agreements with unions.

Background

Since its adoption into law in 2018, the Medicinal and Adult Use of Cannabis Regulation and Safety Act (“MAUCRSA”) has required applicants for state cannabis licenses with 20 or more employees to “provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.”1 (Cal. Bus. & Prof. Code § 26015.5(a)(5)(A).) A labor peace agreement, as defined under California’s cannabis laws, must contain the following commitments, at a minimum:

  1. Employer shall not “disrupt” efforts by the union to “communicate with, and attempt to organize and represent” the employer’s employees;
  2. Employer shall give the union “access at reasonable times to areas in which the employees work, for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment;” and
  3. Union and its members shall not engage in picketing, work stoppages, boycotts, and any other economic interference with the employer’s business.

(Cal. Lab. & Prof Code § 26001(x).)

Effective January 1, 2020, AB 1291 requires an applicant for a state license under MAUCRSA with 20 or more employees to provide a notarized statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement. If the applicant has less than 20 employees and has not yet entered into a labor peace agreement, AB 1291 requires the applicant to provide a notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 20th employee. By expanding the scope of the crime of perjury, AB 1291 imposes a state-mandated local program and authorizes the Bureau of Cannabis Control, the Department of Food and Agriculture, and the State Department of Public Health to revoke or suspend a license for a violation of these requirements.

AB 1291 May Be Unconstitutional

AB 1291 poses substantial questions as to whether it is unconstitutional due to preemption by the National Labor Relations Act (“NLRA”) under two complementary preemptions doctrines: Garmon and Machinists. In San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959), the U.S. Supreme Court declared that the states are constitutionally barred by the U.S. Constitution’s supremacy clause from regulating conduct that NLRA protects, prohibits, or arguably protects or prohibits. Garmon preemption exists to protect the National Labor Relations Board’s (“NLRB”) primary jurisdiction and to preclude a state’s interference with its interpretation and enforcement of the integrated regulatory scheme that is the NLRA. Indeed, Congress delegated exclusive authority to the NLRB because it sought to establish a single, uniform national labor policy that would be unaffected by the vagaries of state law or shaped by local attitudes or prejudices. (Garner v. Teamsters Union, 346 U.S. 485, 490 (1953).) In Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132 (1976), the U.S. Supreme Court similarly declared that the NLRA forbids states to regulate conduct that Congress intended “to be unregulated because left ‘to be controlled by the free play of economic forces.’” Together, Garmon and Machinists preempt state and local policies that would otherwise interfere with the “integrated scheme of regulation” and disrupt the balance of power between labor and management embodied in the NLRA.

It appears AB 1291’s purpose is to afford unions greater rights than provided under the NLRA and make it easier for unions to organize cannabis employers. AB 1291 arguably presents the type of state interference in labor-management relations that Garmon and Machinists preemption forbids. For example, in Golden State Transit Corp. v. City of Los Angeles (“Golden State I”), 475 U.S. 608, 616 (1986), the Supreme Court held that while the NLRA “requires an employer and a union to bargain in good faith, … it does not require them to reach agreement,” nor does it demand a particular outcome from labor negotiations.” The substance of labor negotiations, and the results therefrom, are among those areas Congress intentionally left to the free play of economic forces when it legislated in the field of labor law. (Id.) In that case, the Supreme Court found that Machinists preempted the City of Los Angeles’ (“City”) refusal to renew a taxi cab company’s license when it failed to reach an agreement with striking union members. By conditioning the renewal of the taxi cab franchise on the acceptance of the union’s demands, the City effectively imposed a timeline on the parties’ negotiations and undermined the taxi cab company’s ability to rely on its own economic power to resist the strike. (Id. at 615.) The Supreme Court held that the City could not pressure the taxi cab company into reaching a settlement and thereby “destroy[] the balance of power designed by Congress, and frustrate[] Congress’ decision to leave open the use of economic weapons.” (Id. at 619.)

The facts of Golden State I are instructive here. Like the taxi cab company in Golden State I, California cannabis businesses now face a Hobson’s “all or nothing” choice under AB 1291. If a cannabis business refuses to negotiate a labor peace agreement with a labor organization, it effectively loses the right to do business in California. But if the cannabis business negotiates a labor peace agreement, the union knows full well that it can hold out for significant concessions in exchange for its members giving up one of their most valuable economic weapons – the power to strike.

The U.S. Supreme Court’s decision in Chamber of Commerce v. Brown, 554 U.S. 60 (2008) is also instructive. At issue in Brown was California’s Assembly Bill 1889 (“AB 1889”), prohibiting certain private employers from using state funds to “assist, promote, or deter union organizing.” (Id. at 63 [quoting Cal. Govt. Code §§ 16645.1–16645.7].) The Court held that AB 1889 was unconstitutional. As explained by the Court, the current text of Sections 7 and 8 of the NLRA are amendments made to the NLRA in 1947 as part of the Labor Management Relations Act, also known as the Taft Harley Act, for the purpose of overturning earlier NLRB precedent. The NLRA was amended in in several key respects. First, it emphasized that employees “have the right to refrain from any or all” union activities. (29 U.S.C. § 157.) Second, it added Section 8(b), which prohibits unfair labor practices by unions. (29 U.S.C. § 158(b).) Third, it added Section 8(c), which protects speech by both unions and employers from regulation by the NLRB. (29 U.S.C. § 158(c).) Specifically, Section 8(c) provides:

The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this subchapter, if such expression contains no threat of reprisal or force or promise of benefit.

With the amendments, Section 8(c) “manifested a “congressional intent to encourage free debate on issues dividing labor and management.” (Id. at 6-7.) That Congress amended the NLRA, rather than leaving to the courts the task of correcting the NLRB’s decisions on a case-by-case basis, is “indicative of how important Congress deemed such ‘free debate.’” (Id. at 7.) In addition, Sections 8(a) and 8(b) “demonstrate that when Congress has sought to put limits on advocacy for or against union organization, it has expressly set forth the mechanisms for doing so.” (Brown, 554 U.S. at 67.) Moreover, “the amendment to §7 calls attention to the right of employees to refuse to join unions, which implies an underlying right to receive information opposing unionization.” (Id.) “[T]he addition of §8(c) expressly precludes regulation of speech about unionization so long as the communications do not contain a ‘threat of reprisal or force or promise of benefit.” (Id. [internal quotation omitted].) Thus, based on these overriding principles, the Court concluded that “California’s policy judgment that partisan employer speech necessarily interfere[s] with an employee’s choice about whether to join or to be represented by a labor union” and struck down AB 1889. (Id. at 68 [internal quotation omitted].)

AB 1291 is arguably no different. By forcing unwilling cannabis businesses to negotiate and accept labor peace agreements, AB 1291 compels a result Congress deliberately left to the free play of economic forces. The NLRA does not allow state and local governments to interfere with employer rights to communicate with employees regarding unionization under Section 8(c). Nor does it allow state and local governments to “introduce some standard of properly balanced bargaining power . . . or to define what economic sanctions might be permitted negotiating parties in an ideal or balanced state of collective bargaining.” (Machinists, 427 U.S. at 149-50.) Yet, this is exactly what AB 1291 appears to do. Accordingly, AB 1291 may be unconstitutional.

1 A labor peace (aka a labor harmony agreement) is essentially a contract between an employer and an organized labor union in which the employer agrees to help the union organize the employer’s workforce (i.e., unionize) by providing, for example, certain information or agreeing not to interfere with the union organizing efforts, in exchange for the union’s agreement not to strike or cause other disruption in the employer’s workforce during a union organizing campaign. Because these agreements open the door to union activity within the workplace, they should not be entered into casually. Rather, unionization may result in increased labor costs, contractual contributions to union pension plans, loss of flexibility, and adherence to union rules set forth in a legally binding contract. In addition, once a union is recognized or certified as the collective bargaining representative of employees, it is practically impossible to terminate that relationship. Indeed, only after a costly and divisive decertification election can a workforce return to the merit-based and flexible non-union environment.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

For more on union regulation, see the National Law Review Labor & Employment law page.