Category: Labor & Employment

You’ve Got Mail: NLRB Requests Briefing on Standard for Employee Use of Employer Owned Electronic Communication Systems

In what could signify the beginning of the end for Purple Communications, Inc., 361 NLRB 1050 (2014) and guaranteed employee access to Employer computer systems for union organizing purposes, the NLRB issued a notice on August 1 inviting the filing of briefs on whether the Board should uphold, modify or overrule the decision.  Under Purple Communications (which we previously covered here), employees have a presumptive right to use their employer’s e-mail system to engage in protected activity under Section 7 of the NLRA on nonworking time, unless the employer can demonstrate circumstances allowing it to restrict such use.  Overturning Purple Communications could return the Board to the standard under Register Guard, 351 NLRB 1110 (2007), which permitted employers to impose Section 7-neutral restrictions on an employee’s non-work use of their e-mail systems, even if those restrictions ultimately limited the employee’s use of the employer’s e-mail for communications involving protected activity.

The NLRB issued the notice in response to a 2016 ALJ decision finding that an employer’s computer usage policy did not comply with Purple Communications standard, because it prohibited employees from using their work e-mail for any nonbusiness purpose.  Board Members Pearce (who was in the Purple Communicationsmajority) and McFerran dissented from the decision to solicit briefs.  Both dissenting Members contended that issuing the notice was inappropriate in light of the pending appeal of Purple Communications before the Ninth Circuit and their view that there has been no change in workplace trends or evidence showing that Purple Communications has created significant challenges for employers, employees, unions or the Board.

Perhaps in recognition that workplace communication technology has clearly expanded beyond e-mail, the notice welcomes briefing on what standard the Board should apply to other methods of employee communication on employer-owned equipment (e.g., instant messages, text messages, and social media postings). While the Board has limited its holdings in the area of computer usage to employer e-mail systems, this notice may indicate a move by the Board to apply a consistent standard to all forms of workplace communication platforms.

 

© 2018 Proskauer Rose LLP.
This post was written by Michael J Lebowich and Jordan Simon of Proskauer Rose LLP.
For more labor and employment news, check out the National Law Review’s Labor and Employment Page.

Puerto Rico Law Authorizes Pay Deductions as Repayment for Employer-Provided Emergency Aid

Puerto Rico is still reeling from the aftermath of Hurricane Maria. Recently, the governor of Puerto Rico signed into law Act No. 115 of June 20, 2018, to promote recovery efforts and provide much-needed aid to affected non-exempt employees in situations of emergency. Ordinarily, Puerto Rico law does not allow deductions from a non-exempt employee’s salary, except for specific purposes defined in Act No. 17 of April 17, 1931, as amended. Act No. 115 amends Article 5 of Act No. 17 to lengthen the list of authorized payroll deductions. Consequently, employers in Puerto Rico are now able to prospectively recoup, via salary deductions, any loan, salary advance, or the cost of any equipment, materials, or goods provided to their non-exempt employees to help them in situations where there has been an emergency declaration by the president of the United States, the Federal Emergency Management Agency (FEMA), or the governor of Puerto Rico.

Act No. 115 added section (q) to Article 5 of Act No. 17 to provide that a non-exempt employee and his or her employer may agree, in writing, that the employer will deduct a fixed amount from the employee’s salary, in each of the employee’s regular pay cycles, until the employee has fully repaid the employer, without interest, for any “loan, salary advance, or [the cost] of any equipment, materials, or goods provided by the employer, whose benefit, use, or enjoyment is directly related to situations in which a state of emergency has been officially declared”, as provided by Act No. 115.

The deduction may not be greater than 20 percent of the net amount of the non-exempt employee’s pay after all other legal deductions and/or employee-authorized withholdings have been made. Further, the written authorization must include a breakdown of the repayment and a provision on how the debt will be repaid in the event the employment relationship is terminated.

 

© 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Brett Kavanaugh Nominated to U.S. Supreme Court

In the wake of Justice Anthony Kennedy’s retirement, President Donald Trump was presented with the rare opportunity to make his second U.S. Supreme Court nomination in as many years, nominating the Honorable Brett M. Kavanaugh to succeed Justice Kennedy. If confirmed by the Senate, Judge Kavanaugh would bring more than a dozen years of judicial experience to the position.

While the nomination process was swift, the confirmation process is likely to be contentious. Any nominee to the Supreme Court can expect deliberate and careful scrutiny, but in the context of losing Justice Kennedy’s critical “swing” vote, Judge Kavanaugh’s record of judicial decisions will receive even more attention than usual.

Career

Judge Kavanaugh, a federal judge on the U.S. Court of Appeals for the D.C. Circuit, received his B.A. from Yale College in 1987 and his J.D. in 1990 from Yale Law School, where he was a Notes Editor on the Yale Law Journal. Judge Kavanaugh’s lengthy experience with the judicial process began immediately upon graduation from law school, having clerked for Judge Walter Stapleton of the U.S. Court of Appeals for the Third Circuit (1990-1991) and for Judge Alex Kozinski of the U.S. Court of Appeals for the Ninth Circuit (1991-1992). Judge Kavanaugh served as a law clerk to the man he has been nominated to replace, Justice Anthony M. Kennedy of the U.S. Supreme Court, during October Term 1993.

Immediately following his U.S. Supreme Court clerkship, Judge Kavanaugh served in the Office of the Solicitor General of the United States. From 1994 to 1997, and for a period of time in 1998, Kavanaugh was Associate Counsel in the Office of Independent Counsel Kenneth W. Starr. He also spent time in private law practice, as a partner at Kirkland & Ellis in Washington, D.C., from 1997 to 1998 and again from 1999 to 2001. From 2001 to 2003, he was first Associate Counsel, and then Senior Associate Counsel to the President in the George W. Bush White House. From July 2003 until May 2006, Judge Kavanaugh was Assistant to the President and Staff Secretary to the President.

President Bush nominated Judge Kavanaugh to the D.C. Circuit and on May 30, 2006, he was appointed after being confirmed by a vote of 57-36.

Key Labor and Employment Decisions

 Judge Kavanaugh’s judicial philosophy is regarded as conservative; he is a textualist and an originalist, following in the footsteps of the late Justice Antonin Scalia. He generally takes a narrow and demanding approach to employment-related lawsuits and statutory interpretation, and routinely rules in favor of employers. That said, some of his opinions written for the majority, along with his dissents, reveal a flexible and nuanced approach to discrimination claims. How will Judge Kavanaugh treat workplace law cases that come before the Supreme Court? Following are summaries of several key decisions that illustrate his approach to deciding such cases.

Corporate Governance and Internal Investigations

 Judge Kavanaugh’s opinions display a tendency to refer to the plain text of statutes and their history, especially when voicing his support for the authority of the Executive Branch. See PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 165-67 (D.C. Cir. 2018) (Kavanaugh, J., dissenting). In his PHH dissent, Judge Kavanaugh held that the structure of the Consumer Financial Protection Bureau is unconstitutional, because having only one director erodes the President’s Article II powers. Id. at 166. Judge Kavanaugh reasoned that: (1) in light of historical practice, there has never been any independent agency so unaccountable and unchecked; (2) the lack of a critical check runs the risk of abuse of power and threatens individual liberty; and (3) Presidential authority to control the Executive Branch is of great importance and is diminished by this single-director independent agency. Id. at 167.

In an earlier dissent in Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 537 F.3d 667, 686 (D.C. Cir. 2008), Judge Kavanaugh asserted that the Public Company Accounting Oversight Board (PCAOB), created by the Sarbanes-Oxley Act, is unconstitutional because the appointment and for-cause removal powers of the PCAOB lie with the SEC, another independent agency. Kavanaugh stated this structure unconstitutionally restricted the President’s appointment and removal powers, either directly or through an alter ego, which he said has “never before [happened] in American history.” Id.

Discrimination in the Workplace

Judge Kavanaugh frequently writes opinions in a manner designed to portray himself as giving precise meaning to statutes, and resisting the urge to expand the law or “legislate from the bench.” See, e.g., Miller v. Clinton, 687 F.3d 1332, 1358 (D.C. Cir. 2012) (Kavanaugh, J., dissenting) (denouncing the majority’s decision to apply Age Discrimination in Employment Act (ADEA) to the State Department and quoting from Antonin Scalia & Bran A. Garner, Reading Law: The Interpretation of Legal Texts).

Several of Judge Kavanaugh’s decisions suggest he construes anti-discrimination statutes in a manner that may be considered plaintiff-friendly, but there is not a sufficient sample from which to draw a definitive conclusion on this issue. In both Ortiz-Diaz v. United States HUD, 831 F.3d 488, 494 (D.C. Cir. 2016), rev’d 867 F.3d 70, 81 (D.C. Cir. 2016), and Ayissi-Etoh v. Fannie Mae, 712 F.3d 572, 579-80 (D.C. Cir. 2013), Judge Kavanaugh argued in favor of making it easier for plaintiffs to establish a prima facie case of employment discrimination. In Ortiz-Diaz, Judge Kavanaugh was part of a three-judge panel that initially affirmed a district court’s ruling that refusal to grant a lateral transfer is not an adverse employment action under Title VII. See Ortiz-Diaz, 831 F.3d at 494. The ruling prevented the plaintiff from demonstrating harm resulting from his employer’s refusal to grant him a lateral transfer away from an allegedly racist and biased supervisor who the plaintiff claimed was hurting his ability to develop and succeed professionally. Id. at 491-92. Several months later, however, that three-judge panel reversed itself sua sponte, holding that when an employer denies a lateral transfer for reasons based on race or gender or other protected grounds, that employer violates Title VII. Ortiz-Diaz, 867 F.3d. at 74-77. In both decisions, Judge Kavanaugh wrote a concurring opinion arguing in favor of expanding the definition of adverse employment action to include discriminatory refusal to grant requests for lateral transfers. Id. at 81; Ortiz-Diaz, 831 F.3d at 494. Similarly, in Ayissi-Etoh, 712 F.3d at 579-80, Judge Kavanaugh wrote a concurring opinion, arguing that a single verbal incident ought to be sufficient to establish a hostile work environment. Judge Kavanaugh opined, “[t]he test set forth by the Supreme Court is whether the alleged conduct is ‘sufficiently severe or pervasive’ — written in the disjunctive — not whether the conduct is ‘sufficiently severe and pervasive.’” Id. at 579. He continued, “in my view, being called the n-word by a supervisor — as Ayissi-Etoh alleges happened to him — suffices by itself to establish a racially hostile work environment.” Id. at 580.

Employee Benefits

Some of Judge Kavanaugh’s dissenting and concurring opinions offer insight into what his approach may mean for employers. In Priests for Life v. United States Dep’t of Health & Human Servs., 808 F.3d 1, 14 (D.C. Cir. 2015), Judge Kavanaugh dissented from the denial of a rehearing en banc in a Religious Freedom Restoration Act (RFRA) challenge to the process for accommodating religious objections to the Affordable Care Act’s contraceptive mandate. Under the accommodation, the carrier still provides the services to the plan participants, but directly to those requesting them rather than the plan paying for the services as the mandate requires. The panel decision had upheld the accommodation, stating that a court is not required “simply to accept whatever beliefs a RFRA plaintiff avows—even erroneous beliefs about what a challenged regulation actually requires.” Id. at 4. Rather than join other conservative dissenters, who would have held for the religious organization agreeing that the government has no compelling interest in contraception facilitation, Kavanaugh wrote, “It is not our job to re-litigate or trim or expand Supreme Court decisions. Our job is to follow them as closely and carefully and dispassionately as we can. Doing so here, in my respectful view, leads to the conclusion that the plaintiff religious organizations should ultimately prevail on their RFRA claim, but not to the full extent that they seek.” Id. at 14.

Judge Kavanaugh’s approach to his cases is objective and literal, and he has shown a depth of understanding of ERISA, as well as an employer’s duties and responsibilities. His dedication to the text of the law or the plan document does not favor one side over the other, but rather illustrates his commitment to interpreting the language objectively before applying it to the situation.

Immigration

Judge Kavanaugh’s immigration decisions indicate a tendency to interpret the law to protect U.S. workers rather than employers who want to hire foreign nationals. For example, his dissent in Fogo de Chao (Holdings) Inc. v. U.S. Department of Homeland Security, 769 F.3d 1127 (D.C. Cir. 2014), offers a glimpse into his approach to immigration law. Fogo de Chao, a Brazilian steakhouse restaurant chain, claimed that a critical component of its success included employing genuine gaucho chefs, churrasqueiros, who “have been raised and trained in the particular culinary and festive traditions of traditional barbecues in the Rio Grande do Sul area of Southern Brazil.” Id. at 1129. Over the years, the company had brought over 200 chefs to the U.S. on L-1B visas. To qualify for an L-1B visa, the company must show that the individual has worked for the company abroad for at least one year in the prior three years and has “specialized knowledge.” The statutory definition states that an employee possesses specialized knowledge “if the alien has a special knowledge of the company product and its application in international markets or has an advanced level of knowledge of processes and procedures of the company,” and the regulation followed suit. 8 U.S.C. § 1184(c)(2)(B). The U.S. Citizenship and Immigration Services (USCIS) denied Fogo de Chao’s petition, and the district court granted the government summary judgment. The D.C. Circuit reversed, holding that: (1) the regulation regarding “specialized knowledge” would not be given Chevron deference because the regulation merely mirrored the statute; (2) judicial review was not barred because the denial was not statutorily in the discretion of the Attorney General or the Secretary of Homeland Security; and (3) the agency’s denial based upon a categorical bar on culturally acquired knowledge to prove specialized knowledge was not sufficiently supported. Fogo de Chao, 769 F.3d at 1149.

Judge Kavanaugh dissented, noting that even if Chevron deference was not required, under a de novo standard of review, the agency’s decision should have been upheld. He reasoned the categorical bar on culturally acquired knowledge was correct because any other interpretation would “gut the specialized knowledge requirement and open a substantial loophole in the immigration laws.” Id. at 1152. Moreover, Judge Kavanaugh agreed with the agency that Fogo de Chao’s argument that American chefs could not be trained in a reasonable amount of time was inadequate. He noted that Fogo de Chao already employed some American chefs and “common sense tells us that the chefs who happen to be American citizens surely have the capacity to learn how to cook Brazilian steaks and perform the relevant related tasks.” Id. at 1153.

Ultimately, Judge Kavanaugh concluded that Fogo de Chao’s argument was at least in part based on their desire to cut labor costs and that “mere economic expediency does not authorize an employer to displace American workers for foreign workers.” Id. He further stated that: “By claiming that its Brazilian chefs possess ‘cultural’ knowledge and skills that cannot be learned by Americans within a reasonable time, Fogo de Chao has attempted an end-run around the carefully circumscribed specialized knowledge visa program.” Id. at 1154. Finally, in an interesting footnote, Kavanaugh pointed out that the agency could adopt a binding regulation (instead of relying on a policy memo) that would make it clear that workers such as the chefs in this case do not possess specialized knowledge under the statute ― then their decision would be entitled to Chevron deference. Id.

Judge Kavanaugh’s majority opinion in Int’l Internship Program v. Napolitano, 718 F.3d 986 (D.C. Cir. 2013), also illustrates his inclination to protect U.S. workers from being undercut based on an employer’s economic needs. Napolitano involved an organization that sponsored a cultural exchange program that helped Asians find jobs in American schools. The exchange program applied for Q visas for these individuals. The USCIS denied several of these petitions because the individuals participating in the program were not paid. The agency interpreted the Q visa statute and regulations to require payment of wages. Id. at 987.

The plaintiff argued that unpaid interns were eligible for Q visas as long as there were comparable American workers in the program who were unpaid because the statute stated that the foreign participants “will be employed under the same wages and working conditions as domestic workers.” Id. citing 8 U.S.C. § 1101(a)(15)(Q). Judge Kavanaugh disagreed, opining that the terms included in the statute and regulations (“employed,” “wages,” “workers,” and “remuneration”), were “best read to require foreign citizens to receive wages and that those wages be equivalent to the wages of domestic workers.” Int’l Internship Program, 718 F.3d at 987.

Labor

Because Judge Kavanaugh sits in the D.C. Circuit, he has frequently been involved in cases reviewing National Labor Relations Board (NLRB) decisions, which he appears to analyze on a case-by-case basis rather than in service of an overarching judicial philosophy. Judge Kavanaugh has written several majority opinions that vacated an NLRB order. Writing for the majority in S. New Eng. Tel. Co. v. NLRB, 793 F.3d 93, 94 (D.C. Cir. 2015), Judge Kavanaugh vacated an NLRB decision that had found an employer unlawfully banned employees (who went into customer’s homes) from wearing union t-shirts that stated “Inmate” and “Prisoner of AT.” Judge Kavanaugh opened his opinion by noting: “Common sense sometimes matters in resolving legal disputes,” and criticized the Board for applying “the ‘special circumstances’ exception in an unreasonable way.” Id. at 94, 96; see also Verizon New Eng. v. NLRB, 826 F.3d 480, 483 (D.C. Cir. 2016) (granting the employer’s petition for review of an NLRB decision which had overturned a labor arbitration decision that had ruled for the employer); Venetian Casino Resort L.L.C. v. NLRB, 793 F.3d 85, 87 (D.C. Cir. 2015) (granting employer’s petition for review, finding employer had a First Amendment right to contact police regarding a union demonstration allegedly trespassing on its private property).

In addition, Judge Kavanaugh has authored several dissenting opinions in favor of employers’ arguments. Most recently, in Island Architectural Woodwork, Inc. v. NLRB,2018 U.S. App. LEXIS 16109, at *32 (D.C. Cir. June 15, 2018), he dissented from the majority opinion enforcing an NLRB order holding an employer was an alter ego of a unionized shop and thus violated the National Labor Relations Act (NLRA). Judge Kavanaugh stated that “the Board’s analysis is wholly unpersuasive.” Id. at *34. In NLRB v. CNN Am., Inc., 865 F.3d 740, 765-66 (D.C. Cir. 2017), Kavanaugh dissented in part, finding that the NLRB erred in its analysis of both the joint-employer and successor-employer issues when it found that CNN had violated the Act, stating, among other things, that he agreed with conservative Member Miscimarra’s dissent in the underlying NLRB decision. Judge Kavanaugh ended his decision bluntly, “Bottom line: In my view, the Board jumped the rails in its analysis of both the joint-employer and successor-employer issues.” Id. at 767.

Judge Kavanaugh also dissented in Agri Processor Co. v. NLRB, 514 F.3d 1, 10 (D.C. Cir. 2008), refusing to join the majority’s decision enforcing an NLRB decision that held individuals who are not legally authorized to work in the United States are nonetheless “employees” for the purposes of the NLRA (and permitted to organize and vote in Union elections involving their employer). Judge Kavanaugh’s dissenting opinion stated, “I would hold that an illegal immigrant worker is not an ‘employee’ under the NLRA for the simple reason that, ever since 1986, an illegal immigrant worker is not a lawful ‘employee’ in the United States.” Id. In Kavanaugh’s view, the case should have been remanded to the Board “to determine how a party can challenge a union election or certification upon discovering after the fact that illegal immigrant workers voted in the election and effected the outcome.” Id.; see also Midwest Div.-MMC, LLC v. NLRB, 867 F.3d 1288, 1304-05 (D.C. Cir. 2017) (dissenting from majority, stating he would hold Weingarten rights do not apply to peer-review committee interviews, noting he would vacate the Board’s order to the extent it ruled the Union was entitled to peer-review information).

However, Judge Kavanaugh has sided with the NLRB in some instances. Most recently, in Veritas Health Servs., Inc. v. NLRB, 671 F.3d 1267, 1269-70 (D.C. Cir. 2012), Kavanaugh enforced an NLRB decision that had determined that certain pro-union conduct of charge nurses (supervisors) did not taint a union election, determining the employer did not show that the Court should overturn the decision upholding the election that resulted in the union’s certification. See also New York-New York, LLC v. NLRB, 676 F.3d 193 (D.C. Cir. 2012) (finding the NLRB had been granted discretion pursuant to an earlier Circuit decision to decide whether a property owner could prohibit employees of an on-site contractor from distributing handbills on its property); Raymond F. Kravis Ctr. for the Performing Arts, Inc. v. NLRB, 550 F.3d 1183, 1186 (D.C. Cir. 2008) (enforcing Board Order holding the employer violated the NLRA when it unilaterally changed the scope of the bargaining unit and withdrew recognition from the union); United Food & Commercial Workers v. NLRB, 519 F.3d 490, 492 (D.C. Cir. 2008) (enforcing NLRB decision that held employer was required to engage in effects bargaining with the union after positions no longer constituted an appropriate bargaining unit due to technological change); E.I. du Pont de Nemours & Co. v. NLRB, 489 F.3d 1310, 1312 (D.C. Cir. 2007) (enforcing Board Order finding that employer’s refusal to provide requested information to the union precluded lawful impasse).

Workplace Privacy

Judge Kavanaugh’s dissent in Nat’l Fed’n of Fed. Employees-IAM v. Vilsack, 681 F.3d. 483 (D.C. Cir. 2012), is perhaps indicative of his stance on privacy issues. In Vilsack, the plaintiff union challenged the constitutionality of a policy of random drug testing of all employees working at the Job Corps Civilian Conversation Center (specialized residential schools for at-risk youth) run by the defendant, the Secretary of Agriculture and Chief of the U.S. Forest Service. 681 F.3d at 485. The district court granted the Secretary’s summary judgment motion, concluding that the government interest in preventing illegal drug use justified intrusion of employee privacy interests and Fourth amendment rights. Id. at 488. The D.C. Circuit Court reversed and remanded the case. Id. at 486.

The panel opinion considered the balancing of the government’s interest in a drug free work place with employee privacy interests, using the Skinner test in assessing the employees’ privacy interests, to determine both “the scope of the legitimate expectation of privacy at issue” and the “character of the intrusion that is complained of.” Id. at 490. In ruling in favor of the plaintiffs and their interest in employee privacy, the opinion emphasizes the defendant’s lack of explanation of how “general program features loosely ascribed staff responsibilities serve to undermine the reasonable expectations of privacy held by Job Corps employees” and the lack of notice of such testing, given that for over a decade employees in the same position were not tested. Id. at 493. Moreover, typically drug testing is considered permissible in high security or safety positions; however, here the Secretary defendant designated all employees to drug testing, and the court concluded the defendant’s rationale supporting “special needs” to justify drug testing all employees was too speculative. Id. at 494-95, 498.

Judge Kavanaugh’s dissent narrowly addressed the issue of drug testing government employees who work at specialized residential schools for at-risk youth, and avoided an assessment of when drug testing should or should not be permissible in the government setting in general. Id. at 499-500. In the specific context of random drug testing at a “public school” for “at-risk youth,” Kavanaugh stressed that there was no Supreme Court precedent. Id. at 500. He distinguished a case the majority relied on, Vernonia School Dist. v. Acton, 515 U.S. 646 (1995), that cautioned against “suspicionless drug testing” passing “constitutional muster” in the public school setting. In Vernonia, the public school attempted to justify “suspicionless drug testing” of teachers and other staff on the basis that in the same school, drug testing of student athletes was permitted. Judge Kavanaugh found the Secretary’s rationale supporting “special needs” to be persuasive. See Vilsack, 681 F.3d at 501. “To maintain discipline, the schools must ensure that the employees who work there do not themselves become part of the problem,” Kavanaugh stated. Id. “That is especially true when, as here, the employees are one of the few possible conduits for drugs to enter the schools.” Id.

Judge Kavanaugh emphasized that his dissenting opinion was narrowly limited to this specific factual situation. See id. at 499-500. Therefore, in this case, although Kavanaugh ultimately concluded that the government’s interest outweighed the employees’ right to privacy, it remains difficult to assess the degree to which this case signals Kavanaugh’s stance on privacy issues generally.

***

Next steps: Judge Kavanaugh’s nomination must be approved by the U.S. Senate after the Senate Judiciary Committee holds a hearing. After a hearing, the committee votes on whether to put Kavanaugh before the Senate. If the committee votes to move forward, the Senate will vote on the nomination. A majority vote of the Senate is needed to put Judge Kavanaugh on the Court.

President Trump will have the opportunity to leave a lasting mark on the federal judiciary, which currently has more than 100 vacancies pending in the U.S. District Courts and the Courts of Appeals. In addition to the selection of the current nominee and Justice Gorsuch’s appointment in April 2017, Trump may have occasion to fill another Supreme Court seat in the coming years, with Justice Ruth Bader Ginsburg at age 85 and Justice Stephen Breyer at age 79.

Jackson Lewis P.C. © 2018
For more legal news and analysis, check out the National Law Review’s Homepage.

Ninth Circuit’s Decision Holds That Salary History Is Not a Defense to Equal Pay Claims

The federal Equal Pay Act (“EPA”) mandates equal pay for equal work regardless of sex.  Employers that pay men and women different wages for the same work are strictly liable for violations of the EPA unless they can show that one or more of four exceptions apply to explain the wage disparity. The four statutory exceptions are seniority, merit, the quantity or quality of the employee’s work, or “any other factor other than sex.”  The Ninth Circuit recently took up the question of the meaning of the fourth, catchall exception – “any factor other than sex” – in order to consider whether an employer may rely, in whole or in part, on an employee’s prior salary as a basis for explaining a pay differential in Aileen Rizo v. Jim Yovino.

Rizo was a math consultant who worked for the Fresno County Office of Education (“County”). After learning that comparable male employees were earning more for the same work, Rizo filed suit against her employer, alleging that its practice of calculating the salaries for newly hired employees based on their salary history violated the EPA. The County did not dispute that Rizo was paid less than her male counterparts, but it argued that basing her salary on past earnings was a lawful reason for the pay differential as it constituted a “factor other than sex” under the EPA.

On April 9, 2018, the Ninth Circuit sitting en banc rejected the County’s argument. The Court held that “prior salary alone or in combination with other factors cannot justify a wage differential.” Writing for the majority, Judge Reinhart stated that justification of a pay disparity based on “‘any other factor other than sex’ is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.” The Court explained that the terms “job-related” and “business-related” are not synonymous and that an employer cannot explain a pay differential based on the benefit to the business as opposed to a legitimate work-motivated consideration.  Some examples of job-related factors identified by the Court included shift differentials, job hazards, physical job requirements, and training.  Unlike each of these things, past salary was not a “job-related” factor but rather, potentially, a business-related factor.

The Court further opined that permitting an employer to rely on historical pay information was inconsistent with the purpose of the EPA, which was to correct past pay discrepancies caused by sex discrimination.  “It is inconceivable,” wrote Reinhart, “that Congress, in an Act the primary purpose of which was to eliminate long-existing ‘endemic’ sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities….”  Thus, the majority concluded that relying on past salary in order to explain a wage differential was improper, even if it was only one of the factors ultimately considered.  Confusingly, the Court also noted that there could be instances in which past salary might play a role in individualized negotiations and declined to resolve whether past salary could be taken into account in such circumstances.  However, given the broad pronouncement against factoring past compensation into current salary considerations, it would seem unlikely that the current court would countenance such an exception.

In finding that past salary may never be considered, the Rizo decision overrules the Ninth Circuit’s prior ruling in Kouba v. Allstate Insurance Co. 691 F.2d 873 (9th Cir. 1982).  Kouba held that past salary could be one of the factors considered by employers in evaluating pay, as it was a “factor other than sex” permissible to justify pay gaps between men and women under the EPA.  Notably, four of the eleven judges on the panel concurred with the decision in Rizo, because salary history was the sole reason for the pay disparity, but separated from the majority on the issue of excluding salary history from consideration under any circumstance.  The Rizo decision has also exacerbated a circuit split on whether salary history may be considered, and to what extent.  While certain circuits have taken an approach similar to the concurring judges in Rizo, permitting it as long as it is not the sole basis for a pay disparity, the Seventh Circuit has held that salary history is always a legitimate factor other than sex.

While California employers are no longer entitled to inquire about past salary as part of the job application process as of January 1, 2018, in light of the Rizo decision, employers with operations in California, Oregon, Washington, Idaho, Montana, Nevada, Arizona, Alaska, and Hawaii may wish to take actions to ensure that any pay disparities are not based on salary history, such as not asking about salary history during the hiring process (even in states where this practice is not prohibited by law) and conducting pay equity audits.

 

©2018 Epstein Becker & Green, P.C. All rights reserved.
Read more on equal pay at the National Law Review’s Labor and Employment Page.

New Legislative Action on “Tip Pooling”

Congress and the President have waded into the ongoing debate regarding employers’ use of “tip pools” under the Fair Labor Standards Act (“FLSA”) by passing the Tip Income Protection Act (“TIPA”) as part of the omnibus spending bill.

The FLSA permits an employer to take a partial credit against its minimum wage obligations based on employee tips if the employee retains all of his or her tips, or they are made part of a tip pool shared only with employees who “customarily and regularly receive tips.” See 29 U.S.C. § 203(m). Thus, an employer utilizing a tip credit to comply with minimum wage obligations cannot establish a tip pool that includes non-tipped employees (e.g., back-of-the-house restaurant employees).  The FLSA left the allocation of tips unregulated where an employer did not use tip credits.

In 2011, the Department of Labor (“DOL”) issued a regulation applying the limitation on the use of tip pools to cases where the employer did nottake a tip credit and paid employees the full federal minimum wage.  See 29 C.F.R. § 531.52.  A number of federal courts concluded that the regulation was inconsistent with the text of the FLSA.  See, e.g., Marlow v. New Food Guy, Inc., 861 F.3d 1157, 1163-64 (10th Cir. 2017) (2011 DOL regulation was inconsistent with the FLSA, which did not authorize the agency to “regulate the ownership of tips when the employer is not taking the tip credit”).  However, the Ninth Circuit disagreed, reasoning that because the FLSA is “silent as to the tip pooling practices of employers who do not take a tip credit” it should defer to the DOL.  Oregon Rest. and Lodging Ass’n v. Perez, 816 F.3d 1080, 1090 (9th Cir. 2016).

In 2017, the DOL announced proposed rulemaking to rescind the 2011 regulation.  See here and here. After much deliberation regarding the proposed agency action, Congress enacted TIPA, which states, in relevant part:

“An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.”

TIPA also provides that the 2011 regulation shall have “no force of effect.”  An employer that violates TIPA may be liable for any tip credit taken, the amount of the withheld tips, liquidated damages, and $1,100 civil penalty for each violation.

Stated simply, TIPA limits the permissible use of tip pooling for all employers irrespective of whether an employer takes advantage of a tip credit or whether its employees’ regular hourly rate exceeds the minimum wage.  However, TIPA’s language raises a number of interpretive questions, such as:

  • What does it mean for an employer to “keep tips” received by employees?  The law very likely prohibits an employer from diverting tips directly to its own coffers.  But does an employer “keep tips” by implementing a standard tip pool that does not include “managers or supervisors?”

  • TIPA does not define a manager or supervisor.  Assuming TIPA permits standard tip pools, does an employer violate the law if the pool includes modestly-paid hourly employees with minimal management responsibilities and limited or no ability to discipline employees (e.g., shift leads)?

These are a few of the questions employers with tipped employees will confront in the coming months and years as we await additional guidance from the courts and the DOL.  Employers in the restaurant and other industries should closely analyze how they distribute employee tips to ensure compliance with TIPA.

 

© Polsinelli PC, Polsinelli LLP in California
This post was written by James C. Sullivan and Brian K. Morris of Polsinelli PC, Polsinelli LLP in California.
For more on Employment Legislation, Check out the National Law Review’s Employment Law Page.

Happy 25th Birthday, FMLA! 25 Years Later – Where Are We Now?

The Family and Medical Leave Act (FMLA) is celebrating its 25thanniversary this month. On February 5, 1993, President Bill Clinton signed the FMLA into law guaranteeing certain employees up to 12 unpaid weeks off of work a year to care for children or ill family members, or to recover from one’s own serious health condition. During the time off, an employee’s medical benefits would remain intact.

When initially passed, the statute’s purpose was to address the rising number of American households with working parents who were concerned about losing their jobs when taking time off to care for a child or a sick family member. It was also meant to allow people who had serious health conditions to  remain employed when taking time off work for temporary periods.

Since that time, the FMLA has become a source of contention for employers and employees alike. Employers often feel overburdened by the paperwork’s technical requirements, the ever-increasing threat of litigation, and the costs of complying with the statute.  Employees and workers’ rights groups are concerned about the FMLA’s lack of coverage for part-time and small-business workers and the narrow definition of family.  Either way you slice it, the FMLA is due for a revamp, but are the Trump administration’s budget proposal and tax cuts pushing the FMLA in the right direction?

FY2018 Budget Proposal

Although in its nascent form, President Donald Trump followed up on a campaign promise and included a proposal for paid parental leave in his FY2018 Budget Proposal. The Budget Proposal would give new mothers and fathers up to six weeks of paid parental leave.  The funding for the proposal would come from the Unemployment Insurance system and be funded and run, at least in part, by the states.  A reduction in improper payments, assistance finding new jobs, and the ability to keep reserves in the Unemployment Trust Fund accounts are listed as possible vehicles to fund the program.

As we previously reported, some state and local governments have already enacted their own Paid Family Leave measures.  It is unclear at this point how the new proposal would affect these state and local laws.  Although making coverage mandatory and taking the burden off of employers to pay for leave are attractive goals for many, there are practical concerns about how this proposal would be funded and which employees would be covered.

Tax Act

In December, a bill formally known as the Tax Cut and Jobs Act was signed into law.  Beginning in 2018, employers who voluntarily provide paid family and medical leave are eligible to receive a tax credit of between 12.5 percent and 25 percent of the cost of each hour of paid leave based on the amount of compensation provided during the leave. The employer must provide at least two weeks of leave and compensate the worker for at least 50 percent of the worker’s earnings to be eligible.  The tax credit will only be applied toward paid leave for employees who make less than $72,000.  The employer must also make the paid leave available to both full-time and part-time employees who are employed at the organization for at least a year to receive the credit.

The tax act also broadens the scope of paid leave to cover part-time employees and may incentivize employers to voluntarily provide paid leave, but the act ends in 2019 and may not provide enough credit for all employers to buy into the program.

As the policy landscape shifts at the federal and state level towards paid leave, employers should consider which approach is best for their current situation. If relying on the tax incentive for purely financial reasons, an employer should analyze the numbers to make sure that the tax incentive is worth offering the paid leave, taking into consideration that the tax incentive may extinguish at the end of 2019 unless extended by Congress.  Employers would also be wise to review state and local laws to make sure that their policies align with local paid leave mandates.  Employers could proceed ahead of any mandatory change and voluntarily implement paid leave based on intangibles such as recruitment, retention, and worker productivity or wait and see if the family and medical leave winds change direction yet again.

 

© 2018 Foley & Lardner LLP
This post was written by Taylor E. Whitten of  Foley & Lardner LLP.

R2-Me2? How Should Employers Respond to Job Loss Caused by Robots?

There is no question that the use of robots, along with other similar technological changes in the workplace, will continue to eliminate or downgrade jobs. Indeed, it has been estimated that on average, each workplace robot eliminates six jobs. This article will examine (1) the impact such changes will have on women and (2) whether these changes can be subject to legal challenge as prohibited gender discrimination.

The gender pay gap has become a much debated and controversial topic, but this article will stay out of the fray. However, data produced by the consultancy firm Korn Ferry has concluded that women in Britain make just one percent less than men who have the same function and level at the same employer.  Therefore, some have suggested that the main problem today is not necessarily unequal pay for equal work, but rather the forces and circumstances that lead women to be forced into and stuck in lower-paid jobs at lower-paying organizations. According to The Economist, this is the true gender “pay gap,” which is a much more difficult problem to solve.

Current research suggests that, unless addressed, this gender “pay gap” will increase rather than decrease. Last month, a report to the World Economic Forum in Davos, Switzerland, predicted that “artificial intelligence, robotics and other digital developments,” and the consequent job disruption, are likely to widen rather than diminish the gender pay gap. See “Towards a Reskilling Revolution” at p. 3. Citing statistics published by the federal Bureau of Labor Statistics, the report concluded that of the 1.4 million U.S. jobs that are projected to become “disrupted” because of robotic and other technological changes between now and 2026, 57 percent will be held by women.

But there could be good news for those concerned about gender wage equality. The report argued that an increased awareness of the impending effect of these changes, along with a concerted plan by governments, employers, businesses, labor unions and employees themselves to retrain or “reskill” disrupted workers, will present displaced workers with more opportunities for jobs at higher pay levels than their current wages. In a summary of the main report, the authors predicted that reskilling programs could result in higher wages for 74 percent of all currently at-risk female workers, thereby narrowing the gender wage gap.

Although job disruption from the use of robots will disproportionately impact women, the fact that it will result from “business necessity” means that employees may have difficultymounting successful legal challenges to this practice. Instead, thoughtful employers may want to focus their energies on learning more about the scope of this looming problem and, wherever possible, create or participate in programs that will reskill impacted employees, and thereby provide them with more opportunities in expanding and higher-paid occupations.  Nor is this an unrealistic proposition as, overall, in the decade ending in 2026, the U.S. job market is projected to create 11.5 million new jobs.

 

© 2018 Foley & Lardner LLP
This post was written by Gregory W. McClune of Foley & Lardner LLP.

Recent Challenges to the Use of Hair Follicle Drug Testing

Without question, the trucking industry must do all it can to make sure its drivers are drug-free. However, employers must establish policies and procedures that recognize the diversity in the work force and the need to be flexible in the types of drug tests it administers to drivers and applicants. Hair testing is very effective in detecting drugs but should not be used as an end all for all applicants and experienced drivers. The National Minority Trucking Association reports that of the 3.5 million truck drivers in the United States, 1.5 million are minorities. As demands for new drivers increases, minorities are increasingly entering the profession. In addition, employers seek to retain experienced drivers. Recent court cases and EEOC settlements point to the need for those wishing to hire and retain minority drivers to have flexibility when it comes to the types of drug testing used on minority drivers and candidates.

Race-Based Challenges to Hair Follicle Testing

A recent decision from the United States District Court of Appeals for the First Circuit revived a lawsuit filed by eight police officers, a cadet, and a 911 operator. All are African American. All tested positive for cocaine after a hair follicle test was administered by the Boston Police Department. This was the second time the First Circuit found that the hair follicle test had a statistical disparate impact on African American officers in violation of Title 7 of the Civil Rights Act of 1964.

Title 7 prohibits employers from utilizing “employment practices that cause a disparate impact on the basis of race,” unless those practices are justified by business necessity. A disparate impact claim can succeed even when the employer did not intend to discriminate against persons in a protected class. The Boston Police Department’s officers and cadets had been subject to annual hair follicle drug tests. When the testing agency reported that a sample tested positive for cocaine, a physician chosen by the department checked to see if the individual had been administered certain medications during a medical procedure. If not, the individual could elect to have a “safety net” test of a different hair sample. The safety net tests were much more sensitive than the initial tests in detecting the presence of cocaine and its chemical by-products.

Plaintiffs challenged the reliability of hair testing. They pointed out that the federal government has refused to authorize hair testing in drug screening of federal employees and employees of private industries for which the government regulates drug testing. Plaintiffs argued that black individuals have higher levels of melanin in their hair and that causes cocaine and cocaine metabolites to bind to the hair at higher rates. If someone snorts or smokes cocaine its “aerosolized powder” will deposit on any nearby surface, including non-users hair. These deposits cannot be distinguished from the effects of actual use by current hair testing methods.

The plaintiffs also pointed to statistics kept by the department over a seven-year period. The statistics showed that out of 4,222 blacks that were hair follicle tested, 55 were positive. That compared to 10,835 whites being tested and 30 being positive. This resulted in a standard deviation of 7.14. The court acknowledged Mark Twain’s quip that there are three kinds of lies: lies, damned lies and statistics. However, the statistical analysis provided by plaintiffs provided to the court that “…we can be almost certain that the difference in outcomes associated over race over that period cannot be attributed to chance alone.”

The court then discussed whether the testing was job related. The court readily agreed that the hair test was job related since abstention from drug use was an important element of police behavior and that having a work force that did not consume drugs was a legitimate business need for the department. It noted that there was no reason why a test need be anything near 100% reliable – as few tests are – to be job related and consistent with business necessity. However, the disparate impact claim of the plaintiffs survived if they could show that an alternative test would decrease the chances of impacting innocent officers. Plaintiff’s suggested that those who had a positive hair follicle test go through a series of random follow up urinalysis tests in order to reduce the number of experienced officers being terminated and recruits being denied the opportunity of joining the force. The court found that a jury could agree with that approach and ordered that the suit go forward.

Religious Challenges to Hair Follicle Testing

In a charge filed with the EEOC, four East Indian Sikh applicants challenged J.B. Hunt’s drug testing policy. The policy required applicants to provide a hair sample for follicle testing. One of the five Articles of Faith for a Sikh is to maintain uncut hair. The Sikhs sought a religious accommodation, but were denied by J.B. Hunt. Though other testing methods were available, J.B. Hunt elected to require hair follicle testing, arguing that hair follicle testing was more accurate – and therefore more likely to assist in the company’s compliance efforts in having a drug-free driver force – than other methods.

The EEOC found reasonable cause to believe that Hunt failed to accommodate the Sikhs’ religious beliefs and effectively failed to hire a class of individuals due to race, national origin and religion in violation of Title 7 of the Civil Rights Act of 1964. The EEOC believed that alternate testing methods were a reasonable accommodation for the Sikhs, even if marginally less accurate than hair follicle testing. Hunt agreed to pay $260,000 and extend unconditional offers of employment to the complainants. In addition, it agreed to designate an EEOC consultant, develop written policies and procedures, and conduct training for all employees participating in the hiring, compliance, and grievance process.

These cases highlight the need for trucking companies to balance their responsibilities of keeping a drug-free driver corps while also respecting the rights of their diverse applicants and employees. Though hair follicle testing is common in the industry, it is important to note that there are some situations where trucking companies need to be flexible in its use.

 

© 2018 Heyl, Royster, Voelker & Allen, P.C.
This post was written by Doug Heise of Heyl, Royster, Voelker & Allen, P.C.
Read more at the National Law Review’s Transportation Page.

Raise Your Hand If You’re Confused about I-9 Reverifications for Employees with TPS

Temporary Protected Status (TPS) is a humanitarian benefit available to foreign nationals who are unable to return to their home countries because of certain temporary conditions including ongoing armed conflict such as civil war, an environmental disaster like an earthquake, hurricane, epidemic, or other extraordinary conditions. During TPS designation, qualifying foreign nationals are not removable from the US and can obtain work authorization and travel permission.

The Department of Homeland Security (DHS) has recently terminated TPS for nationals of El Salvador, Haiti, Nicaragua, and Sudan but has granted a period of orderly departure to allow time for this population to wind up their affairs in the US. This has left employers in a quandary about which TPS holders remain able to work and how to comply with Form I-9 Employment Eligibility Verifications.

To help ease the confusion, the chart below illustrates TPS-designated countries, the dates by which beneficiaries were required to re-register and, for those who do re-register, how long their current Employment Authorization Cards (EAD) are automatically extended pending decisions of EAD renewal applications. The TPS termination dates for El Salvador, Haiti, Nicaragua, and Sudan are also included.

Country

Re-Registration Period Ends

EAD Auto-Extended Until

TPS End Date

El Salvador

03/19/2018

09/05/2018

09/09/2019

Haiti

03/19/2018

07/21/2018

07/22/2019

Honduras

02/13/2018

07/04/2018

–

Nepal

12/27/2016

06/24/2017

–

Nicaragua

02/13/2018

07/04/2018

01/05/2019

Somalia

03/20/2017

–

–

South Sudan

11/20/2017

05/01/2018

–

Sudan

12/11/2017

05/01/2018

11/12/2018

Syria

09/30/2016

03/31/2017

–

Yemen

03/06/2017

09/03/2017

–

As reflected in the chart above, sometimes DHS issues a blanket automatic extension of the expiring EADs for TPS beneficiaries of a specific country in order to allow time for EADs with new validity dates to be issued. The automatic extension periods are available to those TPS beneficiaries who timely re-register and apply to renew their EADs.

Although an employer cannot specify which documents an employee can present in connection with the I-9 Employment Eligibility Verification process, TPS beneficiaries with automatic EAD extensions may present an expired EAD bearing the C19 eligibility code along with a Form I-797C Notice of Action indicating the eligibility category code A12 or C19. The codes need not be the same.

The M-274 Handbook for Employers is an excellent resource in determining how to complete the Form I-9 for those employees with automatic EAD extensions. It specifies that:

“For a current employee, update Section 2 of Form I-9 with the new expiration date as follows:

  • Draw a line through the old expiration date and write the new expiration date in the margin of Section 2;

  • Write EAD EXT in Section 2;

  • Initial and date the correction.”

For TPS beneficiaries, the new expiration date should correspond with the respective date as noted in the chart above. An employee whose employment authorization is automatically extended along with his/her EAD may cross out the “employment authorized until” date in Section 1, write the new expiration date as reflected in the chart, initial and date the change.

A new employee may present the expired EAD and Form I-797C Notice of Action indicating USCIS’s receipt of the employee’s timely filed renewal application. When completing Section 1, the employee should enter the corresponding date from the chart in the “employment authorized until mm/dd/yyyy” field.

When completing Section 2, the employer should enter into the Expiration Date field the date the automatic extension period expires, not the expiration date on the face of the expired EAD. The employer should enter the receipt number from the I-797C Notice of Action as the document number on Form I-9. Note that reverification is required when the employee’s automatic extension ends.

While an employer is not required to be an expert in I-9 documents and review, having access to reliable resources comes in handy and will take you to the head of the class.

 

Copyright © 2018 Womble Bond Dickinson (US) LLP, All Rights Reserved.
This post was written by Jennifer Cory of Womble Bond Dickinson (US) LLP.

New Jersey Amends Its Law Against Discrimination to Provide Protections to Nursing Mothers

On January 8, 2018, former New Jersey Governor Chris Christie signed new legislation (the “Amendment”) amending the New Jersey Law Against Discrimination (“NJLAD”) to add breastfeeding as a protected class under the law. The Amendment, which takes effect immediately, makes it unlawful to discriminate or retaliate against an employee that the employer knows, or should know, is either breastfeeding or expressing milk for her infant child.

The Amendment also requires employers to provide reasonable accommodations to nursing women, unless it would result in an undue hardship to the employer, and specifically requires employers to provide:

  1. Reasonable break time each day for the employee to express breast milk for her child; and
  2. A suitable location with privacy, other than a toilet stall, in close proximity to the work area for the employee to express breast milk for her child.

To determine whether an accommodation would provide an undue hardship, the NJLAD provides that the following factors should be considered:

  • the overall size of the employer’s business with respect to the number of employees, number and type of facilities, and size of budget;
  • the type of the employer’s operations, including the composition and structure of the employer’s workforce;
  • the nature and cost of the accommodation needed, taking into consideration the availability of tax credits, tax deductions, and outside funding; and
  • the extent to which the accommodation would involve waiver of an essential requirement of a job as opposed to a tangential or non-business necessity requirement.

The Amendment also provides that breastfeeding employees are entitled to paid or unpaid leave as a reasonable accommodation, in the same manner as “provided to other employees not affected by pregnancy or breastfeeding but similar in their ability or inability to work.” While the Amendment does not provide an express right to leave, it requires employers to treat such a leave request as they would any other request for leave.

While many New Jersey employers have already been subject to similar requirements to provide breaks and private spaces for nursing mothers to express breast milk in accordance with the Patient Protection and Affordable Care Act’s 2010 Amendment to the federal Fair Labor Standards Act (“FLSA”), the key differences between the breast feeding protections in the FLSA and in the NJLAD are:

  1. Which employees are covered? The FLSA’s protections apply only to “non-exempt” workers (i.e., those workers entitled to overtime pay), while the NJLAD’s protections apply to all New Jersey employees.
  2. Which employers are covered? Small businesses (fewer than 50 employees) may not be covered by the FLSA break-time-for-nursing-mothers provision if they can demonstrate that compliance with the provision would impose an undue hardship. The NJLAD contains a similar “undue hardship” exception, but does not limit the exception to small businesses.
  3. How long must employers accommodate nursing mothers? Protections under the FLSA apply up until one year after the birth of the child, while the NJLAD’s protections do not provide a time limit and apply while the mother is “breast feeding her infant child.” The NJLAD does not define “infant child.”

What should employers do?

New Jersey employers should review their procedures and practices to ensure compliance with the Amendment by:

  1. Reviewing anti-discrimination and reasonable accommodation policies to ensure compliance with the law;
  2. Training supervisors and managers on how to handle accommodation requests related to breastfeeding;
  3. Providing an employee who is breastfeeding with reasonable break times and a suitable private location, other than a toilet stall, in close proximity to the work area to express breast milk for her child.

In addition, employers should consult with counsel before denying an employee an accommodation related to breastfeeding to determine whether an “undue hardship” may be established.

 

©2018 Epstein Becker & Green, P.C.
More Labor and Employment News on the Labor and Employment Practice Group page.