Category: Labor & Employment

Wave of Recent and Transformative Pro-Employee Measures in New York

New York State and New York City lawmakers have taken several actions recently to expand employee rights and benefits. New York State has passed a 2016-2017 budget (“Budget”) that will significantly impact New York employers by creating a law governing paid family leave and enacting a statewide plan to incrementally increase the minimum wage resulting in a $15 minimum wage rate for some employers. Mayor Bill de Blasio also recently signed several bills amending the New York City Human Rights Law (“NYCHRL”), including 3 amendments that will strengthen existing employee protections.

Paid Family Leave

The New York State Budget enacts a paid family leave policy for New York employees (the “Paid Family Leave Law”) that will provide wage replacement to employees taking time o for covered reasons. Beginning January 1, 2018, employees who have worked for at least 6 months will be eligible for 8 weeks of paid leave benefits for the purpose of (1) caring for a family member with a serious health condition, (2) caring for a new child during the first 12 months after the child’s birth or after the first 12 months after placement of the child for adoption or foster care with the employee, or (3) addressing certain exigencies when a family member, including a spouse, domestic partner, child or parent, is called to active military service. Leave will be paid at a rate of 50% of the individual’s average weekly wage, not to exceed 50% of the state average weekly wage.

The length of leave benefits and amount of bene ts paid to eligible employees will increase incrementally. Once fully implemented on January 1, 2021, the Paid Family Leave Law will provide employees with up to 12 weeks of paid family leave to be paid at a rate of 67% of the individual’s average weekly wage, not to exceed 67% of the state average weekly wage.

Until New York passed the Paid Family Leave Law, only 3 states o ered any paid family leave: California, New Jersey and Rhode Island. While New York State lauds its Paid Family Leave Law as the “longest and most comprehensive in the nation,” this week San Francisco’s city supervisors voted to require employers with more than 20 employees to give workers six weeks of fully paid leave – a measure that is even more expansive than California’s current leave law that provides benefits for 55% of an employee’s average weekly wage. If signed into law, San Francisco’s paid leave law may be considered the most far-reaching in the nation.

But how does New York’s Paid Family Leave Law stack up against paid family leave insurance benefits o ered by its neighbor across the Hudson?

New York New Jersey
Employers Covered All Employers All Employers
Employees Eligible All employees who have worked for at least 6 months in NY All employees who have worked 20 calendar weeks
Reasons for Leave
  • care for newborn/newly adopted/foster child
  • care for family member with serious health condition
  • address exigencies associated with certain family members on active military service
  • care for newborn/adopted child
  • care for family members with serious health condition
Length of Benefits 12 weeks, once fully implemented 6 weeks during any 12 month period, with a different rate for intermittent leave
Amount of Benefits 67% of average weekly wage, not to exceed 67% of the state average weekly wage, once fully implemented 2/3 of employee’s average weekly wage, up to $524 per week maximum, with a different rate for intermittent leave
Job and Benefits Protection Requires reinstatement to the position held immediately prior to taking leave, or to a comparable position with comparable benefits. No job protection

Minimum Wage

New York’s Budget incorporates minimum wage increases throughout the State, which will increase the wage significantly from the current $9 per hour rate. The increases will be implemented in incremental phases and will vary by location within New York State and by the size of the employer’s business. By the end of 2018, many New York City businesses will be required to pay employees $15 per hour, which is the swiftest and most significant increase set forth in the Budget. However, New York City employers with 10 or fewer employees will experience smaller increases over a longer period leading to a $15 minimum wage rate at the end of 2019. Employers in other counties around New York City will reach the $15 per hour minimum wage rate by the end of 2021. Other areas in New York State will experience lesser increases, reaching a $12.50 minimum wage rate by the end of 2020 with further increases to be determined. New York is the second state to institute a $15 minimum wage rate, preceded by California which also recently implemented a phased-in increase to its minimum wage rates that will begin next year.

The Budget incorporates a “safety valve” provision, which provides that starting in 2019 the State Director of the Division of Budget will annually assess the impact of the minimum wage increases to determine whether it is necessary for the State to temporarily suspend the scheduled increases. Based on the Director’s recommendation and report, the Commission of Labor will determine whether or not to suspend or delay further increases to the minimum wage rate.

NYCHRL

The recent amendments to the NYCHRL, which already had some of the broadest employee protections in the country, further strengthen employee protections in New York City. Speci cally, the NYCHRL has been amended to benefit employees by:

  • codifying three judicial decisions, including by expressly stating that the statute must be interpreted liberally to accomplish “uniquely broad and remedial purposes” regardless of whether similar civil and human rights provisions under federal or state law have been similarly construed and that any and all exceptions and exemptions found in the statute must “be construed narrowly in order to maximize deterrence of discriminatory conduct.”

  • permitting a claimant to recover attorneys’ fees, expert fees and other costs in an administrative proceeding before the New York City Commission on Human Rights; and

  • repealing several provisions that were previously interpreted to limit protections related to sexual orientation.

Each of these amendments is effective immediately.

Tips for Employers

New York employers should review their policies regarding leave and ensure any necessary updates are made in advance of the Paid Family Leave Law’s January 1, 2018 implementation date. Similarly, the varied and incremental increases to the minimum wage rate throughout New York State will require New York employers to closely monitor their payroll practices to ensure that they properly implement minimum wage requirements. The employment-related amendments to the NYCHRL do not create a rmative requirements on employers. However, employers should bear in mind that New York City’s ever expanding NYCHRL creates unique challenges for employers seeking to defend claims. We will continue to update you as courts interpret these new measures, and if and when regulations are issued to address more nuanced concerns about the new legislation.

Article By David I. Rosen, Galit Kierkut, Charles H. Kaplan & Grace A. Byrd of Sills Cummis & Gross P.C.

© Copyright 2016 Sills Cummis & Gross P.C.

Coca-Cola Bottling Of Mobile to Pay $35,000 to Settle EEOC Sex Discrimination Suit

Company Refused Job to Experienced Applicant Because of Gender, Federal Agency Charged

Coca-Cola Bottling Company of Mobile, a manufacturer, bottler and distributor of soft drink products, will pay $35,000 and furnish other significant relief to settle a sex discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.

According to EEOC’s suit, Coca-Cola Bottling Company of Mobile, a subsidiary of Coca-Cola Bottling Co. Consolidated, refused to hire Martina Owes, an applicant for two vacant warehouse positions, because she is female. While Owes had the required warehouse and forklift experience, the company chose to hire less qualified men for the available positions. EEOC also charged that, by not preserving all application materials related to those positions, the company violated federal record-keeping laws.

Sex discrimination violates Title VII of the Civil Rights Act of 1964, which protects employees against discriminatory practices based on race, color, national origin, sex, and religion. EEOC filed suit in U.S. District Court for the Southern District of Alabama, Mobile Division (EEOC v. Coca-Cola Bottling Co. Consolidated et al., Case No. 1:15-cv-00486) after first attempting to reach a pre-litigation settlement through its administrative conciliation process.

The consent decree settling the suit, entered by U.S. District Judge William H. Steele, provides that Coca-Cola Bottling will pay Owes $35,000 and prohibits further discrimination. Also, the company is required, for three years, to conduct annual training of its Mobile employees on discrimination and retaliation, develop new or revised anti-discrimination policies and a written hiring process, and designate a director-level employee to coordinate its compliance with anti-discrimination laws and compliance with the decree.

“Employers are required to provide women with equal employment opportunities, and that includes jobs that traditionally have been dominated by men,” said Delner Franklin-Thomas, district director of EEOC’s Birmingham District Office, which has jurisdiction over Alabama and portions of Mississippi and Florida. “We appreciate Coca-Cola Bottling’s desire to cooperate with EEOC early in the litigation process to resolve this matter.”

EEOC Birmingham Regional Attorney C. Emanuel Smith, said, “EEOC will continue to litigate when necessary in cases involving arbitrary and unfair barriers to equal opportunity in the workplace based on sex. The law requires that female applicants be judged on their qualifications and not passed over because of their gender.”

The elimination of recruiting and hiring practices that discriminate against women, racial, ethnic and religious groups, older workers, and people with disabilities is one of six national priorities identified by EEOC’s Strategic Enforcement Plan (SEP).

EEOC’s litigation and settlement efforts were led by Senior Trial Attorney Gerald Miller and Trial Attorney Christopher Woolley of its Birmingham District Office.

EEOC enforces federal laws prohibiting employment discrimination. Further information about EEOC is available on its website at www.eeoc.gov.

You can read the original article on the EEOC’s website here.

Article By U.S. Equal Employment Opportunity Commission
© Copyright U.S. Equal Employment Opportunity Commission

Dane County Judge: Wisconsin’s “Right to Work” law unconstitutional

wisconsin supreme courtIn a decision issued April 8, 2016, Dane County Circuit Court Judge William Foust ruled that Wisconsin’s “Right to Work” law violates the Wisconsin Constitution because it takes union property without just compensation (i.e., it is an unlawful taking).

According to the Wisconsin Manufacturers & Commerce (WMC), which played a leading role in seeking and attaining passage of the law, Judge Foust’s decision “is an act of blatant judicial activism that will not withstand appellate review.” Wisconsin Attorney General Brad Schimel also issued a statement expressing disappointment in the ruling and stating that he is “confident the law will be upheld on appeal.”

Judge Foust ruled that the law unconstitutionally takes union property by forcing a union to represent workers who are not members of the union and do not pay dues to the union. Judge Foust found the State’s argument that “neither federal law nor state law requires a union or other entity to become an exclusive bargaining representative” to be “disingenuous.” According to Judge Foust, the unions have no choice in representing all employees because, by law, their existence depends upon being the exclusive bargaining agent for any particular bargaining unit.

A copy of Judge Foust’s order is available here.

Article by: Rufino Gaytán of Godfrey & Kahn S.C.
Copyright © 2016 Godfrey & Kahn S.C.

Attorneys Facing An Uphill Battle In Litigation Should Consider Option Value When Arguing Valuation

Let me tell you a sad story; Joe owned a marketing company and earned a prosperous living for several years. Joe’s business was growing rapidly and all seemed right with the world. Then a trusted employee left Joe’s firm, taking with him half of Joe’s customers in violation of his non-compete agreement. Joe’s business slowly suffered and lost customers until eventually his firm declared bankruptcy.

Joe sued his former employee and asked for damages related to the value of his firm. Joe’s attorney argued to the court for compensation based on the value of Joe’s firm that was destroyed by the employee. Yet the attorney left out one critical question when arguing the case; how should the law account for the fact that Joe’s business was growing rapidly until the employee left?

Perhaps Joe had several big accounts that he might have been able to sign had the employee not engaged in unfair trade practices. Without taking these factors into account, Joe’s attorney is under-representing the value of Joe’s claim and leaving compensation on the table for no reason.

In finance, this idea of the possibilities that could plausibly occur in the future is called an embedded option or a real option and it is extremely useful in a variety of cases from divorce proceedings and business bankruptcies to merger disputes and matters of economic harm. In the scenario above, Joe’s firm had the ability to potentially continue to grow and become even more successful than it was at the time before Joe’s employee left. Hence the damage done to Joe is greater than simply the lost historical value of the firm. He has also lost the possibility of much more value in the future.

The crux of modern asset valuation is based on a concept called the time value of money. Essentially the idea is that because money received in the future is worth less than money received today, we can value assets or a business based on their associated cash flows and an appropriate discount rate. This approach forms the basis of everything from stock valuation on Wall Street to proper methods for computing interest rates in bankruptcy. This facet of valuation is well understood. But what about the future opportunities or chances of cash flows that are uncertain?  That’s what embedded options address.

The concept of embedded options might seem abstract or even too nebulous for many judges to buy into in a court case, but the reality is that real options have significant value and are often a subject of serious financial negotiations. Particularly for small firms, real options are often important and serve as the basis for various types of convertible debt and warrant grants.

As a finance professor and frequent consultant to companies on matters of asset valuation and financial forecasting, I have long taken it for granted that the techniques used in the finance profession were well understood and universally applied across many other industries including the law. I was very surprised to learn when I started doing expert consulting work, this is not the case. Lawyers often neglect to ask for damages based on real options in their cases. This leaves an important tool out of the litigation toolbox.

In discussing real options thus far, it might seem like they are primarily useful for parties alleging damages, yet they can also be useful for defendants as well. In particular, defendants need to understand how real options are valued and also understand the four appropriate metrics for calculating economic harm as it relates to options (compensating variation, equivalent variation, Paasche indices, and Laspeyres indices). I’ll talk more about these in a future column though.

When valuing real options, there are various statistical techniques that can be used. The math is not necessarily important here, but the concepts are. Essentially, real options increase in value in situations where there is greater uncertainty, and when interest rates in the broader economy rise. Those conditions make real options an exciting tool in today’s courts. With the Fed finally starting to raise interest rates, real options should become marginally more valuable. More importantly, situations with significant amounts of uncertainty lead to greater volatility in intrinsic asset prices.

These volatile situations are often the very situations that lead to court cases for attorneys – a business deal that went wrong leads to a bankruptcy but could have led to a hugely successful company, a merger agreement could result in substantial cost savings for both firms or substantial value destruction for investors and is being challenged by shareholders, a wrongful death case for an individual in the prime of their lives leaves so many possible futures unexplored. Thanks to new statistical techniques and greater computing power, these situations and others can be effectively modeled through computer simulations and valued by economists in ways that would have been unimaginable a decade ago.

Representing clients fairly and to the best of one’s ability in court is the foremost duty of an attorney. To do that, attorneys need to understand the tools of business and the cutting-edge techniques being used in asset valuation. Failing to use these tools is not only a disservice to clients, but a severe hindrance to the attorney as well. In a competitive legal market, the Joes of the world will flock to those attorneys that free themselves to position their clients for maximum success in court.

Article By Dr. Michael McDonald of Fairfield University Dolan School of Business

© Fairfield University Dolan School of Business

Are they Worth Price of Paper They're Printed On? – Ubersization of Arbitration Clauses

Arbitration has long been treated as an inferior method of resolving disputes, despite pronouncements to the contrary from the U.S. Supreme Court. However, arbitration does serve a purpose. The process is less formalized, so it moves much faster than the court system. That means less disruption to business. It’s also less expensive than bringing a civil action, making it easier for individuals to assert their rights or air their grievances. For these reasons and more, many businesses have incorporated arbitration provisions into their contracts and handbooks. The Federal Arbitration Act was enacted in 1925, yet these types of contractual agreements to arbitrate still get shot down in certain courts and by certain administrative authorities.more

Drivers v. Uber – The Arbitration Dispute

In Uber’s California litigation, Judge Chen has examined various aspects of the arbitration provisions contained in the various versions of Uber’s agreements with its drivers.  The 2013 Agreement and the 2014 Agreement shared several key features:

(1) all disputes not exempted from the scope of arbitration were subject to resolution by final and binding arbitration;

(2) arbitration could proceed only on an individual basis, not by class;

(3) the delegation clause in the provision stated that “disputes arising out of or relating to the interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision” shall be decided by the arbitrator; and,

(4) an opt-out clause allowed drivers to avoid the arbitration clause.

In separate litigation, the Court had Uber revise the opt-out provision to make it more conspicuous and less onerous on the drivers.  Because the 2013 Agreement contained the original opt-out provision, it did not stand a chance of being found enforceable.  In later 2014 and 2015 Agreements,  Uber included the provision in boldface and ALL CAPS with text larger than the provisions around it.  Language also was added to explain the significance of arbitration and the right to opt-out.  Additionally, to exercise that right now, a driver need only send an email to Uber stating his/her name and the desire to opt-out (although he/she could send a letter by regular mail, overnight delivery, or hand-delivery, too).  As a result, when the Court certified a class on September 1, 2015, those drivers who failed to opt-out of the provision were excluded from the class.  However, in December, the Court found the arbitration agreements were unenforceable on California public policy grounds, irrespective of the opt-out provision, thus dramatically increasing the size of the class.

Meanwhile, delegation clauses, like the one set forth under (3) above, seem to cause consternation in courts across the nation.  Even the U.S. Supreme Court has recognized that courts are the typical adjudicators of whether the parties have agreed to arbitrate in the first instance.  Because a delegation clause puts this determination in the hands of the arbitrator instead, it must be clear and unmistakable.  In Uber’s case, the clause was clear, but it was made ambiguous because it conflicted with other clauses contained in the Agreements.  For instance, a separate clause in Uber’s 2013 and 2014 driver agreements stated that the state and federal courts in San Francisco had exclusive jurisdiction over any disputes, actions, or claims arising out of the Agreement.  While Uber argued that the forum selection clause reserving jurisdiction in San Francisco courts was for any disputes found not subject to arbitration, Judge Chen did not buy into that argument.  He felt the clauses conflicted, and since the courts would have to apply rules of construction to resolve the ambiguity created by the competing clauses, that meant that the delegation clause was not clear and unmistakable, and therefore, was unenforceable.

The arbitration provision in Uber’s 2013 and 2014 Agreements also addressed responsibility for payment of the arbitrator’s fees.  It provided that if applicable law did not require Uber to pay for all of the costs and fees of arbitration, then the costs would be apportioned between the parties as required by law.  Judge Chen found that because the delegation clause would force drivers to pay exorbitant fees just to arbitrate whether or not their substantive disputes even belonged before the arbitrator in the first place, when drivers would not have to pay a court to make that determination, such a clause deprived drivers of any forum for their claims.

The arbitration provision contained three additional unfavorable terms which Judge Chen found were not sufficiently highlighted for the drivers’ attention.  For one, the confidentiality clause precluded the parties from disclosing the existence, contents, or results of any arbitration.  For another, the intellectual property carve-out clause excluded intellectual property disputes from arbitration – something the Court found favored Uber.  Finally, the unilateral modification clause permitted Uber to unilaterally modify the terms of the agreement without notice to the drivers.  As a result of all of the foregoing issues, the Court found the agreements to arbitrate were unconscionable.  Thus, Judge Chen refused to enforce them.

Can an enforceable arbitration agreement even be written? 

Arbitration agreements are evaluated on a case-by-case basis.  While many are still disfavored, as I mentioned earlier, they are more likely to be upheld if they are not unconscionable.  The procedural component of the unconscionability analysis usually deals with the formation of the agreement itself.  This includes the characteristics of the parties (e.g., age, literacy, sophistication), the manner and circumstances under which the contract was executed, and whether terms of the agreement are hidden or complex, among other things.  The substantive component looks at the unfairness of the agreement.  Judge Chen, acknowledging that the issue wasn’t fully settled, nevertheless evaluated the arbitration provision through the lens of an employer/employee relationship.  Let me provide some tips that make arbitration agreements more likely to be upheld by courts in the employment context.

  • Keep your agreement to arbitrate in a separate document requiring a separate acknowledgement.

  • While the agreement may cover all workplace disputes between the parties, do not preclude employees from filing charges with state or federal administrative agencies, like the EEOC.

  • If you reserve the right to modify or discontinue the arbitration clause, include a requirement that notice will be given to employees and that the modification or rescission will be applied prospectively.

  • Since cost is a big issue for courts reviewing these agreements, make sure the employee will only be required to pay what the arbitrator finds is reasonable should the employee lose, or make sure the costs to pursue arbitration are not more costly than those to bring a lawsuit.

  • The remedies available in arbitration should be similar to those available in court.

  • Avoid delegation clauses.

As always, there is no substitute for consulting with an attorney when attempting to draft one of these agreements.

ARTICLE BY Vanessa L. Goddard of Steptoe & Johnson PLLC
© Steptoe & Johnson PLLC. All Rights Reserved.

Are they Worth Price of Paper They’re Printed On? – Ubersization of Arbitration Clauses

Arbitration has long been treated as an inferior method of resolving disputes, despite pronouncements to the contrary from the U.S. Supreme Court. However, arbitration does serve a purpose. The process is less formalized, so it moves much faster than the court system. That means less disruption to business. It’s also less expensive than bringing a civil action, making it easier for individuals to assert their rights or air their grievances. For these reasons and more, many businesses have incorporated arbitration provisions into their contracts and handbooks. The Federal Arbitration Act was enacted in 1925, yet these types of contractual agreements to arbitrate still get shot down in certain courts and by certain administrative authorities.more

Drivers v. Uber – The Arbitration Dispute

In Uber’s California litigation, Judge Chen has examined various aspects of the arbitration provisions contained in the various versions of Uber’s agreements with its drivers.  The 2013 Agreement and the 2014 Agreement shared several key features:

(1) all disputes not exempted from the scope of arbitration were subject to resolution by final and binding arbitration;

(2) arbitration could proceed only on an individual basis, not by class;

(3) the delegation clause in the provision stated that “disputes arising out of or relating to the interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision” shall be decided by the arbitrator; and,

(4) an opt-out clause allowed drivers to avoid the arbitration clause.

In separate litigation, the Court had Uber revise the opt-out provision to make it more conspicuous and less onerous on the drivers.  Because the 2013 Agreement contained the original opt-out provision, it did not stand a chance of being found enforceable.  In later 2014 and 2015 Agreements,  Uber included the provision in boldface and ALL CAPS with text larger than the provisions around it.  Language also was added to explain the significance of arbitration and the right to opt-out.  Additionally, to exercise that right now, a driver need only send an email to Uber stating his/her name and the desire to opt-out (although he/she could send a letter by regular mail, overnight delivery, or hand-delivery, too).  As a result, when the Court certified a class on September 1, 2015, those drivers who failed to opt-out of the provision were excluded from the class.  However, in December, the Court found the arbitration agreements were unenforceable on California public policy grounds, irrespective of the opt-out provision, thus dramatically increasing the size of the class.

Meanwhile, delegation clauses, like the one set forth under (3) above, seem to cause consternation in courts across the nation.  Even the U.S. Supreme Court has recognized that courts are the typical adjudicators of whether the parties have agreed to arbitrate in the first instance.  Because a delegation clause puts this determination in the hands of the arbitrator instead, it must be clear and unmistakable.  In Uber’s case, the clause was clear, but it was made ambiguous because it conflicted with other clauses contained in the Agreements.  For instance, a separate clause in Uber’s 2013 and 2014 driver agreements stated that the state and federal courts in San Francisco had exclusive jurisdiction over any disputes, actions, or claims arising out of the Agreement.  While Uber argued that the forum selection clause reserving jurisdiction in San Francisco courts was for any disputes found not subject to arbitration, Judge Chen did not buy into that argument.  He felt the clauses conflicted, and since the courts would have to apply rules of construction to resolve the ambiguity created by the competing clauses, that meant that the delegation clause was not clear and unmistakable, and therefore, was unenforceable.

The arbitration provision in Uber’s 2013 and 2014 Agreements also addressed responsibility for payment of the arbitrator’s fees.  It provided that if applicable law did not require Uber to pay for all of the costs and fees of arbitration, then the costs would be apportioned between the parties as required by law.  Judge Chen found that because the delegation clause would force drivers to pay exorbitant fees just to arbitrate whether or not their substantive disputes even belonged before the arbitrator in the first place, when drivers would not have to pay a court to make that determination, such a clause deprived drivers of any forum for their claims.

The arbitration provision contained three additional unfavorable terms which Judge Chen found were not sufficiently highlighted for the drivers’ attention.  For one, the confidentiality clause precluded the parties from disclosing the existence, contents, or results of any arbitration.  For another, the intellectual property carve-out clause excluded intellectual property disputes from arbitration – something the Court found favored Uber.  Finally, the unilateral modification clause permitted Uber to unilaterally modify the terms of the agreement without notice to the drivers.  As a result of all of the foregoing issues, the Court found the agreements to arbitrate were unconscionable.  Thus, Judge Chen refused to enforce them.

Can an enforceable arbitration agreement even be written? 

Arbitration agreements are evaluated on a case-by-case basis.  While many are still disfavored, as I mentioned earlier, they are more likely to be upheld if they are not unconscionable.  The procedural component of the unconscionability analysis usually deals with the formation of the agreement itself.  This includes the characteristics of the parties (e.g., age, literacy, sophistication), the manner and circumstances under which the contract was executed, and whether terms of the agreement are hidden or complex, among other things.  The substantive component looks at the unfairness of the agreement.  Judge Chen, acknowledging that the issue wasn’t fully settled, nevertheless evaluated the arbitration provision through the lens of an employer/employee relationship.  Let me provide some tips that make arbitration agreements more likely to be upheld by courts in the employment context.

  • Keep your agreement to arbitrate in a separate document requiring a separate acknowledgement.

  • While the agreement may cover all workplace disputes between the parties, do not preclude employees from filing charges with state or federal administrative agencies, like the EEOC.

  • If you reserve the right to modify or discontinue the arbitration clause, include a requirement that notice will be given to employees and that the modification or rescission will be applied prospectively.

  • Since cost is a big issue for courts reviewing these agreements, make sure the employee will only be required to pay what the arbitrator finds is reasonable should the employee lose, or make sure the costs to pursue arbitration are not more costly than those to bring a lawsuit.

  • The remedies available in arbitration should be similar to those available in court.

  • Avoid delegation clauses.

As always, there is no substitute for consulting with an attorney when attempting to draft one of these agreements.

ARTICLE BY Vanessa L. Goddard of Steptoe & Johnson PLLC
© Steptoe & Johnson PLLC. All Rights Reserved.

Supreme Court Rules Public Sector Union Agency Fees Still Alive

The U.S. Supreme Court was equally divided 4-to-4 on a case that asked the Justices whether to overturn long-established law that allows a public sector union to charge an agency or service fee to those employees who choose not to join the union. With the Court equally split, the lower court’s decision is automatically affirmed, and public sector unions can continue to charge agency fees to employees who do not join the union.

Overturning Abood Appeared A Real Possibility

In the 1977 Abood v. Detroit Board of Education decision, the Supreme Court ruled that unions could charge an agency fee to public employees who chose not to join the union to cover the union’s costs to negotiate a contract that covers all the public employees. For over thirty years, that has been settled law. In 2014, however, the Court suggested it might be willing to overturn Abood, questioning its analysis on several grounds, including whether a mandatory agency fee violates a non-union member’s First Amendment right to free speech.

That apparent willingness to overturn Abood set up the First Amendment challenge to public union agency fees in this term’s case of Friedrichs v. California Teachers Association. At the oral argument in Friedrichs in January, the Court’s more conservative Justices appeared ready to overrule Abood. Even the four more liberal Justices appeared to concede that the First Amendment argument may be tough to uphold but instead focused on the importance of not overturning prior rulings unless there is a compelling reason to do so. The long-standing Abood precedent appeared in jeopardy.

Justice Scalia’s Death Creates Stalemate 

Justice Antonin Scalia’s unexpected death in February left the Court at a 4-to-4 stalemate in Friedrichs. With the even split, the Ninth Circuit’s ruling applying Abood stands.

Opponents of unions and the Abood decision will have to wait for another case to work its way through the judicial system to raise the issue for consideration by a future Court. Of course, depending on who fills Justice Scalia’s vacancy, the majority of Justices may no longer have an appetite to reconsider Abood. We’ll all have to wait and see. In the meantime, public sector unions may continue to charge agency fees to those employees not paying union dues.

Article By Jason S. Ritchie of  Holland & Hart LLP

Copyright Holland & Hart LLP 1995-2016.

California Employers: New Poster to be Posted April 1, 2016

Did you recently update your workplace posters? Time to do it again.

In California, all employers have obligations to satisfy workplace posting, such as posting information related to wages, hours and working conditions. The workplace posters must be placed in an area frequented by employees where these posters may be easily read during the workday.

As a result of new amended regulations pertaining to the California Fair Employment and Housing Act (“FEHA”) going into effect on April 1, 2016, certain covered employers must post a new poster on April 1, 2016. Employers with 5 or more employees (full-time or part-time) are covered by the FEHA and must post a specific notice, which replaces Pregnancy Disability Leave (“PDL”) Notice A. This new poster, titled “Your Rights and Obligations as a Pregnant Employee,” provides clarifications of the PDL, including, but not limited to, the following:

  • Eligible employees are entitled up to four months of leave per pregnancy, and not per year;

  • The four months means the working days the employee would normally work in one-third of a year or 17 1/3 weeks; and

  • PDL does not need to be taken all at once, but can be taken on an as-needed basis as required by the employee’s health care provider.

For a copy of this poster, click here.

Under the California Code of Regulations, “[a]ny FEHA-covered employer whose work force at any facility or establishment is comprised of 10% or more persons whose spoken language is not English shall translate the notice into every language that is spoken by at least 10 percent of the workforce.”  The Spanish version of the foregoing notice should be available soon here.

Any time employers are required to update their posters and/or new (or amended) regulations are issued, employers should take the opportunity to ensure their workplace posters and their employee handbooks and policies are up to date and compliant.

Article By Pascal Benyamini of Drinker Biddle & Reath LLP

©2016 Drinker Biddle & Reath LLP. All Rights Reserved

U.S. Department of Labor Issues Final Rule Greatly Expanding Scope of Reportable “Persuader” Activities

DOLOn March 23, 2016, the U.S. Department of Labor (DOL) issued a final rule, first proposed in June 2011, requiring employers and their labor relations consultants, including law firms, to report to DOL any agreements pursuant to which the consultant undertakes activities with “an object directly or indirectly to persuade employees concerning their rights to organize and bargain collectively.” Reports are to be filed electronically and are subject to immediate public access. Failure to report is subject to criminal sanctions.

The new rule reverses a decades-old DOL interpretation of the “advice” exception to reporting requirements. Previously, if the agreement between the employer and consultant involved nothing more than the consultant providing the employer with materials or advice that the employer had the right to accept or reject, so long as the consultant had no direct contact with employees, no report was required.

The new rule requires an employer to report on Form LM-10 and consultants to report on Form LM-20 information relating to the scope of the agreement and fees paid for the provision of both direct and indirect persuader materials or activities.

The new rule narrows the “advice” exception to oral or written recommendations from the consultant regarding a decision or course of conduct by the employer including, for example, counseling a business about its plans to undertake a particular course of action, legal vulnerabilities and how they may be minimized, identification of unsettled areas of the law and representation of the employer in disputes or negotiations that may arise.

The greatly expanded definition of reportable persuader activities, provided the object is to directly or indirectly persuade employees concerning their rights to organize and bargain collectively, includes, among many other activities:

  • Planning, directing or coordinating activities undertaken by supervisors or other employer representatives with employees.

  • Providing persuader materials or communications to the employer in oral, electronic or written form for dissemination or distribution to employees, including drafting and revising of such materials. (The sale, rental or other use of “off the shelf” persuader materials not created for the particular employer is excluded, unless the consultant assists the employer in selecting materials).

  • Conducting a seminar for supervisors or other employer representatives if the seminar includes development of anti-union tactics and strategies.

  • Developing or implementing personnel policies or actions which have a direct or indirect object of persuading employees concerning their rights to organize and bargain collectively.

The rule is applicable to agreements and payments made on or after July 1, 2016. Legal challenges and an attempt to block enforcement of the new persuader rules are a certainty—the outcome is not.

Article By Thomas E. Obenberger of Michael Best & Friedrich LLP

© MICHAEL BEST & FRIEDRICH LLP

Busted [Bracket]: Facebook Posts From Employee’s Vacation Undermine FMLA Claims

Ah, the tell-tale signs of March are here.  The winter is starting to dissipate in the northern climes, we’ve set the clocks forward, and Syracuse is bound for another Final Four run.  Unfortunately, most teams won’t be so lucky and many coaches will soon find themselves on a beach.  And why not?  After a long, hard-fought season that fell just a bit short, might as well take a warm-weather vacation – go for a quick swim, maybe hit the amusement park, and take a few pictures of all the fun in the sun and post them to Facebook.  Sounds like a marvelous idea for many NCAA coaches, but not so much for employees out on FMLA leave.  The plaintiff in Jones v. Gulf Coast Health Care of Delaware, a recent case out of a Florida federal court, learned this the hard way.

Background

Rodney Jones, an employee of Accentia Health, took 12 weeks of FMLA leave for shoulder surgery, but was unable to provide a “fitness for duty” certification because, his doctor said, he needed additional therapy on his shoulder.  Accentia permitted him to take an additional month of non-FMLA leave.  Towards the end of his FMLA leave and during his non-FMLA leave, Jones took trips to Busch Gardens in Florida and to St. Martin.  Jones posted several pictures of his excursions to Facebook – including, for example, pictures of him swimming in the ocean (this, of course, during the time in which he was supposed to be recovering from shoulder surgery).

Accentia discovered the photos Jones posted to Facebook and provided him with an opportunity to explain the pictures.  When he could not do so, Accentia terminated his employment.  Jones then sued Accentia, claiming it interfered with his exercise of FMLA rights and retaliated against him for taking leave under the FMLA.

Termination Not Illegal

The court sided with Accentia.  First, Jones’ interference claim failed because Accentia provided him with the required 12 week leave and did not unlawfully interfere with his right to return to work thereafter.  Accentia had a uniform policy and practice of requiring each employee to provide a “fitness for duty” certification before returning from FMLA leave.  When Jones failed to provide such certification at the end of his FMLA leave, he forfeited his right to return under the FMLA.

Second, Jones’ retaliation claim failed because he failed to show Accentia terminated his employment because he requested or took FMLA leave.  Rather, Accentia terminated his employment for his well-documented conduct during his FMLA leave and non-FMLA leave.

Takeaways

This case provides several important lessons for employers.

  1. It is important to provide employees with an opportunity to explain conduct that appears to be an abuse of their FMLA leave entitlement. Employers who defend FMLA retaliation cases based on their “honest belief” that employees were misusing FMLA are much more likely to succeed if they conduct a thorough investigation into the employee’s conduct and give the employee an opportunity to explain the conduct.

  2. Ensure that any “fitness for duty” certification requirement applies uniformly to all similarly-situated employees (e., same job, same serious health condition) who take FMLA leave. The court in this case found that Jones’ interference claim failed, in part, because Accentia’s “fitness for duty” certification requirement applied to all employees similarly-situated to Jones.  Had it enforced this policy on an ad hoc basis, the outcome may have been different.

Article By Daniel R. Long of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.