Tag: employers

Lawrence of Arabia Makes Surprise Contribution to UK Holiday Pay Debate

There is a line in, I think, Lawrence of Arabia where a terrified young soldier trapped under fire with a small group of his colleagues asks Peter O’Toole as Lawrence what they  are going to do.  “Nothing”, drawls O’Toole languidly, “After all, it’s generally best”.

And so by a tenuous little link to the question of amending your holiday pay calculations to reflect the new jurisprudence around including an allowance for overtime and/or commission.  Have you been sitting in your office wondering why no one seems able to tell you exactly what you need to do?  Have you been approached for a deal by your union on the basis that everyone else has sorted it out and only your company still has its head over the parapet?

You are not as alone as you may feel.  A survey of over 1,000 companies of a wide variety of sizes, sectors and employee representation structures provides the answers and a number of interesting statistics:-

  • Of all respondents, a full 73% have yet to take any steps to amend their holiday pay calculations. Those union claims may perhaps be taken with a pinch of salt.

  • Of the 27% who have changed their holiday pay arrangements, only a small majority (less than 60%) have unionised workforces.

  • Where changes to holiday pay include use of a reference period, the period invariably picked has been twelve weeks. That is even though that period has yet to be enshrined in law and even though those responses came from sectors as diverse as construction, aviation, retail and banking.  Employee numbers in those businesses ranged from less than 100 to over 45,000.  It therefore appears that for all the uncertainties and injustices both ways which such a reference period can generate (and despite the enormous spread of overtime and commission schemes in use over that population) twelve weeks will likely be the default position for voluntary holiday pay agreements.

  • Where respondents have reached agreements with their workforces about alterations to holiday pay calculations, these have all been forward-looking. None of respondents refer to any accommodation being reached in relation to any notional arrears.

  • The principal factors leading to changes in those 27% of employers were (i) awareness of the case law (i.e. the perceived inevitability of having to do something at some stage) followed by (ii) union/employee pressure (though of the 73% who had made no change, only one admitted to receipt of a Tribunal claim), and (iii) brand/reputational factors.

  • Where changes have been made, half had applied them to the full UK 5.6 week holiday entitlement. About a quarter of respondents had limited the changes to the Working Time Directive four week minimum and a further quarter did not specify which.

  • Of those cases where changes had not been made, nearly 85% of employers had also taken no steps to amend their commission/overtime structures to minimise the scope for employee claims.

So in other words, whether or not it is generally best, doing nothing does seem thus far to be the principal employer response to the holiday pay question.  There are good objective reasons to support such a stance at this point, including in particular the absence of Government guidance, the uncertain direction (in matters of detail, at any rate) of the case law, and the relatively limited number of unions willing to undertake the colossal logistical exercise of collective Tribunal claims.  There is no reason to expect much change in the first two factors in the near future, but whether that last point will remain valid if employer indifference persists at such a high rate is an open question.

Article By David Whincup of Squire Patton Boggs (US) LLP

© Copyright 2015 Squire Patton Boggs (US) LLP

EEOC Defends “Mark of The Beast” Ruling – Religious Beliefs Don’t Have To Make Sense To Be Protected

EEOCSealIn August 2015, the EEOC prevailed in a religious discrimination lawsuit against Consol Energy and was awarded in excess of $500,000.00.  Former Consol mine worker Beverly Butcher, who had been with the company for over 35 years, refused to use Consol’s new biometric hand scanners that were installed to track employee time and attendance.  He explained that he believed that scanners would leave the “mark of the beast” and would be a sign for the antichrist.  Consol required Butcher to use the scanners and refused to consider alternate means of tracking Butcher’s time, and Butcher believed he had no choice other than to retire.

Consol recently moved for judgment as a matter of law or for a new trial, arguing that Butcher had admitted that he did not actually believe the scanner would give him the mark of the beast (or any mark at all), but instead believed that future versions of the device would be capable of doing so. Butcher further admitted that his pastor did not agree with him that the hand scanners had any relationship to the mark of the beast.

The EEOC has responded to Consol’s motion and stated that although Butcher admitted that the current version hand scanner left no mark, he testified that these scanners “are being used as part of a system of identification being put into place that will be used to serve the antichrist as foretold in the New Testament Book of Revelation and which creates an identifier for followers of the antichrist known as ‘The Mark of the Beast,’” and that “[t]he fact that a believer draws a line at the first step in what he sincerely believes to be an immoral process rather than the last step of that process does not alter the employer’s accommodation duty.”

The EEOC responded to Consol’s efforts to poke holes in the logic of Butcher’s beliefs, stating that it is unconstitutional for Consol to demand theological accuracy or consistency.  “[A]s EEOC has previously pointed out, and as the Court instructed the jury, religious beliefs need not be seen as rational, doctrinally consistent, or accurate in order to be protected under Title VII.”

The takeaway of this is that if an employee seeks an accommodation based on religion, an employer should not subjectively evaluate the logic or wisdom of the employee’s beliefs, but instead should only consider whether the employee sincerely believes.

The case is EEOC v. Consol Energy, Inc., 1:13-cv-00215 in the United States District Court for the Northern District of West Virginia.

Article By Douglas M. Oldham of Barnes & Thornburg LLP

© 2015 BARNES & THORNBURG LLP

Medical Cannabis in Illinois: What Employers Need to Know

THE MEDICAL CANNABIS PILOT PROGRAM IN ILLINOIS

Is Illinois allowing recreational cannabis use, as is currently the case in Colorado and Washington?
No. The Illinois medical cannabis program is one of the most restrictive regulatory programs in the country, limiting individual usage and industry operations much more than a recreational cannabis state such as Colorado. The Illinois medical cannabis program is a four-year experiment. Illinois government leaders will evaluate a variety of outcomes before deciding whether to restrict, expand or modify the approved uses of cannabis.

How many patients in Illinois will be participating in the pilot program?
Currently, just over 3,000 patients have been approved by the Illinois Department of Public Health to participate in the program. Thousands more are expected to register once the program begins full operations.

How will I know if an employee is approved to participate as a patient in the pilot program?
Employees approved to participate in the program will be issued a State of Illinois identification card verifying registration with the Illinois Department of Public Health.

EMPLOYER CONCERNS

Are employers required to allow patients to use medical cannabis in the workplace?
No. The Illinois medical cannabis law does not require employers to permit employee use of cannabis in the workplace, even when the employee is registered as a patient in the pilot program.

Is permission to use medical cannabis required as a “reasonable accommodation” under the Americans with Disabilities Act?
Although some states have specific language in their laws that answer this question, Illinois law does not appear to include the use of medical cannabis as a required reasonable accommodation under the ADA. Although the underlying debilitating medical condition may qualify an individual for protections under the ADA, whether an employer decides to allow an employee to use medical cannabis as a reasonable accommodation under the ADA will be an individualized determination for the employer to undertake.

Am I required to tolerate medical cannabis use by an employee who works in a safety-sensitive position (i.e., a position in which the employee’s cannabis use could increase the risk of harm to the employee or others)?
No. An employer can enforce a zero-tolerance policy that disallows cannabis use by any employee, such as a physician, who works in a safety-sensitive position.

EMPLOYEE AND CANDIDATE DRUG TESTING

Can I require a medical cannabis patient who is in my employ or a candidate who I am considering hiring to undergo drug testing? What can or should I do if the employee or candidate tests positive?
In Illinois, an employer has discretion to require job candidates (as part of a conditional job offer) and employees to undergo drug testing, as long as the drug testing is conducted in a non-discriminatory manner. The employer also has the option of taking disciplinary action against a current employee who tests positive for a controlled substance (including cannabis), withdrawing an offer of employment issued to a job candidate who tests positive, or taking no action. However, the employer should be consistent in its policies and practices.

If I have contracts with the federal government, am I required to conduct drug tests for medical cannabis for job candidates and/or employees? If so, what am I required or permitted to do if a candidate or employee tests positive for cannabis use?
Some federal government contractors are required to conduct tests for drugs, including cannabis use, for employees and job candidates who are or will be performing certain safety-sensitive or security duties (e.g., owners of nuclear power plants, gas or oil pipelines, airlines and railroads). Action to be taken as a result of a positive drug test will depend on the pertinent circumstances. To ensure compliance with such requirements, employers should consult with an experienced employment law attorney for additional guidance.

Should I review and modify my personnel policies pertaining to drug use and testing? If so, what types of issues should I consider?
Yes, now is an ideal time to review personnel policies involving drug testing and protocols for responding to employee drug use and abuse. Management should carefully consider the company’s approach to drug testing of employees and develop a consistent and transparent plan for responding to drug test results.

Article By Bob Morgan of Much Shelist, P.C.

© 2015 Much Shelist, P.C.

New Texas Open Carry Law Has Significant Implications for Employers

On June 13, 2015, Texas Governor Greg Abbott signed into law HB 910, the Texas Open Carry Bill for Concealed Handgun Holders (“Open Carry Law”). The Open Carry Law becomes effective on January 1, 2016. The Open Carry Law expands the scope of a concealed handgun license and authorizes an individual carrying such a license to carry a handgun in plain view in a public place as long as the handgun is carried in a shoulder or belt holster.

The Open Carry Law also adds Penal Code Section 30.07 to establish a new offense for trespassing with an openly carried handgun if a license holder enters another’s property without effective consent and: (a) had notice that entry was forbidden, or (b) received notice that remaining on the property was forbidden and failed to depart. A license holder receives notice if an owner or someone with apparent authority to act on the owner’s behalf provides notice by verbal or written communication. However, the compliance requirements for a sufficient “written communication” are strict and detailed. The “written communication” may be a card, document or sign posted on the owner’s premises. Such a sign would be required to: (a) include Penal Code Section 30.07 language in English and Spanish, (b) have contrasting colors with block letters at least one inch in height, and (c) be conspicuously displayed and clearly visible at each entrance to the property.

The Open Carry Law additionally permits individuals with concealed handgun licenses to carry handguns in plain view in a motor vehicle or watercraft owned by the person as long as the gun is carried in a shoulder or belt holster.

Implications for Texas Employers

This new legislation raises several implications for Texas employers, as it expands individuals’ rights from parking lots to company property. Currently, employers may not prohibit employees from storing lawfully possessed firearms and ammunition in vehicles parked in the employer’s parking lot (or garage or other lot provided by the employer). Specifically, the 2011 Texas concealed handgun law permits the possessor of a firearm or ammunition to store those items in a locked, privately owned car, as long as the possessor holds a concealed handgun license.

The Open Carry Law, while permitting concealed handgun licensees to openly carry a holstered firearm, also allows public and private employers to prohibit licensees from carrying their firearms onto the “premises” of the business. Under the definition set forth in the Texas Penal Code, “premises” includes “the building or a portion of the building.” The term, however, “does not include any public or private driveway, street, sidewalk or walkway, parking lot, parking garage, or other parking area.”

One significant omission from the Open Carry Law is that it does not grant employers immunity from civil actions resulting from an occurrence involving the employee and his or her openly carried firearm. The 2011 Texas concealed handgun law expressly included a provision providing employers with such immunity, except in cases of gross negligence. That immunity, however, applied only to firearms and ammunition stored or transported in an employee’s vehicle and does not address an occurrence involving an employee who is openly carrying a firearm.

The Open Carry Law, similar to the 2011 legislation, does not create a private cause of action for employees against their employer if the employee contends that his or her right to openly carry has been infringed. Thus, it seems that an employee’s only remedy would be to report the employer’s alleged violation (e.g., a policy banning firearms from being openly carried) to the Attorney General’s office.

In light of this new legislation, employers must decide: (1) whether to allow employees with concealed handgun licenses to openly carry handguns on company premises, and (2) whether to permit visitors, vendors, guests and other third parties to openly carry handguns on company premises. Implementing and enforcing these decisions will require considerable planning, including a determination as to whether any existing company policies need to be updated to comply with the new law.

Article By Micala R. Bernardo & Marc D. Katz of Andrews Kurth

© 2015 Andrews Kurth LLP

HIPAA: Disclosing Exam Results to Employers

Physicians and other providers are often paid by employers to conduct drug tests, fitness-for-duty or return-to-work exams, or employment physicals for employees. In such circumstances, the physician may mistakenly assume that they may disclose the test and exam results to the employer without the patient’s authorization, but that is not correct.HIPAA

As with any other protected health information, physicians and other providers generally need the patient’s written, HIPAA-compliant authorization to disclose exam results to the employer. (45 CFR 164.508(a); see also 65 FR 82592 and 82640). However, unlike other treatment situations, a provider may condition the performance of an employee physical or test on the patient’s provision of an authorization, i.e., the provider may refuse to perform the exam unless the patient executes a valid authorization. (45 CFR 164.508(b)(4)(iii); 65 FR 82516 and 82658). In addition, the employer may condition the employee’s continued employment on the provision of the exam results (at least under HIPAA), thereby creating an incentive for the employee to execute the authorization. (65 FR 82592 and 82640). The foregoing rules also apply when the health care provider is the employer, e.g., when a hospital employee receives treatment or tests at the hospital. In those situations, the hospital/employer generally may not access or use the patient/employee’s health information for employment-related purposes without the patient’s written authorization. (67 FR 53191-92).

An employee who receives an unfavorable test or exam result may attempt to block disclosure by revoking their authorization. Although patients are generally entitled to revoke their authorization by submitting a written revocation, HIPAA contains an exception that limits revocation if and to the extent that the provider has taken action in reliance on the authorization. (45 CFR 164.508(b)(5)). That exception should apply when the provider has conditioned and provided the test or exam in reliance on the patient’s authorization.

There are very limited exceptions to the authorization requirement. As in other situations, a provider may disclose protected health information to an appropriate entity if necessary to prevent or lessen a serious and imminent threat to the health or safety of a person or the public (45 CFR 164.512(j)), or if the disclosure is otherwise required by law. (Id. at 164.512(a)). HIPAA contains a specific exception that allows disclosures to employers if the exam was performed as part of a medical surveillance of the workplace and the employer needs the information to report work-related injuries as required by OSHA, MSHA, or similar state laws. (Id. at 164.512(b)(v)). Finally, HIPAA allows providers to disclose protected health information as authorized by and to the extent necessary to comply with workers compensation laws. (Id. at 164.512(l)).

The bottom line: if you are a physician or other provider who conducts employment physicals, tests, or exams, be sure you obtain the patient’s written, HIPAA-compliant authorization before conducting the exam and/or disclosing test or exam results to the employer.

Article By Kim C. Stanger, Pia Dean & William W. Mercer of Holland & Hart LLP

Copyright Holland & Hart LLP 1995-2015.

Employers Who Permit After-Hours Work Should Exercise Caution in Light of an Anticipated Increase in Nonexempt Workers

Following the directive issued in March 2014 by President Obama, the U.S. Department of Labor published a proposed new rule in the Federal Register and is accepting comments through September 4, 2015. The new rule would extend overtime protections to nearly five million workers by raising the minimum salary threshold to $50,440 per year for employees to qualify for “white collar” exemptions in 2016, with automatic future adjustments. According to a 2013 report published by the Economic Policy Institute, in 2013 only 11 percent of salaried employees in the United States qualied for overtime pay.

If enacted, the Department of Labor’s proposed changes would raise the overtime salary ceiling for qualied employees to sweep millions of Americans into the overtime system.

Continue Reading.

Article By Stephen P. Brown & Tara A. Sheldon of Wilson Elser Moskowitz Edelman & Dicker LLP

© 2015 Wilson Elser

President Obama Drafts Executive Order That Would Require All Federal Government Contractors and Their Subcontractors to Provide Paid Sick Leave

President Obama recently drafted an executive order that would require companies that contract with the federal government to provide paid sick leave to their employees.  Under the draft order, federal contractors and their subcontractors would be required to provide at least 56 hours (7 days) of paid sick leave per year to employees.  medical, doctor, healthcare, sickness, medicine, paid sick leaveEmployees would be able to use such leave for the following reasons:

1. For their own care;

2. To care for a family member, including a child, parent, spouse, domestic partner or other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship; and

3. To seek medical attention, obtain counseling, seek relocation assistance from a victim services organization or to take legal action if the need for such services or leave relates to domestic violence, sexual assault or stalking.

In addition, paid sick time accrued by a former employee would need to be reinstated to the employee if he/she is rehired within 12 months after separating employment.

Under the draft order, the Secretary of the Department of Labor would be required to publish detailed regulations implementing the order by September 30, 2016.  The order would generally apply to contracts solicited or entered into on or after January 2017.

A copy of the proposed order can be found here (New York Timessubscription may be required).

ARTICLE BY Rufino Gaytán & Deborah Rehorst of Godfrey & Kahn S.C.
Copyright © 2015 Godfrey & Kahn S.C.

Death Threats against Co-Workers Defeat Employee Disability Discrimination Claim, Federal Court Rules

A depressed employee who was fired for threatening to kill his co-workers was not a qualified individual entitled to protection under the Americans with Disabilities Act, as the employee could not perform essential job functions, with or without an accommodation, a federal appeals court in San Francisco has ruled, affirming judgment in favor of the employer. Mayo v. PCC Structurals, Inc., No. 13-35643 (9th Cir. July 28, 2015). The Ninth Circuit has jurisdiction over Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

Background

Timothy Mayo was a welder for PCC Structurals, a manufacturer of specialized aircraft parts. Mayo was diagnosed with major depressive disorder in 1999, but medication and treatment enabled him to continue working without incident until 2010, when he began to feel he was being bullied by his supervisor. Mayo told three different co-workers that he wanted to kill the supervisor. He told one co-worker that he felt like bringing a shotgun to work and “blowing off” the heads of the supervisor and another manager. He told another co-worker that he wanted to “bring a gun down and start shooting people.” Mayo said he wanted to start shooting at 1:30 p.m., because by that time all of his supervisors would be at the worksite, thereby presenting him with a maximally target-rich environment.

Mayo’s co-workers reported the threats to the employer. When questioned, Mayo told an HR representative that he “couldn’t guarantee” he would not carry out the threats. PCC immediately suspended Mayo and called the police. The police took Mayo into custody for six days on the basis that he was an imminent threat to himself and others. After his release from police custody, Mayo spent two months on Family and Medical Leave Act and Oregon Family Leave Act leave. Mayo’s psychologist and a nurse practitioner cleared him to return to work and suggested that Mayo be assigned a different supervisor. Instead, PCC terminated Mayo’s employment.

Mayo brought an Americans with Disabilities Act case against PCC, arguing that his threats were the result of his diagnosed major depressive disorder and that PCC Structurals failed to accommodate him (by following the suggestion of his doctor that he be assigned a different supervisor).

The District Court granted summary judgment to the employer, holding that Mayo could not establish a prima facie case of disability discrimination. Mayo was unable to show he could perform the essential functions of his job with or without a reasonable accommodation and, therefore, he was not a “qualified individual” under the ADA.

Expressed Homicidal Ideation in Workplace Bars ADA Discrimination Claim

The Ninth Circuit affirmed the lower court decision. Its holding was straightforward: Mayo was not a “qualified individual” under the ADA because he could not perform the essential functions of his job:

An essential function of almost every job [including Mayo’s] is the ability to appropriately handle stress and interact with others.

The logic of our holding is that compliance with such fundamental standards is an “essential function” of almost every job.

Writing for the panel, Judge John B. Owens stated that threatening the lives of one’s co-workers “in chilling detail” on multiple occasions indicates that an employee cannot appropriately handle stress and interact with others. The Court also held that, even when the threatening comments can be traced back to a disability, such as major depressive disorder, the employee’s inability to handle stress and interact with others renders him unable to perform essential job functions and negates a claim under the ADA.

The Ninth Circuit’s decision brings it in line with several sister Circuits that have held employers cannot be forced to choose between accommodating a disability and creating an unsafe workplace for other employees. The Court said:

The [ADA] does not require an employer to retain a potentially violent employee. Such a request would place an employer on a razor’s edge — in jeopardy of violating the [ADA] if it fires such an employee, yet in jeopardy of being deemed negligent if it returned him and he hurts someone. The [ADA] protects only “qualified” employees, that is employees qualified to do the job for which they were hired; and threatening other employees disqualifies one.

While acknowledging prior cases holding that conduct resulting from a disability “is considered to be part of the disability,” the Ninth Circuit ruled that when it comes to overt threats to kill co-workers, employers have no obligation to “simply cross their fingers and hope that violent threats ring hollow …. [W]hile the ADA and Oregon disability law protect important individual rights, they do not require employers to play dice with the lives of their workforce.”

Addressing Mayo’s claim that PCC Structurals should have reasonably accommodated him by following his psychologist’s suggestion that he be assigned a different supervisor, the Ninth Circuit stated:

Giving Mayo a different supervisor would not have changed his inappropriate response to stress – it would have just removed one potential stressor and possibly added another name to the hit list.

Implications

The Court was faced with a person clearly disabled by major depression who manifested that disability through very specific threats of violence. While being sensitive to the realities of mental illness, the Court ultimately was forced to decide whether safety of the workplace must take primacy over the otherwise extant protections of the ADA for disabled employees. The Ninth Circuit came down on the side of workplace safety. Its ruling can be summarized as “Safety first. ADA second.”

The decision applies only to misconduct that takes the form of violence (or the expression of homicidal or violent ideation in the workplace). The Court did not hold that all forms of employee misconduct fall outside the ADA. Indeed, it emphasized that its holding was limited to “the extreme facts . . . of an employee who makes serious and credible threats of violence.” It stated that employees who are rude, gruff, unpleasant, or anti-social may have a “psychiatric disability” and, thus, be a “qualified individual” under the ADA. Where non-violent misconduct stems from a disability, it will continue to be deemed a part of the disability, requiring employers to attempt accommodation to mitigate future disability-driven misconduct.

ARTICLE BY Andrew L. Pepper of Jackson Lewis P.C.

Jackson Lewis P.C. © 2015

Delaware Adds to Growing Patchwork of Social Media Laws

On August 7, Delaware Governor Jack Markell signed a law to prohibit employers from interfering with the personal social media accounts of their prospective and current employees.  The new law, which also took effect on August 7, defines “personal social media” to encompass any account on a social networking site created and operated by a prospective or current employee exclusively for his or her personal use.  The term does not include accounts created or operated by an employer and that are operated by an employee as part of his or her employment.

Specifically, the new law prohibits an employer from requesting or requiring a prospective or current employee to:

  • disclose a username or password for the purpose of allowing the employer to access personal social media;

  • access personal social media in the presence of the employer;

  • use personal social media as a condition of employment;

  • divulge any personal social media (except as otherwise permitted by the new law);

  • add a person, including the employer, to the list of contacts associated with the prospective or current employee’s personal social media,

  • invite or accept an invitation from any person, including the employer, to join a group associated with the prospective or current employee’s personal social media; or

  • alter settings on the prospective or current employee’s personal social media that affect a third party’s ability to view the contents of the medium.

The new law also forbids an employer from taking adverse action against a prospective or current employee for failing to comply with any of these requests or demands.

Despite these broad prohibitions, nothing in the new law prevents an employer from:

  • exercising its right or obligation under its personnel policies, federal or state law, case law, or other rules or regulations to require or request that an employee divulge a username, password, or social media “reasonably believed to be relevant” to an investigation of alleged employee misconduct or violation of applicable laws and regulations (so long as the social media is used solely for purposes of that investigation or a related proceeding);

  • requiring or requesting an employee to disclose a username, password, or other accessing credentials for (i) an electronic communication device supplied by or paid for in whole or in part by the employer; or (ii) an account or service provided by the employer, obtained by virtue of the employee’s employment relationship, or used for the employer’s business purposes;

  • accessing, blocking, monitoring, or reviewing electronic data stored on an employer’s network or on an electronic communications device supplied by or paid for in whole or in part by the employer;

  • complying with a duty to screen prospective or current employees, or to monitor or retain employee communications, (i) under federal or state law or by a self-regulatory organization, as defined in the Securities and Exchange Act of 1934 (like FINRA); or (ii) in the course of a law enforcement employment application or officer conduct investigation performed by a law enforcement agency; or

  • accessing, using, or viewing information about a prospective or current employee otherwise available in the public domain.

The new Delaware law continues a growing trend across the country.  Twenty-one other states have similar laws restricting employer access to a prospective or current employee’s personal social media account, including Arkansas, California, Colorado, Connecticut, Illinois, Louisiana, Maryland, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Virginia, Washington, and Wisconsin.

ARTICLE BY Katharine H Parker & Daniel L. Saperstein of Proskauer Rose LLP

© 2015 Proskauer Rose LLP.

New Joint Employer Doctrine and Hybrid Test Increase Possible Liability Under Title VII in Fourth Circuit

Over the last several years, there has been quite a push to broaden who is considered an employee – as well as who is considered an employer – under relevant federal (and even state) laws.  For instance, the Department of Labor has stepped up its efforts in singling out employers who misclassify workers as independent contractors.  Their recent memo on this subject – which we wrote about here – is the most recent evidence of that.  The National Labor Relations Board has also been active in this general area, issuing complaints against McDonald’s arguing that a number of its franchisors have as much control over employees as the franchisees do, and therefore are just as legally responsible for ensuring compliance with certain employment laws.  These arguments have been advanced by more than just government agencies, however.  They have been made by private plaintiffs under anti-discrimination law, too.

In a recent Fourth Circuit opinion, Butler v. Drive Automotive Industries of America, Inc., No. 14-1348, 2015 WL 4269615 (4th Cir. 2015), the court found that two parties can be considered joint employers under Title VII.  In reaching that conclusion, the Fourth Circuit adopted a new employee-friendly “hybrid test” to determine whether a company qualifies as an employer.  Employers everywhere – but especially those in the Fourth Circuit, including in West Virginia – should pay particular attention to this decision because it increases potential liability for them.  This is especially true for employers who use contract or temporary employees through staffing agencies.  Let’s take a deeper look at the case.

In Butler, the Plaintiff, Brenda Butler, was hired by ResourceMFG, a temporary employment agency, to work at Drive Automotive in Piedmont, South Carolina.  Butler sued ResourceMFG and Drive Automotive alleging sexual harassment under Title VII of the Civil Rights Act of 1964.  She alleged that her supervisor made constant, inappropriate comments about her body.  Additionally, she alleged that after she reported an altercation in which Butler’s supervisor called her an inappropriate name and told her to go home, she was referred to ResourceMFG for termination.  Further, Butler alleged that her supervisor called before she was terminated and suggested that he could save her job if she performed sexual favors for him.  Soon thereafter, she was terminated by ResourceMFG.  The key issue in the case was not whether the temp agency, ResourceMFG, was Butler’s employer – that was undisputed – but was whether Drive Automotive also was considered her employer.

The District Court for the District of South Carolina, where the case was originally filed, dismissed Butler’s claims against Drive Automotive, finding that Drive Automotive was not Butler’s “employer” under Title VII because it did not “exercise sufficient control over Butler’s employment.”

On appeal, the Fourth Circuit formally adopted the joint employer doctrine for Title VII claims.  The Fourth Circuit stated that two parties can be considered joint employers and therefore both be liable under Title VII if they “share or co-determine those matters governing the essential terms and conditions of employment” over the same employees.  Additionally, the Fourth Circuit adopted a nine-factor “hybrid test” to determine who qualifies as an “employer” for Title VII.  The test is based on traditional common-law elements of control, as well as an “economic realities” test which has long been a factor used by the Department of Labor in issuing determinations in this area.  The nine factors are as follows:

(1) Authority to hire and fire the individual;

(2) Day-to-day supervision of the individual, including employee discipline;

(3) Whether the potential employer furnishes the equipment used and the place of work;

(4) Possession of and responsibility over the individual’s employment records, including payroll, insurance, and taxes;

(5) The length of time the individual has worked for the potential employer;

(6) Whether the potential employer provides the individual with formal or informal training;

(7) Whether the individual’s duties are similar to a regular employee’s duties;

(8) Whether the individual is assigned solely to the potential employer; and

(9) Whether the individual and potential employer intended to enter into an employment relationship.

According to the Fourth Circuit, the first three factors are most important.  However, the Court added that no one factor is determinative and courts can alter the test to fit specific industry contexts. In doing so, the Court said, the amount of control over the individual remains the principal guidepost in the analysis, with the first factor – the ability to hire and fire – being the most important to determine ultimate control.  In a footnote, the Court observed that the use of a form which disclaims an employment relationship will not defeat a finding of a joint employer relationship.

After setting out the new test, the Fourth Circuit concluded in Butler’s case that, while control remained the most important factor in the analysis, Drive Automotive was also Butler’s employer despite not having authority to hire, fire, discipline, or pay Butler.  In so concluding, the Fourth Circuit considered the aggregate circumstances, and found important the fact that Drive Automotive was responsible for determining Butler’s work schedule, training Butler, and supervising Butler’s work.

While these situations are always examined on a case-by-case basis, it’s hard to dispute that, in applying its new “hybrid test” and reaching the conclusion it did in Butler, the Fourth Circuit essentially created a very low threshold to qualify as an employer.  That, in turn, will make more entities – particularly in contracting and temporary relationships – more likely to be considered employers, including in discrimination claims under Title VII.

With another employee-friendly ruling from the Fourth Circuit court, businesses need to be especially vigilant about their employment practices in this area, which is why consulting competent counsel on the subject is becoming increasingly important.  At minimum, review your contracts and your policies to ensure that the practices you apply to your workers truly demonstrate and maintain the legal relationships which you wish to use.

ARTICLE BY Joseph U. Leonoro of Steptoe & Johnson PLLC

© Steptoe & Johnson PLLC. All Rights Reserved.