Tag: labor

Immigration and Compliance Briefing: Fall Travel & COVID-19 Policy Update

On October 25, 2021, the Biden Administration issued a Presidential Proclamation to lift the travel bans which currently restrict entry into the U.S. directly from specific geographic areas (for a full list of restricted countries, see our prior client alert here), to be effective November 8, 2021. Instead of banning entry from specific locations abroad, the U.S. will utilize vaccine status-based restrictions for incoming travelers entering the country as noncitizen nonimmigrants (i.e., temporary visa holders or visa-free travelers). Once the new rules go into effect, most travelers will be required to provide proof of being fully vaccinated for COVID-19 prior to boarding an airplane, regardless of recent travel history (“fully vaccinated” refers to individuals who received the final dose of the COVID-19 vaccine more than 14 days prior).

Currently, the list of acceptable vaccines approved/authorized by the U.S. Food and Drug Administration (FDA) and World Health Organization (WHO), are as follows:

  • Pfizer-BioNTech

  • Moderna

  • Johnson & Johnson

  • Oxford-AstraZeneca/Covishield

  • Sinopharm

  • Sinovac

  • Mixed doses comprising of any two authorized/approved vaccines

As additional vaccines receive authorization/approval by either the FDA or WHO, it is anticipated that they will be added to the list of acceptable vaccines. In addition, the U.S. Centers for Disease Control will implement contact-tracing protocols. Mask mandates for airlines and airports, as well as the pre-travel negative COVID-19 test requirements, will remain in place until at least mid-January.

Exceptions include, but are not limited to, the following types of noncitizen nonimmigrants:

  • Certain noncitizen nonimmigrants traveling in an official capacity (i.e., foreign government officials and their family, individuals entering pursuant to a NATO visa classification, or individuals traveling pursuant to the United Nations Headquarters Agreement)

  • Children under the age of eighteen (18) years

  • Individuals participating in COVID-19 clinical trials*

  • Individuals unable to receive the vaccine due to a medical contraindication, as determined by the CDC

  • Individuals unable to receive the vaccine due to unavailability in their country of residence who are seeking to enter the U.S. on a nonimmigrant visa except B-1/B-2

  • Members of the U.S. Armed Forces

  • Sea crew members

  • Individuals whose entry is in the national interest

  • Individuals granted exceptions for humanitarian or emergency reasons

*The CDC will determine the qualifying criteria for individuals seeking to enter under this exception.

In addition to the restrictions above, all unvaccinated travelers traveling to the U.S. must show proof of a negative COVID-19 test taken within one day of travel. This requirement includes unvaccinated U.S. citizens and Lawful Permanent Residents (“green card” holders).

Vaccinated U.S. citizens and Green Card holders must show proof of a negative COVID-19 test within three days of travel.

Finally, additional measures may be required for certain types of travelers, including self-quarantine and vaccination within sixty (60) days of entry.

This policy will remain in place for an initial period of sixty (60) days and may be renewed on a monthly basis after that.

U.S. Land Border Updates

The Department of Homeland Security (DHS) announced that it will lift travel restrictions for land and ferry border crossings from Canada and Mexico in two phases, beginning November 8, 2021. Instead of keeping the land borders closed to nonessential travel, the Biden administration will implement the same policy as for air travel. Beginning November 8, nonessential travel will be permitted for fully vaccinated individuals, as described above. Nonessential travel will continue to be permitted regardless of vaccination status. However, beginning in early January 2022, all individuals entering the U.S. via the land border or ferry will be required to be fully vaccinated. This decision will permit nonessential travel via the land border between Canada and Mexico for the first time since March 21, 2020.

Vaccine Requirement for Individuals Seeking Permanent Immigrant Status

Effective October 1, 2021, applicants for immigrant status (i.e., a “green card”) in the U.S. who are subject to submitting Form I-693, Report of Medical Examination and Vaccination Record must be fully vaccinated as described above against COVID-19, before a civil surgeon designated by the Immigration Service can complete and sign the Form I-693 medical exam.

Waivers may be granted in certain circumstances, including where the COVID-19 vaccine is:

  • Not age appropriate;

  • Contraindicated due to a medical condition;

  • Not routinely available where the civil surgeon practices; or

  • Limited in supply and would cause significant delay for the applicant to receive the vaccination.

    © 1998-2021 Wiggin and Dana LLP

For more articles on COVID-19 Immigration, visit the NLR Immigration section.

Why Employees at Religious Organizations May Not Be Protected Against Discrimination

In Demkovich v. St. Andrew the Apostle Parish, the Seventh Circuit recently held in a 2-1 decision that the ministerial exception does not preclude church ministerial employees from asserting hostile work environment claims.

Supreme Court Rulings Clarify Ministerial Exception in Employment Discrimination Cases

The decision in Demkovich was preceded by two significant Supreme Court cases that clarified the reach of the ministerial exception by explaining the test for determining which employees of a religious institution are considered ministers. In the 2012 case Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, in a unanimous decision, the Court recognized that the ministerial exception bars ministerial employees from bringing employment discrimination claims against their religious employers. The issue was whether a teacher in a religious school who taught secular subjects should be considered a minister. The Court held, based on several specific facts about the teacher’s duties and status, that she was in fact a minister in the church’s view and thus was barred from bringing her claim that she was fired because of her disability. The ministerial exception bars all types of employment discrimination claims brought by ministers alleging discrimination under Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act, at issue in Hosanna-Tabor. Although it appears to protect bad actors, the ministerial exception serves to ensure that the ecclesiastical authority to select and control who will minister to the faithful is not undermined by the state.

More recently, this past July, in a 7-2 decision in Our Lady of Guadalupe v. Morrissey-Berru, the Court held that the primary consideration in determining whether a claim was barred by the ministerial exception turned on the tasks the employee performed. Hence, in determining whether two parochial school teachers who taught fifth and sixth grade classes and claimed they were fired—in one instance because of her age and in the other because she had breast cancer—could assert an age discrimination or a disability claim, the court determined they could not assert such claims, because the tasks they performed were vital religious duties such that the ministerial exception would apply. Specifically, the Court held that both teachers educated their students in the Catholic faith and guided them to live according to that faith.

As explained in the Demkovich decision, these Supreme Court decisions analyzed termination decisions by the religious schools and held that courts could not allow ministerial employees to challenge such decisions regardless of the reasons for their terminations. Demkovich, on the other hand, would determine whether the ministerial exception should apply to bar hostile work environment cases that did not involve such tangible employment action.

Applying the Ministerial Exception in Hostile Work Environment Cases

In September 2012, Mr. Demkovich began working as the Music Director, Choir Director, and Organist for the Archdiocese of Chicago and St. Andrew Parish in Calumet City. His supervisor, Saint Andrews Pastor, Reverend Jacek Dada, often made derogatory comments about Mr. Demkovich’s being an openly homosexual man engaged to a same-sex partner. Mr. Dada called Mr. Demkovich a bitch and his nuptials a fag wedding. Mr. Dada, also aware that Mr. Demkovich suffered from diabetes and a metabolic syndrome that caused weight gain, made additional remarks about his weight—urging him to walk his dog to lose weight, complaining about the cost of keeping him on the parish’s health and dental insurance, and commenting that he needed to lose weight because Mr. Dada did not want to preach at Mr. Demkovich’s funeral. After enduring prolonged verbal abuse, Mr. Demkovich was finally terminated in September 2014 after marrying his same-sex partner.

Mr. Demkovich initiated a Title VII, ADA, and wrongful termination claim. The defendants, Saint Andrews Parish and the Archdiocese of Chicago, moved to dismiss arguing the suit was barred by the ministerial exception. The district court granted the defendant’s motion, holding all the claims were barred. Mr. Demkovich filed an amended complaint dropping his wrongful termination claim, but seeking damages for a hostile work environment caused by discriminatory remarks and insults based on his disability and sex. The district court dismissed his hostile work environment claims based on sex, sexual orientation, and marital status because even though the claims were not barred by the ministerial exception, their adjudication would lead to excessive entanglement in matters of faith. The district court certified the following legal question for review by the Seventh Circuit: “Under Title VII and the Americans with Disabilities Act, does the ministerial exception ban all claims of a hostile work environment brought by a plaintiff who qualifies as a minister, even if the claim does not challenge a tangible employment action?”

Hostile environment claims do not involve challenges to employment decisions made by religious officials, so the resolution of the question in Demkovich turned on whether litigating the claim would nevertheless result in excessive entanglement between church and state. The Demkovich court discussed both procedural and substantive entanglement. The court concluded there would be no undue procedural entanglement, which refers to the operation of the entire legal process. The church’s concern about the intrusive nature of litigation is shared by all litigants and thus concern of excessive entanglement would not bar hostile work environment claims by ministers any more than by the non-ministerial employees of a church. Next, the court discussed substantive entanglement, analyzing whether civil courts can decide substantive questions of law while avoiding issues of faith. The court discussed a variety of cases allowing claims against churches involving tax disputes, property disputes, tort claims, and application of the Fair Labor Standards Act to church employees. As in those cases, the court determined it was possible for a court to rule on a harassment claim without getting into matters of religious faith. Mr. Demkovich faced ongoing harassment in part due to his sexual orientation. The church argued that all comments made about Mr. Demkovich were motivated by church doctrine and the manner Reverend Dada expressed these beliefs were shielded from judicial scrutiny. The church also argued that haranguing Mr. Demkovich about his health was within his supervisor’s purview in implementing the proper formation of a member of the clergy. Although the district court had accepted the church’s argument in part, dismissing his sexual orientation claim, the court of appeals was not as persuaded that the risk of substantive entanglement was so great that hostile work environment cases should be dismissed without further inquiry. The court emphasized that Reverend Dada could have expressed the church’s views on gay marriage and obesity without being personally abusive, so the content of his religious reprimands did not excuse compliance with valid, neutral laws against harassment.

Courts Split on Reach of Ministerial Exception

The Seventh Circuit decision to narrow the reach of the ministerial exception deepens a split among the circuit courts of appeal. The Seventh Circuit now has joined the conclusion the Ninth Circuit reached in 2004 in Elvig v. Calvin Presbyterian Church, holding that the ministerial exception does not categorically bar ministers’ hostile work environment claims where the religious employer denies or disavows the conduct. At the same time, the Seventh Circuit has rejected the Tenth Circuit’s opposite conclusion in a 2010 case Skrzypczak v. Roman Catholic Diocese of Tulsa, holding that the ministerial exception bars all hostile work environment claims. Because of this lack of uniformity in applying the ministerial exception, ministerial employees who are victimized by any type of harassment constituting a hostile environment should consult an employment attorney to determine whether they can pursue a claim against their religious employer.

Katz, Marshall & Banks, LLP
For more articles on labor discrimination, visit the National Law Review Labor & Employment section.

Supreme Court Agrees to Hear Cases Determining Extent of Title VII Protection for LGBT Workers

The Supreme Court of the United States announced three cases will be argued next term that could determine whether Title VII protects LGBT employees from workplace discrimination.

Title VII prohibits discrimination because of “race, color, religion, sex, or national origin,” but it does not explicitly mention sexual orientation or gender identity.  Federal courts have disagreed on whether discrimination based on sexual orientation or gender identity falls within Title VII’s prohibition against sex-based discrimination.  Differing opinions on this topic exist within the federal government as well:  the Equal Employment Opportunity Commission (“EEOC”) has taken the position that Title VII prohibits discrimination based on sexual orientation and gender identity, while the Department of Justice has argued it does not.  The Supreme Court’s decisions may ultimately decide these conflicts.

Two cases represent a split in federal appellate courts regarding the extent, if any, to which Title VII prohibits sexual orientation discrimination as a subset of sex discrimination.  In Altitude Express v. Zarda, a skydiving company fired Donald Zarda, a skydiving instructor, after Zarda informed a female client he was gay to assuage her concern about close physical contact during skydives.  The trial court dismissed Zarda’s sexual orientation discrimination claim.  In an opinion written by Chief Judge Robert A. Katzmann on behalf of a full panel of the U.S. Court of Appeals for the Second Circuit, the Court reversed the trial court’s dismissal and held that sexual orientation discrimination is properly understood as a subset of discrimination on the basis of sex.  In other words, in the Second Circuit, sexual orientation discrimination is prohibited under Title VII.  The Second Circuit aligned its thinking with the Seventh Circuit’s April 2017 opinion in Hively v. Ivy Tech Community College of Indiana, which held that “discrimination on the basis of sexual orientation is a form of sex discrimination.”

The U.S. Court of Appeals for the Eleventh Circuit reached the opposite conclusion in Gerald Bostock v. Clayton County Georgia.  Gerald Bostock alleged he was terminated from his county job after the county learned of his involvement in a gay recreational softball league and his promotion of involvement in the league to co-workers.  The trial court dismissed and the Eleventh Circuit affirmed, relying on its own precedent that broadly held that Title VII does not prohibit sexual orientation discrimination.  In other words, in the Eleventh Circuit, Title VII does not prohibit sexual orientation discrimination.

The Supreme Court consolidated the cases into a single case to determine whether the prohibition in Title VII against employment discrimination “because of . . . sex” encompasses discrimination based on an individual’s sexual orientation.

The third case, R.G. & G.R. Harris Funeral Homes v. EEOC, focuses on whether Title VII applies to transgender employees.  In 2007, a funeral home hired Aimee Stephens, whose employment records identified her as a man.  Later, Stephens told the funeral home’s owner she identified as a woman and wanted to wear women’s clothing to work.  The owner fired Stephens, believing allowing Stephens to wear women’s clothing violated the funeral home’s dress code and “God’s commands.”  The EEOC filed suit on Stephens’ behalf.  The trial court dismissed a portion of the lawsuit because “transgender . . . status is not currently a protected class under Title VII,” but permitted other portions to proceed based on the claim Stephens was discriminated against because the funeral home objected to her appearance and behavior as departing from sex stereotypes.  The Sixth Circuit agreed that Stephens had viable claims.  The Supreme Court will review “[w]hether Title VII prohibits discrimination against transgender people based on (1) their status as transgender or (2) sex stereotyping” under prior Supreme Court precedent.

All three cases will affect the employment rights of LGBT workers.  Dinsmore & Shohl lawyers will closely monitor the Court’s analysis of these cases.  Dinsmore’s Labor and Employment Practice Group stands ready to assist employers in navigating this developing area of law.  Dinsmore’s experience in this arena includes accomplished labor and employment lawyers, former law clerks to federal judges who have drafted orders on these very issues, former federal government attorneys, litigators and published scholars.

 

© 2019 Dinsmore & Shohl LLP. All rights reserved.
This post was written by Jan E. Hensel and Justin M. Burns of Dinsmore & Shohl LLP.
Read more on the US Supreme Court  decision on the National Law Review’s Labor and Employment page.

#MeToo Movement Inspires Avalanche of New Laws Affecting California Employers

On September 30, 2018, Governor Jerry Brown signed several bills that will affect California employers. The following summarizes key aspects of these new laws. Unless otherwise noted, the new laws are effective January 1, 2019.

Major Changes to the Definition of “Hostile Work Environment” Harassment

Senate Bill (“SB”) 1300 significantly expands the circumstances in which hostile work environment harassment may be found to exist by rejecting the “severe or pervasive” standard developed and refined over several decades by California courts. Harassment is redefined to encompass a broad spectrum of conduct, specifically:

“Harassment creates a hostile, offensive, oppressive, or intimidating work environment and deprives victims of their statutory right to work in a place free of discrimination when the harassing conduct sufficiently offends, humiliates, distresses, or intrudes upon its victim, so as to disrupt the victim’s emotional tranquility in the workplace, affect the victim’s ability to perform the job as usual, or otherwise interfere with and undermine the victim’s personal sense of well-being.”

Government Code Section 12923, which declares the Legislature’s intent in enacting the new law, will provide guidance about what types of evidence will be sufficient to establish a harassment claim. It states that employees are no longer required to prove that their productivity has declined as a result of harassment. Now, they only need to show that the harassment made it “more difficult” for them to do their job. Even a “single incident of harassing conduct” is now sufficient to create a triable issue of fact, allowing a case to go to a jury. Furthermore, a single remark made by someone unconnected to a termination decision can be circumstantial evidence of discrimination. Finally, the Legislature made it clear that harassment cases are “rarely” appropriate for dismissal at the summary judgment stage.

Employers can be held liable for all forms of harassment – not just sexual harassment – directed at employees by non-employees, such as clients or vendors. This includes harassment based on race, national origin, religion, and other protected characteristics.

Finally, if an employer wins a sexual harassment lawsuit, it cannot recover attorney’s fees and costs unless it can prove that the plaintiff’s action was “frivolous, unreasonable, or groundless” either when filed or after it clearly became so.

Restrictions on Releases and Non-Disparagement Agreements

SB 1300 also prohibits employers from requiring a release of harassment, discrimination, or retaliation claims or to sign a non-disparagement agreement that purports to prevent disclosure of information about unlawful acts in the workplace, if the release is required to get a job, stay employed, or receive a raise or bonus. This does not apply to a negotiated settlement to resolve a claim filed in court, with government agencies, in arbitration, or through an employer’s internal complaint process, provided that the employee has an attorney or an opportunity to retain one.

Extended Statute of Limitations for Sexual Assault

The California Legislature lengthened from three years to ten years the statute of limitations for sexual assault claims. Under Assembly Bill (“AB”) 1619, a plaintiff may now bring a civil action for sexual assault within the later of “[ten] years from the date of the last act, attempted act, or assault with the intent to commit an act, of sexual assault by the defendant against the plaintiff” or “[w]ithin three years from the date the plaintiff discovers or reasonably should have discovered that an injury or illness resulted” from the defendant’s act.

Restrictions on Confidentiality and Testimony Provisions in Settlement Agreements

SB 820 prohibits settlement agreements that restrict plaintiffs from disclosing factual information about harassment claims in judicial proceedings. The bill does not, however, prohibit settlement provisions restricting disclosure of settlement amounts. Furthermore, a provision that shields the identity of a claimant may be included in a settlement agreement at the request of the claimant, unless a government agency or public official is a party to the agreement.

AB 3109 voids settlements that waive the right to testify regarding criminal conduct or sexual harassment, when the party has been required or requested to attend a proceeding by court order, subpoena, or other government request.

Enhanced Protection from Defamation

AB 2770 enhances protections from defamation claims made against sexual harassment claimants and employers that investigate such complaints. Three types of statements are privileged: 1) employee complaints of sexual harassment made without malice and supported by credible evidence; 2) communications made without malice between an employer and other interested persons regarding a sexual harassment complaint; and 3) answers provided without malice by a current or former employer in response to questions from a prospective employer regarding whether the current or former employer would rehire an employee, and whether the decision not to rehire is based on a determination that the former employee engaged in sexual harassment.

Broadened Definition of Non-Employment Related Harassment

SB 224 significantly expands sexual harassment claims in business, service, and professional relationships under California Civil Code Section 51.9. Going beyond the prior definition, which applied to physicians, attorneys, trustees, landlords, and other similar relationships, the law now prohibits harassment by individuals who “hold themselves out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party.” Examples include investors, elected officials, lobbyists, directors, and producers.

The law also reduces the burden to establish a claim, removing the previous requirement that a plaintiff establish that he or she was “unable to easily terminate the relationship.” The law also allows the California Department of Fair Employment and Housing (“DFEH”) to prosecute non-employment based sexual harassment claims, and makes it unlawful to “deny or aid, incite, or conspire in the denial of rights of persons related to sexual harassment actions.”

Expanded Anti-Harassment Training

Under existing law, employers with fifty or more employees were required to provide two hours of anti-harassment training to supervisory employees every two years. Under SB 1343, any employer with five or more employees, including temporary and seasonal workers, must provide two hours of anti-harassment training to supervisors and one hour of training to non-supervisors by January 1, 2020, and then once every two years thereafter. The bill also requires the DFEH to develop these courses and to post them online.

Corporate Boards of Publicly Held Corporations Must Include Female Representatives

SB 826 requires all publicly-held domestic and foreign corporations with principal executive offices in California to have at least one female on their boards by the end of 2019. By the end of 2021, the minimum increases to one female for boards with four or fewer members, two females for boards with five members, and three females for boards with six or more members. “Female” refers to an individual’s gender identification, not designated sex at birth.

The bill directs the Secretary of State to publish online reports documenting compliance. In addition, the Secretary of State may issue fines of $100,000 for failure to file board member information, $100,000 for the first violation of the member requirement, and $300,000 for subsequent violations. Each position not appropriately filled constitutes a separate violation.

Salary History Ban and Pay Scale Disclosure Guidance

Labor Code Section 432.3, enacted in January 2018, requires employers to provide applicants, upon request, with the pay scale for a position. It also prohibits employers from asking about or relying on prior salary in hiring or compensation.

An amendment to this bill enacted in July 2018 provides some necessary clarifications. It defines “pay scale” as a “salary or hourly wage range,” and it clarifies that the salary history ban and pay scale requirement do not apply to current employees. It also explains that employers are not required to provide pay scale information until after the initial interview. Employers are also allowed to ask about salary expectations. Finally, it allows employers to make compensation decisions based on existing salaries, so long as any differential is justified by a bona-fide factor such as seniority or merit.

Limitations on Criminal History Inquiries

Existing law restricts employers from considering applicants’ and employees’ judicially dismissed or sealed convictions or participation in pretrial or post-trial diversion programs. SB 1412 narrows the scope of an exception to this general rule. The bill permits employers to seek information from the applicant or other sources only about an applicant’s “particular conviction,” rather than a “conviction” generally.

An employer may inquire about a “particular” conviction only if: 1) the employer is legally required to obtain information regarding the conviction; 2) the applicant would be required to possess or use a firearm; 3) an individual with that conviction is legally prohibited from holding the position; or 4) the employer is legally prohibited from hiring an applicant with that conviction.

The employer may inquire about the particular conviction under these circumstances even if it has been expunged, sealed, statutorily eradicated, or judicially dismissed. The law further states that it does not prohibit an employer from conducting criminal background checks or restricting employment based on criminal history when legally required to do so.

Paid Family Leave for Active Duty Families

SB 1123 extends California’s paid family leave program to families with members on active duty in the armed forces. Beginning on January 1, 2021, an individual may take up to six weeks of paid family leave a year when participating in a qualifying exigency related to the covered active duty or call to covered active duty of the individual’s spouse, domestic partner, child, or parent.

Employment Record Inspection Rights

SB 1252 provides guidance regarding requests to inspect employment records. Employees have a right to receive a copy of their records, not merely inspect or copy them. An employer must deliver a copy within 21 days, and may charge the cost of reproduction to the employee. An employer who fails to provide an employee with a copy of his or her employment records within the 21-day time period will be subject to a $750 fine.

Expanded Lactation Accommodation Requirements

AB 1976 expands the existing lactation accommodation standards to now require that employers create a permanent lactation location in an area other than a bathroom. Before this change, employers were required to provide only an area other than a toilet stall. Employers may create a temporary location if they can demonstrate: 1) an inability to provide a permanent location due to operational, financial, or spatial constraints; 2) the temporary location is private and free from intrusion when needed for lactation; 3) the temporary location is only for lactation purposes when needed for that purpose; and 4) the temporary location otherwise meets state law requirements. If the requirements would create an “undue hardship”, however, the employer must make “reasonable efforts” to provide the employee with an area other than a toilet stall that is in close proximity to the employee’s work area where the employee can express milk in private.

California Construction Employers Temporarily Protected from PAGA Suits

California construction workers will no longer be able to bring suit against their employers under the Private Attorneys General Act of 2004 (“PAGA”) if they work under a collective bargaining agreement that meets certain requirements provided in AB 1654. To qualify, the agreement must: 1) provide for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours worked, and for employees to receive a regular hourly pay rate of not less than 30 percent more than the state minimum wage rate; 2) provide for a grievance and binding arbitration procedure to redress labor code violations; 3) expressly waive PAGA’s requirements in clear and unambiguous terms; and 4) authorize the arbitrator to award any and all remedies available under law. This exception expires on the earlier of the collective bargaining agreement’s expiration date or the statute’s repeal date of January 1, 2028.

Petroleum Industry Employee Rest Breaks May be Interrupted

Although California law prohibits employers from requiring employees to work during their meal, rest, or recovery periods, AB 2605 creates an exception for certain workers in the petroleum industry who are covered by a qualifying collective bargaining agreement. Under this provision, employers may interrupt rest breaks taken by employees who hold safety-sensitive positions at petroleum facilities from their duties, to the extent the employee is required to carry and monitor a communication device and respond to emergencies or is required to remain on employer premises to monitor the premises and respond to emergencies. If a rest break is interrupted, an employer must promptly provide an additional rest break. If a rest break cannot be provided, the employer must pay the employee an hour of pay. This bill became effective immediately when it was signed by Governor Brown on September 20, 2018, and it will remain effective until the section is repealed in January 1, 2021.

Suggested Actions

In light of these changes, California employers should consider taking the following actions:

  • Train managers, recruiters, human resource professionals, and other relevant staff regarding these new requirements and restrictions.
  • Educate all employees, especially supervisory employees, about laws prohibiting harassment, including SB 1300’s expanded definition of harassment, and train employees on how to appropriately respond to complaints of harassment.
  • Update policies, procedures, and agreements in light of SB 1300’s new restrictions on non-disparagement agreements and releases and SB 820’s and AB 3109’s restrictions on confidentiality provisions in settlement agreements.
  • Update training policies, procedures, and materials to comply with SB 1343’s expanded requirements for sexual harassment training for all employees.
  • Consider updating procedures and policies regarding employment references to third parties to permit disclosures regarding eligibility for rehire. Employers should designate a single person or a human resources professional to provide references in order to ensure that disclosures fall within AB 2770’s defamation privilege.
  • Begin planning for SB 826’s requirements for female representation on corporate boards.
  • Ensure that application forms, candidate questionnaires, interview outlines and scripts, and other screening and hiring materials omit inquiries regarding salary history and inquiries regarding criminal history, consistent with applicable law.
  • Prepare policies and procedures for complying with the salary history ban’s pay scale disclosure requirements. Such policies and procedures should comply with the requirements described above.
  • Consider asking applicants about their salary expectations, rather than salary history. If an employee voluntarily offers salary information, contemporaneously document that the employee introduced the information into the discussion.
  • Review criminal history screening policies, procedures, and forms to ensure compliance with the restrictions on criminal history inquiries. Prepare policies for dealing with criminal history to avoid ad hoc decision-making by managers and consider involving human resource professionals.
  • Contemporaneously document any individualized assessments regarding an applicant’s suitability for employment based on criminal history information.
  • Update written policies regarding qualifying exigencies related to military service.
  • Ensure policies for responding to employee requests for records; permit employees to obtain copies of such records.
  • Ensure that there is an available space for lactation in the workplace that complies with the new requirements.
  • Reach out to us if you have any questions, concerns, or need guidance with respect to these new laws or your company’s obligations to comply with them.
Copyright 2018 K&L Gates.
This post was written by Spencer Hamer and Catherine C. Smith of K&L Gates.

New Federal Overtime Rule Expected in Early 2019

It doesn’t seem that long ago that employers were busily preparing for the new overtime rule that would have doubled the minimum salary level for the “white collar” exemptions from $23,660 to nearly $48,000.  That new rule—finalized in May 2016 and set to take effect on December 1 of that year—was struck down by a Texas federal court in late November 2016.

President Trump took office in January 2017, and the DOL—with less interest in so aggressively raising wages as the predecessor administration—pushed the pause button on revisions to the overtime rule.  In public comments, however, Labor Secretary Alexander Acosta, who assumed the post in late April 2017, repeatedly indicated that he favors some increase in the minimum salary threshold for exemption, which was last raised in 2004 (and before that, in 1975).

In July 2017, the DOL began seeing public comment on a revised overtime rule, publishing a Request for Information in the Federal Register.  The comment period closed in September 2017.

In its Spring 2018 Regulatory Agenda, the Trump Administration formally announced its intention to issue a Notice of Proposed Rulemaking (NPRM) in January 2019 “to determine what the salary level for exemption of executive, administrative, and professional employees should be.”

So what should employers expect in a new overtime rule?  Likely an increase in the minimum salary for exemption to something in the low-to-mid $30,000s.  This would be consistent with Secretary Acosta’s comments on the issue, but still considerably lower than the level proposed by the Obama Administration.  It would also be significant lower than some state law minimum salaries for exemption (consider New York’s minimum for exempt executive and administrative employees, which will climb to $58,500 at the end of 2018).

Another thing we could see in a new overtime rule are more modern examples of how the various exemptions might apply in today’s workplaces.  The DOL included a number of new examples in its sweeping revisions to the overtime exemption rules in 2004.  It would make sense to revisit those examples, and to consider additional examples, given how the workplace has evolved in the last 15 years.

It’s also possible the DOL will depart from a one-size-fits-all salary minimum and propose different tests for smaller or non-profit employers.  Small businesses, non-profits, and educational institutions were among the loudest voices in opposition to the 2016 overtime rule changes, and would be among the hardest hit by any increase in the minimum salary levels.

What I don’t expect from a new overtime rule are automatic future increases (which were part of the 2016 rule) or a change from a qualitative to a quantitative (e.g., California-style) primary duties test.

I also don’t expect any new overtime rule to take effect before 2020.  Even assuming the DOL meets its expected deadline of proposing a new rule in January 2019, it will likely receive (and have to review) hundreds of thousands of public comments.  (The DOL received more than 270,000 comments in response to the proposed overtime rule that was finalized in 2016.)  In all likelihood, the DOL will give employers plenty of lead time to plan and prepare for any increases in the minimum salary for exemption.  So for employers who are not subject to more stringent state rules around exemption, it’s likely you have at least a year and a few months before you’d have to implement any changes.

 

© 2018 Proskauer Rose LLP.
This post was written by Allan Bloom of Proskauer Rose LLP
Learn more labor and employment news on the National Law Reviews Labor & Employment page.

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.

Keep Rollin’ Rollin’ Rollin’: DOL Reissues 17 Opinion Letters That Had Been Withdrawn Under the Obama Administration

In late June 2017, the United States Department of Labor (DOL) announced it would be reinstating Opinion Letters issued by its Wage and Hour Division, which was a practice that had ceased back in 2010. This announcement is significant from both the procedural and substantive basis. From 2010 to July 2017, Opinion Letters were replaced by Administrator Interpretations, which set forth a more general interpretation of the law and regulations as they pertained to a particular industry or set of employees. Opinion Letters, on the other hand, are official written opinions that set forth how wage and hour laws apply in very specific circumstances as presented to the DOL Wage and Hour Division via specific employer questions asking for a formal opinion to guide the employer as to how to proceed. In other words, employers submit questions based on their specific factual circumstances and policies and the DOL issues a written opinion as to the legality of the employer’s policies.

With Opinion Letters back, businesses have been waiting to see what the DOL would do with them. In the first week of 2018, the DOL answered that question by re-instating 17 Opinion Letters that were issued in January 2009 but withdrawn during the Obama administration. The DOL also reissued over a dozen advisory Opinion Letters that had been published during former President Bush’s administration, but were also later rescinded.

Because Opinion Letters answer specific business questions related to wage and hour issues in various business segments, the 17 reinstated Opinion Letters and the dozen plus reissued advisory Opinion Letters may provide businesses specific and tailored guidance on various wage/hour issues under the Fair Labor Standards Act (FLSA).

The reinstated letters cover a wide variety of topics including, appropriate inclusions in an employee’s regular pay rate, types of employment that qualify for the FLSA’s minimum wage and overtime exemptions, and how ambulance service workers’ “on-call” time should be treated for purposes of “hours worked” under the FLSA. Here is the full list of reinstated Opinion Letters (all dated January 5, 2018) and links:

Number

Letter Subject

FLSA2018-1

Construction supervisors employed by homebuilders and section 13(a)(1)

FLSA2018-2

Plumbing sales/service technicians and section 7(i)

FLSA2018-3

Helicopter pilots and section 13(a)(1)

FLSA2018-4

Commercial construction project superintendents and section 13(a)(1)

FLSA2018-5

Regular rate calculation for fire fighters and alarm operators

FLSA2018-6

Coaches and the teacher exemption under section 13(a)(1)

FLSA2018-7

Salary deductions for full-day absences based on hours missed and section 13(a)(1) salary basis

FLSA2018-8

Client service managers and section 13(a)(1)

FLSA2018-9

Year-end non-discretionary bonus and section 7(e)

FLSA2018-10

Residential construction project supervisor and section 13(a)(1)

FLSA2018-11

Job bonuses and section 7(e)

FLSA2018-12

Consultants, clinical coordinators, coordinators, and business development managers under section 13(a)(1)

FLSA2018-13

Fraud/theft analysts and agents under section 13(a)(1)

FLSA2018-14

Calculation of salary deductions and section 13(a)(1) salary basis

FLSA2018-15

Product demonstration coordinators and section 13(a)(1)

FLSA2018-16

Volunteer fire company contracting for paid EMTs – joint employment and volunteer status

FLSA2018-17

Construction supervisors employed by homebuilders and section 13(a)(1)

As demonstrated by the list above, there are a number of broad topics covered, i.e., Section 13(a)(1) of the FLSA, which exempts employees employed in a bona fide administrative function, and a number of extremely narrow ones, e.g., those dealing with helicopter pilots, coaches, construction supervisors employed by homebuilders.

Here is a summary of some of the noteworthy findings in the reinstated Opinion Letters:

Bonus Compensation

The DOL reviewed the issue of whether certain bonuses (or other payments) should be included in an employee’s regular rate of pay under the FLSA. See FLSA2018-5, FLSA2018-9, and FLSA2018-11.

Exempt Employee Deductions

The DOL reviewed the issue of whether a salary deduction is permissible when an exempt employee is absent for a full day, but does not have enough leave time in the employee’s leave bank to cover the entire absence. The DOL concluded that, “if the absence is one full day in duration, the employer may deduct one full day’s pay or less. Therefore, in answer to your first question, if an employee is absent for one or more full days, but does not have enough time in his or her leave bank to cover the entire absence, the employer may make a deduction from the employee’s pay for any portion of the full-day absences that is not accounted for by the leave bank.” SeeFLSA2018-7.

Administrative Exemption

In reviewing whether client service managers at an insurance company qualified as exempt administrative employees, the DOL focused on the “independent judgment” factor in determining that their primary duty was to use independent judgment over matters of business significance when issuing advice and, generally, without first seeking upper-level management approval.

On-Call Hours

The DOL concluded that on-call hours of ambulance service personnel are not compensable time under the FLSA for purposes of the regular rate and overtime calculations. The issue arose from an ambulance service’s unwritten policy that required on-call employees to arrive for service at the ambulance garage within five minutes of being notified. The DOL determined the five-minute requirement was “not a significant hindrance” to the employees that would require the employer to convert their on-call time to compensable hours worked. Notably, the scope was an ambulance company servicing a small city of approximately 4,000 individuals.

Takeaways:

  1. Nothing New as the DOL Returns to the Prior Opinion Letter Process. The important news is the return to the more focused, less-sweeping means to establishing DOL-interpretation policy. Otherwise the information provided in the reinstated Opinion Letters is not new; it has been available to businesses for years and, as such, most businesses with issues relevant to the topics in the reinstated Opinion Letters are likely already complying. The reinstated Opinion Letters do not take on any topics that had been severely altered during the Obama administration. We addressed this rolling-back issue in our All Things HR in a post titled “The Way We Were: The NLRB’s Time Machine Resets the Clock on Employer Work Rules and Joint Employer Status” demonstrating this is not just a NLRB mantra, it looks to be the DOL’s too.

  2. Ranging Applicability. As the ambulance-employer DOL Opinion Letter demonstrates, some of the reinstated Opinion Letters will have very limited applicability as Opinion Letters are only as good as the overlapping facts in the circumstances presented in them and the business seeking to use them as guidance. Nevertheless, while many Opinion Letters focus on specific legal issues specific to certain employers/businesses/industries, they are still valuable resources and may provide answers or guidance in many areas in wage and hour law.

  3. More Defenses Available to Businesses. Opinion Letters were and continue to be another tool businesses have in their arsenal to help ensure compliance with the FLSA, and another tool in their defense arsenal. Specifically, Section 10 of the Portal-to-Portal provides businesses an affirmative defense to all monetary liability if the business can demonstrate it acted “in good faith and in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation” of the DOL Wage and Hour Division. See 29 U.S.C. § 259 and 29 C.F.R. Part 790.

In addition, Opinion Letters can be used to prove the “good faith” defense against the double liquidated damages penalty available under the FLSA, and the third-year of damages in the case of willful violations, of which the bar is extremely low. See 29 U.S.C. § 260. The availability of newly-issued Opinion Letters means that a business can request and obtain an Opinion Letter addressing a specific practice, policy, and/or factual circumstance for guidance and rely on a favorable Opinion Letter in response to a charge or lawsuit on the same issue.

  1. This is a Good Thing. This is good news for businesses because it demonstrates two things: (1) businesses will be able to have and rely on additional resources to meet their statutory and regulatory wage and hour obligations; and (2) the Trump administration seems intent on turning back the clock to a time pre-Obama administration, but not necessarily instituting new guidance or interpretations (not in the labor and employment context at least). This means that businesses are likely already familiar with what they should be doing and have been doing it.

© Copyright 2018 Dickinson Wright PLLC
For more Labor and Employment news go to the National Law Review’s Labor and Employment Page.

Addressing Workplace Sexual Harassment in the Wake of #MeToo

Revelations of the Harvey Weinstein scandal, and those that have followed, have ignited sexual harassment complaints against employers across all industries. Recent news more than confirms that the issue of sexual harassment is not limited to Hollywood. As U.S. Equal Employment Opportunity Commission (“EEOC”) Acting Chair Victoria Lipnic recently said in an interview with Law360, “We see this everywhere. This happens to women in workplaces all over the place.”

With the outpouring of support for victims of sexual harassment, the creation of the #MeToo movement in the last quarter of 2017, and Time magazine’s “Silence Breaker” person of the year, it is clear that this is an issue that employers will need to proactively address in 2018. A study by theBoardlist and Qualtrics, based on a survey conducted this summer, reported that 77 percent of corporate boards “had not discussed accusations of sexually inappropriate behavior and/or sexism in the workplace.” Less than 20 percent of the 400+ people surveyed had reevaluated their company’s risks regarding sexual harassment or sexist behavior, even in light of the recent revelations in the media. Plainly, those numbers are expected to, and no doubt will, increase in the coming year.

Failure to take affirmative steps to prevent harassing behavior and adequately respond to allegations of sexual harassment can have serious consequences. While sexual harassment claims may originate as internal complaints, which must be promptly addressed, they may also result in a discrimination charge filed with the EEOC or the corresponding state or local agency. Since fiscal year 2010, roughly 30 percent of the approximately 90,000 charges of discrimination received by the EEOC each year have alleged sex-based discrimination, and the number of charges alleging sex-based harassment has gradually increased from just below 13 percent to just above 14 percent. Next year, this number is expected to increase because employees are becoming more comfortable reporting and publicizing incidences of sexual harassment in light of recent news, and due to the EEOC’s digital upgrade that allows employees to file EEOC complaints online.

Sexual harassment claims may also lead to litigation, which can be expensive and time-consuming and can create negative publicity. For instance, Mr. Weinstein’s former company, The Weinstein Co. (“TWC”), has been named in a $5 million civil suit alleging that executives of the company did nothing to protect women who did business with Mr. Weinstein, despite being aware of his inappropriate behavior. On December 6, 2017, TWC was one of the named defendants in a proposed class-action racketeering lawsuit alleging that TWC helped facilitate Mr. Weinstein’s organized pattern of predatory behavior. Additionally, the New York attorney general’s office is investigating TWC for potential civil rights violations in its handling of claims of sexual harassment.

There may also be unseen consequences of sexual harassment on the makeup of a workforce. Various studies have reported that harassment may lead to the departure of women from the workforce or the transition into lower-paying jobs. Further, women in jobs with a higher risk of sexual harassment often earn a premium over employees in positions with a lower risk of sexual harassment. Sexual harassment, therefore, may have real impact on compensation and implicate the pay gap and pay equity.

For these reasons, many employers are looking to implement and also supplement sexual harassment training seminars provided for their employees in order to combat sexual harassment in the workplace.

Employers should also consider whether their current practices include the following:

  • A robust complaint procedure. Sexual harassment at work often goes unreported. According to the EEOC, as many as three-quarters of harassment victims do not file workplace complaints against their alleged harassers. Make sure that you have reporting mechanisms in place to receive complaints and consider allowing employees to complain directly to human resources, to a supervisor, or to an anonymous hotline.
  • A prompt investigation of complaints. Upon receiving a complaint, promptly and thoroughly investigate the allegations, and make sure that your employees do not retaliate against the alleged victim or any person who cooperates in the investigation.
  • Independent investigations. Ensure impartiality in the process. In certain cases, that may mean hiring an outside consultant or outside legal counsel to conduct the investigation.
  • Thorough communication practices. A common objection asserted by complainants is that they are not informed about the status of an investigation. While complainants need not (and should not) be notified about the details or even given regular status reports, inform the complainant that an investigation will occur and be sure to provide closure—regardless of the outcome of the investigation.
  • A proactive approach. Consider conducting employee engagement or climate surveys (with or without a consultant) to better understand the work atmosphere, rather than simply reacting to workplace complaints. Before doing so, consult with counsel to determine whether and how such a survey may be conducted (potentially under the self-critical analysis privilege, depending on the jurisdiction) to avoid it unwittingly becoming evidence in a proceeding.
  • An atmosphere of inclusiveness. Foster an atmosphere of inclusiveness to help prevent sexual harassment. Make sure that your top-level management is involved in setting the tone, modeling appropriate behavior, and effecting positive change. Some organizations should consider creating a task force to root out and address inappropriate conduct—again with the oversight of legal counsel.
  • Effective training. While most employers conduct some form of anti-harassment training (and those that don’t offer training, should), make certain that your training is designed to effectively combat sexual harassment. Tailor the training to your specific workplace and audience. Use real-world examples of what is, and is not, harassment, and make sure that managers know how to spot potential issues and respond to any and all complaints.
©2017 Epstein Becker & Green, P.C. 
For more labor and employment news visit the National Law Review’s Labor and Employment page.

New Year’s Resolution Series – Ringing Your Post-Employment Covenants into the New Year

Many state legislatures spent 2017 tinkering with post-employment covenants.  Given the growing trend to legislate locally and the employee mobility issues that seem to nag every employer, we thought the New Year would be a perfect time to review and revisit your post-employment covenants. So for our multi-jurisdictional employers (which seems to be everyone these days), how do your post-employment covenants legally measure up?

Even California got into the act this year. Everyone (well, almost everyone) knows of the long-time California legislative non-compete ban (except in the context of a sale of business or equity). But did you know that as of 2017 California now regulates choice of law provisions in employment contracts? This new Labor Code provisionwas passed in an effort to stamp out the practice of some out-of-state employers who were using choice of law/venue provisions in the hope of applying some other state’s law to their California-based employees, thereby (they hoped) avoiding California’s non-compete ban. A review of that provision is in order for any employer hiring individuals in California.

Other states have gotten into the act by banning or regulating non-competes. Nevada, not known for its active employee mobility legislation, passed legislation this year governing non-competes, joining Colorado, Florida, Georgia, Illinois, and Texas, to name a few. New Jersey is also actively considering similar legislation.

And while Massachusetts tried but failed to pass statewide legislation, don’t overlook specific Massachusetts provisions addressing non-competes for Physicians, nurses, psychologists, social workers, and those in the broadcasting industry.

But don’t stop at a state law review. Remember: many states (and many state statutes) require an assessment of the reasonableness of post-employment covenants. The very best evidence of reasonableness is employer mindfulness regarding what agreements are truly necessary to protect some legitimate interest of the employer – and, most importantly, a deep dive into why they are necessary.

So here are a few action items to consider for your post-employment covenants resolution for 2018:

  • Where are your employees performing services for you? Do your post-employment covenants comply with the legislative mandates applicable in the various jurisdictions in which you have employees?
  • What impact, if any, do promotions have on your employees? Do they now have access to sensitive information, in addition to expanded job duties? If so, should they have new or different post-employment covenants?
  • How if at all has your business changed? Are you doing business in new locations or have you abandoned business in other locations?
  • Are post-employment covenants truly necessary – or will a solid proprietary rights agreement (and the applicable trade secrets law) provide the legal protection you really need?
  • Are you just as eager to recruit individuals bound by these agreements as you are to enforce your own? Have you considered the possible cognitive dissonance of such an approach?

We hope you have enjoyed our New Year’s Resolution Series and we look forward to a prosperous, productive and compliant 2018!

©1994-2017 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Social Hosts Beware: “One More for the Road?” May Be a Bad Idea

The company was hosting its annual holiday party.  The company had arranged to hold the event that Saturday night in a hotel ballroom.  Moods were festive, especially because the company’s profits were up about 10%.  Because he enjoyed doing it and served as a freelance bartender in his spare time, one of the company’s new sales employees, Tom Collins, was helping to tend bar.

Much of the company’s success that year was attributable to the efforts of Johnny Walker, V.P. of Sales, who, for understandable reasons, was in a celebratory mood.  When he, at about 11 p.m., bellied up to the bar for a fourth round, Tom couldn’t help but notice that Johnny, normally the epitome of self-control, seemed more than a little impaired.  Tom said to Johnny, “Mr. Walker, with all due respect, don’t you think that it may be time to slow down?  In fact, given the hour, I’ll be happy to arrange a ride to take you home.”  Johnny, now irritated, replied “Tom, you make an excellent highball, but I’d be grateful if you’d mind your own business, OK?”  Tom did as he was asked and poured Walker another drink.  With that, Johnny, armed with another scotch and soda, disappeared into the crowd.

The next morning, Tom, to his shock, learned that Johnny had gotten into his Volvo to drive home and promptly collided with another driver.  The other driver, as a result, was seriously injured and remained hospitalized in a coma for about nine months.  He then died.

Candy is dandy, but liquor is quicker, so be careful out there . . .

May an employer with employees in North Carolina, in appropriate circumstances, be held liable for the malfeasance of its employees and, specifically, be held liable as a “social host” because one of its employees served alcohol to a person when the employee knew or should have known that the person was drunk and would soon be driving on public roads and might hurt or kill someone?

Absolutely.  The doctrine of “social host liability” was first declared in North Carolina about 25 years ago.  The North Carolina Supreme Court, in the 1992 case of Hart v. Ivey, ruled that the plaintiffs had stated a valid claim when they alleged that various defendants had been negligent in throwing a party at which beer was served to an 18-year-old, under circumstances in which the defendants knew or should have known that the young man was intoxicated at the time he was served, that he would drive a motor vehicle from the party, and that he was likely to injure someone.

The court wrote that it had not been able to find a North Carolina case dealing with similar facts, but concluded “that the principles of negligence established by our decisions require that we hold that the plaintiffs .  .  . have stated a claim.”  The court emphasized that it was not recognizing a new claim, but was merely applying the established elements of negligence to find that the plaintiffs stated claims recognized by law.

What had the plaintiffs claimed?  Only:

  • That “the defendants served an alcoholic beverage”;
  • To a person they knew or should have known was under the influence of alcohol; and,
  • That the defendants knew that person would shortly thereafter drive an automobile.

The court’s conclusions in Hart, if you think about them, aren’t surprising:

If proof of these allegations were offered into evidence, [then] the jury could find from such evidence that the defendants had done something a reasonable man would not do and were negligent.  The jury could also find that a man of ordinary prudence would have known that such or some similar injurious result was reasonably foreseeable from this negligent conduct.  The jury could find from this that the negligent conduct was the proximate cause of the injury to plaintiffs.

Sadly, the court later had occasion to encounter just such a claim brought by the estate of a man killed by an employee who had attended a party for a retiring supervisor at the home of an officer of the employer.  In the 1995 case of Camalier v. Jeffries, the employer sponsored the party and hired a catering company to help with food and drink service and another company to handle parking arrangements.  The catering company and a company that it hired supplied all of the bartenders at the party.

The employee downed three or four gin and tonics and then decided to leave, and was taken by van to his car.  He then drove his car into an automobile whose driver suffered serious injuries and then died of the injuries about nine months later.  Within two hours after the time of the accident, a blood sample was drawn from the employee showing that his blood-alcohol concentration was well over the legal limit.

In ruling on the case, the North Carolina Supreme Court reiterated the elements of “social-host liability” that it had declared in Hart.  In Camalier, the defendant company and one of its officers dodged liability, but only because the evidence was insufficient to show that they knew or should have known that the employee was hammered when he was served alcohol at the officer’s home.

The court observed that there was no question that the defendant employer and its officer caused alcohol to be served to the employee and knew or should have known that the employee would be driving an automobile after the party.  Thus, the first and third factors set forth in Hart were not in dispute.  But the court also found that the predicted evidence didn’t show that either the employer or the officer knew or should have known that the employee was drunk when he was being served.

The impaired employee who caused injury in Camalier had been served by a vendor hired by the employer rather than by an employee of the defendant employer.  It appears that North Carolina’s appellate courts have not yet held an employer liable as a “social host” based on the actions of an employee, but the circumstances in which a court may do so are not difficult to imagine.  Such liability can arise from an employer-hosted event at a restaurant, country club, pub, or similar establishment.  The location will not matter and a court is likely to find employer liability if there is proof that an employee, under circumstances intended to promote the interests of the employer, served alcohol to a person when the employee, or its representative, knew or should have known that the person was intoxicated and would soon be driving and that a third-party was injured as a result.

The Supreme Court of New Mexico, addressing such an issue, highlighted the principles of employers’ and employees’ liability as “social hosts” where the host purchases liquor and causes it to be served to a guest and, as a result, a third person is injured.  In the 2011 case of Delfino vs. Griffo, employees of a pharmaceutical company, in the course of their employment, entertained a physician’s employee in several restaurants.  The guest consumed considerable alcohol, became very intoxicated, departed in her car, and shortly thereafter caused a fatal accident.

The New Mexico court, discussing liability as a “social host,” observed:

Social hosting need not occur in a home; one may host in a bar or restaurant where the actual delivery of alcoholic beverages to the guests is performed by a licensed server.  Factors that are key to determining whether one is a social host in a public establishment are whether the alleged social host exercised control over the alcohol consumed by the guests; whether the alleged social host convened the gathering for a specific purpose or benefit to the alleged social host, such as promoting business good will; and whether the alleged host intended to act as ‘host’ of the event, meaning arrange for the service of and full payment for all food and beverages served to the guests.

The New Mexico court found, based on the facts of the Delfino case, that the employer was a “social host” for the drunk driver and, in such capacity, the employer could be sued and held liable.

Bring your carrier along for the ride . . .

Employers may consider purchasing general liability insurance to insure them against losses arising from the provision of alcohol by their employees to an intoxicated driver who then causes injury or death.  A typical general liability insurance policy includes a business liability provision that will pay for damages arising from causing or contributing to the intoxication of a third party, so long as the insured entity is not in the business of manufacturing, distributing, selling, or furnishing alcoholic beverages.  Employers can also buy a one-time special event policy if their current insurance doesn’t provide that kind of coverage.

Employers may also try to insulate themselves from “social host” liability by hiring professional caterers or bartenders who maintain such general liability insurance coverage, so that the employer, if it encounters a “social host” liability claim, may at least try to pass the liability to the caterer’s or bartender’s insurance carrier.

Employers should bear in mind, however, if tragedy occurs and litigation ensues, that it is the employer—not the insurance company—that will be sued, and that having insurance does not mean that the employer is immunized from liability.  It means only that the insurance carrier may have to pay if the employer is found liable (or, more likely, if the employer convinces the carrier to pay a pre-trial settlement to enable the employer to avoid an embarrassing lawsuit).  Moreover, a policy’s limits of liability are not always high enough to cover all claims.  The amount of liability can exceed the limits, in which case the employer, if held liable as a “social host,” can, to one degree or another, be on its own to pay a settlement or judgment.

Conclusion

One useful tip for employers who want to celebrate with their employees and host social events at which alcohol is served is to limit the access to alcohol, such as by setting limits on how much or how long alcohol is served at the event.  You can’t mandate good judgment, but you can decide how much temptation you’re willing to pour.

 

© 2017 Ward and Smith, P.A..
This post was written by Grant B. Osborne of Ward and Smith, P.A..
Read more Labor and Employment News on the National Law Review’s Labor and Employment Practice Group page.