Tag: labor

Insurance Coverage in the Post-Weinstein Era

With new headlines involving sexual harassment and other inappropriate sexual conduct continuing to emerge on a daily basis, insurance coverage for claims that might emerge is something every company should consider.

Recently, media reports have discussed settlements of shareholder derivative claims against members of the boards of directors and other senior executives of public companies. These settlements illustrate both the type of corporate liability that can ensue from allegations that a company turned a blind eye to, or otherwise failed to prevent, sexual misconduct allegations, causing financial and reputational harm to the organization, and the critical role insurance can play in protecting companies and their executives against such claims.While reports indicate that one or more of the settlements is being funded entirely from insurance proceeds, it is unclear whether the settlement proceeds will be coming from D&O insurance or EPLI insurance, or both. D&O insurance is intended to cover corporate mismanagement claims but typically contains some form of employment practices liability exclusion. EPL insurance is intended to cover employment practices liability claims but may not cover management liability claims arising from allegations of sexual harassment. This creates a potential gap in coverage that could have serious consequences.

D&O and EPLI policies are not standard and contain different wording and exclusions.

WHAT TO DO?

In this environment, it behooves corporate management of every company to understand the scope of insurance coverage for sexual harassment and management liability claims and to ensure that appropriate coverage is in place without coverage gaps.

Here is what policyholders should do: comprehensively review all relevant corporate insurance programs to determine what coverage is in place for sexual harassment claims of any variety, and for claims arising from corporate actions that might be necessary in the wake of an issue or claim, such as claims of wrongful termination and defamation.

Policies to be reviewed should include CGL, EPL, D&O and E&O.

Determine whether coverage gaps exist and if so, consider enhancing coverage to ensure proper protection.

Understand what needs to happen in terms of notice to insurers in the event of a claim or knowledge of circumstances that might lead to assertion of a claim.

And be aware of the potential for coverage before agreeing to any payments or settlements that might preclude or limit coverage.

© 2017 Proskauer Rose LLP.
This post was written by Seth B Schafler of Proskauer Rose LLP.
Learn more at the Insurance Law Page on the National Law Review.

“Newly Minted” NLRB Majority Begins to Roll Back Decisions of the Obama Board

In two recent developments, the “new” National Labor Relations Board (“NLRB” or the “Board”), which includes two Members nominated by President Trump, has commenced the anticipated roll back of decisions and procedures rendered by the previous Administration’s NLRB.

1. The NLRB General Counsel can no longer demand settlements with a full remedy for all violations. 

In UPMC, 365 NLRB No. 153 (December 11, 2017), the Board reversed a 2016 decision that prohibited settlements of NLRB complaints over the objection of the NLRB General Counsel (Prosecutor) and the party filing the charge, unless the settlement provided complete remedies for all violations alleged in the Complaint. The 2016 decision, United States Postal Service, 364 NLRB No. 116 (2016), had overturned decades-long NLRB precedent established in Independent Stove, 287 NLRB 740 (1987).

In the UPMC majority’s (Chairman Philip Miscimarra, Member William Emanuel, Member Marvin Kaplan) view, requiring a settlement of all violations with a full remedy for the employees (and union) “imposed an unacceptable constraint on the Board itself which retained the right under prior law to review the reasonableness of any … settlement terms” offered by Respondents (employers and unions). According to the UPMC majority, the 2016 USPS decision unduly restricted the settlement of NLRB cases and ignored the risks inherent in NLRB litigation. The UPMC decision now allows a Respondent, with approval of the Administrative Law Judge, to settle a case without providing full and complete relief, so long as the resolution is “reasonable.” This approach should facilitate more settlements, and reduce the costs and uncertainty inherent in litigation (for employers and the NLRB).

The dissent strongly disagreed with what it called “an eleventh hour” decision during Republican Chairman Miscimarra’s last week as a Board member. However, Chairman Miscimarra will soon likely be replaced by another Republican.

2. The NLRB seeks comments on quickie elections – is more change likely? 

The day after the UPMC decision, the NLRB published a Request for Information (“RFI”) in the Federal Register seeking prompt public comments about the controversial 2014 Election Rule, commonly referred to as the “quickie election” rule.

Specifically, the RFI seeks public input from December 13, 2017 until February 12, 2018 regarding the following three questions:

  1. Should the 2014 Election Rule be retained without change?
  2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
  3. Should the 2014 Election Rule be rescinded?

The “quickie election” rule, effective since April 2015, impacted NLRB elections in three main ways:

  • It significantly shortened the time period between the date a petition for election is filed and the date of the election. As a result, elections frequently took place approximately three weeks after the petition was filed. This period shortened employers’ time to respond to the union’s campaign efforts from approximately 6 weeks to 23 days.
  • It considerably restricted the scope of any pre-election challenges that might result in litigation, such as individual voter eligibility issues, unless the question relating to eligibility affected twenty percent (20%) of the proposed unit. Eligibility issues, including determining who is a supervisor and thus is precluded from voting, were generally delayed until after the elections if the union won.
  • It forced employers to disclose a substantial amount of private employee information to the unions, including providing unions with employee contact information. In particular, the employer is required to disclose, for the first time, employee personal email addresses and phone numbers, including all cell phone numbers. Previously, only mailing addresses needed to be disclosed.

While the “quickie election” rule has not substantially increased union election win percentage, opponents of the rule have objected to the limited time it provides employers to communicate with employees regarding the election, the deferral of election eligibility issues until after the election, as well as the procedural challenges.

Takeaways

Moving forward, interested parties should monitor the new Board’s actions. The recent developments indicate the new Board could likely overturn some of the decisions rendered and procedures proffered by President Obama’s NLRB.

© Polsinelli PC, Polsinelli LLP in California
This post was written by W. Terrence Kilroy and Henry J. Thomas of Polsinelli PC.
Learn more at our Labor and Employment Practice Group Page.

PHMSA Raises Random Drug Testing Rate to 50% for 2018

The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration announced December 8, 2017 that during calendar year 2018, the minimum random drug testing rate will be increased to 50%.

Operators of gas, hazardous liquid, and carbon dioxide pipelines and operators of liquefied natural gas facilities must randomly select and test a percentage of all covered employees for prohibited drug use. The minimum annual random drug testing rate was 25% of all covered employees for calendar year 2017.  However, the PHMSA regulations require the Administrator to raise the minimum annual random drug testing rate from 25% to 50% of all covered employees when the data obtained from the Management Information System reports (required to be filed by covered entities under PHMSA regulations) indicate the positive test rate is equal to or greater than 1%.  In calendar year 2016, the random drug test positive test rate was greater than 1%.  Therefore, the PHMSA minimum annual random drug testing rate shall be 50% of all covered employees for calendar year 2018.

Jackson Lewis P.C. © 2017
This post was written by Kathryn J. Russo of Jackson Lewis P.C.
Check out the National Law Review Labor and Employment page for more information.

Impact of the Trump Administration’s Decision to Terminate DACA

On September 5, 2017, Elaine Duke, Acting Secretary of the U.S. Department of Homeland Security (“DHS”), issued a memorandum rescinding the Deferred Action for Childhood Arrivals (“DACA”) program. The DACA program, instituted in 2012 under the Obama administration, defers deportation and provides work authorization for individuals who were brought to the United States as children and who pass criminal and national security background checks. The DACA program was designed to assist individuals who were raised in the United States but who do not possess lawful status in the United States. These individuals are often referred to as “Dreamers.”

Citing a recent 4-4 decision by the U.S. Supreme Court, which in effect allowed a lower court injunction of a program providing similar relief for undocumented parents of U.S. citizens to stand, the Trump Administration determined that the DACA program should end on March 5, 2018. Effectively, this provides Congress with six months to provide a legislative solution for the nearly 800,000 individuals impacted by the DACA program rescission.

For individuals eligible or currently enrolled in the DACA program, this will have the following impact:

  • Currently valid DACA benefits, including Employment Authorization Documents (“EAD”s) and Advance Parole documents (I-131 applications, authorizing beneficiaries of DACA to travel) will remain valid until their expiration. These documents remain subject to termination or revocation under the existing DACA program rules.
  • No new DACA applications (I-821D applications) will be accepted as of September 6, 2017.
  • Currently pending initial DACA applications and extensions will be adjudicated.
  • USCIS will not accept any new advance parole applications where the basis of that application is an approved I-821D.
  • Currently pending advance parole applications will be administratively closed, and I-131 filing fees will be refunded.
  • Individuals whose DACA benefits expire between September 5, 2017 and March 5, 2018 will be allowed to file an extension of their DACA benefits until October 5, 2017. If approved, we anticipate that extensions will be valid for two years, and not end on March 5.
  • U.S. Citizenship and Immigration Services (“USCIS”, the agency that oversees administration of the DACA program) will not affirmatively provide information regarding DACA recipients to U.S. Immigration and Customs Enforcement (“ICE”, the agency in charge of interior immigration law enforcement) or U.S. Customs and Border Protection (“CBP”, the agency in charge of border security) unless the DACA recipient meets existing deportation enforcement guidelines.

Once an individual’s DACA benefits expire, that individual will no longer have work authorization, and his or her deportation will no longer be deferred. This does not mean that individual will be automatically deported by ICE. However, it does mean that the individual will no longer be protected from deportation. In essence, without congressional action, Dreamers will once again become subject to potential removal from the United States.

A lawsuit has already been filed challenging the DACA program’s termination. It is hard to know whether the case will succeed, however. In the meantime, Dreamers plan to press Congress to pass a legislative solution before March 5.

A DHS memorandum outlining rescission of the DACA program is here. An FAQ is here.

 

This post was written by David J. Wilks of Miller Mayer LLP. All Rights Reserved. © Copyright 2013 – 2017
For more Immigration legal analysis go to The National Law Review

The Ninth Circuit Asks the California Supreme Court to Weigh in on Bag Checks

On August 16, 2017, the Ninth Circuit Court of Appeals issued an order certifying a question regarding an important wage and hour issue to the California Supreme Court: Is time spent on an employer’s premises waiting for and undergoing required exit searches of bags or packages voluntarily brought to work for purely personal convenience by employees compensable as “hours worked” under California law?

The question arose in Frlekin v. Apple, Inc., an appeal in a wage and hour class action brought against Apple, Inc., by current and former nonexempt California retail store employees. In the suit, the plaintiffs sought compensation for time that they spent waiting for and undergoing exit searches whenever they left Apple’s retail store locations, pursuant to the company’s Employee Package and Bag Searches policy. The at-issue policy, which is similar to ones in place at many other large retailers, required that employees undergo unpaid, manager-performed bag/package checks before leaving the stores—at breaks or at the end of their shifts.

In July 2015, a district court certified the case as a class action. However, in November 2015, the district court granted Apple’s motion for summary judgment and denied the plaintiffs’ motion for summary judgment and ruled that time spent by class members waiting for and undergoing exit-related bag searches pursuant to Apple’s policy was not compensable as “hours worked” under California law because such time was neither “subject to the control” of the employer nor time during which the class members were “suffered or permitted” to work.

On appeal, the plaintiffs argued that employees are under the control of the employer while waiting for and undergoing the bag checks because they are required whenever entering or leaving the premises. Apple countered that the time is not compensable because employees are not required to bring bags to work, and may avoid the searches altogether by not bringing a bag or package to the workplace. In its order certifying the issue for the California Supreme Court, the Ninth Circuit noted that Apple’s position “finds strong support” in the seminal California Supreme Court decision Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000), in which the court held that time spent by employees using employer-mandated transportation to get to a worksite was compensable, while noting that time spent on “optional free transportation” would not be compensable. However, the Ninth Circuit expressed questions about whether differences in context—i.e., employer-provided transport to and from the workplace versus searches at the worksite—rendered Morillion distinguishable.

Although the U.S. Supreme Court previously determined that similar bag checks were not compensable in Integrity Staffing Solutions, Inc. v. Busk, 135 S. Ct. 513 (2014), the California Supreme Court has not addressed the compensability of bag checks under California’s wage and hour laws, which involve a somewhat different definition of compensable work time. As the Ninth Circuit noted in its order, the consequences of any interpretation of California law with respect to bag searches “will have significant legal, economic, and practical consequences for employers and employees” throughout California and will materially affect the outcome of many pending lawsuits. For the time being, employers should consult with qualified employment counsel to mitigate risk while we wait for the California Supreme Court to weigh in.

This post was written by Philippe A. Lebel of  Drinker Biddle & Reath LLP.
Read more on litigation of wage and hour issues at the National Law Review.

For Whom the Class Tolls: “No Piggybacking Rule” Does In Would-Be Class in Ongoing Wal-Mart Saga

In 2011, the United States Supreme Court issued its landmark decision in Wal-Mart Stores, Inc., v. Betty Dukes, et al., decertifying a putative class of approximately 1.6 million current and former female Wal-Mart employees who claimed gender discrimination in wages and promotions in violation of Title VII. 564 U.S. 338 (2011).  The Court reversed the Ninth Circuit’s affirmation of class certification and determined the plaintiffs failed to meet the class “commonality” standard set out in Federal Rule of Civil Procedure 23. Id. at 349-60. The Dukes decision set in motion a number of spinoff regional cases, one of which – barring another grant of certiorari to the high court – met its end somewhat anticlimactically, when the Eleventh Circuit issued its August 3, 2017 order in Love, et. al. v. Wal-Mart Stores, Inc. No. 15-15260.

The Love plaintiffs included a sub-group of the Dukes plaintiffs who worked in the southeastern United States. These holdover Dukes plaintiffs were able to refile their claims because of the requirement that federal court discrimination plaintiffs first file with the Equal Employment Opportunity Commission. This rule effectively tolled the statute of limitations during the pendency of Dukes. But critically, under the Eleventh Circuit’s “no piggybacking rule”, tolling is limited to individual claims only, not class claims, which has also been adopted by the Fifth and Sixth Circuits.  The Love court previously left little room for argument when it noted in a 2013 order that “[t]he Eleventh Circuit categorically refuses to toll the limitations period for subsequent class actions by members of the original class once class certification is denied in the original suit.”  Thus, on October 16, 2015 the individual named plaintiffs and Wal-Mart settled and jointly filed a “stipulation of voluntary dismissal.”

On November 6, 2015, the Love appellants, made up of unnamed members of the would-be class, filed a motion to intervene solely to appeal the dismissal of class claims. This motion was denied 13 days later as moot, which, to make matters worse for the appellants, took them outside of their 30-day deadline to appeal the October 16 stipulated dismissal. The Eleventh Circuit thus found the appeal jurisdictionally barred, providing a rather sudden end to the winding multi-year litigation.

In light of this tangled and technical history, employers and their counsel should be sure to understand the differences in treatment of class actions and individuals under the relevant rules, regulations, and statutes. Though it can be tempting to move immediately to the standard substantive arguments against numerosity, commonality, typicality, and adequacy of the proposed class, the Wal-Mart cases show that knowing your way around the procedural thicket is another useful skill in avoiding or minimizing the cost of class litigation.

 This post was written by Kelly J. Muensterman of  Polsinelli PC.

[1] https://www.supremecourt.gov/opinions/10pdf/10-277.pdf

[2] http://hr.cch.com/eld/LoveWalmart080317.pdf

[3] Salazar–Calderon v. Presido Valley Farmers Ass’n, 765 F.2d 1334 (5th Cir.1985) and Andrews v. Orr, 851 F.2d 146 (6th Cir.1988)

[4] 2013 WL 5434565, at *2.

 For more legal analysis check out the National Law Review’s homepage.

California Employers Face New Notice Requirement for Domestic Violence, Sexual Assault, and Stalking Time Off

The California Division of Labor Standards Enforcement (DLSE) has published a new form that must be added to the growing list of documents that employers are required to provide to employees at the time of hire.

The new form refers to employees’ rights under California Labor Code Section 230.1 relating to protections of employees who are victims of domestic violence, sexual assault, and/or stalking. Last October, we notified California employers about this new law amending Section 230.1, Assembly Bill (AB) 2337. The amended law requires employers with 25 or more employees to provide an employee with written notice of his or her rights to take time off for the following purposes:

  1. “To seek medical attention for injuries caused by domestic violence, sexual assault, or stalking.
  2. To obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence, sexual assault, or stalking.
  3. To obtain psychological counseling related to an experience of domestic violence, sexual assault, or stalking.
  4. To participate in safety planning and take other actions to increase safety from future domestic violence, sexual assault, or stalking, including temporary or permanent relocation.”

The law requires employers to provide the notice “to new employees upon hire and to other employees upon request.”

As we reported previously, employers were not required to distribute this information until the California Labor Commissioner published a form employers could use to comply with the law. The law gave the Labor Commissioner until “on or before July 1, 2017” to develop and post the form.

As required by AB 2337, the Labor Commissioner’s office recently released the notice. The DLSE has made both an English and Spanish version of the notice available on its website. The notice also contains information on employees’ rights to reasonable accommodation and to be free from retaliation and discrimination.

Finally, the new law clarifies that employers that do not use the Labor Commissioner’s notice may use an alternative that is “substantially similar in content and clarity to the form developed by the Labor Commissioner.”

This post was written by Christopher W. Olmsted and Hera S. Arsen of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
Read more legal analysis on the National Law Review.

Take a Screen Shot of This: Supervisor Unlawfully Interrogated Employee Through Text, NLRB Says

Texting has become one of the most common ways  people communicate. Despite its prevalence, however, texting can raise serious concerns for employers, particularly when such communication takes place between a supervisor and employee in the context of a union election.  A recent National Labor Relations Board (NLRB) case makes that point clear. In RHCG Safety Corp and Construction & General Building Laborers, Local 79, the Board held that a coercive text message from a supervisor to an employee could serve as evidence that an employer unlawfully interrogated employees concerning their union support.

This decision echoes other NLRB decisions holding that an unlawful interrogation does not need to be face-to-face to be in violation of the National Labor Relations Act (NLRA). The Board has held that such unlawful interrogation can occur over a phone call, a written job application form, and now, it seems, via a short text message containing 40 characters.

The case arose in the context of a union election. During the union’s campaign, an employee texted his supervisor asking if he could return to work after a leave of absence. The supervisor responded, by text message, “U working for Redhook or u working in the union?” (Redhook is how RHCG Safety is known.) The Board found that by juxtaposing working for the employer with working in the union, the supervisor’s text strongly suggested that the two were incompatible. The Board accordingly ruled that the text constituted an unlawful interrogation and violated Section 8(a)(1) of the NLRA.

Significantly, the NLRB found that for purposes of determining legality, it doesn’t matter whether the message actually coerced the employee, so long as the interrogation was coercive in nature. To this end, the Board found certain facts weighed in favor of making the text coercive in nature. First, the employee was not an open union supporter at the time of the interrogation. Second, the supervisor did not communicate to the employee any legitimate purpose for asking if he was working in the union. Finally, the supervisor didn’t provide the employee with any assurances against reprisals.

This case suggests that seemingly offhanded communications between supervisors and employees may be determined to be coercive, interrogative, and in violation of the NLRA. Employers should consider their communication policies and train supervisors on methods of communicating with employees, particularly during a union election.

Read more legal analysis at the National Law Review.

This post was written by Minal Khan of  Barnes & Thornburg LLP.

Defendants’ Timing Defense to DTSA Claims Faces Mixed Results

With the law’s first anniversary in the rear view mirror, defendants have established a viable defense to claims arising under the Defend Trade Secrets Act (“DTSA”) – a plaintiff may be precluded from bringing a claim under DTSA if it only alleges facts that show acts of misappropriation occurring prior to May 11, 2016 (the date of DTSA’s enactment).   In the last few months, four different courts have tackled this “timing defense,” and defendants raising it in motions to dismiss DTSA claims have encountered mixed results.

In Brand Energy & Infrastructure Servs. v. Irex Contr. Grp., No. 16-cv-2499, 2017 U.S. Dist. LEXIS 43497 (E.D. Pa. Mar. 23, 2017), a Pennsylvania federal court rejected the defendants’ attempt to invoke the timing defense because the plaintiff’s amended complaint alleged various times after the enactment of the DTSA that the defendants “used” the plaintiff’s alleged trade secrets.  The court also noted the plaintiff’s inclusion of allegations in the amended complaint showing that “to this day, the defendants continue to ‘obtain access to [its] confidential and proprietary business information ….”  Based on this pleading, the court held that the plaintiff could pursue its DTSA claim.  Similarly, in AllCells, LLC v. Zhai, Case No. 16-cv-07323, 2017 U.S. Dist. LEXIS 44808 (N.D. Cal. Mar. 27, 2017), a California federal court denied the defendants’ motion to dismiss a DTSA claim because “even if [defendants] copied and thus acquired the alleged trade secrets before May 11, 2016, [the plaintiff] has sufficiently alleged that there was at least use of the trade secrets after that date.  Hence, the Act applies.”

In Molon Motor & Coil Corp. v. Nidec Motor Corp., No. 16-cv-03545, 2017 U.S. Dist. LEXIS 71700 (N.D. Ill. May 11, 2017), a plaintiff’s DTSA claim survived dismissal, overcoming the defendant’s argument that “no acts occurred after the effective date of the Act.”  The court held that the plaintiff’s allegations regarding the inevitable post-enactment disclosure of its trade secrets to the defendant by its former employee were sufficient to state a plausible DTSA claim:  “[i]f it is plausible that some of the alleged trade secrets maintain their value today, then it is also plausible that [defendant] would be continuing to use them.”  The court noted, however, that further discovery would be needed to determine whether post-enactment disclosure of the trade secrets was in fact inevitable.

By contrast, a California federal court granted a defendant’s motion to dismiss where a complaint lacked sufficient allegations regarding the timing of the alleged appropriation in Cave Consulting Grp., Inc. v. Truven Health Analytics Inc., No. 15-cv-02177, 2017 U.S. Dist. LEXIS 62109 (N.D. Cal. Apr. 24, 2017).  In Cave, the plaintiff alleged that the defendant acquired trade secrets and used them in a 2014 client meeting, but that conduct predated the enactment of the DTSA.  The court held that plaintiff had failed to make any “specific allegations that defendant used the alleged trade secrets after the DTSA’s May 11, 2016 enactment.”  Because the plaintiff failed to allege that any “postenactment use occurred,” the plaintiff had not stated a plausible DTSA claim.

These decisions illustrate that the likelihood of success of the timing defense largely is a matter of drafting, and provide an important takeaway for both sides of a trade secrets dispute. A plaintiff should be mindful in drafting its pleading to include factual allegations showing that the defendant’s misappropriation occurred (or inevitably will occur) after DTSA’s enactment.  The defendant, on the other hand, should carefully scrutinize the complaint to determine whether a timing defense applies.

This post was written by Jonathan L. Shapiro by Epstein Becker & Green, P.C..

New York City Tells Fast Food Employees: “You Deserve A Break Today” By Enacting New Fair Workweek Laws

Earlier this week, New York became the third major city in the United States to enact “fair workweek” laws aimed at protecting fast food and retail employees from scheduling practices that are perceived by the employees to be unfair and burdensome.   Following the lead set by San Francisco and Seattle, New York has adopted a series of new laws aimed at enhancing the work life of fast-food and retail employees.  By eliminating certain scheduling practices commonly used by fast food and retail employers, the New York Legislature seeks to protect these employees from unpredictable work schedules and fluctuating income that render it difficult for them to create budgets, schedule child or elder care, pursue further education, or obtain additional employment.   These new laws include the following provisions:

  • Fast food employers must now publish work schedules 14 days in advance;
  • If fast food employers make any changes to an employee’s schedule with less than 14 days’ notice, the employer must pay the employee, in addition to the employee’s normal compensation,  a bonus payment  ranging from $10 to $75 depending on the amount of notice provided of the change;
  • Before hiring new employees, fast food employers must first offer any available work shifts  to current employees, thereby enabling part-time employees desiring more work hours the opportunity to increase their hours worked and, accordingly, their income, before the employer hires additional part-time employees;
  • Fast food employers may no longer schedule an employee to work back-to-back shifts that close the restaurant one day and open it the next day if there are less than 11 hours in between the two shifts.  However, if an employee consents in writing to work such “clopening” shifts, the fast food employer must pay the employee an additional $100;
  • Fast food employees may ask their employers to deduct a portion of their salary and donate it directly to a nonprofit organization of their choice (This provision is a victory for unions as fast food employees can now earmark money to a group that fights for their rights, and the employer has to pay it on their behalf); and
  • Bans all retail employers  from utilizing  “on-call” scheduling that requires employees to be available to work and to contact the employer to determine if they are needed at work.
This post was written by John M. O’Connor of Epstein Becker & Green, P.C.