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Ford UAW Workers Defy Logic Of Ricky Bobby With New Tentative Agreement

If you ain’t first, you’re last. Not so, say the Ford UAW workers whose bargaining committee recently reached a new tentative agreement with Ford. While Ford was the last to reach a tentative agreement with the UAW, if the membership ratifies the tentative agreement, the UAW workers at Ford stand to receive a better overall deal than their counterparts at Fiat Chrysler and GM. Highlights of the tentative agreement with Ford include:

Investment of $9 billion in the U.S. by Ford over the life of the agreement;
$8,500 ratification bonus along with a $1,500 profit-sharing prepayment;
Entry level employees can progress to the Tier 1 wage rates within 8 years; and
$70,000 retirement incentive for eligible employees.

As with the ratification process for Fiat Chrysler and GM, the UAW membership at Ford will now be asked to vote in the coming days to approve the tentative agreement. The fact that the Ford tentative agreement is already better than the tentative agreements with Fiat Chrysler and GM should aid in the ratification process. Additionally, the UAW has already seen firsthand what works and what does not when it comes to seeking ratification of a tentative agreement in the current automotive climate.

While the bargaining process at Ford seems to be headed in the right direction, GM is still waiting to announce the ratification of its tentative agreement with the UAW. Despite a majority of the hourly production workers supporting the tentative agreement, a majority of the skilled-trades workers voted “no.” Based on the UAW’s constitution, the UAW is required to meet with the skilled-trades members to hear their complaints. Those meetings began this week. We will have to wait and see if the UAW attempts to go back to the bargaining table based on the issues raised by the skilled-trades workers.

Article By Michael W. Groebe of Foley & Lardner LLP

‘Fight for $15’ Walk-Outs and Protests Continue; Are You Prepared for November 10?

national labor relations board Continuing its three-year campaign, “Fight for $15” on November 4, 2015, announced plans for worker strikes and protests at fast food restaurants in 270 U.S. cities on November 10. The protests, timed to occur one year prior to the 2016 presidential election, is calculated to send a message to voters and candidates. Protests will culminate with a march on the November 10 Republican presidential debate in Milwaukee.

While the fast food workers involved in the walk-outs are not represented for purposes of collective bargaining by a labor union, the walk-outs have largely been organized and funded by the Service Employees International Union (“SEIU”). Employers with union contracts who have lived with the possibility of strikes are generally more familiar with the rights and obligations of employees and employers under the labor law than their non-union counterparts. But now that walk-outs and work stoppages are becoming an accepted strategy in the non-union workforce, non-union employers need to know the rules, too. Indeed, over three years of protests, scores of unfair labor practice charges have been filed against non-union employers alleged to have interfered with employee participation in protected activity. Moreover, on November 4, 2015, the National Labor Relations Board (“NLRB”) upheld a decision finding that a St. Louis Chipotle Grill unlawfully discharged an employee because he engaged in fight-for-$15 protests.

“Protected, Concerted Activity”

Under the National Labor Relations Act, employees have the right to engage in group activity for the purposes of “mutual aid and protection.” Thus, whether a union is involved, if two or more employees acting in concert walk off the job to protest work conditions or enforce demands relating to the terms of their employment, the walk-out, or strike, generally is protected concerted activity under the National Labor Relations Act. (Quickie, intermittent work stoppages might not be.) Under these circumstances, it would be unlawful to discipline or discharge (or otherwise disadvantage) employees for walking off the job. It also means that unless the employees have been permanently replaced (discussed below), the strikers are entitled to be returned to their jobs when they make an unconditional offer to do so.

Lawful Employer Responses to Protected Concerted Activity

Employers are not without rights in dealing with protected concerted activity (“PCA”). First and foremost, employers have a right to continue business operations. This can be accomplished by assigning managers or hiring replacement workers to do the work of the employees who walked off the job. If the strike is not caused by an employer unfair labor practice, employers have the right to designate the replacement workers either as permanent or temporary. (If the strike is caused by an employer unfair labor practice, employers have the right to designate the replacement workers only as temporary.)

If replacement workers are designated as temporary, when the strikers offer to return to work, the employer is obligated to lay off the temporary workers and put the strikers back to work.

When the employer designates the replacements as permanent, when the strikers offer to return to work, they are placed on a preferential hiring list. In that situation, the employer is not obligated to lay off the replacements, but when positions open up through normal attrition, the employer first has to offer those openings to the former strikers who are on the preferential hiring list.

Walk-outs in the fast food industry have been short, however, typically rendering the hiring of replacement workers impractical. As a practical matter, employers may have to rely on managers or other employees who are not participating in the strike.

Violence and Other Picket Line Misconduct

Employees lose the protection of the NLRA if they engage in certain improper conduct. This includes intermittent or “quickie strikes.” Generally, strikers lose the protection of the NLRA when they engage in a pattern of striking for short periods, returning to work briefly, and then striking again. By engaging in this type of conduct, strikers effectively deny the employer the ability to run its business either by relying on its regular employees or by hiring replacements. The NLRA does not prevent the employer from issuing discipline or discharging employees who participate. However, before taking action, employers should consult counsel and be absolutely certain the particular job action is unprotected.

Other activities that are unprotected include stay-ins or sit-down strikes. A stay-in or sit-down strike occurs when employees refuse to work and also refuse to vacate the employer’s premises. Strikers seek to force the employer to accede to their demands by bringing operations to a halt, preventing the employer from operating. This type of trespasser activity generally is unprotected.

Slow-downs are another tactic sometimes used to impede production. Work is deliberately performed ever more slowly; the employer cannot conduct business and customers fume. Slow-downs are not protected and can be addressed by discipline or discharge.

Lawful Responses to Unprotected Activity

Strikers, of course, are allowed to picket on public property near their place of employment to publicize a labor dispute. They, however, are not privileged to engage in threats, physical assaults, trespass, or property destruction. When they do, employers have these remedies available:

1. Law Enforcement: The most immediate relief available is to call the police. Just because employees ostensibly are engaged in a strike does not immunize them from prosecution when they commit crimes.

2. State Court Injunction: Another remedy is to seek a state court injunction to prohibit violence. This is particularly helpful when there is mass picketing, obstruction of traffic, and blockages of entrances, and the police have difficulty controlling the situation. In these kinds of cases, employers seek court orders prohibiting further violence or destructive activities and limiting to a reasonable number the number of picketers at a particular location at any given time, so police can assure public order.

3. Employer Discipline and Discharge: If the threats, violence and property destruction are egregious enough, the employees involved lose the protection of the NLRA, which means they can be discharged or disciplined. (However, a full investigation should be conducted before the employer takes action to determine what the employee actually did or said. In addition, investigation of past discipline in similar situations not involving protected concerted activity is important because the rules (under the NLRA) prohibit discrimination against employees who engage in such activity. In other words, if, in the past, an employee who was not participating in protected concerted activity engaged in violence for which he was suspended, an employee who engages in similar violence while partaking in protected concerted activity generally also should be suspended, rather than discharged.) Employees should not suffer greater discipline for their misconduct because it occurs while they engage in activity the law protects.

While there is no bright line for evaluating when misconduct becomes unprotected, some general guides may be kept in mind. For example, simple name-calling, momentary blocking of ingress and egress at employer facilities, and simple trespass onto an employer’s property, without any accompanying destruction or violence, probably will not be sufficient to cause the employee to lose the protection of the NLRA. However, physical assaults, participating in extended blocking of ingress or egress, and property destruction are generally the types of conduct that will cause an employee to lose the protection of the NLRA.

Article By Jonathan J. Spitz, Philip B. Rosen, Timothy J. Ryan & Peter N. Moss of Jackson Lewis P.C.

Target Faces First Ever Union

The Wall Street Journal reports the NLRB has rejected an appeal from Target Corp. seeking to invalidate an employee vote in favor of unionization. In September, a “micro-unit” of about one dozen pharmacy workers in Brooklyn, NY voted in favor of unionization. The company appealed, but the NLRB affirmed the vote yesterday.

As reported in the article, “The group of less than a dozen employees in Brooklyn, N.Y., would be the first union among Target’s nearly 350,000 employees, marking a significant milestone for a company that has fought to keep unions out of its stores.” The complete article can be found here.

Article By John T.L. Koenig of Barnes & Thornburg LLP

Fifth Circuit Rules Employer-Mandated Transit Time May Make Lunch Break Compensable

The Fifth Circuit Court of Appeals, which has jurisdiction over Texas, Louisiana and Mississippi, ruled recently that security guards’ “off-the-clock” meal periods may be compensable when they were required to travel for 10 to 12 minutes from their work stations to get their meals. Naylor v. Securiguard, Inc., No. 14-60637 (5th Cir. Sept. 15, 2015) available here.

The private security guards in Naylor were required to leave their work sites and travel to other locations for meals or breaks in order to preserve the appearance of the worksite. The court reasoned that a jury could find this mandated transit time predominately benefited the employer, rather than the employee, making it compensable under the Fair Labor Standards Act (“FLSA”).

The court noted that, when this mandated round trip travel time to break areas was only a few minutes in duration, it is “de minimis” and would not transform the 30-minute break to compensable time. However, at some point, employer-mandated travel time during an employee’s lunch break shortens the length of the break enough to make it a compensable “rest” period. Under the FLSA, “rest” periods of 20 minutes or less are generally compensable because they are considered to benefit the employer by rejuvenating the employee. Ten to twelve minutes of transit time cut too much into the “lunch breaks.”

Significantly, the court did not set a bright line rule for the precise number of transit minutes an employer may require away from the work station during a lunch break before the entire break becomes compensable.

The conversion to compensable time may entitle the employees to both compensation for the 30-minute meal periods and resultant weekly overtime once that time is added to other hours worked.

The ruling also raises questions of whether the mandatory transit time rationale applies to breaks required in other contexts, such as offsets to “30-minute” break requirements under collective bargaining agreements or state laws, or to other break activities, such as clothes changing, going through security or reassigning equipment. Providing employees written notice of which break-related activities are required and clearly stating their options to eat meals and engage in other break activities without mandatory transit or other activities that may reduce their meal periods might preclude any such issues.

Article By Robert E. Sheeder, Nancy M. O’Connor & Clayton M. Davis of Bracewell & Giuliani LLP

New Rules Provide Insights for Pregnancy Accommodations in Illinois

Since the start of the year, all employers in Illinois with one or more employees are required to provide accommodations for pregnant workers for conditions associated with pregnancy and childbirth. Now the Illinois Department of Human Rights (IDHR) and the Illinois Human Rights Commission (IHRC) have issued a set of proposed joint rules to assist with interpretation and enforcement of the new law.

Under amendments to the Illinois Human Rights Act that went into effect on Jan. 1, 2015, employers and labor organizations must make reasonable accommodations for any medical or common condition related to pregnancy or childbirth, unless the employer or labor organization can demonstrate that the accommodation would impose an undue hardship on the ordinary operations of the business of the employer or labor organization.

Beyond the information already provided in the law itself, the rules go into further detail as to the types of accommodations that employers must consider and how an employer should engage in the interactive process when considering a request for an accommodation. The rules also provide detailed sections on consideration of job transfers and time off as reasonable accommodations.

Of particular interest is the guidance concerning when an employer can seek medical certification of an employee’s need for a reasonable accommodation. While the rules make clear that employers are entitled to obtain information in order to evaluate if a requested reasonable accommodation may be necessary, the request needs to be limited to:

The medical justification for the requested accommodation;
A description of the reasonable accommodation medically advisable;
The date the reasonable accommodation became medically advisable; and
The probable duration of the reasonable accommodation.

Moreover, employers may request documentation from the job applicant’s or employee’s health care provider concerning the need for the requested accommodation if:

The employer would request the same or similar documentation from a job applicant or employee regarding the need for reasonable accommodation for conditions related to disability;
The employer’s request for documentation is job-related and consistent with business necessity; and
The information sought is not known or readily apparent to the employer.

Under the rules as proposed by the IDHR and IHRC, the determination of whether an employer’s request for documentation from the employee’s healthcare provider concerning the need for a reasonable accommodation is job-related or consistent with business necessity will depend upon the totality of the circumstances, including factors such as whether the need for reasonable accommodation is readily apparent; whether the job applicant or employee is able to explain the relationship between the requested accommodation and her pregnancy condition; the employer’s reasons for requesting the information; and the degree to which the requested accommodation would impact the ordinary operations of the employer’s business if it were granted by the employer.

If an employee needs a reasonable accommodation beyond the probable duration identified by her healthcare provider, the employer may request additional information from the health care provider.

It is also important to note that, under the rules, medical conditions related to pregnancy or childbirth need not constitute a disability within the meaning of the Illinois Human Rights Act and may be transitory in nature.

The rules, which were published in the Illinois Register, are expected to go into effect sometime in October. Once fully adopted, the rules will be found at 56 Ill. Admin. Code 2535.10 et seq. For now, they can be found in the Illinois Register. And if you are an employer in Illinois and you have not yet posted the notice required under the new law, you can print a copy from the Illinois Department of Human Rights website.

Article By Jennifer Cerven of Barnes & Thornburg LLP

Department of Labor Glitch Prevents PERM Filings re: Immigration

A programming glitch, which occurred during a software update implemented by the Department of Labor (DOL) on September 1, 2015, prevented some employers from being able to file their PERM applications, the DOL announced today on its website. The DOL explained that the malfunction precluded employers from completing some of the ETA Form 9089 online.

The problem with the Permanent Labor Certification Case Management System (CMS) continues and the DOL has directed employers who are unable to complete and file an ETA Form 9089 online to mail in their PERM applications to the Atlanta National Processing Center. The DOL is authorizing those employers who tried and could not file a PERM application online between September 1, 2015 and September 11, 2015, only, to include documentation demonstrating that information in their ETA Form 9089 was affected by the programming glitch.

If your PERM application was affected last week, you must submit your ETA Form 9089 and supporting documentation before September 30, 2015. Please see the DOL’s Employment & Training Administration’s web page for filing instructions here.

Article By Rebecca B. Schechter of Greenberg Traurig, LLP

Be Careful What You Say During a Union Organizing Campaign

At the same time that the current National Labor Relations Board is giving employees what seems like the unfettered ability to engage in disparagement, profane outbursts, and racist comments that accompany protected union or other concerted activity, employers are having to become ever more careful about what they say. Even truthful and seemingly innocuous statements made during an organizing campaign can be viewed, in hindsight, as having an unlawful “chilling effect” that discourages employees from exercising their rights to support a union. A recent decision from a federal appeals court in Chicago provides a cautionary tale for employers who find out about organizing activity and want to keep their workplace union-free.

On September 4, the United States Court of Appeals for the Seventh Circuit (covering Illinois, Indiana and Wisconsin) upheld the Board’s determination that an Illinois auto dealership illegally discouraged workers from supporting a union and illegally terminated a worker after learning he failed to disclose the suspensions of driver’s license following a DUI charge. The court noted that the employer learned union activity was “afoot” after receiving an anonymous voicemail from a woman who called “on behalf of the spouse of one of your employees.” The anonymous caller said that a particular employee was trying to “stir up” the unionization effort and stated that he did not have a valid license, which the dealership required, because of his DUI. After receiving this voicemail, the employer interviewed the employee, who admitted his license was invalid, and then suspended and later terminated him.

Meanwhile, the dealership’s general manager and other top managers met with workers to discuss the union organizing effort. One of the employees present secretly recorded the meeting. During the meeting, the managers said that any bargaining with the union would “start from scratch,” warned (truthfully) that its Orlando dealership had not had any bargaining negotiations even though its workers elected a union nearly three years ago, advised that pay raises were “absolutely possible” in the event employees rejected the union as it considered pay adjustments every year, responded that they “don’t know” if some employees would be demoted under union rules, and suggested that support for the union could “follow” them when they seek other employment because other employers might be hesitant to hire them.

The Board determined that the managers’ statements all had a “tendency” to discourage employees from organizing, and were therefore illegal under federal labor law. The managers’ statements were unlawful in four respects: (1) they “threatened” that it would be “futile” for workers to organize by suggesting that bargaining would start from scratch and bringing up the Orlando dealership as an example of potential negative consequences; (2) they implied “promises” of wage increases by suggesting that employees might receive pay raises if they reject the union; (3) they “threatened” workers with demotions by saying they didn’t know what would happen under the union’s rules; and (4) they “threatened” blacklisting by suggesting that employees’ support for the union would follow them.

The Seventh Circuit upheld all of the Board’s findings, although it did not review the Board’s decision from scratch but rather decided only whether there was “substantial evidence” to support the decision. The most obvious violation to the appellate court was the threat of blacklisting. The court found the other statements could reasonably be interpreted as unlawfully discouraging employees from unionizing. For example, the managers told the truth about the failure of negotiations at the Orlando dealership, but bringing this up in the context of the other statements could have been viewed by the workers as a threat that it would be futile for them to elect the union. And the managers were not off the hook when they spoke in hypotheticals or said that they were unaware of what would happen – answering “maybe” when asked about future pay increases was still an illegal promise of benefit and saying “I don’t know” if workers will be demoted under union rules was still a threat.

As to the employee who was suspended (and later terminated) after the employer found out his license was suspended, the Board found that his termination was illegal because it was motivated, at least in part, by his support for the union. The court again upheld this finding, stressing that the employee’s support for the union did not need to be the sole or even primary reason for his termination – it only needed to be a “motivating factor.” Here, there was enough evidence to show an unlawful motivation because the caller who left a voicemail singled out the employee for his union activity and the employer had shown “hostility” toward the union during its meeting with employees.

The lesson from this case is that employers need to be very careful about what they tell employees during a union organizing campaign. Even one statement that crosses the line can put everything else that was said in a worse light and ultimately get the employer in trouble. The case shows that employers should not make the following statements:

Bargaining will start from scratch (viewed as a threat that workers will lose their current pay and/or benefits).
You will receive a pay increase and/or other benefits even without a union (viewed as a promise that workers will receive benefits if they reject the union).
We are going to bargain hard if you elect a union, so do not expect things to change (viewed as a threat that supporting a union would be futile).

Perhaps you are wondering, what can employers say? Here are some examples of permissible statements:

We oppose the union and urge you to do the same.
You enjoy good pay, benefits, and job security without a union.
You have a right to refuse to sign an authorization card or speak to union representatives, and may vote against the union in an election even if you previously signed a card.
If there is an economic strike, we may permanently replace all striking workers.
The union cannot guarantee better wages, benefits, and working conditions (as long as there is no threat that workers risk losing what they currently have by supporting the union).

In short, employers can express their opposition to the union and discuss the pros and cons of union membership, such as having to pay union dues (in non-right to work states). Employers can also provide factual information about the law, the union (dues, fees, rules, officials’ salaries, etc.), and how unionized companies compare against non-unionized companies in terms of wages and benefits, competitiveness, etc. in the industry.

It is often hard to tell when an employer’s statement opposing a union might cross the line and be viewed as unlawfully discouraging workers from exercising their rights. Even true statements can be viewed as illegally tending to discourage union activity. To stay in the clear, employers should obtain legal advice before speaking in opposition to a union organizing campaign.

Article By Scott T. Allen of Foley & Lardner LLP

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

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

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

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

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

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

(1) Authority to hire and fire the individual;

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE BY Joseph U. Leonoro of Steptoe & Johnson PLLC

New York Becomes First State Raise Minimum Wage to $15 . . . For Fast Food Workers

A panel appointed by New York Governor Andrew Cuomo recommended a minimum hourly wage increase to $15 for fast food service workers on Wednesday. The recommendation comes just three months after Governor Cuomo tasked the state’s acting Labor Commissioner to empanel a Wage Board to investigate and make recommendations on increasing the minimum wage in the fast food industry.

The Labor Commissioner now has to adopt the recommended changes, but it is largely expected that he will, even if he first makes minor changes. The minimum wage hike would be phased in over time, with the first increase to $10.50 for City fast food workers and to $9.75 for State fast food workers coming at the end of the year. The minimum wage rate for City workers would then rise by $1.50 each year for the next three years until it tops out at $15 in 2018. For the rest of the State, the wage rate would rise incrementally each year until it tops out at $15 in 2021.

The wage order covers Fast Food Employees working in Fast Food Establishments. Fast Food Establishments mean any establishment in the state of New York serving food or drink items:

where patrons order or select items and pay before eating and such items may be consumed on the premises, taken out, or delivered to the customer’s location;
which offers limited service;
which is part of a chain; and
which is one of thirty (30) or more establishments nationally, including: (i) an integrated enterprise which owns or operates thirty (30) or more such establishments in the aggregate nationally; or (ii) an establishment operated pursuant to a Franchise where the Franchisor and the Franchisee(s) of such Franchisor owns or operate thirty (30) or more such establishments in the aggregate nationally.

Fast Food Employee covers anyone whose job duties include at least one of the following: customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.

San Francisco, the City of Los Angeles and Seattle each have raised their minimum wage rates to $15 for all employees. But New York becomes the first state to do so, even though it is limited to the fast food industry. Many believe this hike will serve as a precursor to wage hikes in other low wage industries and possibly state-wide. Similar efforts are being made on the left coast, where on the same day that the New York Wage Board released its recommendations, the County of Los Angeles Board of Supervisors voted for a $15 minimum wage. Moments later, the University of California, which employs nearly 200,000 workers statewide, announced that it will pay its workers at least $15/hr. We will continue to track these developments.

ARTICLE BY Michael S. Arnold of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

A Look Ahead to The Supreme Court’s 2015-16 Term

As the Supreme Court winds down its 2014-15 term, the Benefits Law Advisor looks ahead to the ERISA cases and issues the Supreme Court may confront in its next terms. The Supreme Court’s recent ERISA jurisprudence has touched on issues such as remedies (CIGNA Corp. v. Amara and US Airways v. McCutchen), retiree entitlement to healthcare benefits (M&G Polymers v. Tackett), time-based defenses to ERISA claims (Tibble v. Edison Int’l and Heimeshoff v. Hartford Life & Accident Ins.), and the now-defunct “presumption of prudence” that lower courts had applied to ERISA plans’ decision to offer employer stock as an investment option (Fifth Third Bank v. Dudenhoeffer).

As of this writing, the Court has only granted certiorari in one ERISA case for next year’s term, Montanile v. Board of Trustees, No. 14-723, cert. granted Mar. 30, 2015. The Montanile case arose from the familiar situation where an ERISA plan seeks to recover medical benefits paid to an injured participant, after that participant receives a tort recovery for those injuries. Both lower courts granted summary judgment to the plan, with the additional proviso that the plan could impose an equitable lien (under the terms of the plan) on Montanile’s settlement proceeds, even if those monies have been dissipated.

In granting Montanile’s petition, the Court interprets, once again, the term “equitable relief” in ERISA §502(a)(3) – an issue the Court has addressed has repeatedly revisited. In particular, the Montanile case gives the Court a chance to address an open question from its equitable-remedies jurisprudence: is there an “equitable tracing” requirement that obligates ERISA plaintiffs to identify a specific sum of money that may be the subject of an equitable recovery?

The existence of an equitable-tracing requirement has been hotly debated since at least 2003, when the Court’s decision in Great West Life & Annuity v. Knudson firmly established that equitable relief under ERISA was limited to those forms of relief traditionally available in the courts of equity. Since Knudson, many ERISA defendants have successfully argued that equitable relief was only available where plaintiff could identify a particular asset or sum of money that could be made subject to a restitutionary recovery, constructive trust or equitable lien. As a result, the Court has struggled (in this author’s view) with how to apply traditional “tracing” rules, because the Court’s answer could have far-reaching implications both for plans seeking reimbursement, and for participants invoking ERISA §502(a)(3) for redress in fiduciary-breach claims or other violations of ERISA.

It seems that the Court is ready to answer that question in Montanile, judging from the question presented in the Court’s writ. Another similar case, Elem v. AirTran Airways, No. 14-1061 (cert. pet. filed Feb. 27, 2015). is pending before the Court on the participant’s petition.

Beyond Montanile, the Court has several other writ petitions pending, including three cases where the Court has invited the Solicitor of Labor to weigh in with an amicus brief. These cases include:

Smith v. Aegon Cos. Pension Plan – In this case, the lower courts dismissed benefits claims on grounds of improper venue. In doing so, the lower courts held that an exclusive-venue provision in the plan required the participant to bring his benefits suit in the specified venue. The Department of Labor (DOL) had submitted an amicus brief to the Sixth Circuit, arguing that venue-selection provisions ran afoul of ERISA’s goal of providing participants with ready access to the courts. The Sixth Circuit, however, rejected DOL’s position and enforced the plan’s venue provision. A Supreme Court decision on this issue would likely be significant, because many plan sponsors are using the plan document to “hard wire” certain defenses to benefits claims – for example, the Court’s recent Heimeshoff decision approved a limitations period established by the plan.
Gobeille v. Liberty Mut. Ins. Co. – This case presents a pre-emption question – specifically, whether ERISA pre-empts a Vermont law requiring healthcare payors (including ERISA plans) to submit certain claims data to the state. A split panel of the Second Circuit held the Vermont law was pre-empted because it imposed additional reporting requirements on those already imposed by ERISA. At the Court’s invitation, DOL filed an amicus brief opining that ERISA does not pre-empt the Vermont statute because it applies to non-ERISA entities, as well, and does not impose significant reporting burdens. The DOL brief added, however, that the Court’s review was not currently warranted, and suggested that “further percolation” of the issue in the appellate courts would be beneficial. Given that the Court’s last decision on ERISA pre-emption was over 10 years ago, the Court may nevertheless be signaling its readiness to take the case, and to issue further guidance on ERISA’s pre-emptive reach.
RJR Pension Inv. Comm. v. Tatum – The Tatum case arose from a dispute over plan fiduciaries’ decision to divert the plan of company stock, at a time when the stock was distressed. After the company stock recovered dramatically, participants asserted ERISA claims that plan fiduciaries had acted imprudently in selling the stock at a time when the price was down significantly. The Fourth Circuit held, among other things, that (1) the burden of proving loss causation shifted to plan fiduciaries, upon a showing that the fiduciaries had breached their duty of prudent investment; and (2) plan fiduciaries must show a hypothetical prudent fiduciary “would have” (as opposed to “could have”) made the same investment decision, where there was no evidence that the plan’s fiduciaries had undertaken robust deliberations before divesting the plan’s holdings in company stock. The Court invited the DOL to brief both issues. If the Court takes the case, its decision could be significant. On the former issue, a decision from the Court would resolve diverging lower-court decisions on whether the plaintiff bears the ultimate burden of proof (including loss causation), or whether the burden-shifting approach of trust law – requiring a trustee, upon a showing of a breach of duty, to demonstrate that the breach did not cause the loss – is more appropriate for ERISA cases. On the latter issue, a decision from the Court could provide much-needed guidance on the proper scope of judicial review of fiduciary decision-making.

Although the Court has taken no action yet on the petition, it may be worth watching to see whether the Court takes up the case of UnitedHealthcare of Arizona, Inc. v. Spinedex Physical Therapy USA, Inc., No. 14-1286 (cert. pet. filed April 24, 2015). There, the Ninth Circuit held that a claims administrator is a proper party defendant in a medical benefits claim, even though it otherwise had no obligation as the benefits payer. Because ERISA §502(a)(1)(B) only authorizes suit for “benefits due … under the terms of his plan,” the Ninth Circuit’s reading of the statute – which purports to make claims administrators liable for benefits in a manner not contemplated by “the terms of the plan” – clearly seems overbroad. If left unaddressed, the Spinedexdecision could ultimately prove counter-productive, in that it will inevitably raise costs for service providers, which in turn, will be passed along to the plans, and ultimately to the participants in the form of higher premiums, larger deductibles, or less-generous coverage.

The Supreme Court has demonstrated some enthusiasm for ERISA in recent years. The Montanile case represents a significant beginning to the Court’s ERISA work for the next term. Given the cases and issues before it, however, the odds are that the Court will consider more ERISA cases in the next twelve months.

This post was written with contributions from William H. Payne IV.

ARTICLE BY Charles F. Seemann III of Jackson Lewis P.C.

Tag: labor

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