NLRB Dismisses Northwestern University Football Players’ Union Election Petition

Posted by on Aug 19, 2015 in NLRB, School Law

By: Felicity S. Hanks, Esq. (fhanks@hillwallack.com)

In January 2014, football players at Northwestern University (“Northwestern”) filed a historic union election petition with the National Labor Relations Board (“NLRB”) seeking to unionize and claiming that they were university employees. We blogged about it last year and much has happened since that post, culminating in a surprising NLRB decision issued this month.

NLRB Regional Director Peter Sung Ohr acted on the players’ petition on March 26, 2014, and ruled that the football players were “employees” of Northwestern, primarily due to the football program’s commercial activity and profitability, in addition to the extraordinary levels of control that Northwestern and its coaches had over the players’ lives.[1] Northwestern appealed the decision to the NLRB. For the last several months, players, the NCAA, colleges, and labor practitioners alike have been awaiting the NLRB’s decision with interest, but some sport enthusiasts and labor watchers might say that the NLRB swallowed its whistle on this one.

In a unanimous decision, the NLRB declined to assert jurisdiction over the case and dismissed the football players’ petition.[2] In doing so, the NLRB avoided addressing the merits of Director Ohr’s decision concerning the players’ status as employees. The NLRB held that that exercising jurisdiction over this case would not promote labor stability due to the nature of the NCAA Division I Football Bowl Subdivision (“FBS”) in which Northwestern University participates. The majority of the schools in the FBS, unlike Northwestern, are public institutions not subject to the National Labor Relations Act (“NLRA”), and therefore a substantive decision on the players’ petition would create an unwanted piecemeal treatment of players within the league.

Importantly, by declining to exercise jurisdiction, the NLRB did not decide whether student-athletes in general, or at Northwestern in particular, have the ability to unionize as employees under the NLRA. The decision does not preclude student athletes at other institutions from attempting to organize under the NLRA or state-specific public employer labor relations laws. It is likely that the issue of athletes as employees will come up again in the not-so-distant future. As the question of whether one is an employee is so fact specific it is typically a case-by-case basis as to whether a class of individuals may be deemed employees. After this decision, however, we now know that if faced with this issue in the future, the NLRB will not limit its inquiry into the specific institution, but will consider implications on the league as a whole.

This article is for informational purposes only and does not constitute legal advice or a legal opinion. All employers should seek legal counsel when addressing matters related to its employees or unionization efforts.

[1] The Regional Director’s 3/26/14 decision can be accessed at: https://www.nlrb.gov/news-outreach/news-story/nlrb-director-region-13-issues-decision-northwestern-university-athletes

[2] The NLRB 8/17/15 decision can be accessed at: https://www.nlrb.gov/news-outreach/news-story/board-unanimously-decides-decline-jurisdiction-northwestern-case

 

 

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SECOND CIRCUIT INSTITUTES A NEW STANDARD FOR UNPAID INTERNSHIPS

Posted by on Jul 17, 2015 in FLSA

By: Susan L. Swatski, Esq. (sswatski@hillwallack.com) and Bryan A. Coe, Summer Associate (bcoe@hillwallack.com)

An unpaid internship can be beneficial to both interns and employers. Interns can gain valuable experience in their field while employers can help educate people who one day may work for their companies. However, confusion exists as to what type of experience must be provided to an intern for the experience to replace a paycheck. By providing an unpaid internship instead of a paid position, employers put themselves at risk of legal action, which can result in fines and back pay to the intern. A recent decision from the United States Court of Appeals for the Second Circuit provides employers with much needed guidance to craft their internship programs.

In most states, employers must conform to the United States Department of Labor’s Intern Fact Sheet when deciding if an internship qualifies to be unpaid. The DOL’s requirements are: (1) the internship should be similar to training that would be provided in school; (2) the experience should be for the student’s benefit; (3) the intern should not be a replacement for a regular employee, but instead, should be under the supervision of a regular employee; (4) the employer must provide training and not derive an immediate advantage from the intern’s activities; (5) the intern is not entitled to a job at the end of the internship; and (6) both the employer and the intern have an agreement that the intern will not receive payment for work performed. According to the Department of Labor, all six items must be present for an internship to qualify as unpaid.

In Glatt v. Fox Searchlight Pictures, Inc., the United States Court of Appeals for the Second Circuit determined that the proper question to ask is whether the intern or the employer is the “primary beneficiary” from the relationship. The Court of Appeals replaced the Department of Labor’s six factor Intern Fact Sheet with the following seven non-exhaustive factors to aid in answering whether an internship can be unpaid: (1) the extent to which the intern and the employer understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa; (2) the extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions; (3) the extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit; (4) the extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar; (5) the extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning; (6) the extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and, (7) the extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. When deciding if a person should be classified as an employee, employers should balance these factors. No one factor is dispositive to conclude the intern should be not considered an employee.

A second important point to be taken away from the Glatt ruling is that interns will find it much harder to certify a class to bring their claims, because although the primary beneficiary test may be partially answered using generalized proof, the more substantial questions require individualized proofs to very fact specific inquiries.

Employers should be aware of the Second Circuit’s break from the DOL’s Intern Fact Sheet and account for the distinctions between the “primary beneficiary test” and the Fact Sheet when creating an internship program. As a general matter, when creating an internship program, employers should focus on the educational component. Programs such as guest speakers and information sessions can help tip the scale towards the internship being more beneficial to the employee. The greater the amount of educational opportunities that are present, the more likely a court will find an intern to be the “primary beneficiary” of the relationship.

Currently, only employers who are located in New York, Connecticut and Vermont are affected by this ruling. However, employers in other states should be aware of this ruling because it shows a change in thinking regarding unpaid internships. If your company offers an unpaid internship, you should have it reviewed by skilled employment law counsel to ensure the program complies with the law in your jurisdiction.

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NLRB Decision Opens Door to Unionization of Private University and College Faculty

Posted by on Feb 18, 2015 in NLRB

By: Felicity S. Hanks, Esq.

At the end of last year the National Labor Relations Board (“NLRB”) issued a decision in Pacific Lutheran University and Service Employees International Union, Local 925, 361 NLRB No. 157 (December 2014), in which it revisited and revised the standard for deciding the managerial status of private university and college faculty members.[1] As a result, private schools are likely to see an increase in efforts to unionize faculty.

As a general matter, any group of employees may self-organize, form or join with a labor union for the purpose of collective bargaining or to engage in activities for the mutual aid or protection of the group. Certain supervisors and persons in managerial positions do not fall within the definition of “employee” under the National Labor Relations Act (“NLRA”). As managerial employees are tasked with policy and decision-making authorities, a supervisor’s membership in an employee bargaining group would be inappropriate. Accordingly, in many instances where employees seek to unionize, a threshold issue is which individuals are part of the proposed group and which, if any, supervisory employees may be excluded.

For thirty years, the NLRB and federal courts have primarily followed a standard set forth in the 1980 case NLRB v. Yeshiva University, 444 U.S. 672 (1980). The Yeshiva Court held that managerial employees in a university setting are those who “formulate and effectuate management policies by expressing and making operating the decisions of their employer. Yeshiva, 444 U.S. at 682. The Yeshiva decision, however, was analyzed with the understanding that a private university, unlike standard industry, operated pursuant to a system of “collegial decision-making,” where the professional expertise of the faculty was necessary to the formulation and implementation of academic policy. Id. at 680. Therefore, the Yeshiva standard recognized heightened managerial and operational duties of university faculty than is present in the modern-day model.

The NLRB in Pacific Lutheran explained that since 1980, the trend has shown that colleges and universities are being run more like corporations. Schools have moved away from the model where faculty are involved in management, and have increasingly centered management control within the administration. Several factors, including the increase in part-time, contingent and non-tenured faculty support this change in school governance. According to the NLRB, this movement has made the Yeshiva standard ripe for revision.

In revamping the standard, the NLRB formulated a two-prong test and set forth several factors to be considered under each prong. The goal of the test is to determine whether the faculty actually exercise control or make effective recommendations over areas of policy that effect the university as a whole, not just their department or classes; the analogy being akin to a determination of whether corporate employees exercise control over the product produced by the company, the terms by which the product is offered, or the customers served.

The first step of the test is to review the faculty’s decision-making in five identified areas: academic programs, enrollment management, finances, academic policy and personnel policy and decisions. NLRB weighs the first three factors as “primary” factors which is consistent with the acknowledgment of and analogy of what is important to determining managerial status in a private industrial or corporate setting. The last two factors, the “secondary” areas of decision making, hold less weight.

The second step in the test is to determine whether the decision-making that the faculty engages in is (1) pursuant to actual, rather than paper, authority, and (2) results in effective recommendations to the administration that are “almost always followed.” NLRB will also consider where in the university structure the faculty at issue stands, e.g. are they tenure eligible, contingent, etc., as temporary, part-time, or non-tenure eligible faculty are naturally limited in their ability to effect university policy.

Under the Pacific Lutheran test, not only does a faculty member have to actually engage in decision making over the university’s programming, the student enrollment, and the tuition, but the faculty’s role in those decisions must be authorized and their recommendations must be “almost always” accepted by the administration. In addition, even if a faculty member does engage in such administrative, university-wide policy making, it may still be difficult for any non-tenured or contingent faculty members to satisfy the test, as their status alone is likely to tip the scales to the non-managerial side. As this standard has been set out by the NLRB, it appears that, only a small number of faculty members who are engaged in management-level functions in the university would be likely to satisfy the Pacific Lutheran test.

Notably, the facts in Pacific Lutheran concerned contingent faculty members who were not tenure eligible, were not permitted to sit on faculty standing committees, had a limited voice in faculty or university governance or university-wide academic programing. Therefore it was easy for the NLRB to find that the faculty at issue were not managerial, under the new or the Yeshiva standard, and thus could be included in the proposed employee bargaining unit.

Because the facts were as they were, the Pacific Lutheran decision is likely to be just the first in numerous labor board and court decisions reviewing and seeking to apply this new standard. Through those decisions, the standard may be defeated or redefined. Nevertheless, as it now stands, the Pacific Lutheran standard is more comprehensive and sets a higher bar for finding a managerial employee than the Yeshiva test did. It will make it more difficult for universities and colleges to have faculty members excluded from unionization efforts, and in turn increase the appeal of union organizing in those schools.

We recommend that all affected entities take note of this new standard and seek legal guidance and advice in reviewing the duties and authorities of faculty members that may no longer be considered managerial. Hill Wallack LLP’s Labor and Employment and School Law attorneys have vast experience in counseling school entities in all areas of labor relations, including defending school clients before national and state labor boards.

[1] The decision also reviewed the standard used by the NLRB to determine whether a religious university is subject to the National Labor Relations Act, which will not be addressed in this client alert.

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Minimum Wage Update

Posted by on Feb 3, 2015 in Benefits, FLSA

By Felicity S. Hanks, Esq. and Joseph M. McGinley, Esq.

Minimum wage reform has become a prevalent and at times polarizing issue. The trend in recent years has been to increase wages above federal minimum standards. Currently, the federal minimum wage is $7.25/hour.[1] This rate is a floor; states may legislate to provide higher minimum wage rates, but may not pay workers below the federal standard. In complying with this provision, U.S. states and territories are split in whether they provide for higher wage benefits to workers or rely on the federal minimum.

Currently, thirty states and territories have minimum wage requirements that exceed the federal minimum of $7.25/hour.[2] The remaining states and territories meet the federal standard either expressly or by default: seventeen states have minimum wage rates equivalent to the federal minimum,[3] five states have no minimum wage law (thus, federal law applies),[4] and two states have minimum wage rates lower than the federal minimum (those laws are superseded by the federal minimum wage).[5]

On February 12, 2014, President Obama signed Executive Order 13658, which raised the minimum wage for workers on Federal construction and service contracts to $10.10/hour. Although President Obama’s executive order increased rates for federal contract workers, only Congress has the authority to increase the federal minimum wage rate; it has declined to do so.

The minimum wage rate in Pennsylvania is set equal the federal standard.[6] New Jersey provides for a slightly higher rate at $8.38/hour. Interestingly, the New Jersey minimum wage will continue to change in upcoming years in tandem with the consumer price index.[7]

Many states continue to debate raising their minimum wage requirements; in response to legislative inaction, some localities have taken matters into their own hands. Major cities such as Seattle, San Francisco, and Chicago have voted to gradually increase to minimum wage to $15/hour in the upcoming years, while Oakland has voted to increase its minimum wage to $10.10/hour.

Due to the wide variation of minimum wage rates across the United States, it is important for businesses to keep abreast of federal, state, and local minimum wage requirements, especially if a business operates and employs workers in multiple states. We encourage employers to consult with employment attorneys regarding any minimum wage issues or concerns and to stay aware of proposed legislation.

 

[1]Fair Labor Standards Act, 29 U.S.C. § 206.

[2] Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Rhode Island, South Dakota, Vermont, Washington, and West Virginia.

[3] Guam, Idaho, Indiana, Iowa, Kansas, Kentucky, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, Puerto Rico, Texas, Utah, Virginia, the U.S. Virgin Islands, and Wisconsin.

[4] Alabama, Louisiana, Mississippi, South Carolina, and Tennessee all have no minimum wage laws.

[5] Georgia and Wyoming.

[6] 43 P.S. § 333.101 et seq.

[7] N.J.S.A. 34:11-56 et seq.

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EEOC Cites Separation Agreement Language as Basis for Resistance Claim

Posted by on Jan 28, 2015 in Severence Agreements

By: Felicity S. Hanks, Esq. (fhanks@hillwallack.com)

The employment world took notice last year when the U.S. Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against CVS Pharmacy, Inc. (“CVS”) alleging that CVS’ standard separation agreement fails to adequately advise employees of their right to pursue or participate in certain non-discrimination processes.[1]  EEOC’s position left employers with questions as to how clear the language in separation agreements must be.

A separation agreement typically provides the employee with severance in the form of a monetary payout in exchange for an agreement not to sue the employer for damages related to the employee’s termination of employment with the company.  An employee’s waiver of such rights is limited, and an employer cannot require an employee to waive the right to file a charge with the EEOC or to assist in EEOC investigations under Title VII and other employment discrimination laws.  Separation agreements generally provide a carve-out in the waiver provision which clarify that the employee is not waiving such rights.  As evidenced by the EEOC’s position in EEOC v. CVS, these standard carve-outs may no longer be sufficient.

The EEOC has authority under Title VII of the Civil Rights Act of 1964 to bring lawsuits against entities which the Agency  reasonably believes are engaging in a “pattern or practice” of “resistance” to the full enjoyment of any rights guaranteed by Title VII and which are intended to deny the full exercise of such rights.  These “resistance” cases are typically based on acts of discrimination or retaliation prohibited by Title VII.  The EEOC recently sought to expand “resistance” cases to cover any effort to keep an employee from exercising his or her statutory rights.  In the CVS case, the EEOC alleged that CVS was engaged in such resistance by conditioning an employee’s severance payment at the time of termination on the signing of a separation agreement containing language that did not clearly or obviously carve out an employee’s right to file a charge or to assist in an employment discrimination investigation.  The specific language in CVS’s agreement was as follows:

[n]othing in this paragraph is intended to or shall interfere with Employee’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws, nor shall this Agreement prohibit Employee from cooperating with any such agency in its investigation.

EEOC alleged that this provision, which was set forth in just one sentence of the separation agreement, was “hidden.”

The Northern District of Illinois recently dismissed the CVS lawsuit on the procedural basis that EEOC failed to engage in conciliation procedures required by Title VII.  As such, the court did not address the substantive issue of whether CVS’s agreement adequately advised employees of their rights.

The EEOC’s position in CVS leaves employers with the question of whether to now revise their separation agreements to avoid scrutiny and potential charges from the EEOC.  Although the courts have not yet ruled on the validity of language like that in CVS’s separation agreement, the  EEOC made its position clear.  We suggest that employers revisit their standard form separation agreement to determine whether the agreement adequately and clearly advises employees of their continued right to file charges with the EEOC and to participate in EEOC investigations.  As always, it is recommended that employers consult with an employment attorney to advise on the legality of any employment agreement.

[1] EEOC v. CVS Pharmacy, Inc., Case: 1:14-cv-00863 (N.D. Ill.  2014).

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