Courts Pin Back NLRB Rulemaking
By: Deniz S. Uzel, Summer Associate (duzel@hillwallack.com and Susan L. Swatski, Esq. (sswatski@hillwallack.com On June 14, 2013, the Fourth Circuit Court struck down the National Labor Relations Board’s rule that would have required six million private employers to hang posters about workers’ right to unionize or to face penalties for anti-union bias for refusing. The court noted that even the National Mobilization Against Sweatshops, a worker-advocacy group, admitted that very few workers learn about their rights through postings. The NLRB has rarely engaged in rulemaking in its seventy-seven years of existence, but the Fourth Circuit’s ruling makes clear that when it does, it may be acting outside of its legal authority. The Court explained that the part of the National Labor Relations Act that gives the Board power to issue rules, Section 6, does not allow the issuance of this type of rule because the NLRB is supposed to be a reactive agency. Accordingly, the court found that the posting rule is outside of the bounds of the law. The rule was also challenged in the D.C. Circuit in May, where the Court vacated the rule as unenforceable on the same grounds. The D.C. Circuit also recently struck down another NLRB rule that was passed shortly after the postings rule which was related to union elections. Some of the NLRB’s rulings from the past couple of years may also be compromised on different grounds. In the course of finding President Obama’s NLRB recess appointments unconstitutional, the D.C. Circuit and the Third Circuit Court of Appeals have both engaged in a detailed analysis of the meaning of “recess”. As a result of this review, the D.C. Circuit nullified some of the NLRB rulings, determining that they were made during a time that the NLRB lacked quorum to make valid Board decisions. The United States Supreme Court will hear the case from the D.C. Circuit in October 2013, and as a result of its findings, more than 900 NLRB decisions may be deemed invalid. The NLRB was formed in 1933 as a reaction to union strikes, but the recent rules about unions seemingly go past the authority granted at that time. With the string of recent court rulings unfavorable to the NLRB, as well as the amount of resources the Board has had to expend on defending its rulings, the Board may be discouraged from acting proactively anytime soon. This means that employers, employees, and unions who seek legal relief should plan on bringing a claim to the NLRB instead of relying on the NLRB to handle any widespread employment issue with a broad rule. Any employer, employee, or union who needs assistance with NLRB rules or rulings should consult with experienced employment or labor...
read moreStakes Run High In The Arbitration Arena As Supreme Court Unanimously Holds That “Convincing A Court Of An Arbitrator’s Error – Even His Grave Error – Is Not Enough”
By: Susan L. Swatski, Esq. (sswatski@hillwallack.com and Deniz S. Uzel, Summer Associate (duzel@hillwallack.com On June 10, 2013, the United States Supreme Court unanimously affirmed Oxford Health Plans v. Sutter, exhibiting a cautionary warning to employers and the particular terms they may want to include in the arbitration clauses of their employment agreements. This case involved a situation where parties bargained for broad contractual language, stating specifically that any disputes were to be “submitted to final and binding arbitration.” The contract was silent concerning class arbitration. Sutter brought a class action claim against Oxford Health Plans. The parties agreed that the arbitrator would decide whether this broad contractual language would be inclusive of class arbitrations. The arbitrator ultimately found that since the language included the phrase “all such disputes,” class arbitrations were permitted. Plaintiff challenged the arbitrator’s decision, bringing the case through federal District Court, the Third Circuit, and then finally to the Supreme Court, relying on a previous decision, Stolt-Nielsen S.A. v. AnimalFeeds International Corp. In that case, the contract was also silent as to class arbitrations and the Supreme Court found that the parties had not authorized such arbitration. The court in Stolt-Nielsen held that the Federal Arbitration Act (“FAA”) requires parties to specifically agree to class arbitration before arbitration can be allowed. Since virtually no arbitration agreements include express class arbitration authorizations, employers trying to avoid such class actions were not seen as a threat in the outcome of Stolt-Nielsen. To our intrigue, the Supreme Court unanimously rejected the challenge to the arbitrator’s decision in Oxford Health Plans and allowed the class arbitration because the arbitrator had based his decision on the language of the contract. The bargained for exchange here was for the attention of an arbitrator to the matter, which the Court deemed should be honored. Justice Kagan specifically stated: “All we say is that convincing a court of an arbitrator’s error—even his grave error—is not enough.” She further asserted that “[s]o long as the arbitrator was arguably construing the contract – which this one was – a court may not correct his mistakes under [the FAA]. . . . The arbitrator’s construction holds, however good, bad, or ugly.” Significantly, however, the only question that the Supreme Court considered was whether the arbitrator was entitled to interpret the parties’ contract, not whether it was interpreted correctly. Accordingly, the Court could completely disagree with an arbitrator’s decision but still choose not to interfere with it because of the great deference afforded to contract terms. As a result of this decision, commentators have interpreted federal courts to be essentially unable to relieve parties from an arbitrator’s substantive interpretation of a contract’s terms, even if that interpretation is wrong. Such a holding calls for employers to attend to their arbitration clauses. Moving forward, employers should draft their arbitration clauses unambiguously, indicating whether they would apply to class or individual arbitration or both. If an agreement is silent regarding class or collective action waiver and gives an arbitrator the right to deal with controversies rising under the contract, the arbitrator is likely to be given full and unwaiving discretion. Employers can no longer rely on silence. Employers should contact experienced employment counsel to review their arbitration agreements to ensure their agreements provide what the employer intends them...
read moreStakes Run High In The Arbitration Arena As Supreme Court Unanimously Holds That “Convincing A Court Of An Arbitrator’s Error – Even His Grave Error – Is Not Enough"
By: Susan L. Swatski, Esq. (sswatski@hillwallack.com and Deniz S. Uzel, Summer Associate (duzel@hillwallack.com On June 10, 2013, the United States Supreme Court unanimously affirmed Oxford Health Plans v. Sutter, exhibiting a cautionary warning to employers and the particular terms they may want to include in the arbitration clauses of their employment agreements. This case involved a situation where parties bargained for broad contractual language, stating specifically that any disputes were to be “submitted to final and binding arbitration.” The contract was silent concerning class arbitration. Sutter brought a class action claim against Oxford Health Plans. The parties agreed that the arbitrator would decide whether this broad contractual language would be inclusive of class arbitrations. The arbitrator ultimately found that since the language included the phrase “all such disputes,” class arbitrations were permitted. Plaintiff challenged the arbitrator’s decision, bringing the case through federal District Court, the Third Circuit, and then finally to the Supreme Court, relying on a previous decision, Stolt-Nielsen S.A. v. AnimalFeeds International Corp. In that case, the contract was also silent as to class arbitrations and the Supreme Court found that the parties had not authorized such arbitration. The court in Stolt-Nielsen held that the Federal Arbitration Act (“FAA”) requires parties to specifically agree to class arbitration before arbitration can be allowed. Since virtually no arbitration agreements include express class arbitration authorizations, employers trying to avoid such class actions were not seen as a threat in the outcome of Stolt-Nielsen. To our intrigue, the Supreme Court unanimously rejected the challenge to the arbitrator’s decision in Oxford Health Plans and allowed the class arbitration because the arbitrator had based his decision on the language of the contract. The bargained for exchange here was for the attention of an arbitrator to the matter, which the Court deemed should be honored. Justice Kagan specifically stated: “All we say is that convincing a court of an arbitrator’s error—even his grave error—is not enough.” She further asserted that “[s]o long as the arbitrator was arguably construing the contract – which this one was – a court may not correct his mistakes under [the FAA]. . . . The arbitrator’s construction holds, however good, bad, or ugly.” Significantly, however, the only question that the Supreme Court considered was whether the arbitrator was entitled to interpret the parties’ contract, not whether it was interpreted correctly. Accordingly, the Court could completely disagree with an arbitrator’s decision but still choose not to interfere with it because of the great deference afforded to contract terms. As a result of this decision, commentators have interpreted federal courts to be essentially unable to relieve parties from an arbitrator’s substantive interpretation of a contract’s terms, even if that interpretation is wrong. Such a holding calls for employers to attend to their arbitration clauses. Moving forward, employers should draft their arbitration clauses unambiguously, indicating whether they would apply to class or individual arbitration or both. If an agreement is silent regarding class or collective action waiver and gives an arbitrator the right to deal with controversies rising under the contract, the arbitrator is likely to be given full and unwaiving discretion. Employers can no longer rely on silence. Employers should contact experienced employment counsel to review their arbitration agreements to ensure their agreements provide what the employer intends them...
read moreSupreme Court Clarifies Causation Standard for Title VII Retaliation Claims
By: Felicity S. Hanks, Esq. (fhanks@hillwallack.com / link to bio) On June 24, 2013, the Supreme Court issued its decision in University of Tex. Southwestern Medical Center v. Nassar through which it confirmed the causation standards to be used in Title VII retaliation cases. The Court held that retaliation claims under Title VII must be proved according to “traditional principals of but-for causation, not the lessened causation test stated in §2000e-2(m). This ruling relieves the confusion for attorneys and litigants and gives employers a reason to let out a sigh of relief. The facts are not overly relevant to the Court’s causation ruling, and thus are summarized only briefly as follows. The Respondent, Nassar, was a faculty member of the University and a physician at the University-affiliated Parkland Memorial Hospital. He is of Middle Eastern descent. Nassar complained to a Dr. Fritz, the supervisor of a Dr. Levine, that Dr. Levine was biased against Nassar due to his religion and ethnic origin. Dr. Levine was one of Nassar’s supervisors. Nassar thereafter resigned from the faculty asserting racial and religious harassment, and accepted a position offered by the hospital, only. Dr. Fritz was upset at the public humiliation of Dr. Levine and objected to the hospital’s employment offer to Nassar. As a result, the hospital withdrew its offer. Nassar filed a lawsuit alleging, among other things, that Dr. Fritz’s efforts to prevent the hospital from hiring him constituted retaliation for his complaints of racial harassment. 42 U.S.C. §20000e-3(a) prohibits an employer from taking retaliatory action because the employee has made a Title VII claim or challenged an unlawful practice of the employer. The jury found for Nassar on the retaliation claim and the Fifth Circuit affirmed. The Fifth Circuit, however, held that retaliation claims require only a showing that retaliation was a “motivating factor” for the adverse employment action. The “motivating factor” or “mixed motive” standard applied by the Fifth Circuit is a burden shifting standard adopted by Congress through the Civil Rights Act of 1991 to apply to status-based discrimination claims, i.e. employer discrimination in hiring, firing, salary, promotion and other actions, due to race, color, religion, sex or national origin of the employee or applicant. Under this standard, the complaining employee need only show that discrimination was one of the employer’s motives in making its employment decision. Thereafter, the burden shifts to the employer to demonstrate that here were lawful, non-discriminatory reasons for the decision and that it would have taken the same action regardless of the alleged discrimination. If the employer can show this, the burden then shifts back to the employee to prove that the employer’s stated reason was merely pretext. The traditional standard for causation is the “but-for” test, which requires a complaining employee to show that the adverse employment action, and injury caused thereby, would not have occurred but for the discriminatory act or motivation. This test places a heavier burden on plaintiffs’ to prove discrimination than does the “motivating factor” test. Until now, the debate had been whether a retaliation claim under Title VII receives the same “motivating factor” burden shifting standard as status-based discrimination claims under the act. The “motivating factor” test is widely believed to be beneficial to employees, lessening their burden of proof. On the other hand, the “but-for” standard...
read moreInterns Hunt Fox for Compensation
By: Susan L. Swatski, Esq. (sswatski@hillwallack.com and Gina R. Lauterio, Summer Associate (glauterio@hillwallack.com As long as an internship doesn’t consist of coffee-runs, internships usually provide valuable opportunities for developing skills, experience, and networking for young professionals. Still, there is a debate about whether this value can replace a paycheck — the latest story in this discussion being a Manhattan federal court ruling this week that a business which relies heavily on unpaid interns is obligated to pay them. The Department of Labor has outlined in the Fair Labor Standards Act a series of conditions under which an unpaid internship is sanctioned. All six criteria should be met before an employer should consider creating an unpaid internship program: (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 provides for any training and does 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. In Glatt et al. v. Fox Searchlight Pictures Inc., two interns claimed Fox Entertainment violated their right to wages when they worked as production assistants, bookkeepers, and secretaries, among other roles, for the film “Black Swan” in 2009 and 2010. The interns sued for a minimum wage recovery of the hours worked, including applicable overtime payment, as well as for a reimbursement for personal cell phone and laptop computer expenses used for the job. The court granted summary judgment to the interns, finding that five of the six factors were not met in the Fox Searchlight Pictures internship program. The one factor that was met was that the interns were not expecting to get paid, but Judge Pauley III explained that this factor has little significance because workers cannot waive their right to payment under the FLSA. One of the Fox interns explained the case in terms of bargaining power, saying that “[i]t shouldn’t be up to the least powerful person in the arrangement to have to bring a lawsuit to stop this.” The court also allowed another class of interns from the Fox Entertainment Group to bring related claims under state law and conditionally certified a national class of interns from the company. Because unpaid interns are commonly used in the film industry, the ruling is a warning sign for those companies as well as the business community at large. The Department of Labor has created a fact sheet with resources on this topic, which can be found here: http://www.dol.gov/whd/regs/compliance/whdfs71.htm. The case is number 1:11-cv-06784 in the U.S. District Court for the Southern District of New York. For assistance with creating an internship program in compliance with the FLSA, employers should consult with legal...
read moreClient FYI – New York’s Minimum Wage is Increasing
By: Christina Saveriano, Esq. (csaveriano@hillwallack.com / link to bio) On March 29, 2013 Governor Andrew Cuomo signed legislation that increases the New York state minimum wage rate starting on December 31, 2013. The minimum wage in New York will increase to $8.00 an hour on and after December 31, 2013, to $8.75 per hour on and after December 31, 2014 and $9.00 per hour on and after December 31, 2015. We at Hill Wallack stand ready to assist you with any concerns that may arise as a result of this new...
read moreNEW JERSEY SOCIAL MEDIA BILL HEADS TO THE GOVERNOR
On March 21, 2013, the New Jersey General Assembly passed a bill (A2878) that prohibits employers from requiring or requesting that employees or job candidates disclose user names and passwords for their social media accounts. The Bill also prohibits employers from inquiring whether these individuals have personal social networking accounts. Any employer who retaliates or discriminates against an applicant or employee based on the refusal to provide access to a social media account or to disclose a user name or a password may face a private cause of action by the job candidate or employee and civil penalties of up to $1,000 for the first instance and up to $2,500 for each additional violation. An aggrieved employee could file suit against an employer for up to a year following the violation and recover attorneys’ fees and costs of suit. The New Jersey Senate approved a counterpart bill in October 2012. Governor Chris Christie will now consider the bill. If Governor Christie signs the bill into law, New Jersey will be the eighth state to pass legislation preventing employers from asking prospective and current employees for passwords to their accounts on social media site. However, New Jersey’s law would be the first to include language prohibiting employers from asking employees if they even have such accounts. Similar laws have been introduced or are pending in 32 other states, according to the National Conference of State Legislatures. If this bill passes, it will pose a potential litigation land mine for employers because the protections under this bill may not be waived under any circumstance even if the use of social networking sites such as LinkedIn is part of the employee’s job. The law also would place employers in a difficult position of complying with the law while ensuring a secure work environment for their employees. Employers should consult with experienced legal counsel regarding how it may affect their hiring...
read moreAN EMPLOYER’S EXPENSIVE LESSON IN SEVERANCE AGREEMENTS
By: Susan L. Swatski, Esq. (sswatski@hillwallack.com / link to bio) Although the case this entry addresses comes to us from the U.S. District Court of South Dakota, it holds a valuable lesson for all employers – what an employer may consider an “informal” communication with its employees may well constitute a legally binding contract. In March 2009, the President of Masco Builder Cabinet Group (“MBCG”) distributed a memo to its Rapid City employees advising them that the Rapid City plant would be closing at the end of September 2009. The company did not expect to find a buyer. The memo said that “[a]ll employees will be offered a severance package and we are identifying resources to assist them with their job search.” On that same day, two MBCG representatives met with Rapid City employees and told them that employees who stay until the closing will receive severance. At some point thereafter, MBCG representatives again met with employees to affirm those representations stating that the company “will pay severance as we have in all other plant closures in accordance with what has already been announced.” In August 2009, MBCG found a buyer, and the buyer agreed to hire many of MBCG’s employees. As a result, MBCG decided to only pay severance to employees who weren’t hired by the buyer, because those who were hired suffered no loss. As you might expect, MBCG’s employees disagreed citing the memo and the verbal commitment to pay severance; neither of which mentioned anything about what would happen if the company was bought and the buyer hired the employees. The employees filed a class action: Baker v. Masco Builder Cabinet Group, Inc., No. CIV. 09-5085-JLV, 2012 BL 327872 (D.S.D. Dec. 14, 2012). Both sides filed motions for summary judgment because the facts were undisputed. The court found MBCG’s conduct with respect to its severance communications evidenced its intent to enter into a binding agreement and its consent to contract. The court further found that the employees upheld their end of the bargain by staying on until the company closed its doors. Whether another company opened those doors with the same employees the next day was of no consequence to the contract between MBCG and its employees. MBCG owed $2,005,403 in severance pay to the 100 employees who stayed with it. Here’s the takeaway for employers – when offering a retention bonus to incentivize employees to stay until the end in a plant closing, address in all severance materials, including informal memos and emails (which are ill-advised; there really is no such thing as “informal” if the communication is disseminated to employees), how the agreement will be affected if the company is bought and there is a rehire. Communications with employees such as memos, emails and statements at meetings may all be used as evidence to show that the employer and the employee had a “meeting of the minds” as to what promise or offer was made by the employer. The best way to avoid the costly error of MBCG is to seek advice of experienced employment counsel to help navigate through a plant closing or reduction in...
read moreNLRB: Discharging Non-Union Employee’s for Facebook Posts Violated NLRA
By: Susan L. Swatski, Esq. (sswatski@hillwallack.com / link to bio) In Hispanics United of Buffalo, Inc., 359 NLRB No. 37 (Dec. 14, 2012), the NLRB released its first decision to examine protected, concerted activity involving Facebook. By a 3-1 vote, the Board held that the non-union employer committed an unfair labor practice by discharging five employees for responding to another employee’s criticism of their work performance on Facebook. The majority of the Board found that comments posted on Facebook are protected in the same manner and to the same extent as comments made at the “water cooler.” “Although the employees’ mode of communicating their workplace concerns might be novel,” the Board concluded this activity was for “mutual aid or protection” within the meaning of Section 7 of the National Labor Relations Act (“NLRA”). The discharged employees received full reinstatement and backpay. The facts of the case are common water cooler fodder. While not in the workplace and not on company time nor using a company computer, an employee (Cole-Rivera) criticized on Facebook the work performance of and comments made by another employee (Cruz-Moore). Cole-Rivera then asked her coworkers how they feel about the situation. Four of her co-workers responded on Facebook by agreeing with Cole-Rivera’s criticism. Cruz-Moore then complained to her employer’s executive director that she felt slandered by this exchange on Facebook. Her employer investigated the complaint by reviewing the Facebook posts. The next workday, the employer fired Cole-Rivera and the other four employees for “bullying and harassment” in violation of the employer’s “zero tolerance” policy. The Board upheld an administrative law judge’s decision that the terminations violated the NLRA even though no union was involved because the postings were: 1. a “concerted” activity under the Act; 2. known to be concerted by the employer’s supervisor, who was shown the postings; 3. “protected” under the Act; and, 4. the motivation for the terminations. The Board concluded that the postings constituted a “concerted” activity because they “implicitly manifest[ed]” that the co-workers’ postings had the “clear ‘mutual aid’ objective of preparing [the] coworkers for a group defense to [Cruz-Moore’s] complaints.” In so deciding, the Board rejected the employer’s argument that the employees’ Facebook posts lost any NLRA protections because they were a form of “harassment” or “bullying” in violation of company policy and found that the NLRA trumps any workplace bullying or harassment policy. The dissenting Board member objected to the majority’s reasoning by emphasizing that “the mere fact that the subject of discussion involved an aspect of employment — i.e., job performance — is not enough to find concerted activity for mutual aid and protection. There is a meaningful distinction between sharing a common viewpoint and joining in a common cause.” There is little reason to believe that the NLRB’s trend in directing its decisions to non-union employers will subside in 2013. As a result, whether you have a union or a non-union workforce, employers should review your social media policy with experienced employment/labor counsel as well as consult with counsel before making any adverse employment decision based on a social media-related...
read moreTis the Season to Limit Holiday Party Liability
By: Susan L. Swatski, Esq. (sswatski@hillwallack.com / link to bio) December may be the season of joy for those celebrating at office holiday parties, but January is the season of joy for plaintiff lawyers celebrating the influx of lawsuits resulting from those parties. The key point for employers to remember is that holiday parties – no matter where they are located – are an extension of the workplace. Here are five practical suggestions for employers to limit their liability without sacrificing a merry celebration. 1. Pre-Party Planning Employers should check their comprehensive general liability insurance policy to ensure that it covers third-party liquor liability. If your policy does not, then consider purchasing special event coverage or a liquor liability policy. Remind employees that your office policies regarding harassment and substance abuse extend to the holiday party and refer them to your company handbook for a refresher. Remind supervisors of what to do if they witness a potential problem. 2. Christmas v. Holiday Party Be careful not to offend employees or guests by limiting the celebration to those of only one religious belief or background. Consider acknowledging on the invitation that the party is intended to celebrate all of the holidays that fall within this time of year. 3. Whom to invite Among the first questions that any employer must decide when hosting a party is, whom to invite? Contract Workers v. Employees While inviting contract and temporary workers may be a thoughtful gesture, employers should be wary of treating contract workers the same as employees; any action that dilutes the distinction could be used against the employer in subsequent litigation. Also, employers should know that they will be assuming legal liability for the conduct of all of their guests, including non-employees. Employers should consider only inviting contract and temporary workers if they are also inviting other non-employees such as clients and vendors. The liability risk will still be there – you can’t escape it completely – but at least you are not diluting any distinction your company is making between contract workers and employees. Spouses v. Significant Others Although an invitation to employees and their spouses may seem welcoming, it may have the opposite effect. Employers should be conscious that in many states same sex couples are not permitted to marry resulting in invitations limited to “spouses” coming across as exclusionary. Employers should consider extending invitations to “significant others” or “life partners” to be more inclusive. Inviting significant others may also reduce overindulgence of alcohol and reduce incidences of sexual harassment. 4. Serving Alcohol Alcoholic beverages are probably the most common ingredient of any holiday party and also probably the cause of most litigation following a party. Some things an employer may do to limit its risk include: *Offer ample non-alcoholic options; *Serve plenty of food; *Establish a drink limit by using drink tickets – limiting alcohol consumption will help to keep your guests more in control of their actions and could help to reduce the occurrence of actionable conduct such as sexual harassment and property damage; *Offer a cash bar for alcoholic beverages (this option may limit consumption)(consider donating the proceeds to charity). Social host liability is not necessarily limited by asking guests to pay for alcohol; *Hire a bartender to monitor consumption and check identification; and, *Provide...
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