This update is provided by Gary W. Bethel and Littler Mendelson in order to review the latest developments in employment law. This update is designed to provide accurate and informative information and should not be considered legal advice. © 2011 Littler Mendelson. All rights reserved.
Today, with more than 800 attorneys and 51 offices in major metropolitan areas nationwide, Littler Mendelson is the largest law firm in the country exclusively devoted to representing management in employment, employee benefits, and labor law matters. Littler is dedicated to being the world leader in employment law. Littler has offices in the following states for your convenience: AL, AR, AZ, CA, CO, CT, D.C., FL, GA, IL, IN, MA, MI, MN, MO, NC, NJ, NV, NY, OH, OR, PA, RI, SC, TX, VA, WA, WI
If you have any questions concerning these articles or any other employment law related issues please do not hesitate to contact me by either replying to this email or by telephone at either 559-244-7500 or 805-934-5770 or my assistant Ms. Nanci Berry at this number.
By Gary W. Bethel
Federal Court Strikes Down NLRB Notice Rule As Inconsistent With Employers’ Free Speech Provision
The U.S. Court of Appeals for the District of Columbia Circuit held May 7, 2013, that the National Labor Relations Board's (NLRB) August 2011 regulation requiring businesses to post notices of worker rights violates the free speech rights of employers under federal labor law and is therefore invalid.
The court held that section 8(c) of the National Labor Relations Act (NLRA) “precludes the Board from finding non-coercive employer speech to be an unfair labor practice or evidence of an unfair labor practice.” Requiring employers to post an NLRB statement of employee rights “does both,” according to the court.
In another part of the ruling the court also found that the NLRB could not enforce the notice-posting requirement through a provision that would toll the NLRA's statute of limitations in some cases where an employer failed to display the required notice. The court found that the NLRB failed to show Congress intended to allow such tolling when it enacted the NLRA’s original six-month limitation on the filing of unfair labor practice charges.
The court concluded that since the NLRB's requirement for the posting of employee rights notices is not severable from its invalid enforcement provisions, it “must therefore fall along with the rest of the Board's posting rule.”
(National Ass'n of Mfrs. v. NLRB, D.C. Cir., 5/7/13)
The NLRB proposed the prophylactic posting rule in December 2010 based on the Board’s belief that most American employees are unaware of their NLRA protections until they are involved in an NLRB proceeding in which case NLRB related notices are posted. The Board contended that section 6 of the NLRA gave them the authority to adopt “such rules and regulations as may be necessary to carry out the provisions of this Act.”
The NLRB published a final rule in August 2011 requiring covered employers to post an NLRB notice informing employees of their NLRA rights. Under the rule, employers that customarily post such notices on company intranets or websites also would have to make the notice available in such a manner. The final rule also provided that an employer that failed or refused to post the required notice would violate Section 8(a)(1) of the Act, which forbids employer action “to interfere with, restrain or coerce employees” in their exercise of rights guaranteed by the NLRA.
The enforcement provisions of the proposed posting requirement included the following:
1. A “knowing and willful refusal to comply” with the posting requirement could be considered by NLRB as “evidence of unlawful motive in a case in which motive is an issue;” and
2. The rule provided that although a tolling the NLRA’s six month statute of limitations would be appropriate “if the employer has failed to post the required employee notice unless the employee has received actual or constructive notice that the conduct complained of is unlawful.”
The rule originally was set by NLRB to become effective in November 2011. The agency postponed the effective date to Jan. 31, 2012, and then extended the date to April 30, 2013.
Several large employer associations and small businesses challenged the rule in the U.S. District Court for the District of Columbia.
The proposed posting rule was partially upheld by the federal district court and that ruling was appealed to the employer groups and the other challengers appealed the district court's decision on the rule's validity to the D.C. Circuit, which enjoined the NLRB from enforcing the rule until the appeal was resolved in April 2012.
As a side note, a second lawsuit challenging the notice-posting regulation was filed in the U.S. District Court for the District of South Carolina which held the NLRB exceeded its authority in adopting the rule earlier in April 2012. (See Chamber of Commerce v. NLRB). The NLRB has appealed that ruling to the U.S. Court of Appeals for the Fourth Circuit, where the case awaits a final decision.
The basis of the court’s decision invalidating the NLRB posting requirement was Section 8(c) of the NLRA, which provides that the expression of “views, argument, or opinion” in “printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice” under the NLRA, “if such expression contains no threat of reprisal or force or promise of benefit.”
The business groups challenging the rule objected to the posting mandated by the NLRB rule, claiming it is a one-sided document that favors unionization without notifying employees of their legal rights to decertify unions or refuse to pay union dues to a labor organization in a right-to-work state. The NLRB countered that the rule does not violate Section 8(c) because an employer is required only to post a statement of employee rights composed by the government, not an expression of views purporting to come from the employer.
Ruling Turns On Employers’ First Amendment Rights
The appeals court said the First Amendment protects the dissemination of messages as well as their creation, as does Section 8(c) of the NLRA. The court held that:
“The right to disseminate another's speech necessarily includes the right to decide not to disseminate it,”....and quoted U.S. Supreme Court case which stated the following “Some of [the] Court's leading First Amendment precedents have established the principle that freedom of speech prohibits the government from telling people what they must say.”
The NLRB argued that the employee rights notice mandated by its regulation is a “non-ideological” document that merely recites rights existing under the NLRA and interpretations of the statute. The court disagreed and said the right against compelled speech is not, and cannot be, restricted to ideological messages. The court held:
“We therefore conclude that the Board's rule violates § 8(c) because it makes an employer's failure to post the Board's notice an unfair labor practice, and because it treats such a failure as evidence of anti-union animus in cases involving, for example, unlawfully motivated firings or refusals to hire—in other words, because it treats such a failure as evidence of an unfair labor practice,”
The appeals court also found that the NLRB's attempt to enforce a notice-posting requirement by modifying the tolling of a statutory limitations period in unfair labor practice cases was invalid.
Summary and Important Points
1. The most recent battle has been won by employers on this NLRB posting requirement, but the war continues as the NLRB continues to appeal the Court of Appeal’s rulings on this issue. Almost all employers would be impacted by this posting requirement and this is something you need to follow as it progresses to the U.S. Supreme Court. Stay tuned.
2. I originally did a Legal Update on the NLRB’s proposed workplace posting requirement on September 2, 2011 (See Legal Update: Another Posting Requirement - Informing Employees Of Their Right To Form A Union). I have included an excerpt from this Legal Update below to refresh those who may have forgotten what this proposed Notice would include:
Required Content of Notice
The final rule requires employers to post a specific form notice that begins with the following preamble:
The National Labor Relations Act (NLRA) guarantees the right of employees to organize and bargain collectively with their employers, and to engage in other protected concerted activity or to refrain from engaging in any of the above activity. Employees covered by the NLRA are protected from certain types of employer and union misconduct. This Notice gives you general information about your rights, and about the obligations of employers and unions under the NLRA. Contact the National Labor Relations Board (NLRB), the Federal agency that investigates and resolves complaints under the NLRA, using the contact information supplied below, if you have any questions about specific rights that may apply in your particular workplace.
The required notice also informs employees of specific rights afforded them under the NLRA, such as the right to:
· Organize a union to negotiate with their employer concerning your wages, hours, and other terms and conditions of employment.
· Form, join or assist a union.
· Bargain collectively through representatives of employees' own choosing for a contract with the employer setting wages, benefits, hours, and other working conditions.
· Discuss wages and benefits and other terms and conditions of employment or union organizing with co-workers or a union.
· Take action with one or more co-workers to improve working conditions by, among other means, raising work-related complaints directly with the employer or with a government agency, and seeking help from a union.
· Strike and picket, depending on the purpose or means of the strike or the picketing.
· Choose not to do any of these activities, including joining or remaining a member of a union.
In addition, there is a section in the required notice advising that employers cannot do any of the following under the NLRA:
· Prohibit employees from talking about or soliciting for a union during non-work time, such as before or after work or during break times; or from distributing union literature during non-work time, in non-work areas, such as parking lots or break rooms.
· Question employees about union support or activities in a manner that discourages employees from engaging in that activity.
· Fire, demote, or transfer employees, or reduce hours or change shifts, or otherwise take adverse action against employees, or threaten to take any of these actions, because employees join or support a union, or because they engage in concerted activity for mutual aid and protection, or because they choose not to engage in any such activity.
· Threaten to close a workplace if workers choose a union to represent them.
· Promise or grant promotions, pay raises, or other benefits to discourage or encourage union support.
· Prohibit employees from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances.
· Spy on or videotape peaceful union activities and gatherings or pretend to do so.
The required notice also explains that unions and their representatives cannot do any of the following under the NLRA:
· Threaten or coerce employees in order to gain support for the union.
· Refuse to process a grievance because an employee criticized union officials or because he or she is not a member of the union.
· Use or maintain discriminatory standards or procedures in making job referrals from a hiring hall.
· Cause or attempt to cause an employer to discriminate against an employee because of his or her union-related activity.
· Take adverse action against employees because they have not joined or do not support the union.
The required notice then contains a section that explains the concept of collective bargaining, as follows:
If you and your co-workers select a union to act as your collective bargaining representative, your employer and the union are required to bargain in good faith in a genuine effort to reach a written, binding agreement setting your terms and conditions of employment. The union is required to fairly represent you in bargaining and enforcing the agreement.
The notice also provides employees with information for reporting violations, including the NLRB's website and telephone numbers. The final section of the required notice explains the types of employees who are excluded from the NLRA's coverage, such as public sector employees, independent contractors, agricultural and domestic workers and employees of air and rail carriers covered by the Railway Labor Act.
3. After reading the foregoing, it may be clearer why employer groups are so opposed to the proposed NLRB poster. The poster may cause some employees to discuss and explore unionization, and posting could well increase employee-driven (as opposed to union-initiated) campaigns. As a result, employers may want to consider taking a more proactive approach to the notice requirements, including conducting the supervisor training and undertaking a strategic analysis of the workplace and potential vulnerabilities.
Employee Lacks Evidence
Employer Regarded Him As Disabled, And Employer Medical Exam Not Unlawful
A former college professor fired for professional misconduct cannot establish his employer regarded him as disabled or that he was retaliated against for filing a claim with the EEOC claiming discrimination under the Americans with Disabilities Act (ADA), the U.S. District Court for the District of Maryland decided April 30, 2013.
The court granted the employer¹s motion for summary judgment finding no evidence that the employer regarded the employee as disabled and that the employer had ³ample² legitimate, nondiscriminatory reasons to terminate him.
The court also found that the employer¹s requirement that the employee undergo a medical examination was not unlawful. The request for the medical exam was based on the employer¹s findings that the employee had sexually harassed students and exhibited erratic behavior in the classroom and helped ensure campus safety. As to the employee¹s claims of retaliation the court found he could not show a causal connection between his October 2009 discrimination complaint to the EEOC and his May 2010 termination.
(Coursey v. Univ. of Md. E. Shore, D. Md., No. 111957, 4/30/13)
The employee worked as an assistant professor. In 2004, the human resources department investigated reports of several students who claimed that the employee had sexually harassed them. The investigation confirmed not only the harassment, but also that he had retaliated against them for complaining about his behavior.
Further problems developed three years later when the employee started acting inappropriately toward his colleagues, disregarding his supervisor's directives, and students began to complaint that they were scared of the employee and that he was ³unstable.² In 2009, after an investigation, the employer removed him from the classroom and suspended him finding that he posed a direct threat to the safety of students and staff.
The employee appealed to the faculty grievance board, who in turn recommended reinstatement. The university president refused and it was recommended internally that the employee be required to undergo a medical examination. The employer requested the employee undergo a medical evaluation four times in writing, but the employee refused. Instead, he filed a discrimination charge with EEOC in October 2009. After investigation of the charge the EEOC dismissed the charge.
In May 2010, the decision was made to terminate the employee. In the written termination notice the employee was told he was being terminated because of his abusive behavior, arbitrary and capricious grading methods, and insubordination. The employee filed an internal appeal to the faculty grievance board, which after a lengthy discussion unanimously recommended that the employee be discharged for incompetence in the classroom, professional misconduct, and insubordination. The employee filed other internal appeals, but all were denied.
The employee filed suit alleging violations of the ADA and other causes of action.
In his ADA claim the employee argued that the employer ³regarded² him as disabled solely because it requested he undergo a psychological evaluation.
In the decision the court reviewed the applicable law and noted that under the ADA a ³disability² is defined as a physical or mental impairment that substantially limits one or more major life activities or being regarded as having such an impairment. The court pointed out that an individual is ³regarded as² disabled under the ADA if the employer either mistakenly believes that the individual has a physical or mental impairment that substantially limits one or more major life activities, or mistakenly believes that an actual, non-limiting impairment substantially limits one or more major life activities.
The court held that the employee did not establish a prima facie case of wrongful discharge under the ADA and provided no evidence that the employer regarded him as disabled.
The court rejected the employee¹s argument that the employer regarded him as disabled solely because it requested he undergo a psychological evaluation.
Citing authority from the Sixth and Fourth Circuit federal courts, the court ruled that a mandate for a medical examination by itself was not sufficient to support the employee's claim of being unlawfully ³regarded as² disabled. According to the court, the employer¹s request for a medical evaluation could not be considered equivalent to regarding the employee as disabled. The court found that the employer was properly concerned that the employee's erratic behavior might pose a threat to the students and faculty, and that the medical examination was being required for that reason. Based on federal court case law and the EEOC regulations, the court found the university's request was not unlawful, but was job-related and served a clearly asserted business necessity of campus safety.
The court also rejected the employee¹s retaliation complaints finding he could not show any causal link between the filing of the charge of discrimination and his termination.
Summary and Important Points
Comments On This Case
1. Whenever an employer is considering requiring an employee to have a medical examination as a condition of continued employment, it is imperative that you carefully evaluate whether the request meets the ADA tests for "job relatedness" and "business necessity."
2. In this case the employee argued that simply being asking to have a medical exam by the employer established he was ³regarded² as disabled. The court rejected this argument and pointed to the fact the employer¹s request was, in fact, supported by business necessity under the EEOC regulation on the ADA.
3. Employers are encouraged to seek advice from counsel (and, where appropriate, health care professionals) on whether a planned examination or referral to counseling is legally defensible and serves a job-related business necessity.
Applicable ADA Regulations On The Subject Of Unlawful Inquiries And The Limitations On Medical Examinations
29 C.F.R. § 1630.13 - Prohibited medical examinations and inquiries.
(a) Pre-employment examination or inquiry - Except as permitted by Sec. 1630.14, it is unlawful for a covered entity to conduct a medical examination of an applicant or to make inquiries as to whether an applicant is an individual with a disability or as to the nature or severity of such disability.
(b) Examination or inquiry of employees - Except as permitted by Sec. 1630.14, it is unlawful for a covered entity to require a medical examination of an employee or to make inquiries as to whether an employee is an individual with a disability or as to the nature or severity of such disability.
ADA Regulations On The Limitations On The Use Of Medical Examinations
29 C.F.R. § 1630.14 - Medical examinations and inquiries specifically permitted. (This is only a portion of this regulation)
(a) Acceptable pre-employment inquiry - A covered entity may make pre-employment inquiries into the ability of an applicant to perform job-related functions, and/or may ask an applicant to describe or to demonstrate how, with or without reasonable accommodation, the applicant will be able to perform job-related functions.
(b) Employment entrance examination - A covered entity may require a medical examination (and/or inquiry) after making an offer of employment to a job applicant and before the applicant begins his or her employment duties, and may condition an offer of employment on the results of such examination (and/or inquiry), if all entering employees in the same job category are subjected to such an examination (and/or inquiry) regardless of disability.
(1) Information obtained under paragraph (b) of this section regarding the medical condition or history of the applicant shall be collected and maintained on separate forms and in separate medical files and be treated as a confidential medical record, except that:
(i) Supervisors and managers may be informed regarding necessary restrictions on the work or duties of the employee and necessary accommodations;
(ii) First aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment; and
(iii) Government officials investigating compliance with this part shall be provided relevant information on request.
(2) The results of such examination shall not be used for any purpose inconsistent with this part.
(3) Medical examinations conducted in accordance with this section do not have to be job-related and consistent with business necessity. However, if certain criteria are used to screen out an employee or employees with disabilities as a result of such an examination or inquiry, the exclusionary criteria must be job-related and consistent with business necessity, and performance of the essential job functions cannot be accomplished with reasonable accommodation as required in this part. (See Sec. 1630.15(b) Defenses to charges of discriminatory application of selection criteria.)
(c) Examination of employees - A covered entity may require a medical examination (and/or inquiry) of an employee that is job-related and consistent with business necessity. A covered entity may make inquiries into the ability of an employee to perform job-related functions.
(1) Information obtained under paragraph (c) of this section regarding the medical condition or history of any employee shall be collected and maintained on separate forms and in separate medical files and be treated as a confidential medical record, except that:
(i) Supervisors and managers may be informed regarding necessary restrictions on the work or duties of the employee and necessary accommodations;
(ii) First aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment; and
(iii) Government officials investigating compliance with this part shall be provided relevant information on request.
(2) Information obtained under paragraph (c) of this section regarding the medical condition or history of any employee shall not be used for any purpose inconsistent with this part.
Firings for Facebook Use Illegal, NLRB Rejects Employer's Entrapment Defense
The National Labor Relations Board (NLRB) held April 19, 2013 that an employer unlawfully fired employees who used Facebook to discuss complaints about their supervisor's conduct and their work-related concerns. The NLRB rejected the employer's claim it was tricked into firing the workers.
In a unanimous decision the NLRB Board members upheld the decision of the administrative law judge (ALJ) that two employees of the employer were engaged in protected concerted activity under the National Labor Relations Act when they used Facebook to continue earlier discussions about their employment conditions and the rights of workers under California law.
The NLRB ruled that the employer violated the NLRA by firing the two workers, as well as a third employee who briefly participated in the online discussion. The board also found that the ALJ properly rejected the employer's claim the workers “schemed to entrap” the employer into firing them.
(Design Tech. Grp. LLC d/b/a Bettie Page Clothing N.L.R.B. No. 96, 4/19/13)
The three employees (Ms. Thomas, Ms. Morris, and Ms. Johnson) all worked as sales employees at a San Francisco store operated by the employer, a wholesale and retail clothing company. In his decision the ALJ found that Thomas and Morris had discussed a number of work-related issues in person while at work during 2010. Their complaints included the fact the store manager's treatment of employees was manipulative or intimidating.
One of these employees also complained on November 4, 2010, to Mr. Glaser one of the company's owners, that employees were concerned about their safety in leaving the store when it closed at 8 p.m. The owner said he had not heard from store manager about the issue, but he approved closing the store at 7 p.m. instead of 8 p.m.
The ALJ found that the store manager was upset when she learned one of the employees had spoken to the owner. All three of the employees (Thomas, Morris, and Johnson) discussed the situation on Facebook later the same evening.
The On-line Discussion
Thomas and Morris exchanged online comments that the store manager Griffin was making their employment difficult, with Thomas stating she was “physically and mentally sickened” because manager made their lives “miserable.” One of the employees said “bettie page would roll over in her grave,” and another added “I've been thinking the same thing for quite some time.” The third employee added that she planned to bring to work a book on California workers' rights, and said “my mom works for a law firm that specializes in labor law and BOY will you be surprised by all the crap that's going on in violation.” This employee brought the book to the store the following day and left it in an employee breakroom where other employees could look through it.
Another employee told the store manager about the Facebook postings and showed her the comments. The manager terminated Thomas and Morris on November 10, 2010, telling them their employment was not working out, the ALJ found. The store manager said that when the employees learned they were discharged, the two employees “started giggling and smiling.”
One of the two employee’s described the firing in a Facebook posting later the same day, writing a comment “Muhahahahaha!!! ‘So they've fallen into my crutches,' ” referring to a line from an episode of “The Monkees” television show.
The third employee was fired about a month later. At that point one of the first two employees fired filed an unfair labor practice charge alleging that the three employees were discharged in violation of the NLRA. The ALJ found that the company gave shifting explanations of its firing of the two employees for misconduct, and the third for tardiness and he ruled in favor of the employees on the unfair labor practice charges finding that all three employees were fired in violation of Section 8(a)(1) of the NLRA.
The NLRB concluded that the ALJ correctly found the employee's Facebook communications were a continuation of protected concerted activity that began offline, but they said the postings would have been protected by Section 7 of the NLRA “in and of themselves.”
The NLRB held that the Facebook communications:
“were complaints among employees about the conduct of their supervisor as it related to their terms and conditions of employment and about management's refusal to address the employees' concerns.”
The NLRB pointed out that the employees’ online posting also concerned the employees investigation of possible California state law violations by the employer.
The NLRB agreed that the employer fired the first two employees in response to their Facebook postings, and the third employee’s termination was also a result of her protected concerted activities in making the Facebook posts regarding the terms and conditions of employment and based on her connections to the first two employees.
The employer argued that the three employees “schemed to entrap their employer into firing them” and they lacked statutory protection when the company took the bait. The ALJ found the company's contention absurd. The NLRB agreed citing applicable board case law, and noted that the NLRB applies an objective standard in determining whether employee conduct is protected under the NLRA. Under this standard an employee's motive for acting, even if self-interested, does not deprive the employee of the right to engage in concerted activity that is protected by the NLRA.
The NLRB dismissed the employer’s contention that one of the employee’s posting “Muhahahahaha!!! ‘So they've fallen into my crutches' ” on Facebook supported the employer’s contention that the company was tricked into violating the NLRA.
Summary and Important Points
1. Remember, the National Labor Relations Act is a federal law and the decisions of the NLRB apply to all 50 states. The fact this case involved California employees and discussion of California labor code rights is not a determining factor. The NLRB’s decision would have been the same no matter which state the employees worked in.
2. Employers should continue to closely monitor and review legal developments in this area, and where appropriate, revise their social networking policies with the assistance of experienced labor counsel. If an employer’s social media policy, or for that matter any personnel policy, work rule, or employee handbook provision, contains any language that could be construed to infringe on its employees’ ability, during their non-work time, to communicate with their coworkers, a union, the public, or others about their wages or other terms or conditions of employment, the employer should revise the policy to make it clear it does not apply to activity protected by Section 7 of the NLRA.
3. In addition, before taking disciplinary action against employees because of their social networking activities, employers and their labor counsel should consider whether the employees’ activity constitutes protected, concerted activity under the NLRA.
4. The NLRA protections for “protected concerted” activity apply to both union and non-union employees. The information below provides basic background on the issue area:
NLRA Protects union and non-union employees:
· The National Labor Relations Act (NLRA) protects associational rights of “non-union” employees as well as “union” employees. Section 7 of the NLRA provides in relevant part:
“Employees shall have the right to self-organization, to form, join, or assist labor organization, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities * * *.”
(29 USC § 157).
Definition of protected concerted activity – can include postings:
· Protected concerted activity is that activity engaged in for employees’ “mutual aid or protection.” Such activity includes employee efforts to improve working conditions and terms of employment. This can include group discussions of job performance, staffing, and workload, as well as disparaging comments about supervisors, co-workers, and competitors. The fact the discussion occurs on an internet social media platform is irrelevant. These protected discussions could happen easily on Facebook if a co-worker clicks “like” or "comment"--if those discussions are related to the “terms and conditions of employment.”
· In general, protected concerted activity is found when the activity in which the employee engaged is done with or on the authority of other employees, not solely by or on behalf of an individual employee.
· Even if employees make comments which sound like trash talking (sarcasm, vulgarity, profanity, etc.), employers must sift through the chaff and see if there is protected concerted activity involved before terminating or taking any adverse action against an employee for postings.
5. In order to avoid violating a non-union or union employee’s Section 7 rights to engage in protected concerted activity, please consider the following prior to taking any adverse action against an employee:
· Is there concerted activity? Where two or more employees acting together; or was one employee acting on the authority of other employees.
· Is the activity protected—i.e., engaged in for employees’ “mutual aid or protection?”
· Is the employer’s adverse employment action motivated by the employee’s protected concerted activity? Did the employer know of the activity? Was the employer motivated to act by it?
Supervisor’s Alleged Single Use of ‘N-Word' May Create Hostile Environment
A black employee can proceed to trial with federal race bias and harassment claims based on two allegations. First, that one executive denied him a raise because the employer already was “paying [him] a lot of money” for a “young black man;” second, that another executive once called him the “N-word,” according to the U.S. Court of Appeals for the District of Columbia Circuit on April 5, 2013.
Reversing summary judgment for the employer, the court found that the employee established a triable race discrimination claim under the Civil Rights Act of 1866. The court looked to the employee’s evidence and found that the supervisor's alleged “young black man” statement in relation to a pay raise denial could constitute direct evidence of race bias and that the employee’s claim that another supervisor yelled at him to “[g]et out of my office nigger,” also created a jury question as to whether there was a sufficiently severe, racially hostile work environment to be unlawful harassment.
The court also ruled that the employer was not entitled to summary judgment on the employee’s retaliation claim because he offered evidence that a supervisor told him to choose between being fired and dropping an Equal Employment Opportunity Commission bias charge he had filed.
(Ayissi-Etoh v. Fannie Mae, D.C. Cir., April 5, 2013)
The employee joined the employer’s audit department in 2008 as a senior financial modeler. Three months later, he was promoted to one of 12 “modeling team lead” positions. The 11 other employees who assumed team lead positions received pay raises, but the employee did not. After this promotion, without a pay increase, the employee began to have conflicts with his female direct supervisor.
The supervisor began documenting what she perceived as the employee’s performance weaknesses. In one such evaluation, the supervisor observed that an audit review completed by the employee included language identical to a customer's response in describing why certain auditing procedures were used. The employee believed that the supervisor was accusing him of plagiarism.
The employee complained about his supervisor’s failure to give him a raise and her evaluation of his performance to the employer’s chief audit executive (CAE). He claimed that in response to his complaints the CAE said: “For a young black man smart like you, we are happy to have your expertise; I think I'm already paying you a lot of money.”
In March 2009, the employee met with the employer’s vice president of internal audit, about his work assignments. According to the employee, the meeting “quickly became heated,” with the vice-president allegedly yelling at that employee to “Get out of my office nigger.” After this incident the employee sought permission to leave work for the day because he felt ill. The next day, the employee emailed the employer's chief executive officer and filed an internal discrimination complaint against the vice-president based on use of the “N” word at the meeting the day before.
The employer hired an outside third-party investigator who conducted a three-month investigation of the employee’s complaints. A doctor later diagnosed the employee as having an anxiety disorder requiring medication. After the investigator concluded it was “highly likely” that the vice-president made the “highly offensive racial slur,” the employer fired the VP.
The employee then filed an EEOC charge alleging racial bias in pay and harassment. He also claimed that in September 2009, his direct supervisor told him to choose between dropping his EEOC action or being fired. The employer terminated the employee three weeks later, and he added a retaliation claim to his EEOC charge.
The employee eventually sued the employer for race discrimination in pay, racial harassment, and retaliation. The District Court for the District of Columbia granted summary judgment to the employer on all claims, and the employee appealed.
Reversing the lower court, the D.C. Circuit Court found a triable factual dispute concerning the employee’s claim that Fannie Mae unlawfully denied him a pay raise because of his race. The court noted that an employee generally will be entitled to a trial if they present direct evidence of discrimination.
In this case, the court found the employee’s allegation about comments by the chief audit executive describing him as a smart “young black man” who already is being paid “a lot of money” constituted such direct evidence. The court ruled that although the chief audit executive denied making the statement, this credibility resolution could not be resolved at the summary judgment stage.
A Jury Question
In addition, the appeals court held that a reasonable jury could conclude that the employee experienced a racially hostile work environment. The court said the VP’s alleged single use of the N-word alone could be sufficient to establish severe racial harassment.
The court rejected the employer's argument that it could escape liability under the affirmative defense set out in the Supreme Court’s decisions in Faragher v. Boca Raton, (1998), and Burlington Industries Inc. v. Ellerth, (1998). Under that defense, the court said, an employer must show that it acted reasonably to prevent and promptly correct any alleged harassment and that an employee unreasonably failed to utilize the employer's corrective processes. The court found a jury could find that the employer did not act with reasonable promptness because it took three months to investigate and then fire the VP in the N-word incident.
The court also reversed the summary judgment as to the employee’s retaliation claim. The court found direct evidence of potential unlawful retaliation based on the direct supervisor’s alleged ultimatum to the employee that he either drop his EEOC charge or be fired. The supervisor denied making this ultimatum, but the court noted this credibility resolution would have to be resolved by the jury, not at the summary judgment stage.
Summary and Important Points
1. This case highlights some important points for all employers to consider and emphasize in training their supervisors and managers. Anyone in a management position with your company must understand that any type of “stray” discriminatory comment based on an employee’s protected category status can raise doubt as to “why” an employer took an adverse action against an employee.
2. Remember, the employee only has to show the unlawful consideration (race, in this case) was a “factor” in the challenged employer decision.
3. One additional admonition. Please note, that in this case the alleged epithets occurred in a one-on-one meeting between the employee and the member of management for the employer. It is always a good idea to have a witness present whenever you meet with a potentially problematic employee. You never know what the employee will allege was said and, without a witness, you are creating a credibility resolution issue for trial by meeting with the employee alone.
4. The old judicial standby of time proximity appears again as a factor in this case. The employee complains of harassment and then files an EEOC complaint. Three weeks later he is terminated. If you are in this type of situation you need to get advice from experienced employment law counsel before terminating an employee.
5. Policies Against Harassment (like any other policy or the employee handbook) should be reviewed periodically to make sure you are saying everything you need to say to protect yourself as an employer. If you have not updated your policy in the last two years, for example, there is a good chance your policy does not reflect the most recent changes in the law. You must keep abreast of these changes in order to avoid potential problems. Please let me know if you need any help in this area as we constantly monitor and update our policies (and handbooks) to ensure our clients are doing everything legally possible to avoid liability in these types of harassment cases.
Disabled Employee Not Given Other Vacant Positions And Then Fired Can Proceed With Discrimination Claim
An airline employee fired after a back injury left her unable to fly showed that her employer may have discriminated against her by denying her request to waive a flying requirement and by not considering transferring her to another job, the U.S. District Court for the Eastern District of New York ruled March 31, 2013.
When the employee began her disability leave flying was an essential job function of her inflight supervisor position. However, while the employee was out on leave the employer divided the job into four separate positions, one of which was primarily sedentary and may not have required flying.
In denying the employer's motion for summary judgment on the employee’s claims under the Americans with Disabilities Act (ADA) the court noted that the employer allowed the employee to continue working for six months without flying and did not appear to suffer an undue hardship as a result. The court also found that there were at least two non-flying positions available which the employee was marginally qualified for and that the employer failed to even consider her for these opportunities after she asked to be transferred.
Finally, the court noted that the EEOC had concluded in a determination that the employer's 52-week administrative termination policy—providing that a worker may be fired after taking 52 weeks of leave during a two-year period—created a pattern or practice of denying reasonable accommodations to and discriminating against disabled employees.
(Morse v. JetBlue Airways Corp, E.D.N.Y., 3/31/13.)
The employee was hired as an inflight supervisor in November 2003 and she remained in the position until her termination less than three years later. The job entailed supervising 75 to 80 of the airline's flight attendants and assessing their performance during occasional “check rides,” in which the employee observed the attendants during an actual flight. The position description also required inflight supervisors to be trained and qualified to work as flight attendants if necessary.
From November 2003 to December 2004, the employee estimated she flew about 12 times a month. She began to experience back pain in November 2004. Her doctor ordered her to discontinue flying a month later.
The employee discussed the situation with her supervisor and the employer removed her from flying duties in January 2005. Other inflight supervisors took over the employee's check ride duties, but she continued to perform all of her other job functions. The employee was also placed in de-qualified status beginning the same month because she was unable to perform flight attendant duties, based on the doctor’s flight restrictions.
In early 2005, the employer mandated that inflight supervisors fly at least 20 hours each month. The employee maintained that this requirement was not enforced and pointed out at least one other supervisor who was permitted to work for an extended time period without flying. One of the employee’s managers informed her in June 2005 that she did not meet the minimum qualifications for her position because she had been de-qualified as a flight attendant based on her flying restriction. The manager warned the employee that she could be terminated if she did not re-qualify as a flight attendant or take either disability or unpaid leave by July 2005. The employee requested and was granted a short-term disability leave of absence effective July 2005, in order to give her time to have needed back surgery.
In April 2006 the employer did a re-organization and divided the inflight supervisors duties into four separate jobs: crewmember experience, base operations, systems operations, and onboard experience. While three of these four positions did not include flying as a “core function,” supervisors in each of the positions were required to be qualified flight attendants capable of flying.
Under the company's 52-week administrative termination policy in effect at the time, employees who exceeded 52 weeks of leave during a two-year period were subject to administrative termination. In June 2006, one month before reaching the 52-week threshold, the employee remained on disability leave and was physically unable to fly. The employee told one of her managers that she was able to return to work full-time, performing all of her previous job functions except flying. The employee requested that the flying requirement be waived. The employer denied the request and told the employee she would be terminated effective July 8, 2006, if she did not return to work.
Later in June, the employee asked her supervisor for a transfer to another position that did not require flying. Two service crew supervisor jobs that did not require flying were available at the time she made the request, but were filled by other company employees. The employee argued that there was another position in customer service that she could have been trained for that was open during this time. The employer fired the employee on July 8, 2006, after the 52-week leave period expired.
She filed a charge of discrimination against the company with EEOC and later sued the employer, alleging that it failed to provide her with a reasonable accommodation and fired her because of her disability, in violation of the ADA and other state laws.
The court found that the employee raised a triable issue of fact as to whether the employer discriminated against her by firing her instead of allowing her to continue to work as an inflight supervisor without being required to fly or by failing to transfer her to another position that did not require flying. The court ruled that the employer did not adequately consider whether the employee could have returned to work with a reasonable accommodation, either in the form of waiving the flight requirement or transferring her to another job.
The court did find that flying was an essential job function for the inflight supervisor position when the employee went on leave in July 2005, but it questioned whether the ability to fly remained an essential of the job after the April 2006 re-organization when the job was split into four separate positions. According to the court, one of the positions created as a result of the re-organization was described as “sedentary” and did not list flying as a core function. The court went on to say that the although the job description included being a qualified flight attendant and that the job did entail some flying in the event of operational needs, that it appeared reasonable that another inflight supervisor could have covered this infrequent duty.
The court also focused on the fact the employer allowed the employee to work from January to June 2005 without flying at all. The court noted that the fact the employee satisfactorily worked for the employer for six months in a non-flying capacity suggested that the employee's accommodation request would not have been unduly burdensome on employer.
In looking at the two job openings that the employee pointed out she should have been considered for, the court held the employer failed to show that either of the workers that it hired for the two non-flying openings were better qualified for those jobs than the employee. Also damning for the employer in this regard, was the employer’s talent acquisitions manager’s admission in his deposition that he did not even review the employee's resume before filling the jobs and that she met the minimum requirements for each position.
The court also noted that EEOC determined that the airline's administrative termination policy “created a pattern or practice of denying reasonable accommodation to, and discriminating against, a nationwide class of individuals with disabilities ….” Though not determinative, the court said the conclusion weighed in favor of an inference of discrimination.
Summary and Important Points
1. This case has many important points for all employers to consider when dealing with a disabled employee. All employers are required by the ADA and state disability discrimination laws to engage in the interactive process with disabled employees to determine what, if any, accommodations they may need to allow them to perform the essential functions of the job. The employer is required to make such accommodations unless it would be an undue hardship.
2. In this case, the employer did not consider the employee for any other open vacant positions that the employee may have been qualified to do or could have been easily trained to do. The EEOC regulations clearly require employers to determine if such vacant positions are available as part of the reasonable accommodation process and to provide such positions to a disabled employee who can no longer do the essential functions of their original position. In this case the facts clearly showed the employer did not complete this requirement. Remember, you have to look carefully at your facts because you can be sued just like the employer in this case.
3. You can see by reading the foregoing case summary that when you are sued, every factual aspect and every person involved in making the decisions in a potential discrimination case will be closely scrutinized to determine if you complied with the law. If you are not sure what to do or if you do not know what the rules are, get advice before you make a decision that could cost you hundreds of thousands of dollars, if not more.
"That Can't Be Right!" California Appellate Court Rules That Piece Rate Workers Are Entitled To Separate Hourly Compensation
The following article is by Littler attorneys Richard Rahm and Julie Dunne.
Please see my Summary and Important Points below
A California Court of Appeal dealt another blow to employers this month when it held automobile mechanics, who earned at least minimum wage for every hour worked, were entitled to separate hourly compensation for any time not spent performing auto repairs. See Gonzales v. Downtown LA Motors, LP, 2013 Cal. App. Unpub. LEXIS 1728 (March 6, 2013). The attorneys for Downtown LA Motors (DTLA) argued it "can't be right" to find that employers who guarantee their employees the minimum wage for every hour worked somehow failed to satisfy their minimum wage obligation. The appellate court disagreed, awarding the class in excess of $1.5M.
Gonzalez claimed that DTLA's piece rate plan paid auto mechanics only for time they were actually making repairs, and not for any other time, such as time waiting for customers to arrive, obtaining parts, cleaning their work stations, attending meetings, traveling to other locations to pick up and return cars, reviewing service bulletins, and participating in online training. DTLA's mechanics were compensated based on a piece rate known as "flag hours," which pays a set number of hours for a particular repair, regardless of the actual time the mechanic takes to complete the repair. For example, a brake repair might have a "flag hour" allotment of 2 hours, and the mechanic performing the break repair would thus receive 2 hours' pay, even if the repair took more or less than 2 hours to complete. Further, DTLA guaranteed the mechanics the minimum wage for every hour worked (not just time spent making repairs).
Citing Armenta v. Osmose, Inc.,135 Cal. App. 4th 314 (2005), the Gonzalez trial court found DTLA's compensation plan constituted illegal "pay averaging," and that DTLA was required to pay a separate hourly rate for any time the mechanics were not actively engaged in repairs. DTLA appealed.
Deciding Whether Armenta Applies to Piece-Rate Compensation
The primary issue for the appellate court in Gonzalez was whether its previous decision in Armenta applied to piece-rate compensation. Armenta concerned hourly employees who worked pursuant to a collective bargaining agreement where the employer paid only for "productive" hours, and did not pay for "nonproductive" work, such as travel from the office to a work site. The employees in Armenta sued for alleged failure to pay minimum wage. The employer argued that it satisfied California’s minimum wage requirement because, dividing the employees’ compensation by the total number of hours worked (both productive and nonproductive), the employees still "averaged" more than minimum wage for all hours worked. Citing to California Labor Code sections 221, 222 and 223 (none of which concern minimum wages), the Armenta court held that the employer could not satisfy minimum wage obligations by "averaging," but instead was required to pay minimum wage "for each hour worked."
DTLA argued that Armenta should not apply because its holding was specific to hourly employees who, the trial court found, were not paid minimum wage for all hours worked. The Gonzalez court disagreed, holding that Armenta did apply to piece-rate compensation. The appellate court first noted that the relevant wage order provides that an employer shall pay "not less than the applicable minimum wage for all hours worked in the payroll period," regardless of whether the "remuneration is measured by time, piece, commission, or otherwise." The Gonzalez court next referenced federal district court decisions that have rejected the argument that Armenta should be limited only to hourly employees, citing to Cardenas v. McLane Foodservices, Inc., 796 F. Supp. 2d 1246 (C.D. Cal. 2011) and Carillo v. Schneider Logistics, Inc., 823 F. Supp. 2d 1040 (C.D. Cal. 2011) (both cases holding that truck drivers who were paid on a piece-rate basis must be paid for all hours worked). The appellate court also found the application of Armenta to be consistent with the position and enforcement policies of the Division of Labor Standards Enforcement (DLSE).
The Gonzalez court thus held that, based on Armenta, DTLA’s piece-rate compensation failed to comply with California’s minimum wage statute because DTLA failed to compensate its mechanics for the time they spent waiting between repairs. The appellate court also clarified that its holding was limited to the facts before it, and that it was not making any ruling regarding how the same pay structure would apply in a commission setting.
The Gonzalez Court Misapplies California Minimum Wage Law
The flaw in the Gonzalez logic is that it disregards settled California minimum wage law, which requires only that employers pay employees at least minimum wage for every hour worked, regardless of the tasks performed. Indeed, Labor Code section 200 defines "wages" as "all amounts for labor performed by employees," regardless of whether paid by the hour or the piece, without any qualification that a piece-rate wage may be paid only when an employee is actively working on the "piece."
The only authority supporting a claim that piece-rate compensation may be paid only for time spent actively making "pieces" is section 47.7.1 of the Division of Labor Standards Enforcement Policy and Interpretations Manual. As a preliminary matter, the California Supreme Court has held that the DLSE Manual is not entitled to deference because it is an underground regulation. See Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal.4th 557, 576-77 (1996). However, even if the DLSE Manual is considered, the DLSE has repeatedly opined that a compensation plan that includes a guaranteed rate of compensation per hour that equals or exceeds minimum wage is lawful. See, e.g., section 34.2 of the DLSE Manual (a draw against commissions must be equal at least to minimum wage "for each pay period"); DLSE Op. Ltr. 1987.03.03 ("must be paid at least minimum wage for each period of employment").
Here, DTLA’s piece-rate plan guaranteed that employees would earn at least minimum wage for every hour worked regardless of whether they made any pieces at all. This type of pay plan is lawful, and the appellate court’s conclusions are erroneous, for several reasons. First, the pay structure is distinguishable from Armenta because DTLA guarantees its employees the minimum wage for every hour worked, leaving no work time uncompensated. Second, the hourly guarantee falls squarely within the parameters of section 34.2 of the DLSE Manual. Third, the guarantee ensures minimum employee compensation, while the piece-rate component of the pay plan allows and incentivizes employees to increase their compensation based on productivity. Fourth, the provision of the DLSE Manual that spawned this line of cases is factually inapplicable. It states that an employer may not pay piece rate during periods of time when the employer "precludes" an employee from earning a piece rate. DTLA did not preclude its mechanics from earning their piece rate during periods of down time. Customers simply were not present or in need of repairs. And in any event, DTLA accounted for such down time by guaranteeing that it would pay its employees minimum wage for every hour worked, regardless of whether the employees were "making pieces."
Summary and Important Points
1. The court found in this case that even though the employer paid its technicians at least minimum wage for all hours worked, that when employees are paid on a piece rate basis, the employer must also pay them on an hourly basis at minimum wage for time spent in between piece rate tasks.
2. The impact of the decision could impact employers in many industries. Although far from clear, the impact could be that any employer that pays on a piece rate basis, and even arguably those who pay on a commission basis, may be required to pay for the time in between tasks when no work or work not compensated by the piece is performed.
3. When piece-rate tasks are not being performed, according to this decision, an employer must pay for the time in between tasks even if the employer has already added money to the paycheck to bring pay to minimum wage because the employee’s pay for all hours worked fell below minimum. As noted in the article above, we believe the court in Gonzalez wrongly applied Armenta case rationale to piece rate pay.
4. If not reversed by the California Supreme court, Gonzalez could be a catalyst for the next wave of wage and hour class actions against employers. A petition for review must be filed with the California Supreme Court on or before April 15, 2013.
Ninth Circuit Says Worker Was Not Harassed, But Her Termination Could Be Retaliation
An office worker, who was allegedly fired for refusing to follow instructions, provided enough evidence to show that the decision may have been in retaliation for her previous complaints about a supervisor's and a co-worker's sexually offensive conduct, the U.S. Court of Appeals for the Ninth Circuit ruled April 1, 2013. In a 2-1 decision, the appeals court partially reversed a district court's decision granting summary judgment to the employer on the employee¹s claims for sexual harassment and retaliation under Title VII.
The Ninth Circuit disagreed with the lower court's characterization of the employee's retaliation claim as alleging only that she was fired for her latest complaint about her supervisor's work-related comments. Instead, it said she alleged that the decision was also colored by her previous complaints about sexually offensive conduct by her supervisor and a co-worker. The court held that the employee¹s complaints about the behavior were protected under Title VII because she had a good faith belief that she was being harassed.
(Westendorf v. West Coast Contractors of Nev. Inc., 9th Cir., 4/1/13)
The employee began working as a project manager assistant for the employer 2008 and remained in the position until she was fired less than a year later. Her rocky relationship with her supervisor began almost immediately with an incident during her first month on the job in which the supervisor referred to the employee's duties as "girly work." The supervisor quickly apologized, but was later reprimanded by company owner, who overheard the comment.
The supervisor called the employee six weeks later after the owner spoke to him about the "girly work" comment. He asked the employee "what the hell" she had said to the owner and warned her that he had "been through this shit before" and that "it's just not happening" again.
The employee claimed that she was subjected to a barrage of harassment after she began working one day a week at the construction site in May 2008. A male co-worker who worked in the same office with the employee also allegedly made a variety of sexual comments to the employee. This included repeatedly referring to a large-breasted associate as "Double D" and asking her whether she was intimidated by the size of the woman's breasts. The co-worker also asked the employee whether women "got off" by using a particular kind of tampon and told the employee women were lucky because they "got to have multiple orgasms." The employee said she demanded that the co-worker stop making these comments during each of the incidents. The employee alleged that her supervisor also participated in the "Double D" discussion and was present for other alleged incidents of harassment, during which he smiled or chuckled. The co-worker continued to make these types of comments despite the employee's complaints to the owner and regularly telling her that she had to clean the office wearing a French maid costume.
The employee again complained to the owner about the co-worker and supervisor's failure to stop the conduct in July 2008. In response, the owner brought in a court reporter and conducted separate interviews with the employee, the co-worker and the supervisor. In her interview, the employee expressed concern about the supervisor's response to her complaints, alleging that he recently told her "he didn't need this shit anymore." The owner told the supervisor about the complaints in a separate interview. He also warned the supervisor that he would have to take "drastic" action, including possible termination, if the supervisor failed to do anything about the co-worker's behavior.
The employee claimed that the supervisor began "nit picking" her work and berating her in front of subcontractors after the meeting and once the owner left for vacation four days later.
On July 29, 2008, the supervisor became upset with the employee when he learned that she had told a subcontractor that company staff would not be attending a social event planned by the subcontractor because they would instead be at the supervisor's daughter's wedding. The supervisor allegedly said "fuck you" to the employee three times during the conversation. The employee immediately went to the owner's office, where she told him about the incident. She also complained about the supervisor's recent "nit picking," giving as an example a recent incident in which she tried to hand the supervisory a piece of paper. Instead of taking it, the supervisor allegedly told her to put it in a binder and smirked at the co-worker while reprimanding her for not performing the task.
When the owner told the employee that she should do what her supervisor instructed her to do, she complained that the owner was refusing to address the problem. In response, the owner said that he was "tired of listening to all this," that she and the supervisor obviously had a "problem getting along," and that the best thing would be for her to get her personal items and leave. The employee alleged that she was fired. While the owner acknowledged that the employee was escorted from the building, he claimed that she quit her job during the conversation.
The employee sued the company for sexual harassment and retaliation in violation of Title VII. The district court granted summary judgment to the company on both claims, finding that the conduct complained of did not rise to the actionable level of sexual harassment and that the complaint to the owner directly before her firing was not protected activity under the law as it related to a simple work dispute.
Reversing the lower court's decision, the Ninth Circuit found that the employee provided enough evidence to raise a material fact question as to whether she was fired for her complaints about what she believed was sexual harassment. The appeals court agreed with the lower court that the co-worker and supervisor's alleged conduct was not sufficiently severe and pervasive to rise to the level of sexual harassment. The court held:
³Although we certainly do not condone [the co-worker's]'s crude and offensive remarks, we note that [the employee] went to his workplace only once a week for three months and often did not stay an entire day.²
In addressing the co-worker¹s comments the court noted that aside from the French maid comments, the co-worker only made offensive sexual remarks to the employee on roughly four separate occasions. Meanwhile, the supervisor joined in on the "Double D" discussion, but otherwise did not make any sexually offensive comments. He also quickly apologized for the "girly work" statement. The court also observed that the employee did not claim that her work suffered because of the conduct.
Nevertheless, the court held that the employee engaged in protected activity when she complained about the behavior to the owner. The court found that even though the evidence did not support the employee's sexual harassment claim, it could support a reasonable belief that she was subjected to actionable sexual harassment. The appeals court rejected the lower court's finding that the owner fired the employee only because of the complaint she lodged on the date of her termination.
During the employee¹s deposition she replied "yes" when the employer¹s counsel asked whether she was claiming she was fired because she complained on July 29. The court found, however, that this response did not necessarily limit her retaliation claim to this single incident. The court found the that this affirmative response was ambiguous and that in any case it did not compel a conclusion that the employee claimed that the owner fired her solely because of her complaints about what happened on July 29, the date of her termination. The court concluded that although the July 29, complaint may have triggered the termination, the employee probably meant that the decision was also based on her previous complaints, including those she lodged during the interview with the owner earlier in the month about the harassment by the co-worker and the supervisor.
Summary and Important Points
1. This fact pattern could happen to anyone. A supervisor and a co-worker are saying inappropriate things in the work environment. The employer is made aware of the statements and responds. The employee is later terminated and claims the decision to terminate is in retaliation for her earlier complaints of harassment. Every employer will face this type of situation sooner or later.
2. As you have read in my Legal Update hundreds of times, it is imperative that you be able to establish that the ³real reason² an employee was terminated was because of performance based reasons if your decision is subsequently challenged.
3. Whenever an employee has complained of harassment, discrimination or retaliation you must be prepared to show in detail why those complaints had absolutely nothing to do with why the employee was terminated. This may mean you have to take additional steps to document what the performance based problems are prior to termination. This may mean you have to bite your tongue and wait a little longer before pulling the trigger. Remember, you too can be sued by a disgruntled employee.
4. Another important point highlighted by this case is that an employee's complaints of harassment will be protected by the retaliation laws even if the employee turns out to be wrong about the harassment or discrimination. In this case, the court found the employee was not exposed to unlawful sexual harassment because it was not found to be severe or pervasive enough, but that she was still protected because she had a good faith belief that she was being harassed.
5. As further background on this part of the law, the EEOC Compliance Manual which is provided to the EEOC investigators as guidance for their investigations, states the following:
Did CP (Charging Party) have a reasonable and good faith belief that
the opposed practice violated the anti-discrimination laws?
- If so, CP is protected against retaliation,
even if s/he was mistaken about the
unlawfulness of the challenged practices.
- If not, CP is not protected under the anti-
6. Know what you are doing. If you are not sure get advice before you act.
New I-9 Form to Go Into Effect on May 7, 2013
On March 8, 2013, U.S. Citizenship and Immigration Services (USCIS) published an announcement in the Federal Register advising employers that Employment Eligibility Verification Form I-9 has been revised. The key changes to the newly-revised form include new data fields requiring an employee's foreign passport information (if applicable), and the employee's telephone number and email address. The format has also been expanded from one to two pages, such that Section 1 (Employee Information and Attestation) takes up the entire first page of the form, and Sections 2 and 3 (Employer Authorization and Re-verification) are found on the second page.
The new form, which is available on USCIS's website (www.uscis.gov/files/form/i-9.pdf), denotes a revision date of March 8, 2013 in the lower left hand corner of the form. Although the form is available for immediate use, USCIS will not require employers to use the form until May 7, 2013. After May 7, 2013, all prior versions of Form I-9 cannot be used. Employers should take steps now to ensure that they are using the newly-revised form after May 7, 2013 to avoid civil penalties.
The USCIS noted that the revised I-9 does not need to be completed for existing employees who already have an I-9 on file, unless their employment eligibility needs to be re-verified. The agency cautioned that unnecessarily re-verifying employees' employment eligibility could violate the anti-discrimination provision of the Immigration and Nationality Act.
The new I-9 still contains three basic sections:
• Section 1 collects identifying information about the employee, asks him or her to attest to being a citizen, noncitizen national, lawful permanent resident, or alien authorized to work, and asks the employee to provide documentation proving identity and work authorization;
• Section 2 collects information from the employer and the identity and work authorization documentation provided by the employee; and
• Section 3 collects information regarding the employee's continued work authorization when the documentation in Section 1 or Section 2 expires.
If you have any questions regarding immigration related issues, Littler has a very experienced and well-staffed immigration department that can help with anything from possible terminations, questions, audits and compliance questions raised by the USCIS and DOL, as well as issues raised by customers and contractors requesting verification of your I-9 authorization compliance.
Employee Fired for Workplace “Negativity” Has ADA, FMLA Retaliation Claims
A call center worker who was fired for “negativity” shortly after he complained about discrimination against a company security guard and told his supervisor he was going to seek leave under the Family and Medical Leave Act (FMLA) can proceed with retaliation claims, the U.S. District Court for the District of Massachusetts ruled February 14, 2013.
The court found that the “negativity” that led the employer to fire the employee might have been related to his various work-related grumbles and rumor spreading, as the employer asserted, or to his complaints about the alleged harassment of the security guard based on her speech impediment.
Explaining that the employee's retaliation claim under the Americans with Disabilities Act Amendments Act and state discrimination law “hangs by the slenderest of threads,” the court also noted that he was suspended just two days after complaining about the discrimination in a meeting with the employer's senior vice president.
The court also denied the employer's summary judgment motion on the employee's FMLA retaliation claim, noting that he was suspended just hours after allegedly telling his boss that he intended to apply for leave under the FMLA.
(Surprise v. Innovation Grp. Inc., D. Mass., 2/14/13)
The Employee Complained About Co-workers
The employee began working in the employer's call center in 2007, first as a customer service representative and then a quality assurance associate. After being promoted to the latter position in 2009, the employee was tasked with monitoring calls, coaching representatives, and supervising temporary projects. He also was asked to answer incoming calls when necessary and he complained about this to management on multiple occasions.
The employee was diagnosed with a spine impairment at some point in 2005 and received regular chiropractic treatment for the condition during the course of his employment. Although the employee’s initial supervisor allowed the employee to occasionally arrive late or leave work early during his shift in order to get treatment, she also warned him about tardiness several times, including some in which the employee cited traffic for his lateness. When Ms. Garcia became his supervisor in June 2010, she did not allow the employee to arrive late or leave early for treatment sessions.
The employee alleged that he witnessed two call center managers make discriminatory comments about a company security guard who had a speech impairment on at least five occasions between February and April 2010. The supervisor allegedly mocked the guard's voice and, on at least one occasion, yelled at her inappropriately, according to the employee.
The employee complained about the call center supervisors’ behavior in an April 2010 meeting attended by department manager. He complained again about this and other issues—including his call-answering duties and the employer's disposition of client health records—four months later in an anonymous online survey.
Impact Of Employee’s “Issues”
On September 7, 2010, the employee met with new Senior Vice President Mr. Terry Ronan to discuss a number of issues, including those raised in the survey, a copy of which he provided to Ronan. During the meeting, the employee also allegedly complained about not being allowed to take time off for medical treatment and told Ronan that he intended to seek FMLA leave. According to the employee, Ronan became agitated and told the employee that he was planning to meet with the entire quality assurance team the following day.
News of the scheduled meeting and rumors of “significant changes” to the QA team spread throughout the office after the employee told co-worker about the employee's meeting with Ronan, in a series of text messages the same day.
According to the court, “In response to the stir that had been generated by the rumors circulating around the office, Ronan became more irritated with [the employee],” so irritated that Ronan decided to terminate the employee for “negativity” in the workplace, in accordance with employer policy.
The employer suspended the employee Sept. 9, 2010, in order to buy time for the human resources department to process his termination. Later on the same day, prior to receiving notice of the suspension, the employee claimed that he told his supervisor that he had completed the necessary forms to seek FMLA leave and would provide them to her at the end of his shift. He was fired five days later.
The employee later sued the employer and asserted that the employer retaliated against him for complaining about discrimination against the security guard, in violation of the ADA and state law, and for seeking FMLA leave, in violation of the Act.
Although noting the evidence was limited in support of the employee’s ADA and state law retaliation claims, the court nevertheless found that the circumstances surrounding the employee's termination were sufficient for a jury to find that he was terminated for complaining about the alleged discrimination.
The court held that the employee could have reasonably believed that the security guard was disabled based on her speech impairment, and ruled that he engaged in protected activity by complaining about the guard's alleged mistreatment. The court found that although only one of the five alleged incidents directly involved the guard—the employee simply overheard his co-workers mocking her in the other incidents—that single occasion involved “her being publicly humiliated, allegedly for the call-center manager's amusement.”
The court noted that normally whether an employee’s negative behavior rose to the level of justifying termination was a matter of company policy, which would be left to the employer. However, the court noted that:
“The problem, however, is that “negativity” is a term that could be used to describe a number of plaintiff's actions—including making protected complaints,”
The court further held that the “extremely close temporal proximity” between the employee's complaints and his termination also supported his retaliation claims. The court noted that the mere hours between the time the employee told a supervisor he was going to apply for FMLA leave and his suspension only strengthened his separate retaliation claim under the FMLA. According to the court this additional piece of evidence made it slightly more likely that a reasonable juror would conclude that the employer’s reason for termination was pretextual.
Summary and Important Points
1. This is great case to learn from. In this case, the court found that the “negativity” that led the employer to fire the employee might have been related to his various work-related grumbles and rumor spreading, as the employer asserted, or to his complaints about the alleged harassment of the security guard based on her speech impediment and his request for FMLA leave. The first is lawful, the second is not.
2. In this case the question became what was the “real reason” the employee was fired:
· Was it because of the employee’s various work-related grumbles and rumor spreading, or
· Was it because employee’s complaints about the alleged harassment of the security guard based on her speech impediment and his request for FMLA leave?
What was the real reason? Ultimately, we know who will decide, the JURY!
3. If an employee claims retaliation was the “reason” they were terminated will the fact you are an “at-will” employer be a defense? No. Why? Because “at-will” is not a defense to alleged illegal, unlawful, or violation of public policy conduct, such as violation of the ADA or FMLA. The issue will be what was the “real reason” the employee was terminated.
4. This case also focused on the timing of the termination. Many courts have found that "temporal (time) proximity" is enough to raise inferences of unlawful motive or retaliation. If a personnel action is going to take place in relatively close time proximity to the employee's protected activity, the employer MUST be able to show the REAL REASON for the adverse action against the employee is based on performance related issues, not the employee's protected activities.
5. Whenever you are considering any kind of personnel action you must consider what you have done or said prior to disciplining or terminating the employee. What is in their personnel file? Has the employee recently engaged in protected activity or taken protected leave? Is there a timing issue you should be concerned about? If you do not ask these tough questions and take a hard look at what you are about to do, the jury may end up doing it for you in the context of a lawsuit.
If you are not sure if what you are about to do may be a problem, I strongly recommend you seek legal counsel from an employment law specialist before making the decision to discipline or terminate an employee.
California Supreme Court Rules "Mixed Motive" Is a Mixed Bag for Employers
The following article is by Littler attorney Margaret Edwards.
Please see my Summary and Important Points below.
The California Supreme Court recently clarified the defenses available to employers defending against claims of discrimination. In Harris v. City of Santa Monica, No. BC341469 (Cal. Feb. 7, 2013), the court ruled that, if a discriminatory motive was a substantial factor in the decision to terminate an employee, an employer can still cut off all damages by proving that, even in the absence of any discriminatory motive, it would have made the same decision to terminate the plaintiff. In theory, the Harris decision will provide employers with a tool to cut off damages in claims of discrimination where an employee was clearly headed for termination. The court also held, however, that when a jury finds that the termination was substantially motivated by discrimination, the employee may still seek and receive declaratory and injunctive relief, and an award of attorneys' fees. Because of the availability of attorneys' fees and declaratory and injunctive relief, the Harris decision may result in more cases going to trial.
The plaintiff was hired by Santa Monica's bus service, Big Blue Bus, as a bus driver trainee in October 2004. The city's policies require that new drivers go through a 40-day training period, followed by a probationary period before becoming full-fledged drivers. The plaintiff completed her training period, but was terminated during her probationary period.
Shortly after beginning her training period, the plaintiff got into an accident that the city deemed "preventable." Nevertheless, the city elevated her to the probationary level, at which point she became an at-will city employee. During this probationary period, the plaintiff got into a second preventable accident in which she sideswiped a parked car and tore off its side mirror. She also incurred her first "miss-out," i.e., she failed to give her supervisor at least one hour's warning that she would not be reporting to her shift. A few months later, the plaintiff's supervisor rated her overall as "further development needed" in her probationary performance review. The plaintiff incurred another miss-out soon thereafter.
During a chance encounter in May 2005, the plaintiff told her supervisor that she was pregnant. According to the plaintiff, her supervisor reacted with seeming displeasure, exclaiming: "Wow. Well, what are you going to do? How far along are you?" He then requested that she provide a doctor's note clearing her to continue working. Four days later, the day the plaintiff provided her supervisor with her doctor's clearance note, the supervisor attended a meeting at which he received a list of probationary drivers who were not meeting standards for continued employment, including the plaintiff. Her employment was terminated effective May 18, 2005.
The plaintiff sued, alleging that the city fired her because she was pregnant, a form of sex discrimination. At the trial, the city asked the trial court to instruct the jury regarding the so-called "mixed-motives defense," asserting that, even if the supervisor's decision was motivated in part by discriminatory intent, the city would have fired the plaintiff anyway for her poor performance. The city argued such a showing would absolve it of all liability. The trial court refused this instruction and instead gave the California model jury instruction that the plaintiff was entitled to damages if she proved that her pregnancy was a motivating factor or reason for the discharge.
In a nine-to-three vote, the jury found that the plaintiff's pregnancy was, in fact, a motivating reason for her termination and awarded her $177,905 in damages, of which $150,000 were for non-economic losses (i.e., mental suffering).
California Supreme Court's Analysis
The California Fair Employment and Housing Act (FEHA) makes it illegal for an employer to discriminate in its employment decisions "because of" an employee's protected status, such as disability, race, or sex – which includes discrimination because of pregnancy.
The crux of the question for the court, then, was the precise meaning of the phrase "because of." There was no dispute that the phrase requires a plaintiff to prove a causal link between an employer's consideration of the protected characteristic and its action. However, what was disputed was the degree of causation required. The court considered three alternative approaches to the plaintiff's burden of proof:
(1) the employer's consideration of a protected characteristic was necessary to its decision to take the employment action – also known as but for causation;
(2) the employer's consideration of a protected characteristic was a substantial motivating factor in the employer's decision; or
(3) the employer's consideration of a protected characteristic was a motivating factor in the employer's decision.
The court found the changes to federal law regarding mixed motive cases that were embodied in the Civil Rights Act of 1991 most persuasive and consistent with the expressed goals of the California Legislature in enacting the FEHA. The FEHA expresses goals not just to redress aggrieved employees when they have been discriminated against, but also to "prevent and deter unlawful employment practices."
In light of those goals, the court found that if a plaintiff would have been terminated, even in the absence of any discriminatory intent, it made no sense under the FEHA to provide that plaintiff with a financial windfall in the form of financial damages. On the other hand, where a plaintiff has proven that discrimination was a substantial motivating factor for the adverse employment action, it likewise did not make sense to absolve the employer of all liability, even though that plaintiff was rightfully terminated for other reasons.
In the end, the court selected a middle road: employers that can prove an employee would have been terminated even in the absence of discrimination are not liable for back pay, emotional distress, or other monetary damages. However, a plaintiff who has proven that a discriminatory motive was a substantial motivating factor in the termination decision may still be entitled to declaratory relief (essentially the court stating that the discriminatory decision was against the law), injunctive relief (the court ordering the employer to take steps to prevent further discrimination), and reasonable attorneys' fees incurred in bringing the lawsuit, at the discretion of the trial court.
Summary and Important Points
1. The most lasting effect from the Harris decision will likely be the new causation standard articulated by the court that is necessary to prove a discrimination claim, requiring a showing that discrimination was a substantial motivating factor for the employment decision. This test will apply to mixed-motive and non-mixed-motive cases alike.
2. Although the court does not delineate precisely what evidence plaintiffs must prove to meet this burden, it did take care to highlight that stray remarks in the workplace, statements by non-decision makers, and statements by decision makers unrelated to the decision making process cannot, by themselves, establish that an improper bias was in fact a substantial motivating factor behind a particular employment decision.
3. The probability of a true mixed-motive finding (i.e., where a jury finds that a plaintiff was discriminated against, but would have been terminated anyway) is probably low. However, even in that case, employers still have exposure for attorneys' fees, which is often a driving concern even in cases where there is additional exposure for back pay and emotional distress. Thus, as always, employers must remain vigilant in enacting, maintaining, and enforcing their anti-discrimination policies, and in providing anti-discrimination training. However, Harris potentially provides a significant tool to cut off meritless allegations prior to trial, and to limit exposure to damages.
4. The Harris decision is important for employers because it underscores the need for employers to keep strong documentation of performance problems and of business reasons for terminations. This documentation will be critical in being able to establish the employee’s performance problems were the reason for the termination, as verse any motive to discriminate against the employee. The better the documentation, the harder it will be for an employee to establish improper bias was in fact a substantial motivating factor behind a particular employment decision.
5. The Harris decision also is important for in-house counsel and defense attorneys because it:
Sets forth options for pleading the affirmative defense of "same-decision."
Sets out the burdens of proof on each side.
Identifies useful examples of discrimination as a "substantial factor," which can be used for briefing, training, etc.
Disapproves of jury instructions that set a lower standard of proof of discrimination.
California Appellate Court Rules There Is No Statutory Cap for Pregnancy-Disability Leave
The interplay among state and federal employment leave requirements can be confusing and often becomes a trap for the unwary, as occurred in the recent case of Sanchez v. Swissport, Inc., No. B237761 (Cal. Ct. App. Feb. 21, 2013).
In a case of first impression, the court in Sanchez concluded that an employee who has exhausted all permissible leave under California's Pregnancy Disability Leave statute (PDL) and the California Family Rights Act (CFRA) nevertheless may sue her employer for refusing to give her additional leave under separate provisions of California's Fair Employment and Housing Act (FEHA).
Background Facts And Trial Court Decision
The plaintiff was employed by defendant Swissport, Inc. when she became pregnant. A few weeks into her pregnancy she was diagnosed with a high-risk pregnancy, requiring bed rest for the remainder of her pregnancy. She requested leave from work, which Swissport initially granted. After 19 weeks of leave – with three months left to go on her pregnancy – the plaintiff's employment was terminated because she had exhausted all available PDL and CFRA leave and was unable to return to work. The plaintiff then filed suit, asserting that Swissport was liable for failing to grant her additional leave under the FEHA.
Swissport filed a demurrer (i.e., a motion to dismiss) to the complaint and argued that, because it had provided the plaintiff with the four months of disability leave mandated by the PDL and CFRA, it necessarily had satisfied all of its obligations under the FEHA. The plaintiff opposed the motion by contending that she was also entitled to reasonable accommodation for her pregnancy-related disability under the FEHA, separate and apart from her leave rights under the PDL and CFRA. On reply, Swissport's position was summed up as follows: "The pregnancy disability statutes and regulations are clear: pregnancy disability leave is capped at four months. [The plaintiff] was permitted all of the pregnancy leave to which she was entitled, and her employment was terminated only when that leave expired and she was not able to return to work."
The trial court agreed with Swissport. In granting the motion to dismiss, the trial court concluded that Swissport's conduct in terminating the plaintiff "after her statutorily authorized pregnancy leave expired and...she was unable to return to work [was] expressly permitted under the Government Code."
Appellate Court Disagrees
The appellate court, however, disagreed. After analyzing the leave requirements of the PDL, CFRA, and FEHA, the appellate court concluded that the PDL was meant "to augment rather than supplant" the leave rights otherwise afforded by the FEHA. Thus, where an employee is disabled by pregnancy, she is entitled not only to 4 months of leave under the PDL, but also to a reasonable accommodation for her disability (including a longer leave of absence) absent an undue hardship to the employer. The appellate court in Sanchez also held that employers must engage in the interactive process with employees disabled by pregnancy and pregnancy-related conditions just as they must do with employees disabled by other conditions.
Summary and Important Points
1. What does this case mean for employers? Well…it changes everything if this case remains good law. In short, it means there is no statutory cap on pregnancy disability leave for employers with five or more employees.
2. An employee disabled by pregnancy or pregnancy-related conditions may take up to 4 months (17.3 weeks) of pregnancy-disability leave under the PDL and then also may be entitled to take additional open-ended leave as a reasonable accommodation for any continued pregnancy-related disability under the FEHA.
3. Once the baby is born, and assuming the employee is eligible for CFRA leave, the employee may also be entitled to take another 12 weeks of CFRA leave for "baby bonding."1 In other words, an employee's pregnancy-related leave may last far longer than the pregnancy itself.
4. Employers also need to be mindful of the new pregnancy disability leave regulations that went into effect on December 30, 2012, which we covered at the Breakfast Briefings earlier this year for those who attended. The new regulations expand the circumstances under which a woman may be viewed as "disabled by pregnancy," including severe morning sickness, gestational diabetes, pregnancy-induced hypertension, preeclampsia, and post-partum depression.
5. The new regulations also clarify that a woman may be disabled by pregnancy if she needs time off for prenatal or postnatal care, bed rest, childbirth, loss or end of pregnancy, or recovery from childbirth or loss or end of pregnancy. For a more detailed discussion of these new regulations, see my prior January 11, 2013, Legal Update: California's New Pregnancy Disability Leave Regulations.
6. With these recent developments in the laws surrounding pregnancy-disability leaves, all California employers should review their leave of absence policies to ensure that they are compliant with current requirements. All employers should be updating their employee handbooks for 2013 in light of the numerous changes in California law effective January 1, 2013. As a part of this updating process, employers should also be sure to review their policies and practices regarding disability accommodations to reflect the requirements for engaging in the interactive process and reasonably accommodating pregnancy, childbirth, and related medical conditions.
1 But see Cal. Code Regs. tit. 2, § 7297.6(c)(1) (allowing an employer to apply the CFRA to an employee's pregnancy-disability leave when PDL is exhausted, but the child has not yet been born).
California Adopts New Disability Discrimination Regulations
The following article is by Littler attorney Ms. Diane Kimberlin.
Please see my Summary and Important Points below.
Regulations proposed by California's Fair Employment and Housing Commission governing disability discrimination have been finalized after public comment and are now in effect. According to the Statement of Purpose, the Commission intends that the definition of "disability" be construed as broadly as allowed by the Fair Employment and Housing Act (FEHA), California's principal anti-discrimination law. The Commission urges that the primary focus in cases brought for alleged violation of the FEHA should be on whether employers have provided reasonable accommodations, whether employers and employees have met their obligations to engage in the "interactive process," and whether discrimination has occurred. The Commission opines that whether the employee meets the definition of disability "should not require extensive analysis." It is true that, in many cases, an employee's status as a disabled person will be obvious. In other cases, unfortunately, the convoluted definitions of "disability" adopted by the Commission in its efforts to define that term to the outer limits of the law will require just the sort of extensive analysis the Commission wishes to avoid unless employers are to abandon the question of a disability's existence entirely and simply assume that anyone requesting an accommodation is disabled under the law.
The amended regulations are reorganized in an effort to make them more user-friendly. In particular, the definitions are now set out in alphabetical order at the beginning of the regulations. The Commission has also explicitly adopted language and concepts used in the amended Americans with Disabilities Act (ADA), to the extent that those principles are not in conflict with the FEHA. The ADA amendments brought federal law closer to California's broader definitions of "disability," but there are still differences and these are recognized in the regulations. The amended regulations add new material to the definitions of "disability" and elsewhere. As expected, these new provisions pose the greatest likelihood of confusion and resulting litigation.
Applicants and Employees Must Prove They Are "Otherwise Qualified"
Most, but not all, of the regulatory amendments seek to expand the rights of employees. Several of the exceptions are amendments intended to incorporate the California Supreme Court's decision in Green v. State of California.1 That case established that an applicant or employee suing for discrimination has the burden of proving that he or she is an "otherwise qualified individual with a disability" that the individual is capable of performing essential functions of the job, with or without a reasonable accommodation. The amended regulations add new language under the section "Establishing Disability Discrimination" explicitly stating that the applicant or employee has this burden of proof.2 The amended regulations also add a definition of "qualified individual,"3 and eliminate the previous defense of "inability to perform" in recognition that the decision in the Green case clearly places the burden on an applicant or employee to prove he or she could do the job, with or without reasonable accommodation, when suing for disability discrimination.4
"Assistive Animals" in the Workplace
The amended regulations include expanded provisions that address bringing animals into the workplace as a reasonable accommodation to a disabled individual. These provisions drew significant comment from employers during the public comment period, many seeking more specific statements of the circumstances when employers could be required to allow animals in the workplace. The adopted regulations, however, provide less specific guidance than the proposed regulations offered.
The regulations define "assistive animals" to include "support" animals, in addition to the guide dogs, signal dogs, and service dogs that most often come to mind. "Support" animals (and there is no limit to the type of animal) provide "emotional or other support to a person with a disability, including, but not limited to, traumatic brain injuries or mental disabilities such as major depression" or other disabilities. Employers may require "minimum standards" for assistive animals. Those standards may include requirements that an animal is free from odors and "displays habits appropriate to the work environment, for example, the elimination of urine and feces." Employers may also require that the animal not engage in behavior that endangers the health or safety of employees and is trained to provide assistance for the employee's disability.5
New regulations governing the "interactive process" permit employers to require confirmation that the animal meets this definition, and specifically state that this confirmation "may include information provided by the individual with a disability." Indeed, it appears as though the required letter may consist entirely of the individual with a disability's own confirmation, as there is no provision in the regulation permitting an employer to require that this confirmation come from some other source.6 The regulations permit an employer to challenge that the animal meets the standards "within the first two weeks the assistive animal is in the work place based on objective evidence of offensive or disruptive behavior." The regulations are silent as to whether an employer may mount a later challenge based on changed behavior or changed circumstances in the workplace.7
Focus on the Interactive Process
The FEHA makes it a separate violation to fail to engage in the interactive process. In keeping with its intent to push reasonable accommodation and the interactive process to the forefront, the Commission has, for the first time, included a definition of the "interactive process"8 and a very detailed description of the obligations of employers, applicants, and employees.9 Amendments to the regulations now specifically state that employers cannot establish the affirmative defenses that the employee presents a danger to his or her own health and safety, or the health and safety of others, without first having engaged in the interactive process.10
An employer's obligation to engage in the interactive process is triggered when: (1) a request for accommodation is made by an applicant or employee with a known physical or mental disability or medical condition (very specifically defined under the FEHA to include cancer and genetic information); (2) an employer is made of aware of the need for an accommodation by a third party or by observation; or (3) an employee with a disability exhausts leave under the California Workers' Compensation Act, or under the California Family Rights Act or the federal Family and Medical Leave Act when leave was for the employee's own serious health condition, and the employee's healthcare provider indicates that further leave is needed.11
Several provisions of the detailed regulations regarding the interactive process are troubling. Portions of earlier regulations allowing employers to receive a restricted range of medical information about the disability have been removed. Under the amended regulations, an employer receiving requests for accommodation in circumstances where the existence of the disability or need for accommodation is not obvious is permitted to ask for "reasonable medical documentation confirming the existence of the disability and the need for reasonable accommodation." However, the regulations explicitly state that "[d]isclosure of the nature of the disability is not required."12
The regulations become even more troubling when the new definition of "required medical information" is taken into consideration. An employer may ask for the name and credentials of an employee or applicant's healthcare provider to determine that the provider is a person qualified to opine in the area in question. An employer may ask the employee or applicant to provide information from that healthcare provider stating that "the employee or applicant has a physical or mental condition that limits a major life activity or a medical condition, and a description of why the employee or applicant needs a reasonable accommodation . . . ."13 If an employee provides "insufficient information," an employer must explain to the employee or applicant why it is insufficient and allow him or her an opportunity to provide sufficient information. Information is deemed insufficient "if it does not specify the existence of a FEHA disability and explain the need for a reasonable accommodation."14
Taken together, the newly enacted regulations governing the "interactive process" appear to require that employers look to the healthcare provider to make the legal analysis of whether or not his or her patient meets the very detailed and expanded definitions of "disability." That is a significant and seemingly unrealistic task to assign to a healthcare provider, especially at a time when the nation is struggling to find ways to deliver more care for less money. Healthcare providers are unlikely to have either the time, training, or desire to analyze the definition of "disability" under the FEHA.
Safeguarding Private Medical Information
The regulations setting out the interactive process acknowledge that an employer might secure a medical examination by its own chosen healthcare provider. Any such examination must be "job-related and consistent with business necessity . . . [meaning it] must be limited to determining the functional limitation(s) that require(s) reasonable accommodation."15
The amended regulations contain new and detailed rules on "medical and psychological examinations and inquiries."16 These make it unlawful to require such an examination before an offer of employment is extended to an applicant,17 set conditions on the use of such examinations after a conditional offer of employment is extended18 and the conditions under which an offer of employment may be withdrawn on the results of a medical or psychological examination.19 They also state that medical or psychological examinations may be used during employment including fitness for duty examinations only when they meet the standards of job-relatedness and business necessity.20
Provisions are made for disability-related inquiries by an employee assistance program counselor, so long as the counselor: does not act on behalf of the employer; is required to shield any information an employee reveals from decision makers; has no decision making power; and discloses these requirements to the employee.21 Similar provisions are made to allow compliance with other federal or state regulations requiring medical examinations (for example, for truck drivers and pilots),22 and for voluntary wellness programs.23
As before, any information regarding the medical or psychological history or condition of employees must be kept in separate, confidential files.24
Who Is Disabled?
The amended regulations state the Commission's expectation that employers and employees will not spend much time analyzing whether employees are disabled, and will focus instead on how to accommodate employee limitations.25 This same goal, the Commission explains, underlays amendments to the Americans with Disabilities Act. However, before the amendments to the ADA, the ADA had defined "disabilities" more narrowly than the California FEHA. Moreover, the ADA's change in focus is the result of amendments to the statute itself, not just amendments to regulations. The Commission's stated intent to expand its regulations to the widest possible interpretation of "disability" may have taken it into territory not contemplated by the FEHA itself and ultimately may blur any meaningful distinction between those who are to be accommodated as "disabled" and those who are not.
For example, the much expanded definition of "disability" now includes a "special education disability." A "special education disability" is a "recognized" impairment or disorder that requires or has required in the past special education or related services.26 By definition, it is something in addition to the "mental disabilities" already defined elsewhere in the regulations (Those "mental disabilities" include intellectual or cognitive disability as well as organic brain syndrome, specific learning disabilities, autism spectrum disorders and a wide array of mental illnesses).27
A "special education disability" may include, or may be something in addition to, a "specific learning disability." "Specific learning disabilities," in turn, are broadly defined in the amended regulations as manifested by "significant difficulties in the acquisition and use of listening, speaking, reading, writing, reasoning or mathematical abilities" and may include "perceptual disabilities, brain injury, minimal brain dysfunction, dyslexia and developmental aphasia."28
Thus, according to the amended regulations, there is a "special education disability" that is above and beyond all the specific sorts of "mental disabilities" and "specific learning disabilities" enumerated in the regulations and that is defined as being "recognized" and to have required, at some point in the past, the use of services that may be "related to" "special education services."
The amended regulations also include definitions of "perceived disability" and "perceived potential disability."29 Thus, a "perceived potential disability" could be established if an employer regarded, perceived, or treated an employee as having a special education disability that has no present disabling effect but may become a special education disability. Of course, an employer who took adverse action against an employee on the basis of a "perceived potential disability" would be, at least in the eyes of the Commission, in violation of the FEHA.
It takes nothing away from the laudable goal of requiring employers to make reasonable accommodations that will permit disabled employees to enjoy equal participation in the workplace to conclude that definitions as imprecise and elastic as these leave employers without needed guidance about their obligations under the FEHA. Indeed, such definitions will require increased focus on who is and who is not disabled, unless employers respond by abandoning any effort to determine whether employees seeking accommodation are actually among those protected by the law and proceed immediately to an interactive process.
Summary and Important Points
1. The protections of the FEHA are broad, and employers must be sensitive to the requirement that they initiate the interactive process not only on request for an accommodation, but if the employer has reason to believe one might be needed.
2. The definition of "disabled" included in the regulations is very broad. Despite the Commission's wish that it require little analysis, employers should consult their legal counsel if they are in any doubt that an employee might be protected by the FEHA.
3. Employers should take care to guard the privacy of medical information they have in their files.
4. The right to require that employees provide medical information, even to establish the existence of a disability, is very limited, and employers should consult counsel before asking for such information. Employers have greater rights to ask employees to provide information from their healthcare providers about any limitations or restrictions on their activities and how those might be accommodated.
1 42 Cal. 4th 254 (2007).
2 Cal. Code Regs. tit. 4, § 7293.7(a). All further citations to the amended regulations will be referred to by the appropriate section number.
3 Section 7293.6(o).
4California Fair Employment and Housing Commission, Initial Statement of Reasons for Proposed Amended Disability Regulations Adopted 10/3/11, page 15, section 7293.8, available at http://www.dfeh.ca.gov/FairEmploymentAndHousingCouncil.htm.
5 Section 7293.6(a).
6 Section 7294.0(e)(1) and (2).
7 Section 7294.0(e)(2).
8 Sections 7293.6(j).
9 Section 7294.0.
10 Section 7293.8(b) and (c).
11 Section 7294.0(b).
12 Section 7294.0(c)(2) and (d)(1).
13 Section 7294.0(d)(5)(A) and (B).
14 Section 7294.0(d)(5)(C) and (C)(1).
15 Section 7394.0(d)(5)(C).
16 Section 7294.2.
17 Section 7294.2(a).
18 Section 7294.2(b).
19 Section 7294.2(c).
20 Section 7294.2(d).
21 Section 7294.2(d)(3)(A).
22 Section 7294.2(d)(3)(B).
23 Section 7294.2(d)(3)(C).
24 Sections 7294.2(d)(4) and 7294.0(g).
25 The amended regulations eliminate language in earlier regulations that specifically noted that "homosexuality and bisexuality are not impairments" because the Commission regarded these provisions as unnecessary in light of "evolving societal norms." Section 7293.5(b). The Commission notes that homosexuality and bisexuality have not been regarded as "mental disorders" under the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders (DSM-II) since 1973, and that both are protected categories under other provisions of the FEHA.
26 Section 7293.6(d)(3).
27 Section 7293.6(d)(3), (d)(1), and (d)(2).
28 Section 7293.6(d)(3).
29 Section 7293.6(d)(5) and (6).
EEOC Suit Against Employer Screening Applicants Based on Credit History Information Dismissed
The following article is by Littler attorney Rod Fliegel.
Please see my Summary and Important Points below.
In April 2012, the Equal Employment Opportunity Commission (EEOC) issued its updated enforcement guidance concerning how, in its view, Title VII of the Civil Rights Act of 1964 (Title VII) restricts an employer's discretion to consider criminal records relative to employment decisions. The EEOC was scheduled to release at the same time its updated guidance concerning the use of credit history information, but at the last minute decided (without explanation) not to do so. Even before April 2012, however, the EEOC filed lawsuits against a handful of employers, including Kaplan Higher Education Corporation (Kaplan), for allegedly violating Title VII by relying on criminal and credit records. On January 28, 2013, the district court judge in EEOC v. Kaplan Higher Education Corp.1 granted Kaplan's motion to dismiss the case without a trial, holding the EEOC failed to meet its threshold burden as the plaintiff to prove that Kaplan's screening practices disproportionately excluded protected class members (i.e., had the requisite "disparate impact"). The opinion is significant for employers because: (1) the subject of background checks remains high on the EEOC's agenda (in fact there is an ongoing case in Maryland2); and (2) at least for employers who are not government contractors, the EEOC may face more hurdles than it expected in proving disparate impact. Because the court decided the matter based solely on the threshold question of disparate impact, it unfortunately did not reach other important issues, such as whether the EEOC can challenge an employer's use of credit history information when the Commission itself relies on such information in the hiring process. This uncertainty reinforces the benefit to employers of reviewing their background check and related programs.
Background of the Kaplan Litigation
In December 2010, the EEOC sued Kaplan in federal district court in Ohio, alleging that Kaplan's use of pre-employment credit checks had an unlawful disparate impact on protected class members in violation of Title VII.3
On November 30, 2012, Kaplan and the EEOC filed separate motions for judgment before trial (known as summary judgment). On the same date, Kaplan also moved to exclude the testimony of the EEOC's expert witness. Kaplan's motions argued that: (a) the EEOC failed to identify a particular employment practice that allegedly had caused the purported disparate impact; (b) the EEOC's proffered expert opinion was inadmissible because it failed to satisfy the federal standards for reliable expert testimony (the Daubert standard), and in any event failed to consider other factors impacting the disparate impact analysis, such as non-common non-discriminatory explanations; and (c) Kaplan's use of credit history information was job-related and consistent with business necessity. The EEOC argued in its motion that the court should reject, as a matter of law, Kaplan's proposed affirmative defense that its use of credit history information was job-related and consistent with business necessity.
On January 28, 2013, the district court granted Kaplan's motion to strike the EEOC's expert opinion and motion for summary judgment, and dismissed the EEOC's lawsuit. The district court also denied the EEOC's motion. In doing so, the court determined that the EEOC had failed to provide reliable statistical evidence of discrimination, and, therefore, failed to satisfy its threshold burden of proving that Kaplan's use of credit history information resulted in a disparate impact on protected class members.
Kaplan did not collect information regarding the race of each applicant. Therefore, to determine the basic fact of the race of the applicants at issue, the EEOC's expert had obtained data from the Department of Motor Vehicles in 38 different states and Washington D.C. While 14 of those states had provided specific data on the applicants' races, 24 states provided only copies of the applicants' drivers' licenses. The district court noted that the EEOC's expert attempted to manufacture data related to those applicants' races by assembling a team of five individuals (so-called "race-raters") that reviewed the pictures on the drivers' licenses and purported to determine the individual's race. Where four of the five "race raters" agreed on the person's apparent race, the EEOC's expert assumed the "race-raters" had it right.
The district court held that the expert's practice of using "race raters" was not reliable under the standards set forth by the U.S. Supreme Court in Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (1993), pursuant to which courts are required to act as "gate keepers" in determining whether purported expert evidence is sufficiently reliable and relevant to be heard by a jury, by examining a non-exhaustive list of factors. Those factors include whether the expert's technique or theory can be or has been tested or subject to peer review and publication, known potential error rates, and whether the theory or technique used by the expert has been generally accepted in the scientific community. The district court held that the EEOC failed to proffer any proof that the use of "race raters" was scientifically accepted, had been the subject of peer-reviewed publication, or had a scientifically acceptable rate of error. Moreover, the district court noted that the EEOC itself on its website in other contexts had discouraged employers from using this same method (visual identification) to ascertain individuals' races.
Furthermore, the district court and Kaplan both noted that the EEOC apparently chose not to simply contact the individuals directly to ascertain their race, which presumably would have been more reliable than the process the expert used. In addition, the district court observed that the EEOC's expert did not use a representative sample in his analysis. First, the EEOC's expert did not use a random sample. Second, Kaplan's expert witness opined (without contradiction by the EEOC) that the final sample pool used by the EEOC's expert consisted of a much higher percentage of individuals who had failed Kaplan's credit checks than the percentage of the entire applicant pool that had actually failed Kaplan's credit checks.
Because the district court held that the EEOC's expert evidence was inadmissible, it concluded that the EEOC could not present a prima facie case of disparate impact discrimination as it could not show that Kaplan's use of credit checks had caused the applicants' exclusion because of their membership in a protected group. The district court explicitly refused to consider the many other issues the parties raised, such as whether the EEOC had adequately identified a particular practice allegedly causing the disparate impact, whether the EEOC was estopped from challenging Kaplan's practices, and whether Kaplan's use of credit checks was job-related and consistent with business necessity.
Summary and Important Points
1. The EEOC indisputably is pursuing an aggressive agenda of targeting what it views as discriminatory practices through "practice and pattern" cases, including investigations and lawsuits focusing on hiring and employment policies related to credit checks and criminal records. A very concrete and fairly recent example of this is the EEOC's January 2012 $3.13 million settlement in a dispute concerning criminal records.4
2. It remains to be seen how the EEOC will respond to the dismissal of its suit against Kaplan without a trial. Because the district court's decision is not technically binding on any other court and focused only on whether the EEOC had presented reliable expert testimony, however, it is likely that the EEOC will continue to pursue litigation against employers while it further hones its methods of proof and expert techniques. In addition, the EEOC's objectionable use of "race raters" in the Kaplan case resulted from, first, the fact that Kaplan did not maintain race data on applicants and, second, that the EEOC chose not to contact the affected individuals directly to ascertain their races. Either or both of those factors may not be present in future cases or for all employers, such as federal contractors who, unlike Kaplan, are required to maintain data on applicants' races.
3. In the meantime, employers should consider reviewing their credit and criminal record-based screening policies and procedures to assess whether they are consistent with Title VII as interpreted by the EEOC.
4. Of course, employers that consider credit history information and/or criminal records for employment purposes must be mindful not only of the EEOC's interpretation of Title VII, but related federal and state laws, including the fair credit reporting laws such as the Fair Credit Reporting Act, and state fair employment laws restricting inquiries into, and the use of, credit history and criminal records (e.g., the new laws in California (effective 2012),Vermont and Newark, New Jersey).
1 No. 1:10-cv-02882, ECF 110 (Jan. 28, 2013).
2 See EEOC v. Freeman, No. 8:09-cv-02573 (D. Md.).
3 As previously reported in another Legal Update, earlier in the case discovery had actually revealed that the EEOC itself used credit history in screening applicants for employment, which the district court had held was relevant to Kaplan's asserted defense of the business necessity of its practices.
4 See Press Release, Equal Employment Opportunity Commission (Jan. 1, 2012), available at www.eeoc.gov/eeoc/newsroom/release/1-11-12a.cfm.
Federal Court Invalidates NLRB Recess Appointments, Creating Uncertainty For Nonunion And Union Employers
The following is an excerpt from an article is by Littler attorney Alan Model.
Please see my Summary and Important Points below.
Over the past year several of the weekly Legal Updates have focused on the NLRB¹s on-going attack on employer¹s day to day policies based on alleged section 7 violations. This has significantly impacted both union and nonunion. The Board¹s decisions have gone far beyond prior precedent and have impacted every employer¹s social media policies, at-will policies, the confidentiality of investigation, etc. Some of these decisions are discussed as part of the ³Washington Agenda² section of the Breakfast Briefings (see slides #63-65).
The article below provides an update on the latest NLRB developments involving the precedential value of these cases and the possible impact of these developments on the cases we have monitored and have (or will) discuss as part of the Breakfast Briefings.
For the past year, unionized and nonunionized employers across the United States have been alarmed by the National Labor Relations Board's expansive interpretation of the National Labor Relations Act and the resulting potential impact on their businesses. On January 25, 2013, the U.S. Court of Appeals for the D.C. Circuit, in Noel Canning, a Division of the Noel Corporation v. National Labor Relations Board, Nos. 12-1115 & 12-1153 (D.C. Cir. Jan 25, 2013), dealt a significant blow to the NLRB's expansive actions. The D.C. Circuit held that President Obama's recess appointments of Members Sharon Block, Terence Flynn, and Richard Griffin to the NLRB on January 4, 2012 were invalid and, thus, the NLRB lacked a legitimate quorum of members to act since such appointments were made.
This decision could potentially invalidate hundreds of NLRB decisions issued since January 4, 2012. The true impact of the Noel Canning decision will not be known for months, as this same issue the validity of the recess appointments is being litigated before other federal appellate courts, with the great likelihood the issue will ultimately be resolved by the U.S. Supreme Court. Below is a discussion about the potential impact of the Noel Canning decision in light of the U.S. Supreme Court's 2010 decision in New Process Steel, LLP and in light of the current political climate in Washington, D.C.
The Noel Canning Decision
In Noel Canning, a three-judge panel of the D.C. Circuit held that President Obama's January 4, 2012 recess appointments to the NLRB of Members Block, Flynn, and Griffin were unconstitutional because the appointments did not "happen during the Recess of the Senate," as required under the "Recess Appointments Clause" of the United States Constitution.
On February 8, 2012, a three-member panel of the Board, comprised of Members Hayes, Flynn, and Block found that Noel Canning, a bottler and distributor of Pepsi-Cola products, violated the Act by refusing to reduce to writing and execute a collective bargaining agreement. The employer appealed the Board's decision to the D.C. Circuit Court of Appeals.
The D.C. Circuit affirmed the Board's substantive findings in the case but then turned to the two constitutional arguments asserted by the employer that the Recess Appointments Clause is inapplicable to the appointments made by the President because: (1) the Senate was not in "the Recess" at the time of the putative appointments; and (2) the vacancies being filled did not "happen during the Recess" of the Senate.
The "Recess Appointments Clause" provides that: "[t]he President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session." The employer argued that at the time of the January 4, 2012 recess appointments, the Senate was not in "the Recess" between sessions. The Board argued that the clause permits appointments during intrasession (as opposed to intersession) "recesses" or breaks in the Senate's business without limitation. The D.C. Circuit Court agreed with the employer's position:
An interpretation of "the Recess" that permits the President to decide when the Senate is in recess would demolish the checks and balances inherent in the advice-and-consent requirement, giving the President free rein to appoint his desired nominees at any time he pleases, whether that time be a weekend, lunch, or even when the Senate is in session and he is merely displeased with its inaction. This cannot be the law. The intersession interpretation of "the Recess" is the only one faithful to the Constitution's text, structure, and history. . . . Considering the text, history, and structure of the Constitution, these appointments were invalid from their inception.
According to the D.C. Circuit opinion, the president's recess appointment authority is limited to the intersession recess of the Senate, which "refers to the time period between [Senate] sessions that would end with the ensuring session of the Senate."
Although it was not necessary for the court to reach the employer's second argument, it chose to address the issue of whether the vacancies must "happen during the Recess" in order for the president to utilize the Recess Appointments Clause. The court found the phrase "that may happen during the Recess" meant the president could only exercise his Recess Appointment power during the same recess in which the vacancy arose. The court stated in support of its decision, "There is no reason the Framers would have permitted the President to wait until some future intersession recess to make a recess appointment, for the Senate would have been sitting in session during the intervening period and available to consider nominations." Thus, the D.C. Circuit held that the vacancies must "happen during the Recess," not merely exist during the Recess, under the Recess Appointments Clause.
As to the dispute at issue, the D.C. Circuit held that the vacancies purportedly filled by President Obama's January 4, 2012 recess appointments did not arise during the intersession recess of the Senate. The court further held that at the time of the January 4, 2012 recess appointments, the Senate was not in intersession recess because it never adjourned the First Session of the 112th Congress on December 30, 2011, and the First Session "expired simultaneously with the beginning of the Second Session" on January 3, 2012. At the time of President Obama's purported recess appointments on January 4, 2012, the Senate was operating in pro forma sessions, which had the effect of preventing a formal adjournment of the First Session. For these reasons, the court found that the president could not have validly used his Recess Appointment power. The court ultimately vacated the Board's order, holding the Board did not have a quorum when it issued the February 8, 2012 order because the president's appointments were invalid.
While the impact of the D.C. Circuit's decision will not likely be resolved for some time and probably not until the Supreme Court weighs in, employers need to determine how to proceed in light of the uncertainty created by this decision.
Summary and Important Points
1. For employers who are currently involved in an unfair labor practice or representation matter, all indications are that the NLRB will continue to operate post-Noel Canning until the Supreme Court weighs in. Within hours of the decision's issuance, NLRB Chairman Mark Gaston Pearce stated: "The Board respectfully disagrees with today's decision and believes that the President's position in the matter will ultimately be upheld. It should be noted that this order applies to only one specific case, Noel Canning, and that similar questions have been raised in more than a dozen cases pending in other courts of appeals. . . . [W]e will continue to perform our statutory duties and issue decisions."1 Regardless of the Board's quorum and authority to act, the NLRB's Office of the General Counsel will continue to investigate and prosecute cases, the Board's administrative law judges will hear and decide cases, and the Regional Directors in the Board's regional offices will process representation cases.
2. Employers currently embroiled in NLRB matters should take steps to object to the Board's authority to act at any stage of the process when necessary. For example, an employer may choose to file a petition to revoke a subpoena (investigatory or hearing) authorized by a Board Member. As another example, if a regional office or an administrative law judge gives precedential weight to a post-January 4, 2012 Board decision, an employer may take the position (and should in writing) that such Board decision is invalid and non-precedential. Additionally, as a "belt and suspenders" approach, employers may include a footnote or argument in all pleadings to the Board that it lacks the authority to act under Noel Canning (and any subsequently issued decision reaching the same conclusion).
3. Employers who are not currently involved in NLRB matters should act cautiously after the Noel Canning decision. While the rationale in Noel Canning may invalidate all 200-plus decisions issued since January 4, 2012, the D.C. Circuit is only one voice on the appointment issue. Another appellate court may hold the recess appointments were valid. The likely reality is that uncertainty will likely exist until the Supreme Court resolves the issue.
4. Several of the cases we discussed as part of the Breakfast Briefing series and many other significant precedent-departing NLRB decisions are now called into question including:
· Costco Wholesale Corp. 358 N.L.R.B. No. 106, (Sept 72012) (employer¹s social media policy, found to be overly broad).
· Banner Health System, 358 NLRB No. 93 (July 30, 2012) (employer's blanket rule prohibiting employees from discussing ongoing investigations of employee misconduct deemed unlawful);
· American Red Cross Arizona Blood Services Region, (July 2, 2012), (employer¹s ³at will employment² provision unlawfully interfered with employee rights)
· Hispanics United of Buffalo, Inc., 359 NLRB No. 37 (Dec. 14, 2012) (nonunion employer's termination of employees for Facebook postings were unlawful);
· Supply Technologies, LLC, 359 NLRB No. 38 (Dec. 14, 2012) (nonunion employer's mandatory arbitration policy was invalid because it interfered with employees' Section 7 rights); and
· Karl Knauz Motors, Inc., 358 NLRB No. 164 (Sept. 28, 2012) (Board invalidated a work rule that required employees to be courteous to co-workers and not use disrespectful language which injures the image or reputation of the employer).
5. Employers who opt to disregard the above Board precedent act at their own peril, as Noel Canning is not yet the law of the land. Given the uncertainty concerning the authority of the NLRB, employers should discuss their options with experienced labor counsel before acting on matters involving recent NLRB decisions.
1 Press Release, National Labor Relations Board, Statement by Chairman Pearce on recess appointment ruling (Jan. 25, 2013), available at http://www.nlrb.gov/news/statement-chairman-pearce-recess-appointment-ruling.
Workplace Policy Institute: Immigration Reform in 2013 - What U.S. Employers Can Expect
The following extensive article is by Littler attorneys Jorge Lopez and Michelle Valerio.
GWB NOTE: This is a much longer Legal Update than I normally send out, but PLEASE do not let that dissuade you from reviewing the very important information being provided below. It is well subtitled and there are numerous links in the footnotes that you can access for even more information. Immigration reform will impact ALL employers. You MUST stay abreast of these developments and be part of the debate. There will be some form of reform, what it will look like and how it will impact employers is discussed below.
For the past decade, lawmakers have discussed immigration reform, but changes to U.S. immigration laws have been minimal. During the 2012 election campaign President Obama pledged to place immigration reform at the top of his agenda. His re-election indicates that key voting blocs support immigration reform, and analysts on both sides of the political debate predict changes to current immigration law in 2013. Most recently, President Obama announced in Las Vegas his support for various proposed reforms, with the top contenders including: relief to undocumented workers; increased immigration enforcement; and an increase in the number of visas allotted to foreign nationals with STEM (Science, Technology, Engineering, and Math) degrees. This article provides a brief background on immigration reform, discusses the potential immigration reform measures, and concludes with the potential effects of immigration reform on U.S. employers.
What Is Immigration Reform?
There is little debate that the U.S. immigration system needs improvement. Individuals enter the country without going through the proper legal process either because it is too complex, difficult and/or expensive, or because there is no legal means at all for entry. The current mechanisms to admit skilled and unskilled workers are not effective, and make it difficult for U.S. employers to have access to top international talent. Comprehensive immigration reform would: (1) overhaul the U.S. immigration system, while simultaneously securing the nation's borders and punishing those who assist others in coming to the U.S. unlawfully; (2) address the issue of what to do with the millions of individuals currently in the country without a legal status; and (3) improve the ability of employers to obtain visas for foreign national employees in important market sectors.
The Comprehensive Immigration Reform Act of 2010 ("Reform Act of 2010") was introduced in 2010 but failed to pass. Today, many on Capitol Hill Democrats and Republicans believe now is the time to introduce a new comprehensive immigration reform proposal. President Obama has said the biggest failure of his first administration was the lack of comprehensive immigration reform. Republicans, partially citing the loss of the presidential election on lack of support from Latino voters, are courting their vote by targeting comprehensive immigration reform. Unions are calling for it in order to help their membership. Industries hard hit by immigration compliance enforcement are also advocating for change.
While there currently is no comprehensive legislation circulating in Congress, both Republicans and Democrats have indicated that immigration reform is a priority. Recently, a group of eight Republicans and Democrats released their Bipartisan Framework for Comprehensive Immigration Reform in January 2013.1 The plan, which is detailed further in this article, is expected to be introduced as legislation in March or April 2013. While members of each party have expressed a willingness to work across party lines, some Republicans are advocating for reform to regulations affecting immigrants such as those with STEM degrees while Democrats are seeking comprehensive immigration reform measures.
STEM Immigration Reform
Previously Proposed STEM Legislation
Current immigration laws provide incentives to foreign nationals graduating from a U.S. university with a STEM degree.2 The most recent statistics from 2009 indicate that 32.7% of graduates with STEM graduates have temporary visas, and this number has been rising every year.3 For example, while most foreign students can receive employment authorization for up to 12 months after they graduate from a U.S. university through a program known as Optional Practical Training (OPT),4 graduates with STEM degrees can apply for an additional 17-month extension of their OPT if their employer is registered with E-Verify, for a total of 29 months.5
The current regulations offer incentives to foreign students who obtain STEM degrees from U.S. schools (as outlined above) to remain in the U.S. temporarily, but do not provide extended nonimmigrant visa options or a pathway to permanent residency. The failure to address these needs often affects operational business needs, with the end result being interruption of vital needs of the U.S. employer. In an effort to address this problem, STEM legislation has been proposed that would create a separate immigrant visa ("green card") category for foreign
graduates of U.S. universities with STEM degrees.
In order to understand the current trends in STEM reform legislation, it is important to look at the history of the proposed legislation. Below is a list of some recently proposed legislation on this topic:6
S. 169 - The Immigration Innovation Act of 2013 (I-Squared Act): Introduced by Senator Orrin Hatch (RUT) and numerous cosponsors on January 29, 2013, the Act has four main objectives: 1) to change the H-1B visa limits based on the annual market; 2) authorize dual intent for student visas; 3) elimination of per-country numerical limitations on employment based visas; and 4) increasing funding for STEM education and training.
H.R. 3012 - Fairness for High- Skilled Immigrants Act: Introduced by Representative Jason Chaffetz (RUT) on September 22, 2011, this bill would eliminate the employment-based per-country cap by fiscal year 2015 and raise the family-sponsored per-country cap from 7% to 15%. By raising the employment-based per-country cap, this legislation would increase the number of skilled workers that can immigrate to the United States.
S. 3185 - STAR Act: Introduced by Senator John Cornyn (RTX) on May 15, 2012, this bill would eliminate the diversity visa program and allocate the 55,000 immigrant visas from the diversity visa program toward eligible STEM graduates of qualifying U.S. research institutions who have job offers in related fields.
H.R. 6412 - Attracting the Best and Brightest Act of 2012: Introduced by Representative Zoe Lofgren (DCA) on September 14, 2012, this legislation would have amended the Immigration and Nationality Act to make up to 50,000 visas available for STEM graduates. This legislation also proposed to eliminate the diversity visa program.
S. 3553 - BRAINS Act: Introduced by Senator Charles Schumer (DNY) on September 19, 2012, this bill provided for immigrant visas for certain advanced STEM graduates, student visa reform, age-out protections for children, retention of priority dates, and family reunifications for high-skilled workers. This legislation did not propose to eliminate the diversity visa program.
As evidenced by this lengthy legislative history of proposed immigration reform to increase the number of STEM workers in the United States, there is support for reform in some context. The most recent legislation, described below, has passed the House of Representatives and is currently pending in the Senate (at the time of this article).
The STEM Jobs Act (H.R. 6429)
The STEM Jobs Act (H.R. 6429) would eliminate the diversity lottery green card program and reallocate up to 55,000 green cards to foreign nationals who graduate from a U.S. university with an advanced STEM degree. Preference would be given to graduates with a doctorate and the remaining green cards to graduates with a master's degrees. In order to qualify for a green card under this category, foreign graduates would have to meet the following requirements:
Receive a doctorate degree from an eligible U.S. university in a STEM field;
Agree to work for five years in a STEM field;
Complete all coursework while physically present in the United States; and
The employer petitioning for the foreign national must go through the labor certification process in order to demonstrate that there is no American worker who is able, willing, qualified or available for the job.
If any of the green cards are not used by foreign nationals with a doctorate, then they would be made available to foreign graduates from U.S. universities with a master's degree. The requirements would be similar to the doctorate requirements listed above, except that the individual must have also majored in a STEM degree in college. In addition, only individuals graduating from universities that meet the definition of a research institution under H.R. 6429 would qualify for a green card under this proposed category.
Summary of Political and Public Interest Group Opinions on STEM Reform
Generally, support for the STEM Jobs Act is split between conservatives that see the legislation as a compromise to comprehensive immigration reform, and more liberal groups that are seeking comprehensive immigration reform measures.
The STEM Jobs Act is primarily backed by Republicans, conservative groups, and technology lobbyist groups. Republicans, who have long sought to eliminate the Diversity Visa Program support the STEM Jobs Act as a solution to immigration reform. Supporters of the bill include The Information Technology Industry Council, U.S. Chamber of Commerce, Microsoft, EEE-USA, American Council on International Personnel, Society for Human Resource Management, Semiconductor Industry Association, Compete America, and the American Conservative Union.7 These groups view STEM reform as a solution that will both improve the U.S. economy by retaining STEM graduates in the U.S. to work in areas where there is currently a shortage of workers and improve the U.S. immigration system.
In contrast, Democrats oppose the bill because it will eliminate the Diversity Visa Program. Although Democrats support STEM reform, their support lies in a more comprehensive immigration reform that will encourage STEM graduates to remain in the U.S. and contribute to the U.S. economy without eliminating the Diversity Visa program. The White House also opposes the STEM Jobs Act since it only offers a small change to U.S. immigration laws.
Moreover, union groups such as the AFL-CIO and SEIU are supportive of comprehensive immigration reform and do not view the STEM Jobs Act as a solution to the broken U.S. immigration system. In addition, groups that oppose STEM reform are concerned with a measure of the bill that prohibits family members from working in the U.S. while they wait for their visas in the U.S. Opposition groups are more likely to support a bill that grants family members¹ work authorization while they wait for permanent residency, since the wait time for permanent residency is usually several years.
The Effect of the STEM Jobs Act on U.S. Employers
Although The STEM Jobs Act is currently stuck in the Senate, now that the elections are over it is expected that immigration reform legislation will be implemented in some form. As such, it is important for U.S. employers to understand the implications of this issue.
The Benefits of STEM Reform
The goal of the STEM Jobs Act is to encourage foreign graduates with STEM degrees from U.S. universities to remain in the U.S. after graduation. U.S. companies with difficulty filling job openings in STEM fields may find a more diverse pool of applicants available post-STEM reform. If an employer wishes to sponsor a STEM employee for a green card, it will now have an additional available option. This will hopefully encourage more individuals to pursue a STEM degree and expand the talent pool in these fields. The U.S. is lagging in the production of native-born STEM degree graduates.
Potential Drawbacks to the Proposed STEM Reform
Although on its face the STEM Job Acts seems to be an easy answer to a shortage of workers in STEM fields, the bill provides neither a straightforward approach to obtaining a green card nor does it create a nonimmigrant visa solution. Both criteria must be met to have a successful outcome.
While an employer can sponsor an employee for a green card before the commencement of employment, this is not normally done. The most common approach is Permanent Labor Certification, a costly and uncertain process of a year or more to obtain a green card. Few employers are willing to make this investment in time and money for an individual who has never worked for them, and the overwhelming majority choose to start the green card process after the employee has been working with them for a period of time.
For an employer to employ a foreign national, the individual needs a visa conferring employment authorization. As explained above, recent graduates can work with Optional Practical Training (commonly known as OPT) for one year, and STEM graduates whose employers are enrolled in the federal E-Verify program are eligible for an additional 17 months of employment authorization. However, once OPT ends the foreign student generally requires a nonimmigrant visa to continue to work for a U.S employer. The most popular nonimmigrant visa is the H-1B visa, but availability is limited each fiscal year to 85,000 new visas, including advanced degree individuals.8 If an employer is unable to obtain an H-1B visa, then it may not be able to hire the foreign national. As a result of this limitation, even if an employer could sponsor a STEM graduate for a green card (allowing for employment on a long-term basis), it might not be possible to employ that same individual on a temporary basis. Absent the ability to employ the individual temporarily while the green card application is in process, many employers will understandably be reluctant to agree to green card sponsorship, making, for many individuals, the availability of STEM green cards more myth than reality.
In addition to the nonimmigrant visa issues outlined above, under the proposed legislation employers must still undergo the Labor Certification process. In this process, an employer must perform expensive and time-consuming recruitment steps, including multiple newspaper advertisements and postings with a state job bank, to determine if minimally-qualified U.S. workers are immediately available to fill the proffered position. The recruitment process takes months to complete, and if no qualified U.S. workers are identified the subsequent application to the U.S. Department of Labor takes six to 12 more months to process.9 After the Labor Certification process is complete, only then can the employer apply for the immigrant visa on behalf of the foreign national, a process involving another four to six months of processing by the U.S. government. Given that the purpose of the STEM Jobs Act is to attract foreign graduates in the STEM field to study and remain in the United States, and given that there is a shortage of workers available in the STEM fields, it seems counterintuitive to require individuals seeking work in a STEM job to navigate such a convoluted process.
Moreover, the five-year commitment to employment in a STEM field may not provide an incentive to foreign graduates, especially if it is difficult for them to change employers during this time period.
Finally, many individuals with a doctorate in a STEM field have completed extensive research in their field to obtain a doctorate and thus might already qualify for a green card under another category, such as the Outstanding Researcher or Extraordinary Ability green card categories neither of which requires the labor certification process or a commitment to work for the sponsoring employer or in a STEM field for five years.10
Concluding Thoughts on STEM Reform
The STEM Jobs Act is a step towards immigration reform, but it is not a complete solution to the need for more STEM workers in the United States. Immigration reform that provides both a path to permanent residency for foreign graduates and also allows employers to hire candidates who can commence work shortly thereafter, rather than waiting months, would be a better solution to the lack of availability of temporary worker visas in the United States. In general, a more comprehensive solution for immigration reform should focus more on the needs of employers rather than the specific degree obtained.
The most recent Comprehensive Immigration Reform Framework proposed by a bipartisan group of senators also includes an initiative to award green cards to immigrants who have received a Ph.D or master's degree in a STEM degree from a U.S. university. The details are expected to be unveiled when legislation is introduced later this year.
Comprehensive Immigration Reform
Most interested parties agree that a comprehensive plan will need to address: (1) a path to citizenship for undocumented individuals; (2) action taken against employers who knowingly hire undocumented workers; and (3) an expansion of current immigration categories and broader visa options for both skilled and unskilled workers.
Path to Citizenship for Undocumented Individuals
It is likely that future comprehensive immigration reform will adopt many of the features of the Reform Act of 2010,11 which proposed a path to citizenship for undocumented individuals currently in the United States.
Lawful Prospective Immigrant Status (LPI)
The Reform Act proposed creating a provisional legal status known as Lawful Prospective Immigrant status (LPI), under which eligible individuals would be those physically present in the country before September 30, 2010, lacking a criminal record, and who met certain admissibility criteria. The status would be valid for an initial period of four years and could be extended. Dependents would be eligible for LPI Dependent status. The LPI status would also allow for work authorization. After six years in LPI or LPI Dependent status, individuals would be eligible to apply for lawful permanent residency. In addition, individuals in LPI status would be eligible for Social Security numbers and would have the ability to update or amend their Social Security number records with no penalties. The number of individuals granted permanent residence under this provision would not count against the already established numerical limits for permanent residence status issuance.
The Bipartisan Framework for Comprehensive Immigration Reform proposes a similar status for undocumented immigrants, requiring them to register with the government, pass a background check, pay a fine, and in exchange earn probationary legal status that would allow them to live and work legally in the United States. Eventually these individuals will have an opportunity to apply for lawful permanent residence, after meeting certain requirements, but they will be required to go to "the back of the line" of prospective immigrants.
The DREAM Act
The Reform Act of 2010 also proposed the DREAM Act (Development, Relief, and Education for Alien Minors Act), which was initially introduced in 2001 as a way to help children brought to the U.S. as minors by their parents who are, as a result, undocumented. Since 2001, the DREAM Act has undergone several revisions, but in most iterations involves a regularization of status for those who entered the U.S. as children, who had been physically present in the U.S. for at least five years, earned a high school diploma or GED or were admitted to a post-secondary school, and had good moral character.12 The DREAM Act has not passed as part of the Reform Act of 2010 or as stand-alone legislation.
In the absence of movement to help children by Congress, the Secretary of the Department of Homeland Security (DHS) Janet Napolitano announced the use of prosecutorial discretion when dealing with a clearly defined set of individuals who were brought to the U.S. at an age when they could not form the intent to break the law given their age.13 Secretary Napolitano directed U.S. Citizenship and Immigration Services (USCIS) to implement this mandate within 60 days of the June 15, 2012 memorandum date. USCIS created the Deferred Action for Childhood Arrivals (DACA) program.14 Individuals may request deferred action to delay removal proceedings from the U.S. for two years. Work authorization is available under DACA, and extensions are also possible. DACA does not provide lawful status or a path to citizenship to covered individuals.
The criteria to benefit from DACA are set forth as follows:
Under the age of 31 as of June 15, 2012;
Arrival in the United States before reaching age 16;
Continuous residence in the United States since June 15, 2007, up to the present time;
Physical presence in the United States on June 15, 2012, and at the time of making the request for consideration of deferred action with USCIS;
Entry without inspection before June 15, 2012, or lawful immigration status expired as of June 15, 2012;
Currently in school, graduated or obtained a certificate of completion from high school, obtained a general education development (GED) certificate, or an honorably discharged veteran of the Coast Guard or Armed Forces of the United States; and
No convictions of a felony, significant misdemeanor, three or more other misdemeanors, and otherwise no threat to national security or public safety.
While DACA addressed some of the issues facing undocumented minors, it is not a long-term solution as legally it is merely a potentially reversible decision by the government not to take action against these individuals. It is not an act of law providing guaranteed benefits or a path to legal status in the U.S.
The ACHIEVE Act
In November 2012, the ACHIEVE Act15 was proposed by former Senators Kay Bailey Hutchison (RTX) and Jon Kyl (RAZ). At a press conference Kyl stated, "We have to get this ball rolling" on a sensible approach to immigration . . . . This particular part of immigration reform seemed a logical place to begin."16 Both Hutchinson and Kyl retired this year, so it is unclear if the ACHIEVE Act will gain a following. They indicated they had been working on this Act for about a year before the election. As this is the first attempt at an immigration fix for many undocumented workers under the new congressional session and President Obama's second term, it is anticipated that the Act will likely be modified.
The ACHIEVE Act also targets individuals brought to the U.S. by their parents as minors and it has 3 stages. The first requires individuals to apply for a six year W-1 visa, allowing them to attend college, enter the military, and obtain legal employment. Upon completion of a college degree, an associate's degree and two-and-a-half years of employment, or four years of military service, an individual can apply for the second stage. Stage two requires the individual by application to obtain a W-2 visa, granting a four-year conditional non-immigrant visa that allows for continued lawful employment. The third stage allows an individual to apply for a five- year W-3 visa and to apply for citizenship. The W-3 allows a four-year extension option. To date, the ACHIEVE Act has not been signed into law.
Support for the DREAM Act and ACHIEVE Act
The Bipartisan Framework for Comprehensive Immigration Reform also proposes to give preferential treatment to individuals who entered the United States as minor children and thus did not knowingly choose to violate any immigration laws. The Framework does not elaborate on what type of preferential treatment these individuals would receive.
As both Democrats and Republicans sponsor work on versions of comprehensive immigration reform, the labor unions AFL-CIO and SEIU are proponents of the DREAM Act. These groups support the creation of a path for undocumented children to earn an education and become a member of the workforce and ultimately earn a path to citizenship. The Congressional Hispanic Caucus rejects the ACHIEVE Act. Senator Bob Menendez (DNJ) says "The problem with the ACHIEVE ACT is it does not achieve the dream," while Representative Luis Gutierrez (DIL) said it was "too little too late."17
Implications of the DREAM Act and ACHEIVE Act on Employers
If passed, the DREAM Act and ACHIEVE Act would widen the availability of highly skilled candidates for employers because they both require the completion of higher education. Currently, many undocumented children do not attend college, vocational schools, or serve in the military for fear of being discovered as undocumented individuals. Passage of either act would help decrease the numbers of undocumented individuals and create lawful employment opportunities. It should also decrease the number of unauthorized workers and thus employers will be less likely to hire individuals who are not eligible to work in the U.S. Presently, DACA is another avenue for employers to access talented lawful workers and reduce their reliance, in some case, on undocumented workers.
Opponents to the DREAM Act and ACHIEVE Act argue that this legislation rewards individuals who are in violation of U.S. immigration law. Although immigration to the U.S. may not have been by choice, i.e., many DREAM Act/ACHIEVE Act beneficiaries were brought to the U.S. as children, there remains a consensus that other areas of immigration reform should take precedence. In addition, the individuals who would benefit from this legislation do not necessarily have the type of education and/or experience that is needed to benefit the U.S. economy. In fact, many have never gone to college because of their immigration status. Legalizing these individuals may not directly affect U.S. employers in the same way that STEM reform would.
Legislation to Prevent Employers from Hiring Undocumented Workers
Mandatory National Employment Verification System
The Reform Act of 2010 called for a mandatory national employment verification system which would have been required for all federal government agencies, and provided for a phase-in compliance period for all employers, depending on the size of the employer, so that compliance would not become automatic upon enactment of the Act. The Reform Act of 2010 proposed training for employers so as not to violate employees' civil rights and privacy. In addition, the verification system was not to be used for discriminatory purposes. There were also proposed guidelines for employers for uniform handling of the confirmation or non-confirmation of employment authorization. In addition, the Reform Act of 2010 proposed a method for individuals to check their own work authorization status in the national system. As a way to combat fraud in the verification system, the Reform Act of 2010 also called for the creation of fraud-resistant Social Security cards.
The recently released Bipartisan Framework for Comprehensive Immigration Reform also discusses a mandatory employment verification system that would prevent identity theft and end the hiring in the future of unauthorized workers. It appears that it will resemble the verification system proposed in the Reform Act of 2010 but more information will be available once the legislation has been drafted.
The verification system in the Reform Act of 2010 was similar to the basic pilot program, the precursor to E-Verify that was mandated under the Illegal Immigration Reform and Immigration Responsibility Act of 1996 (IIRIRA).18 The basic pilot program was launched in 1997 and over the years has grown from a pilot program available in only a few states to a web-based employment verification tool available in all states to all employers. In 2007, the name E-Verify was adopted. As of March 31, 2012, 353,822 employers were enrolled in E-Verify.19
Enrolling in and using E-Verify is mandatory for certain government agencies and government contractors. In addition, many states have passed legislation mandating employers enroll in and use E-Verify as a way to ensure undocumented workers are not being hired. President Obama recently signed legislation extending the E-Verify program until September 30, 2015.
Support for a Mandatory National Employment Verification System
Both Democrats and Republicans have indicated that stopping the employment of undocumented workers is an important part of any immigration reform. The SEIU is a proponent of E-Verify as part of comprehensive immigration reform but not as a singular bill. SEIU's position is that E-Verify should be a part of reform that helps to end illegal immigration. SEIU argues that a mandatory E-Verify bill is a ³jobs killer² that would drive more undocumented workers underground, increasing an illegal secondary labor market. SEIU also views the error rate with E-Verify as high enough that documented workers both U.S. citizens and non-citizens would be laid off, thus increasing the economic hardship in the country were E-Verify to become mandatory.20 The concerns regarding a mandatory E-Verify program will likely be debated in any new comprehensive reform proposal given the new state laws being passed requiring the use of E-Verify.
The U.S. Chamber of Commerce has expressed that the business community would support a mandatory electronic verification system as long as it addressed the concerns of both large and small businesses.21 The Chamber of Commerce is primarily advocating for an electronic system that would preempt all state and local laws, be implemented over a fair and reasonable period and mandatory only for new hires, include fair and reasonable enforcement provisions that are proportionate to the offense and allow employers to rectify minor paperwork violations, and hold the government accountable for E-Verify mistakes. As outlined above, although the U.S. Chamber of Commerce does support an electronic verification system, there are some reservations about the implementation and enforcement of such a system.
The Effect of a Mandatory National Employment Verification System on Employers
The DHS, in cooperation with the Department of Justice, has historically focused on worksite raids and gone after undocumented employees. These raids have involved a great deal of cooperation with local law enforcement. However, under the Obama administration, the DHS has focused its efforts on the employers who knowingly hire undocumented workers. Employers have been fined and imprisoned. Currently, employers that knowingly hire undocumented workers can pay a very high price. Moreover, even those employers that did not knowingly hire undocumented workers but failed to properly complete Form I-9 can face harsh financial penalties.
All employers are affected by this legislation, regardless of whether they are hiring undocumented workers, because all employers are subject to higher scrutiny. In addition, state rules regarding E-Verify have forced employers operating in multiple states to comply with different state E-Verify programs that in some cases may seem more onerous than the federal program. In some cases, employers are mandated to comply with state E-Verify programs when the federal program is voluntary. Multi-state compliance increases the administrative work of any employer and the implementation of a national program would likely add to this burden. In the end, it will become a part of the compliance balancing act.
Expanding Current Immigration Categories as a Solution to Immigration Reform
The Reform Act of 2010 included several provisions to change nonimmigrant visa categories to provide mandates for employers to look for U.S. workers, expand the visa categories, and at the same time protect alien employees from being exploited by unscrupulous employers. The Reform Act of 2010 also called for the creation of a visa category to aid shortage industries. When the Reform Act failed to pass, so did all the initiatives. Both Democrats and Republicans appear to be working behind closed doors with both sides saying little about concrete provisions and programs for comprehensive reform. It is anticipated that both parties will present bills during the first few months of the new Congress.
Similar to the Reform Act of 2010, the Bipartisan Framework for Comprehensive Immigration Reform will aim to expand current immigration categories and provide businesses with the ability to hire lower-skilled workers in a more timely manner, depending on the needs of the market.
Concluding Thoughts on Comprehensive Immigration Reform
As of the printing of this paper, a comprehensive immigration bill has not been introduced on Capitol Hill, yet both Republicans and Democrats have indicated a strong interest in trying to change a system that most perceive as broken. As such, it is anticipated that when a bill is introduced all interested advocacy groups and politicians will have concrete ideas to debate and interests involved in order to move everyone one step closer to a reformed immigration system.
In addition, President Obama considers immigration reform a priority for the current administration and is a proponent of comprehensive immigration reform, rather than a piecemeal approach. In his most recent press conference in Las Vegas on January 29, 2013, President Obama laid out his goals for comprehensive immigration reform, which included four points: (1) an increase in immigration enforcement; (2) a national verification system; (3) a pathway to citizenship for undocumented immigrants; and (4) improvements to the legal immigration system to decrease wait times, assist U.S. employers, and improve family reunification.22 To avoid the implication that this type of reform would constitute an "amnesty," reform would also include the payment of fines and any back taxes. This plan is similar to the comprehensive immigration reform that has been proposed by Democrats. In addition, in his speech President Obama emphasized that if a bill was not introduced in Congress early this year he would introduce a bill himself and force a vote on Congress.
Mostly likely, immigration reform will positively impact employers because it will expand the available workforce and decrease the possibility of hiring unauthorized workers. In particular, healthcare organizations may want to consider active participation in immigration reform due to the shortage of doctors and other medical professionals. According to a recent study, by 2015 there will be a deficit of 63,000 doctors, particularly in rural areas and inner cities where few doctors practice; this number is expected to double by 2025.23 Currently, neither STEM reform nor the comprehensive immigration reform proposals address this shortage. In fact, current immigration laws, in particular the J-1 visa, actually serve to limit the number of foreign doctors in the United States.24 Many doctors that come to the United States for medical residency or fellowship training come on a J-1 visa and are subject to the J-1 two-year home residency requirement, meaning that in most cases they must return to their home country for two years before returning to the United States. Although there is a waiver available, designed to bring doctors to underserved areas in the United States, it is not a comprehensive solution to the healthcare shortage in the U.S.
One area of immigration reform that has the potential to negatively impact employers would be a national employment verification system. This type of program could be costly to implement for both large and small employers, especially employers that have a high turnover rate in their workforce.
Whether reform is comprehensive or only covers a small area of immigration law, employers should anticipate that there will be some form of immigration reform in 2013. Littler's Workplace Policy Institute and its Global Mobility and Immigration Practice Group will be part of this critical dialogue.
1 For a copy of the Bipartisan Framework, see Michelle Valerio, Bipartisan Immigration Plan Releases Today, Littler's Global Mobility & Immigration Counsel (Jan. 28, 2013).
2 See 8 C.F.R. Parts 214 and 274a.
3 U.S. Congressional Research Service, Immigration of Foreign Nationals with Science, Technology, Engineering, and Mathematics (STEM) Degrees (R42530; Nov. 26, 2012), by Ruth Ellen Wasem, available at http://www.fas.org/sgp/crs/misc/R42530.pdf.
6 To see the text of any legislation referenced in this article, please visit the Library of Congress's THOMAS website at http://thomas.loc.gov/home/thomas.php.
7 For letters and statements in support of the STEM Jobs Act, see U.S. House of Representatives, Committee on the Judiciary, The STEM Jobs Act.
8 Public Law 101-649 (Act of November 29, 1990).
9 For processing times, see the iCert Visa Portal webpage of the U.S. Department of Labor's Employment & Training Administration.
10 See generally 8 U.S.C. § 203(b)(1)(B).
11 S. 3932, 111th Congress (2010).
12 See S. 729, 111th Congress (2009).
13 See Memorandum from Secretary of Homeland Security Janet Napolitano to David V. Aguilar, Acting Commission of U.S. Customs and Border Protection, Alejandro Mayorkas, Director of U.S. Citizenship and Immigration Services, and John Morton, Director of U.S. Immigration and Customs Enforcement (June 15, 2012), available at http://www.dhs.gov/xlibrary/assets/s1-exercising-prosecutorial-discretion-individuals-who-came-to-us-as-children.pdf.
14 See U.S. Citizenship and Immigration Services, Consideration of Deferred Action for Childhood Arrivals Process.
15 S. 3639, 112th Congress (2012).
16 See Jordan Fabian, Jon Kyl, Kay Bailey Hutchinson Unveil Alternative to DREAM Act, ABC News-Univision (Nov. 27, 2012).
17 See Emily Deruy, Congressional Hispanic Caucus Rejects ACHIEVE ACT, ABC News-Univision (Nov. 28, 2012).
18 See Pub. L. No. 104-208, 110 Stat. 3009-546 (1996).
19 See U.S. Citizenship and Immigration Services, E-Verify History and Milestones.
20 See Press Release, Service Employees International Union, CTW, CLC, Mandatory E-Verify is a Jobs Killer (Feb. 10, 2011).
21 Hearing on E-Verify: Challenges and Opportunities Before the Subcommittee on Government Management, Organization, and Procurement of the House Committee on Oversight and Government Reform (written statement of the U.S. Chamber of Commerce), 111th Congress (July 23, 2009), available at http://www.uschamber.com/sites/default/files/testimony/090723_everify.pdf.
22 The White House, Remarks by the President on Comprehensive Immigration Reform (Jan. 29, 2013).
23 See Annie Lowrey and Robert Pear, Doctor Shortage Likely to Worsen With Health Law, New York Times (July 28, 2012).
24 See 8 U.S.C. § 212(e).
Dynamic Year Expected in Labor and Employment Law
The following article is by Littler attorney Philip Berkowitz.
Please see my Summary and Important Points below
President Obama's re-election, a newly active NLRB, and important decisions pending before the Supreme Court promise to make 2013 an interesting year in labor and employment law domestically and internationally. Here is a summary of key issues employers should expect to see in the new year.
Hostile Environment Harassment
One case before the Supreme Court, Vance v. Ball State University,1 may resolve a circuit split concerning how to identify which employees qualify as supervisors whose actions can result in vicarious Title VII liability for a hostile environment, including sexual harassment.
Under established precedent, an employer is vicariously liable for severe or pervasive workplace harassment by a supervisor of the victim. If the supervisor took a tangible adverse employment action against the victim, the employer may be held strictly liable, but, if the supervisor did not take a tangible adverse employment action, the employer may be vicariously liable. Under the latter scenario, the employer may avoid liability if it can prove it exercised reasonable care to prevent and correct harassing behavior, and the employee claiming harm unreasonably failed to take advantage of any preventive or corrective opportunities that could have avoided or reduced the harm.
The Second, Fourth, and Ninth Circuits have held that the "supervisor" liability rule applies to harassment by those whom the employer vests with authority to direct and oversee their victim's daily work. The First, Seventh, and Eighth Circuits have articulated a "bright-line" rule, finding supervisor liability limited to those harassers who have the power to "hire, fire, demote, promote, transfer, or discipline" their victim.
If the Supreme Court decides to adopt the broader definition of "supervisor" used by the Second, Fourth, and Ninth Circuits, employers could find those employees whom they place in charge of a project, however minor, or deputize to dole out shift assignments for the day, deemed supervisors. Employers would favor a bright-line definition, meaning that only individuals who have the power to hire, fire, demote, promote, transfer, or discipline are supervisors.
Also pending before the Supreme Court is Fisher v. University of Texas,2 an affirmative action case with the potential to upend thinking about affirmative action and employer diversity initiatives. In Fisher, a white female student denied admission to the University of Texas at Austin alleges that the university discriminated against her on the basis of her race in violation of the Equal Protection Clause of the Fourteenth Amendment. The question presented is whether public universities may use affirmative action policies that take a student's race into consideration in admissions decisions.
In Grutter v. Bollinger,3 the Supreme Court rejected an equal protection challenge to the University of Michigan's use of race as a factor in student admissions. Grutter was a 5-4 decision, with Justice Sandra Day O'Connor writing for the majority; Justices Rehnquist, Kennedy, Scalia, and Thomas dissented. If the Supreme Court rules against the university, it may overturn Grutter and hinder affirmative action policies at public universities.
While it has never been lawful for an employer to make decisions concerning the terms and conditions of employment solely on the basis of minority status, employers have implemented employment practices aimed at increasing their racial and ethnic diversity in the belief that doing so strengthens their business. While not an employment case, Fisher could reshape the perception of affirmative action, even in private industry.
Mandatory arbitration of Fair Labor Standards Act collective actions came under fire in a big way by the National Labor Relations Board (NLRB or "the Board") in 2012. In D.R. Horton, Inc.,4 the Board held that an arbitration agreement requiring "as a condition of employment" all employees to agree to waive the right to bring class or collective actions in any forum violated Section 8(a)(1) of the National Labor Relations Act (NLRA), which protects the rights of employees to engage in protected concerted activity. An appeal is pending before the U.S. Court of Appeals for the Fifth Circuit. Meanwhile, the tension between the NLRB and federal courts is increasing.
A few recent cases have followed and expanded D.R. Horton. In Advanced Services, Inc.,5 an administrative law judge (ALJ) invalidated an arbitration procedure requiring all employees to waive the right to bring class/collective actions unless both the employee and employer agreed to the class/collective action, even though this procedure allowed employees to "act concertedly to challenge the terms of the arbitration policy and class waiver itself."
In 24 Hour Fitness,6 an ALJ ruled that the arbitration policy of 24 Hour Fitness violated the NLRA, despite the fact that its arbitration policy expressly allows employees to opt out of the agreement to arbitrate. 24 Hour Fitness argued that the arbitration was not a condition of employment since employees could opt out if they wanted to preserve their right to engage in concerted, collective action. The ALJ disagreed and found the opt-out provision "illusory" because the policy prohibited non opt-out employees from disclosing "the existence, content or results of any arbitration" to opt-outs, and therefore effectively prevented concerted employee activity between opt-outs and non-opt outs.
An ALJ extended D.R. Horton to a class action waiver in an employment application in Convergys Corp.7
However, a majority of federal district courts8 have refused to follow D.R. Horton (most recently in Owen v. Bristol Care, Inc.9), ruling that it conflicts with Supreme Court precedents, including the Supreme Court's recent decision in AT&T Mobility v. Concepcion.10 This year should bring more guidance on the impact of D.R. Horton, particularly once the Fifth Circuit issues its opinion in the appeal of the NLRB's ruling.
With the increasing use of social media by employees, employers often adopt social media policies to guide and regulate employees' personal social media usage. In Costco Wholesale Corp.,11 the NLRB found that the employer's policies violated Section 8(a)(1) of the NLRA. The Board found unlawful a policy prohibiting employees from posting statements which "damage the Company, defame any individual or damage any person's reputation, or violate the policies outlined in the [Company] Employee Agreement . . . ."
The NLRB also found unlawful provisions that prohibited employees from discussing private matters of other employees (such as sick calls, leaves of absence, workers' compensation injuries, and personal health information), sharing, transmitting, or storing for personal or public use, without prior management approval, sensitive information (such as membership, payroll, confidential financial, and Social Security numbers), and sharing confidential information (such as employees' names, addresses, telephone numbers, and email addresses).
However, the NLRB indicated in the Costco decision that "curing" language, which includes examples clarifying that a policy does not relate to Section 7 activity, may save an otherwise unlawful policy.
The NLRB recently ruled that comments posted on Facebook are protected in the same manner and to the same extent as comments made at the "water cooler." In Hispanics United of Buffalo,12 five employees posted messages, while off duty, on a Facebook page to express their strong discontent with the criticism of their job performance by one of their coworkers. The employer investigated and then terminated the five employees for their violation of the company's "zero tolerance" policy against "bullying and harassment." The NLRB found that the termination was a violation of the NLRA and awarded the employees full reinstatement and back pay.
In 2013, there will likely be additional rulings from both courts and the NLRB tribunals that continue to shape this important new issue (Neither Costco nor Hispanics United has been appealed).
Last year was marked by a number of favorable developments for whistleblowers. The U.S. Department of Justice had a record year in False Claims Act collections, and the Whistleblower Offices of the U.S. Securities and Exchange Commission and Internal Revenue Service (IRS) issued significant and record awards.
Under President Obama, the U.S. Department of Labor (DOL) has dramatically strengthened whistleblower protection available under the Sarbanes-Oxley Act of 2002 (SOX) and the Dodd-Frank Wall Street Reform and Consumer Protection Act, reversing many years of prior rulings which limited those rights. The DOL's Administrative Review Board (ARB) has been ruling in favor of SOX whistleblowers and interpreting that law in a manner that is far more claimant-oriented than in the decade after SOX became law.
With a full complement of Democratic appointees, the ARB appears committed to expanding SOX coverage, broadening the concept of protected activity, restricting employer defenses, and generally making the DOL a friendlier place for whistleblowers.
Interpretations of critical aspects of SOX will likely be in flux for a time as the solidly Democratic ARB moves to broaden both the scope of SOX and the remedies available to a claimant. President Obama can be expected to move forward a pro-whistleblower agenda, further strengthen the hand of the NLRB, and look for other ways to counter the resistance of businesses (whether in the financial services industry or elsewhere) to what they view as unreasonable government regulation of their employment practices.
Health Care Reform
President Obama's victory secures the political future of the Affordable Care Act (ACA) for at least the next four years and brings renewed focus on and urgency to employers' preparations for implementing the law.
With the effective date of the "play-or-pay" provision coming in 2014, employers must carefully consider whether they will continue to provide health care coverage to employees, and, if so, to whom it will be offered and how it will be structured. The calculation involves much more than a simple comparison of the cost of health coverage versus the cost of the "play-or-pay" penalty. Those employers taking a broader and longer-term approach to this analysis will be better positioned.
The absence of regulatory direction on key aspects of the "play-or-pay" penalty leaves many important questions unanswered at this time. The agencies are expected to issue a slew of ACA regulations in the coming year, hopefully giving much-needed clarity to employers' obligations under health care reform.
President Obama's re-election may bring the re-introduction of the Employee Misclassification Prevention Act, which would require employers to keep records of all workers performing labor or services for them and to notify each worker of his or her classification and exemption status.
As reaffirmed by Solicitor of Labor M. Patricia Smith at the ABA Labor and Employment Law Conference in early November 2012, investigating independent contractor misclassification remains a top priority of the agency, and the DOL will continue to work with other federal agencies (such as the IRS) and state agencies to share information and collaborate on investigating worker misclassification claims.
A new trend is employer use of "cloud computing" to give them access worldwide to personnel records of employees who may be on the other side of the world. This practice threatens to expose employers on many levels to privacy claims, as well as to potential liability as a de facto employer to the extent that the entity with access to the records (perhaps the foreign parent of a U.S. subsidiary) makes use of those records and imposes personnel-related decisions on the subsidiary.
Last year was momentous in terms of potential fiduciary liability of employers as against employees and former employees who receive various benefits. In Cigna Corp. v. Amara,13 the Supreme Court expanded the right of the courts to fashion equitable remedies for beneficiaries that go well beyond the mere terms of the governing plan, including possible reformation of the contract, estoppel, and monetary compensation. 2013 will likely see additional lawsuits pursuing these cases, with courts continuing to delineate the boundaries of these remedies.
Other 2012 developments included multi-million dollar awards in class action fiduciary liability cases involving excessive fees in administering 401(k) plans most significantly, in George v. Kraft Foods Global, Inc.14 and Tussey v. ABB, Inc.15 In George, the court approved a $9.5 million settlement. In Tussey, the court awarded nearly $37 million for the employer's failures to monitor recordkeeping fees and negotiate for rebates, and for a decision to switch from a Vanguard fund to a Fidelity fund without good reason for the decision. These cases effectively mandate that employers put in place comprehensive fiduciary training to help prevent these liabilities.
Mexico's Growing Economy
With labor costs increasing in China, many multinational companies are realizing that the savings of manufacturing in Asia can be illusory because of the distance between the company and the manufacturing process. Because of its increasing level of security, many companies are transferring manufacturing to Mexico. Indeed, even the famous Taiwan-based Foxconn, which builds Apple products, and other high-tech firms, have taken root there.
With economic growth, Mexico's labor law is also evolving. The country recently enacted its first substantial modifications to federal labor law since 1970. In short, the new laws (among other things): permit new, more flexible employment agreements; permit employers to terminate "for cause" employees who engage in bullying or sexual harassment, and simplify the dismissal requirements; limit damages for back wages in labor trials; establish new rules on mandatory training; impose new rules on promotions, requiring that a worker's capacity and productivity be considered above seniority; establish a new National Productivity Committee; and impose new requirements regarding union democracy, transparency, and accountability.
It will be interesting to see how business changes in Mexico in 2013. The market will likely become even more attractive for multinationals doing business there.
1 No. 11-556.
2 No. 11-345.
3 539 U.S. 306 (2003).
4 357 NLRB No. 184 (Jan.3, 2012).
5 No. CA-63184-71805 (Nov. 12, 2012).
6 No. 20-CA-35419 (Nov. 7, 2012).
7 No. 14-CA-075249 (Oct. 25, 2012).
8 See LaVoice v. UBS Fin. Servs., 2012 U.S. Dist. LEXIS 5277 (S.D.N.Y. Jan. 13, 2012); see also Tenet Healthsystem Phila., Inc. v. Rooney, 2012 U.S. Dist. LEXIS 116280 (E.D. Pa. Aug. 14, 2012); see also Brown v. Trueblue, Inc., 2012 U.S. Dist. LEXIS 52811 (M.D. Pa. Apr. 16, 2012); Spears v. Mid-America Waffles, Inc., 2012 U.S. Dist. LEXIS 90902 (D. Kan. July 2, 2012); Luciana De Oliveira v. Citicorp N. Am., Inc., 2012 U.S. Dist. LEXIS 69573 (M.D. Fla. May 18, 2012); Morvant v. P.F. Chang's China Bistro, Inc., 870 F. Supp. 2d 831, 834 (N.D. Cal. 2012); Delock v. Securitas Sec. Servs. USA, 2012 U.S. Dist. LEXIS 107117 (E.D. Ark. Aug. 1, 2012).
9 No. 12-1719 (8th Cir. Jan. 7, 2013).
10 131 S. Ct. 1740 (2011).
11 358 NLRB No. 106 (Sept. 7, 2012)..
12 359 NLRB No. 37 (Dec. 14, 2012)..
13 131 S. Ct. 1866 (2011).
14 641 F.3d 786 (7th Cir. 2011).
15 2010 U.S. Dist. LEXIS 45240 (W.D. Mo. Mar. 31, 2012)..
Summary and Important Points
1. The sexual harassment case pending before the U.S. Supreme Court (Vance v. Ball State University) could expand the definition of ³who² is a supervisor under the law. In California, an employer is strictly liable for the acts of a supervisor, regardless of whether the employer was aware of the harassment, had a policy in place and has properly trained the supervisor on the policy against harassment. This case will be the subject of subsequent Legal Updates when the Court issues its decision.
2. For those of you who have already attended the Breakfast Briefings, and for those of you that will do so in the next two weeks, the importance of the National Labor Relations Board¹s rulings regarding mandatory arbitration and in other areas impacting other common employer policies will come as no surprise. The NLRB has, and continues to issue, very controversial decisions that are working their way up the legal system. The Board¹s decisions regarding mandatory arbitration, at-will employment policies, social media policies and the confidentiality of investigations will impact all employers, both union and non-union. You must continue to follow the development of these decisions as they can affect all employers¹ policies in the workplace.
3. The ³Play or Pay² employer responsibility portion of the Affordable Care Act (ACA) will go into effect as of January 1, 2014. It is critical that all ³large employers² (those with 50 or more full time employees (FTE)) prepare for this deadline. You must evaluate whether you have ³50 full time employees² applying the ACA guidelines, which take into account FTE equivalents and then explore the options of either providing the ³minimal essential² coverage required by the ACA or paying the penalty of $2,000.00 for each FTE in excess of the thirty (30) employee threshold. Furthermore, even if you have healthcare insurance coverage in place effective January 1, 2014, you could still be subject to a similar penalty if the coverage you provide is found to be either ³unaffordable² or does not provide the ³minimum value² required by the ACA. As a part of the Breakfast Briefings we will do a brief overview of the recently issued IRS regulations issued December 28, 2012 on the ³Play or Pay² obligation and the definition of ³large employer² provided by the IRS.
Lost in Translation: California's New Pregnancy Disability Leave Regulations and Their New, Contradictory Obligations
The following article is by Littler attorney Michelle Barrett.
Please see my Summary and Important Points below.
In regulations that became effective December 30, 2012, California employers received additional guidance on how to handle leaves of absence for employees disabled by pregnancy, childbirth, or a related medical condition. This guidance comes in the form of amended pregnancy disability leave (PDL) regulations applicable to all California employers that employ five or more employees. According to the newly formed Fair Employment and Housing Council, these amended regulations are necessary to, among other things:
Conform to statutory changes in the PDL law enacted in 1999, 2004, and 2011;1
Be as consistent as possible with the new interactive process provisions in California's also newly revised disability regulations and the current federal Family and Medical Leave Act (FMLA) regulations; and
Provide greater guidance to employers and employees on notice requirements and other obligations under the law.2
While the regulations do provide additional clarity and guidance on notice and related obligations,3 the new regulations also appear to create conflicts with existing law. These conflicts are likely to create even more confusion for employers who may already struggle with leaves of absence and disability accommodation issues.
Disabling Conditions Considered to Be a "Pregnancy, Childbirth or a Related Medical Condition"
The new regulations expand the circumstances under which a woman may be viewed as "disabled by pregnancy." In essence, the regulations now list as "disabilities" that may require employers to provide leave, a job transfer, or reasonable accommodation certain medical conditions related to pregnancy, that could be temporary in nature. These conditions include: severe morning sickness; gestational diabetes; pregnancy-induced hypertension; preeclampsia; and post-partum depression. The new regulations also clarify that a woman may be disabled by pregnancy if she needs time off for: prenatal or postnatal care; bed rest; childbirth; loss or end of pregnancy; or recovery from childbirth or loss or end of pregnancy.4
At first glance, the list of potentially per se disabling conditions may not appear to expand employee rights. However, employers should be aware that the inclusion of post-partum depression and loss or end of pregnancy may expand the circumstances under which leave, a job transfer, or other reasonable accommodation must be provided. For example, an employee who may end her pregnancy may be eligible for time off for the procedure, as well as for time off to recover, or a transfer or other reasonable accommodation while she recovers. Likewise, if an employee suffers post-partum depression after delivering a child or due to the loss or end of a pregnancy, she may need leave or may request a job transfer or other reasonable accommodation while she copes with the depression. Based on the expansion of circumstances that may be considered pregnancy-related disabilities and related medical conditions, employers must keep in mind that such less-common conditions may entitle the employee to leave, a job transfer, or reasonable accommodation.
Moreover, employers should be aware that the regulations include lactation as a potentially disabling "related medical condition." The regulations recognize that lactation without medical complications is generally not "disabling" and would not necessarily require a leave of absence. Nevertheless, they also state that lactation may require a job transfer or other reasonable accommodation. In discussing lactation, the regulations reference California Labor Code sections 1030 et seq. These Labor Code sections require that an employer provide employees with a reasonable amount of break time to express breast milk for the employee's infant child. They also provide employers with the ability to deny this break time if it would seriously disrupt the employer's operations. However, as discussed in more detail below, the new regulations do not permit an employer to deny requests for a job transfer or reasonable accommodation based on an "undue hardship" defense. As such, the reference to the Labor Code section providing an undue hardship defense to lactation break time appears to create a conflict between lactation-related accommodation requests and requests for other pregnancy-related accommodations.
Reasonable Accommodation and the "Interactive Process"
The new regulations repeatedly refer to the concept of "reasonable accommodation," which is by now a familiar concept to employers who must comply with federal and state law requiring reasonable accommodation for qualified individuals with a physical or mental disability. However, employers that have established interactive process procedures for dealing with physical or mental disabilities should not be lulled into a false sense of security. Specifically, the new regulations impose a virtually unconditional duty to provide an accommodation to a pregnant employee, so long as her health care provider5 characterizes the accommodation as "medically advisable." This "medically advisable" standard is different from the "medically necessary" standard utilized in accommodating other physical or mental disabilities and also in the family and medical leave context.
Whether an accommodation is reasonable depends on each situation's facts and how those play out when looking at "the totality of the circumstances." Factors that may be considered include, but are not necessarily limited to, the employee's medical needs, the duration of the requested accommodation, the employer's past and current practices, and other factors.
While the regulations refer to an "interactive process," the regulations themselves do not actually provide for the back and forth process used to discuss alternative accommodations. None of the regulations appear to take into account the employer's business realities or require the employee to interact with the employer to select an accommodation that meets everyone's needs. Unlike existing disability law that allows an employer to argue that a particular accommodation is unreasonable or that it creates an undue hardship, the new pregnancy disability regulations do not provide for any undue hardship defense that would allow an employer to reject a requested accommodation.
The regulations do not provide the employer with the ability to propose alternative accommodations or to choose among accommodations that may be effective. Likewise, the regulations do not offer the employer the option of obtaining a second opinion, as is available in the family and medical leave context. Under the new regulations, so long as the requested accommodation is "medically advisable" and reasonable, an employer must provide the accommodation. Thus, employers must understand that the accommodation process for pregnancy, childbirth, and related medical conditions does not provide the same options or defenses that exist for other disabilities and in the family and medical leave context.
Length of Leave and Reinstatement Requirements
When addressing leave situations, California employers have historically measured family and medical leaves in weeks and pregnancy disability leaves in months or working days. The new regulations address these disparate terms by explaining that four months under the PDL law is equivalent to 17-1/3 weeks. Employers who have used 16 weeks as a rule of thumb for estimating or measuring the time an employee may have for pregnancy disability leave should be aware that 17-1/3, not 16, weeks is the magic number for measuring leave in weeks.
Similarly, employers should also note that the new regulations provide a means to address the amount of leave available in an intermittent or reduced schedule situation. Specifically, the regulations explain that an employee who normally works 40 hours per week will be eligible for a total of 693 hours of pregnancy disability leave. Someone who normally works more or fewer hours per week will receive a pro rata or proportional amount of leave. Moreover, if an employee's schedule varies from month to month, the employer should use the monthly average hours worked for the four months prior to the employee's leave to determine the total number of hours available for pregnancy disability leave.
As has always been the case, the regulations require an employer to reinstate an employee to the same position, or a comparable position if the employer can show the employee would not have been otherwise entitled to reinstatement to the same position. The new regulations, however, include two notable differences with regard to reinstatement. First, the regulations remove the employer's ability to deny reinstatement when the employer can show that preserving the job or duties for the employee would substantially undermine the employer's ability to operate the business safely and efficiently.
Second, the regulations impose job search obligations on the employer in situations where reinstatement may be denied to a comparable job. Under the regulations, if the employee cannot be returned to her original position, she must be given a comparable position for which she is qualified on her scheduled reinstatement date or within 60 calendar days of that scheduled reinstatement date. During this 60-calendar day period, the employer has an affirmative obligation to provide notice to the employee of available positions in person, by letter, telephone or email, or by links to postings on the employer's website if there is a section devoted to job openings. It will not be enough simply to give the employee the option of searching for comparable jobs; the employer will now have the obligation to notify the employee of potential comparable positions.
California's pregnancy disability law was amended in 2011 to require an employer to continue an employee's group health coverage while the employee is on a pregnancy disability leave for up to four months. The amendment took effect on January 1, 2012,6 and the new regulations were intended to address this change in the law. While the new regulations do in fact include provisions to clarify the obligation to continue group health care coverage for the maximum duration of a pregnancy disability leave, the regulations go a step further and attempt to include a change in the law that is not supported by statute.
Specifically, the new regulations state that the time an employer maintains and pays for group health coverage during a pregnancy disability leave cannot be used to meet an employer's obligation to continue and pay for 12 weeks of group health coverage under the FMLA and the Moore-Brown Roberti Family Rights Act (aka the California Family Rights Act or CFRA). The regulations also state that: "This shall be true even where an employer designates pregnancy disability leave as family and medical leave under FMLA. The entitlements to employer-paid group health insurance coverage during pregnancy disability leave and during CFRA are two separate and distinct entitlements."7 The regulations effectively creates an obligation to continue group health coverage for up to a maximum of 7 months for a woman who takes both a PDL and leave protected by the FMLA or CFRA.
However, this newly approved regulation conflicts with the CFRA's existing statutory and regulatory language. Specifically, the CFRA states that an employer must only provide continued health care coverage for a maximum of 12 workweeks in a 12-month period regardless of whether the leave is a CFRA leave only or a FMLA/CFRA leave.8 Likewise, the CFRA regulations say the same thing.9 When interpreting the law, the U.S. Supreme Court has explained that courts must presume that the unambiguous language of a statute means what it says and that other interpretations should not be given to the law.10 Here, it appears clear from the face of the CFRA statute that an employer's obligation to continue group health care coverage under the CFRA was intended to be satisfied when an employer provides coverage when only FMLA applies, when only CFRA applies, or when FMLA and CFRA apply to a leave of absence. Thus, the new pregnancy disability regulation that would require an additional 12 weeks of continued group health care coverage under CFRA beyond the 4 months that might be covered by both the PDL law and FMLA appears to be in direct conflict with existing statutory law.
At present, there is no guidance on how such a conflict should be handled.11 If the Fair Employment and Housing Council does not address the inconsistency, employers who fall under not only the PDL law, but also under the FMLA and CFRA, will be forced to wait until an employee challenges an employer's benefits continuation policy and a court resolves the issue. In the meantime, employers must decide whether to follow: (a) the pregnancy disability leave statute and regulations (resulting in a maximum of four months plus 12 weeks of continued group health coverage, e.g., 29-1/3 weeks); or (b) the CFRA's statutory and regulatory requirements layered over the pregnancy disability statute and regulations (resulting in the maximum of 12 weeks under FMLA and/or CFRA benefits continuation running concurrently with the four months of pregnancy disability leave benefits coverage, e.g., 17-1/3 weeks).
1 For more information on changes to the law that occurred in 2011, please see the Legal Update: The Stork Has Landed: California Employers Must Maintain And Insurers Must Provide Pregnancy Benefits (Oct. 21, 2011).
2 California Fair Employment and Housing Council, Initial Statement of Reasons.
3 The new regulations provide new proposed notices for an employer to post in the workplace and/or include in its handbook, as well as a suggested medical certification form for an employer to use.
4 Likewise, the regulations also make clear that the protection for individuals "perceived" to fall within a protected category also extends to those who are perceived to be pregnant.
5 Health care providers who can now opine on the need for leave, transfer, or reasonable accommodation due to pregnancy, childbirth, or related medical conditions include, among others, marriage and family therapists, acupuncturists, midwives, chiropractors, and clinical social workers.
6 Cal. Gov't Code § 12945(a)(2)(A).
7 Cal. Code Regs. tit. 2, § 7291.11(c)(2).
8 Cal. Gov't Code § 12945.2(f)(1).
9 Cal. Code Regs. tit. 2, § 7297.5(c)(2), (4).
10 Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 254 (1992).
11 Interestingly, the proposed notices set forth as Notice A (for employers covered by only the PDL law) and Notice B (for employers covered by the PDL law, as well as the FMLA and CFRA) differ with regard to benefits continuation. Notice A explains benefits coverage will run for the duration of a pregnancy disability leave. Notice B mentions only that taking a family care or pregnancy disability leave may impact an employee's benefits and that employees should contact their employers.
Summary and Important Points
1.Decide whether to extend continued group health care coverage for pregnancy disability leave and leave that may also fall under the FMLA and CFRA for up to a total maximum of 29-1/3 weeks or up to a total maximum of 17-1/3 weeks.
2. Review and revise leave of absence policies to ensure they comply with both the latest PDL law requirements and the new regulations.
3. Review and revise any reasonable accommodation policies and processes to reflect requirements for accommodating pregnancy, childbirth, and related medical conditions.
4. Consider including "perceived pregnancy" as a protected category in any equal employment opportunity, discrimination, or harassment policies.
5. Train HR, managers, and supervisors on the differences between reasonable accommodation and the interactive process for pregnancy, childbirth and related medical conditions, and other physical and mental disabilities.
6. Review and revise any leave of absence forms or paperwork to ensure they comply with the PDL law and the new regulations.
7. Ensure all employer-required postings are current and up to date.
NLRB Rules Employer’s Termination of Non-Union Employees for Facebook Posts Violated NLRA
In another decision that affects non-union as well as union employers, the National Labor Relations Board recently ruled that comments posted on Facebook are protected in the same manner and to the same extent as comments made at the "water cooler." In Hispanics United of Buffalo, 359 NLRB No. 37 (Dec. 14, 2012), the Board found that a non-union employer's termination of five employees for Facebook postings was unlawful, awarding the employees full reinstatement and back pay.
The controversy began when one employee – Lydia – criticized the work of five of her co-workers. One of the criticized employees – Marianna – sent this message from her personal computer at home to the other four employees:
“Lydia . . . feels that we don't help our clients enough . . . I about had it! My fellow coworkers how do u feel?”
The employees were not amused and, while off duty, posted messages on Marianna's Facebook page making that clear. Lydia also responded on the same Facebook page, demanding that the four "stop with ur lies about me." She then complained to her supervisor that the postings violated the employer's "zero tolerance" policy against "bullying and harassment." The employer investigated and, agreeing with Lydia that its policy had been violated, fired Lydia's five co-workers.
The NLRB upheld an administrative law judge's decision that the terminations violated the National Labor Relations Act (the "Act"), even though no union was involved. The Board concluded that whether the comments were made on line, by way of social media, or "around the water cooler" was irrelevant to the analysis. Instead, the Board focused on whether the postings were:
- "Concerted" activity under the Act;
- Known to be concerted by the employer's supervisor, who was shown the postings;
- "Protected" under the Act; and
- The motivation for the terminations.
The second and fourth elements were undisputed.1 On the first and third elements, the Board, with Member Hayes dissenting, found against the employer. The postings were concerted, the Board concluded, because it was "implicitly manifest" that the co-workers' postings had the "clear 'mutual aid' objective of preparing [the] coworkers for a group defense to [Lydia's] complaints." As to the third element, the Board considered the postings protected because they related to the employees' job performance and objectively could not be considered "bullying" or "harassing." The dissent objected to the majority's reasoning, finding there was "insufficient evidence that either the original posting or the views expressed in response to it were for mutual aid or protection." Specifically, Member Hayes emphasized, "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."
Summary and Important Points
1. The decision is yet another by the NLRB that is directed to non-union employers in addition to employers whose employees are represented by a union. In the last year, the NLRB has:
- Invalidated the mandatory arbitration agreement of a non-union employer,2
- Invalidated terms in non-union employers' employee handbooks.3
- Struck down a provision in a company's at-will employment agreement that prohibited employees from disclosing "confidential information," including "personnel information," to individuals "outside the organization."4
- There is little reason to believe this trend will abate or even slow in the coming year.
2. A first key lesson to be learned from this and other recent cases is the importance for all employers, whether union or non-union, of reviewing all employee-related policies with an experienced labor attorney who is familiar with the NLRB and the National Labor Relations Act. A good starting place would be the employer's social media policy, followed by a review of any arbitration agreements and the employee handbook.
3. Second, all employers should be cautious when basing employment decisions on Facebook or other social media postings. In addition to the issues raised in the Hispanics United of Buffalo decision, there are privacy issues that can arise. Employers should consider postings, such as those in Hispanics United of Buffalo, to be analogous to conversations on non-work time at the "water cooler." Despite the potential for social media "discussions" to be played and replayed to an extremely wide audience, the NLRB will analyze their protected nature the same way that it analyzes a whispered conversation in the employee lunch room or parking lot.
4. Finally, whenever employer discipline or other adverse employment actions are based on employee communications, employers should consult counsel to make certain the speech is not "concerted, protected" speech under the National Labor Relations Act.
A New Year Brings New Compliance Obligations for Employers
The following article is by Littler attorney Christopher Cobey.
There is no Summary and Important Points for this Legal Update. Remember, the Breakfast Briefings will cover the major legislative changes impacting California employers in 2013.
As 2012 winds to a close, a look back at legal developments demonstrates that state legislatures were busy all year long. Every year, employers are inundated with new employment laws and regulations that impose new compliance obligations on employers. This year is no exception.
This summary provides an overview of new laws – and a chart of state laws that become effective in 2013 – and is the result of Littler's 50-state tracking of federal and state employment legislation and regulations. California was by far the busiest state with over 35 new pieces of employment-related legislation and regulations, but nearly every state had something new for employers this year.
Each year brings different trends in state legislation. Often, after one state passes a law, others quickly follow with similar legislation. For example, in 2011 New Jersey became the first in the nation to ban discrimination based on unemployment status. Numerous states proposed similar legislation in 2012, and both the District of Columbia and Oregon enacted their own unemployment discrimination bills in the spring of 2012.
With a vigorous election season in 2012, ballot initiatives were very popular. Both Colorado and Washington legalized marijuana, leaving employers questioning the effects of such laws on the workplace. Massachusetts voters passed a medical marijuana law, while Montana voters revised their existing medical marijuana law. In Connecticut, legislators, not voters, also approved medical marijuana. Same-sex marriage, health care reform, and secret union ballots also filled the ballot box this fall in states throughout the nation.
Each year we see a new bill or two that begs the question, is this the latest trend? Rhode Island receives the honor of passing possibly the most unique new employment law. This new state law prohibits employment discrimination against the homeless, creating a "Homeless Bill of Rights," under which individuals have the right not to face discrimination while seeking or maintaining employment because they lack a permanent mailing address, or because their mailing address is a shelter or social service provider. An aggrieved individual can file a civil suit and, if successful, be awarded injunctive and declaratory relief, actual damages, and reasonable attorneys' fees and costs. As a point of interest, a California legislator has already introduced a similar bill in the new legislative session. We will continue to track this topic and keep clients advised of new developments.
Some of the changes are the result of laws that are automatically updated on an annual basis. At least 10 states will raise their minimum wage in 2013, with nine of those increases caused by recurring annual revisions. Other regulatory activity is based on ongoing implementation of new laws. For example, California's Division of Labor Standards Enforcement this year continued to modify its interpretation of the California Wage Theft Prevention Act. In addition, California approved new regulations effective December 30, 2012 that address pregnancy discrimination.
In light of all of these changes, employers should confirm what new laws have passed in the jurisdictions in which they operate and when the new laws or regulations become effective. Employers then must devise a plan to ensure that they comply with these new requirements.
There is no reason to believe that the federal government and state legislatures and regulators will be less active in 2013, but the focus of their activity will continue to be a moving target.
At this year’s Breakfast Briefings we will be reviewing the major California legislative changes outlined below that will impact California employers in 2013.
Enacted Legislation & Regulations by 2013 Effective Date
Jurisdiction Bill Number Summary Effective Date
AZ 2013 Minimum Wage Determination The minimum wage will increase from $7.65 to $7.80 per hour for non-exempt employees effective January 1, 2013. The minimum wage for tipped employees increases from $4.65 to $4.80 per hour, plus tips. 1/1/2013
CA 2013 Meals & Lodging Cash Values For calendar year 2013, the cash value of meals and lodging for tax purposes is as follows: 3 meals per day: $10.90 (breakfast: $2.35; lunch: $3.30; dinner: $5.20—Note that these amounts add up to $10.85, not $10.90); and a meal not identifiable as either breakfast, lunch or dinner: $3.80. 1/1/2013
CA 2013 Minimum Pay Requirements for Exempt Employees The DLSE announced a $1.01 increase in the hourly rate for computer professionals, from $38.89 to $39.90 per hour. The monthly rate increases $175.56, from $6,752.19 to $6,927.75 per month. Finally, the annual salary increases $2,106.68, from $81,026.25 to $83,132.93 per year. DLSE announced a $1.84 increase in the hourly rate for licensed physicians and surgeons, from $70.86 to $72.70 per hour. 1/1/2013
CA AB 1396 Existing statutory law requires an employer who has no permanent and fixed place of business in the state and who enters into a contract of employment involving commissions as a method of payment with an employee for services to be rendered within the state to put the contract in writing and to set forth the method by which the commissions are required to be computed and paid. An employer who does not comply with those requirements is liable to the employee in a civil action for triple damages. This bill, by January 1, 2013, makes this contract requirement applicable to all employers entering into a contract of employment involving commissions as a method of payment with an employee for services to be rendered in the state. 1/1/2013
CA AB 1536 Allows motorists to dictate, send or listen to text-based messages while behind the wheel if using voice-activated, hands-free devices. 1/1/2013
CA AB 1744 Existing law requires every employer, semimonthly or at the time of each payment of wages, to furnish each employee with an accurate itemized statement in writing showing specified information. This bill additionally requires that the itemized statement include, if the employer is a temporary services employer, the rate of pay for each assignment and total hours worked for each legal entity, with a specified exception. Existing law requires an employer to provide each employee, at the time of hiring, with a notice that includes specified information, such as the rate of pay and basis thereof (whether hourly, salary, commission, or otherwise), and to notify each employee in writing of any changes to the information set forth in the notice within 7 calendar days of the changes unless such changes are reflected on a timely wage statement or another writing, as specified. This bill additionally requires that, if the employer is a temporary services employer, staffing agency, or professional employer organization, the notice must include the name, the physical address of the main office, the mailing address if different from the physical address of the main office, and the telephone number of the legal entity for whom the employee will perform work, and any other information the Labor Commissioner deems material and necessary. 1/1/2013
CA AB 1844 Prohibits an employer from requiring or requesting an employee or applicant for employment to disclose a user name or password for accessing personal social media, as specified. Also prohibits an employer from discharging, disciplining, threatening to discharge or discipline, or otherwise retaliating against an employee or applicant for not complying with a request or demand by the employer that violates these provisions. 1/1/2013
CA AB 1964 Workplace Religious Freedom Act of 2012. Adds "religious dress practice" and "religious grooming practice" as a belief or observance to existing protections against religious discrimination in the FEHA. The amended Act directs "religious dress practice" to be broadly construed and "to include the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts, and any other item that is part of the observance by an individual of his or her religious creed." The amended Act likewise directs that "religious grooming practice" be broadly construed "to include all forms of head, facial, and body hair that are part of the observance by an individual of his or her religious creed." In addition, an accommodation of an individual's religious dress or grooming practice that would require that person to be segregated from the public or other employees is not a reasonable accommodation. 1/1/2013
CA AB 2103 Provides that payment of a fixed salary to a nonexempt employee shall be deemed to provide compensation only for the employee's regular, non-overtime hours, notwithstanding any private agreement to the contrary. 1/1/2013
CA AB 2188 Adds second and subsequent convictions for texting while driving as a serious traffic violation, which disqualifies a driver from operating a commercial motor vehicle for a specified time period. 1/1/2013
CA AB 2386 In existing fair employment laws, "sex," includes gender, pregnancy, childbirth, and medical conditions related to pregnancy or childbirth. This bill provides that, for purposes of the laws, the term "sex" also includes breastfeeding or medical conditions related to breastfeeding. 1/1/2013
CA AB 2492 Existing law prohibits employers from engaging in certain acts that prevent employees from disclosing information to the government or a law enforcement agency or from acting in furtherance of a false claims action. Existing law requires that a civil action for a false claim be filed within a specified time period. This bill defines the term obligation for purposes of these provisions and expands the definition of a claim. The bill provides specified relief to any employee, contractor, or agent that is, among other things, discharged, demoted, suspended, or in any other manner discriminated against in the terms and conditions of his or her employment because of certain acts done by the employee, contractor, or agent in furtherance of these provisions or to stop one or more violations, as specified. The bill modifies the statute of limitations of certain civil actions, as specified. 1/1/2013
CA AB 2674 Requires an employer to maintain personnel records for a specified period of time and to provide a current or former employee, or his or her representative, an opportunity to inspect and receive a copy of those records within a specified period of time, except during the pendency of a lawsuit filed by the employee or former employer relating to a personnel matter. 1/1/2013
CA AB 2675 Existing law requires that whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract must be in writing and set forth the method by which the commissions are to be computed and paid. This bill exempts from this requirement temporary, variable incentive payments that increase, but do not decrease, payment under the written contract. 1/1/2013
CA SB 1140 Provides that marriage is a personal relation arising out of a civil, and not religious, contract. 1/1/2013
CA SB 1177 Prohibits, in cases where an employer is convicted of a crime against an employee, a payment to the employee or the employee's dependent that is made by the employer's workers' compensation insurance carrier from being used to offset the restitution owed unless the court finds that the defendant substantially met the obligation to pay premiums for that insurance coverage. 1/1/2013
CA SB 1186 Reduces statutory damages and litigation protections for defendants who correct violations concerning physical access to buildings by disabled persons; prevents stacking of multiple claims to increase statutory damages; bans pre-litigation demands for money; allows either party to request a mandatory evaluation conference conducted by the court within 90 to 120 days of the request. 1/1/2013
CA SB 1255 Provides that an employee is deemed to suffer injury if the employer fails to provide a wage statement or fails to provide a wage statement showing the name of the employee and the last 4 digits of his or her Social Security number or employee identification number. Also provides that an employee is deemed to suffer injury for that penalty if the employer fails to provide accurate and complete information and the employee cannot promptly and easily determine from the wage statement alone the amount and manner in which the employer calculated the gross and net wages paid to the employee during the pay period, the deductions the employer made from the gross wages to determine the net wages paid to the employee during the pay period, and the name and address of the employer or legal entity that secured the services of the employer. 1/1/2013
CA SB 1574 Reforms electronic discovery procedures. 1/1/2013
CA SB 863 Provides for a substantial revision of the workers' compensation laws. Relates to chiropractic doctors, a specified return-to-work program, labor-management agreements, self-insured employers, surgery, re-training and skill enhancement, home health care services, independent medical review, medical provider networks, billing, liens, language interpretation services, and certain reporting requirements. 1/1/2013
CO 2013 Minimum Wage Determination Minimum Wage Order Number 29 establishes a new state minimum wage rate of $7.78 per hour and $4.76 per hour for employees who regularly receive tips. 1/1/2013
FL 2013 Minimum Wage Determination The Florida minimum wage will to increase by 12 cents to $7.79 per hour. For tipped employees, the minimum wage will increase to $4.77 per hour, in addition to tips. 1/1/2013
GA HB 1166 Provides for individual health insurance coverage to children through child-only health plans. 1/1/2013
IL HB 3782 Provides that it is unlawful for an employer to request a password or other account information in order to access an employee's or prospective employee's social networking website. Permits employers to maintain lawful workplace policies relating to Internet use, social networking site use and electronic mail use. Permits employers to obtain, regarding employees and prospective employees, information in the public domain and information obtained in compliance with this amendatory Act. 1/1/2013
IL HB 5101 Provides that a driver may not use a hand-held mobile telephone or engage in texting while driving a commercial motor vehicle. 1/1/2013
IL HB 5632 Amends the Unemployment Insurance Act. Provides that if benefits are paid after a reversal of a determination in subsequent proceedings, the benefit charges shall be treated as if the decision had not been reversed if the benefits were paid because the employer failed to respond timely or adequately and had established a pattern of that type of failure. Imposes an additional penalty for obtaining benefits by means of a false statement or failure to disclose a material fact. Repeals certain provisions concerning the benefit wage ratio. Also defines employee for purposes of the New Hire Registry. 1/1/2013
LA Louisiana HB 1196 Provides for continuation of coverage for spouses and dependents in the event of death or divorce. Provides for the continuation of group health, dental, and vision plans that are not covered by COBRA continuation provisions. 1/1/2013
MD Question 6 - HB 438 (SB 241) Approves legislation that allows same-sex couples to obtain a civil marriage license. 1/1/2013
MA Medical Marijuana Initiative (Question 3) Allows medical marijuana. 1/1/2013
MA SB 2400 Provides a tax credit of up to $10,000 to companies that establish wellness programs for their employees. 1/1/2013
MO 2013 Minimum Wage Determination Minimum wage will be $7.35 per hour, a 10-cent per hour increase. 1/1/2013
MT 2013 Minimum Wage Determination Minimum Wage will rise to $7.80 per hour, a 15-cent per hour increase. 1/1/2013
MT Referendum 122 Allows residents to choose their health care insurance plans. 1/1/2013
NJ 2013 Rates for Board and Room, Meals, and Lodging The Department of Labor and Workforce Development publishes notice of the rates for board and room, meals, and lodging furnished by employers in addition to, or in lieu of, money wages during calendar year 2013. These amounts are used when the employer does not assign value to such payments for unemployment and temporary disability insurance purposes only. 1/1/2013
NM Albuquerque Minimum Wage Initiative Calls for raising the minimum wage in the city from $7.50 an hour to $8.50 an hour, as well as a cost of living adjustment. 1/1/2013
ND SB 2170 Relating to the imposition of individual income taxes and employer income tax withholding for mobile workforce employees; and relating to the imposition of individual income taxes and employer income tax withholding for mobile workforce employees. 1/1/2013
OH 2013 Minimum Wage Determination Minimum increases to $7.85 per hour for non-tipped employees and to $3.93 per hour for tipped employees. 1/1/2013
OR 2013 Minimum Wage Determination Minimum wage rate will be $8.95 per hour, a 15-cent per hour increase. 1/1/2013
RH HB 7396 Raises the minimum wage to $7.75 per hour. 1/1/2013
RH SB 2374 Raises the minimum wage to $7.75 per hour, and requires adjustments commencing January 1, 2014. 1/1/2013
TX Regulation: 28 TAC 110.1, 110.7 Relating to various reporting requirements placed upon insurance carriers and employers. The amendments to section 110.1 primarily remove from this rule provisions relating to employer reporting requirements to the Division, specifically provisions relating to an employer's notice to the Division of non-subscriber status and an employer's notice to the Division when it terminates workers' compensation insurance coverage. New section 110.7 delineates specific reporting requirements for a self-insured political subdivision to notify the Division when it elects to provide medical benefits in the manner described by Labor Code section 504.053(b)(2). 1/1/2013
TX Regulation: 28 TAC 160 The Texas Department of Insurance, Division of Workers' Compensation adopts amendments to section 160.2 and 160.3 and new section 160.1 regarding reports of injury and occupational disease by employers. Sections 160.2 and 160.3 are Division rules that implement certain statutory provisions in Labor Code Chapter 411, Subchapter C, specifically Labor Code section 411.032, which requires an employer to file with the Division a report for certain on-the-job injuries and occupational diseases. The Division adopts these amendments and new section to update and clarify the language and requirements associated with these reporting requirements placed upon employers. 1/1/2013
US FTC: Updated FCRA Notices New FCRA notices reflect modest changes to the mandatory agency-drafted FCRA summary of rights form. The FCRA Summary of Rights form must be included: (1) as an enclosure with the first of the two "adverse action" notices – the "pre-adverse action" notice; and (2) with the disclosures for "investigative consumer reports" (i.e., consumer reports based on personal interviews conducted by a consumer reporting agency, such as in-depth reference checks). 1/1/2013
US IRS: 2013 Mileage Rates Rate will be raised to 56.5 cents per business mile driven, one cent higher than the 2012 rate. The rate for medical or moving expenses will also be raised one cent to 24 cents per mile. 1/1/2013
US IRS: Limitations on Retirement Accounts The contribution limits for IRAs and 401(k) plans will be increasing from $5,000 per IRA and $17,000 per 401(k) by $500 each. 1/1/2013
VT 2013 Minimum Wage Determination Minimum wage will be increased to $8.60 per hour from $8.46 per hour. The basic wage rate for "service and tipped" employees will increase to $4.17 per hour from $4.10 per hour. 1/1/2013
WA 2013 Minimum Wage Determination Minimum wage will increase 15 cents to $9.19 per hour. 1/1/2013
PA HB 1548 The new Child Labor Act requires a 30-minute rest period for minors who work more than 5 continuous hours and revises work hour restrictions; adopts by reference federal standards for occupations deemed hazardous to minors (with additional state requirements added); provides new notice requirements for employers hiring minors; and consolidates work permits by establishing one basic work permit as opposed to the three different types under current law. 1/22/2013
MA HB 4304 Establishes requirements for providing information to temporary workers. 1/31/2013
US DOL: Final Rule re H-2B Program Delays the effective date of the Wage Methodology for the Temporary Non-agricultural Employment H-2B Program (the Wage Rule) to March 27, 2013 from October 1, 2012. The Wage Rule revised the methodology by which DOL calculates the prevailing wages to be paid to H-2B workers and U.S. workers recruited in connection with a temporary labor certification for use in petitioning the Department of Homeland Security to employ a nonimmigrant worker in H-2B status. 3/27/2013
IL SB 2847 Amends the Equal Pay Act of 2003. Provides that in addition to an individual who is deemed to be an employer, any officers of a corporation or agents of an employer who knowingly permit such employer to violate the provisions of the Act shall be deemed to be the employers of the employees. 6/1/2013
CA AB 1775 Defines "disposable earnings" as the portion of an individual's earnings that remains after deducting all amounts required to be withheld by law. Prohibits the amount of an individual judgment debtor's weekly disposable earnings subject to levy under an earnings withholding order from exceeding the lesser of 25% of the individual's weekly disposable earnings or the amount by which the individual's disposable earnings for the week exceed 40 times the state minimum hourly wage in effect at the time the earnings are payable, unless an exception applies. For any pay period other than weekly, the bill also requires the use of certain multipliers to determine a maximum amount subject to levy under an earnings withholding order that is proportional in effect to a calculation based on the amount by which the individual's earnings for a workweek exceed 40 times the state minimum wage, except as specified. 7/1/2013
VA SB 1049 Provides that any employer with more than an average of 50 employees for the previous 12 months entering into a contract in excess of $50,000 with any agency of the Commonwealth to perform work or provide services pursuant to such contract shall register and participate in the federal E-Verify program to verify information and work authorization of its newly hired employees performing work pursuant to such public contract. Any such employer who fails to comply shall be debarred from contracting with any agency of the Commonwealth for a period up to one year. Such debarment shall cease upon the employer's registration and participation in the E-Verify program. 12/1/2013
MI SB 116 Permits employees to engage in, or refrain from, collective bargaining activities; prohibits an individual from being required to engage in or refrain from certain activities (such as joining or paying dues to a labor organization) as a condition of employment; and prohibits a person from forcing or attempting to force anyone to engage in or refrain from certain activities (such as joining or supporting a labor organization). Effective 90 days after adjournment – estimated effective date 3/31/13
The Federal Regulatory Agenda For 2013
The following article is by Littler attorney Ilyse Schuman. Please see my Summary and Important Points below.
Breakfast Briefing Update
Thanks to the over 425 attendees who have already registered! Seating is now becoming very limited. At this point, the Milpitas and Santa Maria dates are sold out. One of the Fresno dates has only 1 seat left and the other date only has 3 seats available. One of the Diamond Bar dates only has 18 spots available and the second date is almost half full. If you are interested in attending, I encourage you register as soon as you can. If you register and the location date is full, you will have to be placed on a waiting list.
The annual New Year Breakfast Briefings will be held in the following locations:
Santa Maria 1/24/13
Fresno 1/29/13 & 1/31/13
Diamond Bar 2/6/13 & 2/7/13
For more information on all the Breakfast Briefings and to register please
click on this link.
If you need the e-vite re-sent please email my assistant Ms. Nanci Berry at the following link email@example.com
Breakfast Briefing OUTLINE HIGHLIGHT
The following is a preview of some of the federal agenda developments that will be discussed this year:
1. The PPACA’s “Pay or Play” employer mandate and the new IRS guidance on same.
2. The new EEOC guidance on the ability of employers to consider criminal conviction records in the hiring and current employment context.
3. The NLRB rulings from 2012 impacting non-union employers practices and policies.
On December 21, 2012, federal agencies released their long-awaited unified agendas and regulatory plans for 2012. Under the Regulatory Flexibility Act, federal agencies are required to publish semi-annual lists of economically significant regulations under development, with the first publication in April and the second in October. Agencies must also disclose a unified agenda of regulations under development or review to the Office of Management and Budget, which then publishes a complete list of the regulations. However, administrative agencies failed to publish a spring agenda and delayed the newly released Fall 2012 agenda until well past the October deadline, likely holding off on the publications in order to avoid stirring up political controversy during the election cycle.
Although many of the target dates for rulemaking identified in the delayed release are now out of reach, the agencies' release nonetheless provides a valuable roadmap for the likely regulatory agenda for 2013. Labor, employment, and benefits policy, the newly released agenda includes items from the U.S Department of Labor (DOL), National Labor Relations Board (NLRB), and Equal Employment Opportunity Commission (EEOC) and shows a strong focus on enforcement from each of these agencies. This regulatory activity has taken on particular importance in light of the likelihood that legislative gridlock will continue to prevent significant workplace legislation from being enacted before the mid-term elections.
Below is a summary of the highlights of the agencies' unified agendas and regulatory plans for 2012. In addition to the regulatory items included in this agenda, agencies are widely expected to issue additional regulations under the Patient Protection and Affordable Care Act. This long-awaited guidance will be critical for employers as they undertake intensive efforts to comply with the new law's requirements and as they evaluate their options with regard to the provision of health insurance for employees.
The Federal Regulatory Agenda for 2012
Department of Labor (DOL)
According to the DOL's Fall 2012 statement of regulatory priorities, the agency will continue, pursuant to its "Plan/Prevent/Protect" regulatory and enforcement strategy, to pass regulations requiring businesses to establish and enforce plans for identifying and remedying labor law violations. According to "Plan/Prevent/Protect," employers failing to take these steps "to comprehensively address the risks, hazards, and inequities in their workplaces will be considered out of compliance with the law and, may be subject to remedial action." The DOL's agenda includes both a list of rules to be considered in the coming months and a list of more long-term regulatory items.
Within the DOL, the Occupational Safety and Health Administration (OSHA), Mine Safety and Health Administration (MSHA), Office of Federal Contract Compliance Programs (OFCCP), Employee Benefits Security Administration (EBSA), Office of Labor-Management Standards (OLMS), and Wage and Hour Division (WHD) all proposed specific regulatory actions furthering the DOL's implementation of its Plan/Prevent/Protect strategy.
Occupational Safety and Health Administration (OSHA)
The majority of items on the DOL's agency rule list address worker safety and health. OSHA's regulatory list includes 10 regulations at the final rule stage, 10 at the proposed rule stage, five items at the pre-rule stage, and an additional two rulemaking items identified as longer-term priorities. Among the highlights of the anticipated OSHA regulatory items are:
Infectious Diseases. OSHA is in the process of determining whether additional regulations are needed to address worker exposure to infectious diseases in healthcare and other related high-risk environments. According to the agency's statement of priorities, "OSHA is interested in all routes of infectious disease transmission in healthcare settings not already covered by its bloodborne pathogens standard (e.g. contact, droplet, and airborne)." In particular, OSHA expresses its concern that incomplete adherence to voluntary infection control measures is resulting in the transmission of infectious diseases to both patients and healthcare workers.
Injury and Illness Prevention Program (I2P2). OSHA is developing a rule requiring employers to implement an Injury and Illness Prevention Program. A proposed rule on this program, which is scheduled to be issued by the end of 2013, "will explore requiring employers to provide their employees with opportunities to participate in the development and implementation of an injury and illness prevention program, including a systematic process to proactively and continuously address workplace safety and health hazards." The proposed I2P2 includes ergonomics among the hazards to be identified and mitigated by the newly required safety and health program.
Recordkeeping Requirements. OSHA will consider requiring employers to submit data required under OSHA's injury and illness reporting requirements electronically. However, the proposed rule only impacts transmission of the required data, not the recording criteria.
Whistleblower Protection. OSHA proposes issuing procedural rules (available here, here, here, and here) for the filing of whistleblower complaints under eight of the statutes with whistleblower protections that are enforced by the agency. The procedural rules are intended to provide specific timeframes and guidelines regarding the filing of complaints with OSHA, issuance of an agency finding, appeals, and remedies.
Risk Reduction. The agency is in the early stages of drafting rules (available here and here) related to combustible dust hazards, crystalline silica, and beryllium.
Long-Term Rulemaking. The agency has relegated the development of standards addressing occupational exposure to food flavorings containing diacetyl and diacetyl substitutes to a longer-term priority. The controversial plan to add a musculoskeletal disorder (MSD) column to OSHA's recordkeeping and reporting Form 300 Log is also now considered a longer-term regulatory proposal.
Office of Federal Contract Compliance Programs (OFCCP)
Affirmative Action Requirements. The OFCCP intends to issue a host of proposed and final rules amending current affirmative action requirements for various employers. In mid-late 2013, the OFCCP is scheduled to issue proposed rules that would increase construction contractor affirmative action requirements, and regulations that would revise sex discrimination guidelines for federal contractors and subcontractors. According to the agency, because current sex discrimination guidelines have not been updated in more than 30 years, they warrant a "regulatory lookback."
Affirmative Action and Nondiscrimination Obligations Regarding Protected Veterans and Protected Individuals with Disabilities. By April 2013, the OFCCP also plans to issue final rules that would amend regulations regarding a contractor's and subcontractor's affirmative action and nondiscrimination obligations towards protected veterans under the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), and revise the nondiscrimination and affirmative action requirements for federal contractors and subcontractors regarding individuals with disabilities. With regard to veterans, the new rule would amend the regulations to require that federal contractors and subcontractors conduct more substantive analyses of recruitment and placement efforts, including the use of benchmarks to measure the effectiveness of affirmative action efforts. With regard to individuals with disabilities, the rule would similarly require more substantive analysis of recruitment and placement efforts and efforts to better measure the effectiveness of affirmative action efforts. Both rules would also introduce new recordkeeping requirements.
Compensation Data Collection Tool. By June 2013, the OFCCP intends to issue a proposed rule that would create a compensation data collection tool "to identify contractors likely to violate" sex- and race-based compensation discrimination laws.
Employee Benefits Security Administration (EBSA)
Several proposals on the EBSA agenda are intended to "expand disclosure requirements, substantially enhancing the availability of information to employee benefit plan participants and beneficiaries and employers, and strengthening the retirement security of America's workers." The EBSA, in conjunction with other federal agencies, also intends to continue issuing guidance implementing the health reform provisions of the Affordable Care Act.
Definition of "Fiduciary." The EBSA plans to re-propose a rule by July 2013 that would clarify who is a "fiduciary" under the Employee Retirement Income Security Act (ERISA) when providing investment advice to retirement plans and other employee benefit plans. After withdrawing the initial proposal, the EBSA in September 2011 announced that it had decided to re-propose this rule.
Pension Plan Disclosures. The agency intends to issue a final rule addressing the requirement that administrators of defined benefit pension plans annually disclose the funding status of their plan to the plan's participants and beneficiaries. The EBSA also intends to amend disclosure requirements applicable to plan investment options, including Qualified Default Investment Alternatives, "to better ensure that participants understand the operations and risks associated with investments in target date funds."
Lifetime Income Option. As discussed in the statement of priorities, the EBSA is in the early stages of developing a proposed rule under ERISA section 105 "relating to the presentation of a participant's accrued benefits; i.e., the participant's account balance, as a lifetime income stream of payments, in addition to presenting the benefits as an account balance."
Healthcare. Among other rules, the agency plans to develop regulations relating to contraceptive coverage under the new health care reform law for group health plans and health insurance issuers. While the regulatory agenda sets December 2012 as the target release date, the agency has publicly estimated that this rule will be released in early 2013.
Office of Labor-Management Standards (OLMS)
Persuader Agreements - Employer and Labor Relations Consultant Reporting Under the LMRDA. By April 2013, the OLMS intends to issue a controversial final rule that would broaden the scope of reportable activities by substantially narrowing the "advice exemption" to the reporting obligations contained in Section 203(c) of the Labor Management Reporting and Disclosure Act (LMRDA). This final rule would greatly expand the types of employer activity and legal advice in conjunction with a union organizing campaign that would trigger the LMRDA reporting requirement.
Wage and Hour Division (WHD)
FLSA Exemption for Domestic Service (Companionship). By April 2013, the WHD intends to issue a final rule applying the Fair Labor Standards Act (FLSA) to domestic service workers. A proposed rule extending FLSA overtime and minimum wage requirements to domestic caregivers was issued in December 2011.
"Right to Know" Under the FLSA. This rule would amend the recordkeeping regulations under the FLSA by requiring that employers disclose workers' status (e.g., independent contractor or employee) and, for employees, to disclose the manner in which compensation is calculated. The rule would also "clarify that the mandatory manual preparation of 'homeworker' handbooks applies only to employers of employees performing homework in the restricted industries." The agency's plans for a "Right to Know" rulemaking seems to be put on hold indefinitely, as it continues to be listed on the WHD's long-term agenda with no target date.
Equal Employment Opportunity Commission (EEOC)
The EEOC does not have any major regulatory items lined up for consideration. The agency still intends to issue a proposed rule that would update its race and ethnicity data collection method to conform with current reporting instructions for the EEO-1 Report, making employee self-identification the preferred method for collecting race and ethnic data on employees. It also plans to develop a proposed rule revising procedures for complaints or charges under the Americans with Disabilities Act (ADA) and Section 504 of the Rehabilitation Act of 1973.
A complete list of its rulemaking items can be found here.
National Labor Relations Board (NLRB)
The agenda makes no mention of the NLRB's controversial notice posting regulation, which is currently being challenged in court. The agenda does, however, include the NLRB's so-called "ambush election" rule as a "long term action" with no definite date for finalization. The election rule, which initially took effect on April 30, 2012, is also currently subject to legal challenge and has been temporarily suspended pending the outcome of that litigation.
Summary and Important Points
1. As the 113th Congress begins, the legislative logjam that characterized the 112th Congress is likely to continue with respect to labor and employment law.
2. Accordingly, the administration will turn to the agencies to advance its workplace agenda. President Obama's second term in office could hold even more dramatic changes for employers than his first term.
3. The recently released regulatory agenda is evidence of the scope and ambition of these efforts. The regulatory agenda for 2013 suggests that employers should begin now to prepare for significant changes in workplace reporting, monitoring, and other compliance obligations.