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    Welcome to the Labor and Employment Law Update where attorneys from SmithAmundsen blog about management side labor and employment issues. We cover topics including addressing harassment and discrimination in the workplace, developing labor law, navigating through ADA(AA), FMLA and workers’ compensation issues, avoiding wage and hour landmines, key legislative, case law and regulatory changes and much more!
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    The Labor and Employment Law Update is provided for information purposes only, and should not be construed as legal advice on any subject matter, nor should it be construed as creating an attorney client relationship. Do not send confidential information or facts about a legal matter. The opinions of this blog's contributors do not reflect the opinions of SmithAmundsen LLC as a whole. See the disclaimer page for further information.

“We Recommend Keeping This Confidential” Still Violates the Law According to the NLRB

Contributed by Jamie Kauther

Over the last few years the National Labor Relations Board (“NLRB”) has been cracking down on employee confidentiality mandates. An employer can legally require employees to keep trade secrets and legally protected information confidential, but according to the NLRB’s most recent ruling on August 27, 2015 an employer cannot even “recommend” that employees keep internal investigations confidential  (Boeing Co., 362 N.L.R.B. No. 195, 8/27/2015). The Board ruled that Boeing Company’s revised policy that “recommends” employees refrain from discussing HR investigations was unlawful as it violates employee’s rights to engage in concerted activity under Section 7 of the National Labor Relations Act (“NLRA”).

Confidential StampThe Board explained that although employers may “legitimately require confidentiality in appropriate circumstances” the impact of any confidentiality policy must be limited. Essentially, the Board created an individualized balancing approach that requires an employer to weigh its interests in confidentiality against employees’ Section 7 rights. Although it laid out examples of what situations would tip the scales, the Board did not set a clear standard. The examples provided include instances of likely witness intimidation or harassment, destruction of evidence or other misconduct that could jeopardize the investigation’s integrity. However, no specific examples were provided as to when these issues can occur. This standard imparts on employers a requirement to tailor-fit their confidentiality policies to be enforced on a case-by-case basis. As the Board explained, “generalized concern” about the integrity of all investigations is “insufficient to justify [a] sweeping policy,” including one that simply “recommends” confidentiality.

This new individualized balancing standard is a bit of a head scratcher. However, the Board did identify some bad practices that would not pass muster. It expressly pointed out Boeing’s requirement to have employees sign a policy notice without a Section 7 disclaimer in the policy or notice that the employee could disregard the confidentiality recommendation. The Board held that this clearly communicated Boeing’s improper desire for confidentiality.

So what is a best practice in light of this decision? Remove sweeping confidentiality policies pertaining to internal investigations and eliminate requirements that when employees sign notices they understand the confidentiality recommended. Instead, discuss with the employee during an investigation the desire for confidentiality based on the facts of the specific investigation. Remember this ruling only applies to what limits can be placed on employees with knowledge of the investigation. It has no bearing on a company’s approach or handling of an investigation – meaning the company can and should still clearly reiterate in its policies that it will handle all investigations with discretion and will preserve the confidentiality of all involved persons to the extent possible. Essentially, an employer can still control the information it relays, just not what other involved employees communicate.

New Guidance: A Reminder the Cadillac Tax is Still Looming

Contributed by Kelly Haab-Tallitsch

The Internal Revenue Service (IRS) recently released its second set of guidance discussing approaches to the excise tax on employer-sponsored health coverage, often referred to as the “Cadillac tax.” Starting in 2018, the Cadillac tax imposes a 40% tax on the cost of employer-sponsored health coverage in excess of $10,200 for self-only coverage and $27,500 for family coverage. Intended to target overly-generous employer-provided health plans, the Cadillac tax continues to be one of the most controversial parts of the Affordable Care Act (ACA) as dollar thresholds set in 2010 look increasingly too low for 2018 plan costs.

The Cadillac tax is extremely complex and we don’t expect final regulations any time soon. The guidance issued so far Health insurnce photodescribes “potential approaches” that may be incorporated into future regulations. Although this preliminary guidance cannot be relied on, it gives some insight into the direction the agency is going.

Notice 2015-52, released July 30, 2015, addresses employer aggregation and the payment of the tax, among other issues. The guidance suggests that related employers will be treated as a single employer for tax calculation and payment purposes. Annually, employers will calculate the cost of the coverage for each month of the calendar year to see if the ‘Cadillac’ threshold was exceeded. The employer will then inform the IRS and the coverage provider (insurance company for a fully insured plan) of their share of the tax. For multiemployer plans, the plan sponsor will make the calculations and provide notice to the IRS.

Notice 2015-16, released February 23, 2015, addressed the definition of applicable coverage, the determination of the cost of coverage and application of the annual statutory limits. Most notably, applicable coverage would include both fully insured and self-insured employer-sponsored health plans, regardless of whether the employer or employee pays for the coverage or whether it is paid for with pretax or post-tax dollars. This would include major medical coverage, employer and employee contributions to health flexible spending accounts (FSAs) and health savings accounts (HSAs), health reimbursement arrangements (HRAs), onsite medical clinics, retiree coverage and executive physical programs.

What is the bottom line? Although opponents of the Cadillac tax continue to fight to have the provision amended or repealed, employers should proceed with the expectation that the Cadillac tax will be implemented in 2018 as planned. Employers should review the coverage offered to employees and begin to take steps to reduce exposure to the tax. Further, employers should consider providing input into the regulatory process—directly or through trade groups—by providing comment on the preliminary guidance.

Temporary Staffing Agencies & User Companies Deemed “Joint Employers” By the NLRB

Contributed by Jeffrey Risch

As we anticipated and previously discussed, on August 27, 2015, the National Labor Relations Board (NLRB) issued its ruling in the closely watched Browning-Ferris Industries of California, Inc. (BFI) case (Case 32-RC-109684). In rejecting over 30 years of precedent and the underlying Administrative Law Judge’s ruling on the issue, the NLRB’s pro-union majority established a new standard for determining joint-employer status. While the decision related to a company’s engagement of a subcontractor supplying workers, the NLRB’s new joint-employer standard will certainly have a direct impact on franchisor/franchisee relationships, temporary staffing and leased employee business models as well as all aspects of employment outsourcing. In short, it lays the groundwork to overturn other past NLRB decisions and will, if left unchecked, alter how two or more independent businesses conduct business in the United States.

The underlying case: Teamsters Local 350 filed an organizing petition seeking to represent employees of Leadpoint who were placed at BFI’s facility. BFI and Leadpoint objected to this organizing attempt and ultimately prevailed before the NLRB’s assigned Administrative Law Judge. The ALJ, in applying decades of precedent, ruled that BFI and its subcontractor, Leadpoint, were not joint employers because BFI did not share “immediate and direct control” over the terms and conditions of Leadpoint’s employees working at the BFI facility. The Teamsters appealed the decision and urged the NLRB to adopt a new standard to allow the representative process to move forward. The NLRB’s General Counsel advanced the Teamsters’ position as well as a host of pro-union organizations — once invited to do so by the NLRB.

The new standard: According to the NLRB’s majority, two or more entities should be deemed joint employers of a single workforce under the Act when (1) they are both employers within the meaning of the common law; and (2) they directly or indirectly share or codetermine essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB will now consider whether an employer has exercised or reserved ANY control over terms and conditions of employment (directly or indirectly). Suffice to say… it’s now a very low standard. According to the majority, the new standard is designed “to better effectuate the purposes of the Act [National Labor Relations Act] in the current economic landscape.” However, make no mistake… this means exactly what the union, pro-union organizations and the NLRB’s own General Counsel advanced — which was essentially: if business conditions make it more difficult for unions to organize workers or collectively bargain, then the standards must be lowered to allow such.

Board Chairman Mark Gaston Pearce was joined by Members Kent Y. Hirozawa and Lauren McFerran in the majority opinion; Members Philip A. Miscimarra and Harry I. Johnson III dissented. Interestingly, and fodder for future legal challenges, the 2-member dissent stated: “…our colleagues have announced a new test of joint-employer status based on policy and economic interests that Congress has expressly prohibited the Board from considering.”

The impact: Two separate and distinct legal entities could now be embroiled with one another’s alleged unfair labor practices, union organizing drives, strike activities and picketing disputes as well as mandatory bargaining obligations. Further, this decision lays the groundwork for the NLRB to overturn other key decisions and continue its recent actions to provide unions with life-support. For instance, in July 2015, the NLRB invited briefs in the Miller & Anderson, Inc. matter (05-RC-079249), to help determine if the NLRB should overturn its decision in Oakwood Care Center (343 NLRB 659), which disallowed inclusion of solely employed employees or jointly employed employees in the same unit absent consent of both employers. Have no doubt, the writing is already on the wall here. Additionally, this decision will certainly be used by the EEOC, U.S. DOL and other federal agencies in their ongoing efforts to increasingly regulate the workplace.

Conclusion: Take action now! Don’t wait. First, immediately review and analyze all written agreements in place between your organization and any 3rd party. Whether you are a franchisor, franchisee, user company, general contractor, subcontractor, supplier company, temporary staffing firm…. It does not matter. Review all agreements through the lens of the NLRB and its bent towards finding joint-employer status. Second, carefully review and evaluate actual supervisory functions and oversight, training requirements and other day-to-day activities surrounding employee relations (of your own direct employees and 3rd party employees). Finally, perhaps its time to sit down and determine whether your current business model needs to be tweaked or modified in light of these disturbing developments.

Document, Document, Document – A Mantra Revisited

Contributed by Carlos Arévalo

Failure to document performance or conduct problems is a common mistake employers make. Typically, employee handbooks contain provisions requiring periodic performance reviews.  Similarly, handbooks contain discipline provisions that include procedures dealing with the issuance of warnings related to the violation of work rules.  How employers use and apply these provisions can make the difference in successfully defending claims.

A recent decision out of the United States Court of Appeals for the District of Columbia illustrates how critical it is to properly document an employee’s behavior and performance issues. This decision also underscores the importance of making sure that the reasons for termination are clearly and consistently stated throughout the life of a claim. In Giles v. Transit Employees Federal Credit Union, 2015 WL 4217787 (July 14, 2015), an employee suffering from multiple sclerosis (MS) sued her former employer alleging wrongful termination in violation of the American with Disabilities Act (ADA) and the Employee Retirement Income Security Act (ERISA).

Prior to her termination, the employee was involved in a couple of altercations with customers. In one instance, the employee was engaged in an argument with a customer over a pen. The employee was given a verbal warning.  On another occasion, the employee improperly confronted a customer for entering the building through the wrong door. In response, the employee was issued a written warning with a two day suspension. The employee was then assigned to a different position. As for performance, the employee was given a combination of satisfactory and poor ratings in the two positions she held. When a leadership change occurred, the new CEO terminated the employee.

Because premiums for the health insurance plan increased 57% over a period of two years during her tenure, the employee sued claiming that the cost of treating her MS caused premiums to increase and that she was dismissed to reduce the employer’s health care costs. As the employee’s case moved from administrative proceedings before the EEOC to the action in district court, the employee also attacked the employer’s “shifting and inconsistent justifications for her termination.” Initially, the employer stated that the employee was terminated based on the employee’s performance ratings and her altercations with customers. Later, her termination was the result of a “general organizational review” made for “business reasons.” Finally, the employer reverted to poor performance and added that substandard employees were being eliminated as part of a business strategy to cut costs and restore profitability. Fortunately for the employer, the appellate court affirmed the trial court’s finding of summary judgment in favor of the employer because there was no evidence supporting a claim that the cost of insuring plaintiff was a motivating factor in the termination decision. However, inconsistencies or shifting justifications for employment action often give employees a successful argument that the reasons given for termination were pretextual in nature.

Here are five simple and practical lessons from the Giles case:

  1. Behavior issues should always be documented, even if they only involve a verbal warning.
  2. Periodic reviews should clearly identify any deficiencies in employee performance.
  3. The basis of a termination decision should be clearly stated to the employee.
  4. Employee files should be clear and concise so even a change in management will not affect employment decisions.
  5. The basis of the termination decision should be consistent – shifting reasons may impact the outcome of litigation.

Title VII Update: No Adverse Action for Suspension With Pay

Contributed by Noah A. Frank

Recently, a Federal Appellate Court held that there was no adverse action under Title VII for an employee who was suspended with pay during an investigation.  Jones v. Se. Penn. Transp. Auth., — F.3d—, No. 14-3814 (3rd Cir. Aug. 12, 2015).

The underlying facts are straight forward and typical of an employment discrimination suit:

  • The supervisor suspected an employee was guilty of wage theft.
  • The supervisor suspended the employee with pay.
  • The employee informed the company’s EEO/Human Resources Department that she intended to file a complaint against the supervisor; at the investigation meeting the next week, the employee alleged for the first time that the supervisor sexually harassed and retaliated against her.
  • Separately and simultaneously, the time theft issue was investigated. The Company concluded that the employee engaged in misconduct. Her paid suspension was converted to an unpaid suspension, pending formal termination.
  • The employee filed charges of discrimination against the company and supervisor with the state human rights administrative agency.

The trial court granted the Company summary judgment as to Title VII discrimination, which the Appellate Court affirmed (note: the Appellate Court did not review, and declined to opine, whether paid suspension may amount to Title VII retaliation). The Appellate Court found that a paid suspension is not a refusal to hire or terminate, “by design” does not change compensation, and does not cause a “serious and tangible” alteration of employment terms, conditions, or privileges. Further, these terms and conditions of employment ordinarily include the possibility that an employer will be subject to disciplinary policies. Other workers identified by Employee as having engaged in somewhat similar misconduct were readily distinguished and not comparable.

Key Points for Employers 14815491_s

In an increasingly regulated, employee-friendly, and litigious business environment, employers must ensure that they protect the company from employee misconduct and subsequent claims by disgruntled workers and former workers. To do so, employers must:

  • Treat all similarly situated employees with consistency – if there is a change in policy/enforcement, document the basis and effective date. Ensure supervisors are trained on enforcement and employees have notice of the policies.
  • Permitting an employee to continue to work while suspected of gross misconduct may make later termination seem suspect to an administrative agency (including unemployment), and even a jury. Therefore, promptly remove an employee suspected of misconduct from the workplace. If the misconduct is merely suspected, suspend with pay pending investigation and determination.
  • Conduct and document an investigation into misconduct – secure and save evidence such as timesheets, cash register tickets, or CCTV video.
  • Adverse employment actions (suspension without pay, demotion, transfer, termination, and the like) should be based on good faith business reasoning.
  • And, of course, involve counsel if an investigation becomes risky, an employee claims discrimination or harassment, or it appears there may be litigation on the horizon.

“No, You Can’t Wear That”—D.C. Circuit Sets Important Limitation On Union Apparel in the Workplace

Contributed by Steven Jados

In the opening sentence of its recent decision, Southern New England Telephone Co. v. NLRB, the federal D.C. Circuit Court of Appeals stated: “Common sense sometimes matters in resolving legal disputes.” If only that were always true in labor disputes.

The legal dispute in this matter centered on the fact that the company prohibited publicly visible employees—those who had direct contact with customers or the public—from wearing union t-shirts that said “Inmate” on the front and “Prisoner of AT$T” on the back. These shirts were part of a campaign by the union representing certain company employees to apply bargaining pressure in the midst of contentious contract negotiations. Notably, the company did allow the shirts to be worn by employees who were not publicly visible.

Common sense says it is less-than-ideal to have your customers and prospects think that you imprison your employees—metaphorically or otherwise.

43200054_sGenerally speaking, however, the National Labor Relations Act protects union members’ rights to wear clothing with union logos and slogans in the workplace. In light of the NLRB’s efforts to expand its reach into non-union workplaces, that same protection conceivably extends to articles of clothing linked to concerted activities relating to wages and working conditions, regardless of whether the clothing is worn by union or non-union employees.

Relying on that generalized protection, prior to this matter reaching the D.C. Circuit, the NLRB ruled that the company acted unlawfully by prohibiting employees from wearing the “prisoner” shirts, and suspending employees who refused to comply with the prohibition.

The D.C. Circuit, however, cited the “special circumstances” exception to the generalized protection favoring union apparel, and stated that this exception allows employers to stop employees “from displaying messages on the job that the company reasonably believes may harm its relationship with its customers or its public image.” In applying that exception to the union’s “prisoner” shirts, the court reinforced the strength and significance of an employer’s concerns of potential damage to customer relationships. Such concerns may outweigh employees’ rights on the subject of union apparel.

All of that said, the bottom line here is that companies do have some rights when it comes to limiting union apparel in the workplace. However, companies must tread carefully when attempting to impose apparel rules because the “special circumstances” exemption will not apply in every case. Common sense eventually prevailed in this matter, but that happened only after a lengthy legal battle that lasted more than five years.

For Every Employer Action, There Is a NLRB Reaction: Board Expands Scope of Protected Concerted Activity Again

Contributed by Beverly Alfon

In a recent decision, Central States Southeast and Southwest Areas, Health & Welfare and Pension Funds, 362 NLRB No. 155 (Aug. 4, 2015), the National Labor Relations Board (NLRB) held that an employee’s posting of a written warning at his cubicle was protected, concerted activity. The employee, Frederick Allen Moss, received the written warning from his supervisor for refusing to stop using his electronic tablet during a work meeting. In response, Moss laminated a copy of it and posted it next to his computer so that it was visible to anyone who entered his cubicle or stood at the entrance of his cubicle.

During a grievance meeting between management and Moss’ union, the supervisor complained that Moss was being disrespectful and insubordinate. The director of Moss’ department (the supervisor’s boss) told Moss that if he did not remove the posting, he would suspend Moss for three days. Moss took down the posting after the union advised him to do so. However, the director’s threat landed the employer before the NLRB.

The administrative law judge who heard the case found the employer’s threat to be an “overreaction” – but not any violation of the National Labor Relations Act. He found no evidence that Moss sought the support of other employees in the grievance process or that his posting advanced his cause in the grievance process. He found no evidence that Moss was seeking the support of other employees because they wanted to be able to use their electronic devices freely while at work or to protest unfair discipline in general. He found no common cause to bring Moss’ conduct under the protection of protected, concerted activity. Nonetheless, the Board in Washington D.C. reversed the ALJ and found violations of the Act.

9637576_sThe Board reasoned that the posting was protected because it was related to other means of communicating with other employees about discipline. Without reasoning, however, the Board dismissed the uncontested fact that Moss and the employees continued to openly discuss the written warning before and after the posting. The Board rejected the employer’s argument that it had a legitimate business justification to “remov[e] open displays of insubordination because such displays are disruptive and undermine management’s authority,” concluding that the employer had no factual basis for deeming the posting to be insubordinate.

Notably, the Board also found that the direction for Moss to remove the posting amounted to an unlawful work “rule” because it was communicated in the presence union stewards who could reasonably interpret that direction as a rule against any discussion of discipline through the physical posting of the discipline.

Bottom line:  Whether or not you have a unionized workforce, this decision serves as a reminder that when an employee responds to discipline – comparative choices for any employer reaction should be carefully evaluated in light of the real potential for substantial and expensive litigation before the NLRB. Also, if you have not done so already, train your managers and supervisors regarding the NLRB’s increased scrutiny of employer work rules.

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