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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.

Let the Countdown Begin for the Licensing of Medical Marijuana Registered Users, Dispensaries and Cultivators!

Contributed by Michael Wong

Although the Illinois Medical Marijuana law went into effect on January 1, 2014, marijuana (medical and recreational) is still currently illegal to be possessed or used in Illinois. On July 16, 2014, a significant step was taken towards changing that when the Joint Committee on Administrative Rules (JCAR) approved the administrative rules for the Illinois Medical Marijuana law.

The administrative rules address the licensing of registered users, dispensaries and cultivators, as well as regulations on the operation and management of dispensaries and cultivators. However, the administrative rules still do not provide any guidance to employers on how to comply with the conflicting language of the Illinois Medical Marijuana law when it comes to enforcing drug policies, drug testing and registered users.

With the approval of the administrative rules, applications to become a registered user will start being accepted September 1, 2014, with individuals whose last names begin with A to L being able to submit applications between September 1, 2014 and October 31, 2014, those with last names beginning with M to Z submitting applications between November 1, 2014 and December 31, 2014, and on an open year round basis beginning January 1, 2015. Under the Illinois Medical Marijuana law the Department of Public Health will have 30 days to approve or deny a completed application to become a registered user. This means that individuals will start becoming licensed as registered medical marijuana users by at least October 1, 2014.

That being said, under the law registered users are only allowed to purchase medical marijuana from Illinois licensed dispensaries, which in turn are only allowed to purchase marijuana that is grown in Illinois by an Illinois licensed cultivator. While the administrative regulations set the application process for the 60 dispensary licenses and 21 cultivator licenses, the actual dates that the Departments will start accepting applications have not been set. It is anticipated that the application period for dispensaries and cultivators will be during the fall of 2014, if not sooner. Once the application periods are set, the Departments will post such on their websites.

Even after the dispensaries and cultivators are licensed, registered users will still have to wait for the first crop of marijuana grown by the cultivators in Illinois before they will be able to legally purchase, possess and use medical marijuana in Illinois. Thus, it is anticipated that the legal purchase, possession and use of medical marijuana in Illinois will not occur until early 2015.

It is important that employers take notice of this and proactively take steps to ensure that their policies and procedures are in line with the law. Additionally, employers should make sure to remind employees of their policies on drugs, including prescription drugs and medical marijuana, and specifically the possession of such on company property. This is vitally important to avoid situations where an employee absent-mindedly forgets the policy. While employers may think this is common sense, recently after recreational dispensaries opened in Washington, the City Attorney for Seattle City, Pete Holmes, violated Seattle City’s drug-free workplace policy by bringing marijuana he had legally purchased into city offices.

The Illinois Supreme Court Ruling Expands the Pension Protection Clause to Cover Health Care Benefits

Contributed by Julie Proscia

On July 3, 2014, the Illinois Supreme Court issued its decision in Kanerva v. Weems, 2014 IL 115811, reversing the circuit court’s dismissal of four lawsuits, Bauer v. Weems, No. 12–L–35 (Cir. Ct. Randolph Co.); Kanerva v. Weems, No. 12–L–582 (Cir. Ct. Sangamon Co.); Maag v. Quinn, No. 12–L–162 (Cir. Ct. Sangamon Co.); and McDonal v. Quinn, No. 12–L–987 (Cir. Ct. Madison Co.). One of the claims raised in each of the four cases was the constitutional validity of amendments to the Illinois State Employees Group Insurance Act instituted by the general assembly that impacted the amount retired state employees and their survivors had to contribute for health care benefits. Kanerva v. Weems, 2014 IL 115811

The Circuit Court of Sangamon County had previously dismissed the four consolidated complaints from those cases, in part based on its determination that the Pension Protection Clause of the Illinois Constitution only protected traditional pension benefits and did not encompass the state’s obligations to contribute toward the cost of health care benefits for retired state employees and their survivors. Id.

In reversing the circuit court’s decision the Supreme Court addressed only one of the questions raised on appeal, whether health insurance subsidies are constitutionally protected under the Pension Protection Clause. Id. The Court determined that even though health-care benefits for the public employees in question were controlled and set forth in different statutes, the “eligibility for all of the benefits is limited to, conditioned on and flows directly from membership in one of the State’s various public pension systems.” Id. at  ¶40.  The Court further rationalized that “giving the language of article XIII, section 5, its plain and ordinary meaning, all of these benefits, including subsidized health care, must be considered to be benefits of membership in a pension or retirement system of the State and, therefore, within that provision’s protections.” Id. at ¶40.

In only addressing the question regarding what the Pension Protection Clause covers, the Court refused to address other issues raised on appeal, including contract clause claims and the merits of the Pension Protection Clause claims. As recognized by Justice Burke in her dissent, by not expressing any opinion as to the merits of the Pension Protection Clause claims, contract claims or other claims, there is no clear answer whether they are even viable and either party may still ultimately prevail in those claims. Thus, while the Illinois Supreme Court ruling in Kanerva v. Weems does not completely cut the legs out from under the Illinois General Assembly’s steps towards pension reform, it has increased the likelihood that the General Assembly may have to look to other ways to address the pension problems, including increasing income through taxes.

Additionally, it potentially impacts cities, municipalities and other public entities whose collective bargaining agreements and retirement programs may be subject to the Pension Protection Clause.  If a city, municipality or other public entity has a collective bargaining agreement or retirement program that provides health care benefits to retirees, under the Supreme Court’s decision any modification to current retirees’ health care benefits could potentially be challenged as a violation of the Pension Protection Clause. To address such, cities, municipalities and other public entities should be careful in drafting collective bargaining agreements and other documents in which health care benefits are provided to avoid any presumption that such benefits are guaranteed or would vest for the life of the employee or retiree.

“Ban the Box” Comes to Illinois: Employers Must Now Revise Hiring Practices and Employment Applications

Contributed by Jeffrey A. Risch and John J. Lynch

The Illinois “Job Opportunities for Qualified Applicants Act” has been approved by the Illinois legislature. It was sent to Governor Quinn on June 27, 2014, and he is expected to sign it into law.

Once signed (or if the Governor doesn’t veto it by August 27, 2014), the Act would go into effect January 1, 2015. Illinois would become the fifth state on a growing list of states (currently Massachusetts, Rhode Island, Minnesota and Hawaii) to enact “ban the box” legislation that applies to public and private employers. Another five states (California, Colorado, Connecticut, Maryland and New Mexico) have laws prohibiting state government employers from asking about conviction records. Additionally, approximately 50 cities and counties throughout the United States have similar ordinances that apply to the municipalities and, in some cases, vendors who do business with those municipalities.

In anticipation of the new Illinois law, and the trend among states to adopt such laws, employers should prepare to review and, if necessary, modify their job applications and hiring policies and procedures to ensure compliance with the Act.

The Act applies to employers with 15 or more employees or employment agencies working on behalf of such employers. It forbids those employers and employment agencies from inquiring about a job applicant’s criminal record or criminal history prior to the applicant being selected for an interview or, if there is no interview, prior to a conditional offer of employment.

Once an applicant is selected for an interview or receives a conditional offer of employment, the employer may make inquiries into the criminal record or history, including conducting a criminal background check. That is, they can do so without violating the Job Opportunities for Qualified Applicants Act. Employers should be aware that such inquiries still may run afoul of Title VII and the Illinois Human Rights Act, depending on the position in question – consideration of conviction records still must be job related and consistent with business necessity.

The Job Opportunities for Qualified Applicants Act does contain three exceptions. First, the Act does not apply to positions from which federal or state laws require the exclusion of applicants with certain criminal convictions.

Second, the Act does not apply to positions that require a standard fidelity bond or equivalent bond and an applicant’s conviction on one or more specified criminal offenses would disqualify the applicant from obtaining such a bond. In that case, the employer may include a question during the application process whether the applicant has ever been convicted of any of those offenses.

The third exception is for applications for positions that are licensed by the Emergency Medical Services Systems Act (210 ILCS 50/1 et seq.).

Employers should note that they are allowed to notify applicants in writing, before or during the application process, of specific offenses that will disqualify the applicant from employment in a particular position due to federal or state law or the employer’s policy. Again, however, compliance with the Job Opportunities for Qualified Applicants Act may not insulate an employer from scrutiny by the EEOC, the Illinois Department of Human Rights (“IDHR”), or other agencies that investigate alleged discrimination – they may find such inquiries not to be job related and consistent with business necessity.

Potentially complicating matters is that the Job Opportunities for Qualified Applicants Act will be enforced by the Illinois Department of Labor (“IDOL”), not the IDHR.

The IDOL is authorized by the Job Opportunities for Qualified Applicants Act to investigate alleged violations and impose the following civil penalties:

For the first violation, the IDOL will issue a written warning requiring compliance within 30 days and a notice that non-compliance and/or further violations may lead to additional penalties.

For a second violation, or failure to remedy the first violation within 30 days, there is a civil penalty of up to $500.

For the third violation, or failure to remedy the first violation within 60 days, there is a civil penalty of up to $1,500.

For any subsequent violations, or failure to remedy the first violation within 90 days, there is a civil penalty of up to $1,500 for every 30 days that pass without compliance.

The Act does not contain a private right of action; that is, an applicant cannot (yet) sue an employer for a violation of the Act. The applicant will have to make a claim to the IDOL, which will investigate. The fines collected will be used only to fund enforcement of the Act, so employers can expect the IDOL to be aggressive in its enforcement in order to increase its resources to enforce the Act.

The Act also empowers the IDOL to adopt rules and regulations to administer the Act. That has not happened yet, of course; but continue to follow the blog for updates on that issue.

Union’s “Fair Share” Found Unfair

Contributed by Larry Smith and Rita Gitchell

In March 2003, former Illinois Governor Rod Blagojevich issued an executive order calling for state recognition of a union as the exclusive representative of home health care personal assistants employed in the “rehabilitation program.” The executive order was subsequently codified by the Illinois legislature, which declared personal assistants to be “public employees” of the state of Illinois “solely for the purposes of coverage under the Illinois Public Labor Relations Act.” Subsequently, the personal assistants selected SEIU as their exclusive representative for purposes of collective bargaining.

The collective bargaining agreement required non-union personal assistants to pay a “fair share” of the union dues in return for the representation they received from the collective bargaining unit. These “fair share” payments were deducted directly from the Medicaid payments to the personal assistants. In 2009, Governor Pat Quinn signed another executive order that expanded the pool of home-care workers to include disability home health aides. Under the legislation enacted after Governor Blagojevich’s executive order, these disability care workers, whether union or non-union, were subject to the same “fair share” payments as other caregivers governed by the program.

One of these disability care workers, Pamela Harris, filed a class action suit that argued that the compulsory payments constituted a free speech violation, under the First and Fourteenth Amendments.

In Harris v. Quinn, the U.S. Supreme Court decided that non-union home health care disability care workers in Illinois were not required to pay so-called “fair share” fees to SEIU for the union’s role in handling collective bargaining on behalf of both union and non-union members alike.

The Harris decision discussed the difference between being labeled a state employee by either executive order or statute compared to the practical situation in place with these workers in Illinois. The Supreme Court noted that the disabled individuals had the hiring and firing decisions, not the state. These home health care workers do not receive the same benefits as full time state of Illinois employees. It is not clear if the decision would have been the same if the home health care workers were clearly employees of the state.

The decision raises many questions for non-government employers who have home health care disability workers on their payrolls. Harris does not provide much guidance to the private sector that employs home health care workers represented by a collective bargaining union such as SEIU. Does such an employer have the obligation or authority to advise those non-union members, who are subject to fair share payments to a collective bargaining representative, of the Harris decision?

At least, eighteen other states have similar “schemes” in place, which are subject to the ruling in Harris. Anti-union groups were disappointed that the Supreme Court did not go further in striking “fair share” payments in other settings. There are, however, other cases pending both in district courts and before the Supreme Court, which will hopefully clarify those affected by the rationale employed by the court in Harris.

There are two large groups that may be affected by the Harris decision: non-union workers who make “fair share” contributions to collective bargaining representatives; and all workers who disagree with the way in which “fair share” payments are used for political contributions. Politically, both the unions and those who receive political contributions from the unions lose in the wake of the Harris decision.

NLRB Expanding Joint Employer Standard?

Contributed by Suzanne Newcomb

Maybe. Organizations representing a variety of business and labor interests accepted the NLRB’s invitation to weigh in on whether the board should reconsider its standard for determining when organizations are deemed “joint employers.” Teamsters Local 350 requested the NLRB review a decision which found Browning-Ferris and its subcontractor, Leadpoint (which provides employees to the Browning-Ferris facility), were not joint employers because Browning-Ferris did not share immediate and direct control over the terms and conditions of Leadpoint’s employees working at its facility. The board accepted review and also invited input from interested amici – entities not directly involved in the dispute but which have an interest in the outcome – on two very broad questions: “Should the board adhere to its existing joint-employer standard or adopt a new standard? What considerations should influence the board’s decision in this regard?” By inviting outside input the board signaled it is considering changing its stance on the issue.

A wide variety of organizations including the U.S. Chamber of Commerce, labor unions, the EEOC, and the NLRB’s own General Counsel filed briefs in advance of the June 26 deadline. The Chamber lauded stability and predictability in both business relationships and collective bargaining and warned that disrupting 30 years of established precedent would lead to uncertainty and insecurity and have “far-reaching and negative consequences.” Groups representing a wide variety of business interests cautioned that expanding the standard would burden companies with bargaining obligations for employees they do not directly control and unfairly expose them to liability for the acts of their suppliers and subcontractors.

The Teamsters and other groups representing the interests of organized labor pointed to an increase in the number of workers hired through staffing agencies and subcontractors and argued that the practice dilutes employees’ ability to collectively bargain. “The modern worker,” the Teamsters argue, “is awash in a sea of multi-layered and dependent relationships” and “bereft of meaningful resort to the protections and processes of the [National Labor Relations] Act.”

General Counsel for the NLRB joined organized labor and pressed for an expansion of the current joint employer standard arguing Congress intended a broad reading of the term “employer.” The EEOC urged the board to adopt the more all-encompassing standard it applies which looks to several factors, none of which is decisive: “who hires and fires, who assigns work, who controls daily activities, who furnishes equipment, where the work is performed, who pays the worker, who provides employee benefits, how the worker is treated for tax purposes and whether the worker and the putative employer believe that they are creating an employer-employee relationship” and omits the NLRB’s “immediate and direct” language.

Any significant change in the NLRB’s approach will have far reaching implications. SmithAmundsen’s labor and employment team will continue to monitor the situation and alert you to any change that could impact your business.

The Seventh Circuit Blessed the EEOC’s “Sue First, Negotiate Later” Approach—But Will the Supreme Court Do the Same?

Contributed by Steven Jados

In what was disappointing news to employers in Illinois, Wisconsin, and Indiana, the Seventh Circuit Court of Appeals ruled in December 2013 that the Equal Employment Opportunity Commission’s (“EEOC”) failure to engage in good-faith conciliation efforts with an employer prior to filing a lawsuit alleging the employer engaged in unlawful discrimination or harassment is not a viable affirmative defense requiring the dismissal of such a lawsuit.

According to the employer’s petition to the Supreme Court, the Mach Mining case began with a single EEOC charge from one individual alleging sex discrimination.  In the EEOC’s hands, that charge grew to a claim of discrimination affecting “a class of female applicants.”  Exactly how the individual charge grew to a “class” claim is a mystery.  Prior to filing suit, the EEOC gave Mach Mining no specifics in terms of the evidence underlying the class allegations, the identities of the purported class members (other than the charging party, herself), or even the actual number of purported class members.  Employers that have never been sued by the EEOC should realize that the EEOC’s conduct in Mach Mining is not unusual.

Title VII expressly requires the EEOC, prior to filing a lawsuit against a targeted employer, to engage in conciliation efforts with the employer.  According to Mach Mining, the EEOC’s conciliation efforts included, in total, one vague verbal demand and a subsequent notice that conciliation had failed and further discussions would be futile.

Understandably, Mach Mining’s position is that the EEOC ignored its statutory conciliation duty, and the employer asked the court to dismiss the EEOC’s lawsuit for that reason. The Seventh Circuit ruled against Mach Mining and, in deciding that the failure to conciliate cannot be the basis for dismissing an EEOC-filed lawsuit, the court acknowledged its departure from decisions by other federal circuits that had addressed the issue.

Mach Mining asked the Supreme Court to review the decision and—interestingly—the EEOC joined Mach Mining’s request so that the Court could resolve the conflicts among the nation’s lower courts, and thereby allow the EEOC to implement a uniform, nationwide conciliation policy.

As frequent readers of the Labor & Employment Law Update know, it is impossible to predict how the Supreme Court will rule.  It is also impossible to predict exactly when the ruling will come, and it is possible that the ruling may be a full year away.

In the meantime, and regardless of the ultimate disposition of this lawsuit, employers that have received a reasonable cause determination from the EEOC (or a charge filed by the Commissioner of the EEOC, as opposed to an aggrieved individual) should press the EEOC, through documented, written correspondence, for the specific facts at issue in the EEOC’s claims—including facts that will allow the employer to identify potential class members and calculate the employer’s potential exposure to damages.  Until the Supreme Court rules, employers nationwide will be waiting and watching—hoping for a decision that puts reasonable restrictions on the EEOC’s litigation tactics.

U.S. Supreme Court Rules NLRB Appointments Were Invalid

Contributed by John Lynch

The U.S. Supreme Court ruled on Thursday that President Obama’s three appointments to the NLRB in January 2012, made without the “advice and consent” (i.e., approval) of the Senate, were invalid appointments.  The case is NLRB v. Noel Canning, and affirms a prior decision of the court of appeals for the D.C. circuit.

As a result, hundreds of cases decided by the NLRB from January 2012 through July 2013 have been rendered void – as if they never happened – because the NLRB did not have a quorum and could not lawfully act.  The NLRB may have to reconsider those cases anew.  That could take a great deal of time, which may take away from the NLRB’s ability to implement its pro-labor agenda while also handling its already increased workload.

NLRB Chairman Mark Gaston Pearce has issued a statement that reads, in part, “We are analyzing the impact that the Court’s decision has on Board cases in which the January 2012 recess appointees participated. Today, the National Labor Relations Board has a full contingent of five Senate-confirmed members who are prepared to fulfill our responsibility to enforce the National Labor Relations Act. The Agency is committed to resolving any cases affected by today’s decision as expeditiously as possible.”


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