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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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Spousal H-4 Visa Holders: Important Changes on the Horizon Regarding Employment Authorization for Certain H-4 Dependent Spouses

Contributed by Jacqueline Lentini

In May 2014, the Department of Homeland Security announced a proposed rule to allow for work authorization for certain spouses of H-1B visa holders. The work permit is called an Employment Authorization Document or EAD. No time frame has yet been finalized for this benefit.

Employment authorization could be extended to H-4 nonimmigrant spouses in the following situations:

(1) The principal H-1B spouse is the beneficiary of an approved 1-140 Immigrant Petition; or

(2) the H-1B nonimmigrant’s period of stay is authorized under sections 106(a) and/or (b) of the American Competitiveness in the Twenty- First Century Act of 2000 (AC21). AC21 provides for a one-year extension of H-1B status beyond the six-year limitation if the H-1B visa holder is the beneficiary of a labor certification application or an I-140 petition that has been pending for at least 365 days prior to reaching the end of the sixth year of H-1B status. H-4 spouses of H-1B visa holders who meet these eligibility requirements would still need to apply for an EAD and pay the appropriate fee.

Further implementations to be considered include the following:

1) Expand Eligibility to All H-4 Spouses.  This would make the U.S. a more attractive place to work and set up home, for all H-4 spouses. In turn, it would make highly skilled foreign workers (H-1B’s) much happier in their work and private lives, if spouses are able- or at least have the option- to have a career and generate income for the family unit.

2) Expand EAD Eligibility to H-4 Spouses Where the H-1B Nonimmigrant is the Beneficiary of a Pending Labor Certification Application or I-140 Petition.  This approach towards H-4’s would remain true to the spirit and goal of enhancing the ability of the U.S to attract and more permanently retain highly-skilled foreign workers.

NLRB to Encourage Charging Parties to File Claims under OSHA and the FLSA

Contributed by Michael F. Hughes

In a recent memorandum, the Office of the General Counsel for the National Labor Relations Board (“NLRB”), informed all regional directors that the NLRB had entered into a program with the Occupational Safety and Health Administration (“OSHA”) and the Wage and Hour Division of the U.S. Department of Labor (“DOL”) whereby NLRB investigators, in certain circumstances, will actively encourage parties that file an unfair labor practice (“ULP”) charge to also file charges or complaints with OSHA and the DOL for potential violations of the Occupational Safety and Health Act (“OSH Act,” prohibiting unsafe working conditions) or the Fair Labor Standards Act (“FLSA,” requiring the payment of wages and overtime).

The memorandum expands the NLRB’s previous announcement that it had entered a program with OSHA whereby any individual who files an untimely OSHA whistleblower complaint (which has a short, 30-day statute of limitations) will automatically be informed by OSHA of their right to file a ULP charge with the NLRB (ULP charges have a more-generous 6-month statute of limitations).  The NLRB has provided talking points for OSHA to use for such purposes and specific language to be included in letters to OSHA claimants whose charges have been administratively dismissed.

Now, the NLRB has begun a reciprocal arrangement.  The new memorandum advises regional directors that their personnel investigating ULP charges should actively encourage charging parties to contact OSHA or the DOL when any witness in a ULP investigation “divulges facts that suggest that an employer may have committed a possible violation” of the OSH Act or the FLSA.  The memo provides contact information for OSHA and the DOL for the board agents to pass along to charging parties or their representatives.

While the memo states that the NLRB does not expect to be experts in either the OSH Act or the FLSA, the memo nonetheless encourages the regions to inform charging parties to contact OSHA and/or the DOL when the NLRB Board Agent believes that even a possible violation of those other statutes may have occurred.  The NLRB in recent years has embarked on an activist role, seeking to arm unions with easier ways to organize bargaining units and to give unions and employees increased weapons against employers in order to make it more difficult for employers to resist unionization or union demands in bargaining.  Now, the NLRB seeks to have unions and employees attack employers on several fronts (through the NLRB, OSHA and the DOL) even when its board agents (who are not experts in the highly technical areas of OSHA and wage and hour laws) merely suspect a possible violation of those laws based only on what the charging party witnesses tell the NLRB Board Agent.

Employers have come to expect the activist NLRB to seek new ways to bring within its fold every facet of the employer-employee relationship (e.g., its new and changing pronouncements with respect to at-will employment statements, social media policies, arbitration agreements and confidentiality agreements) which in any tangential way may be considered to fall under the NLRB’s jurisdiction.  Now, the NLRB has sought to involve itself in the enforcement, not only of that relationship, but also of statutes that its personnel are not well versed in, and based only on a suspicion of possible wrongdoing.  Employers beware.

U.S. Mail Insufficient for Important Notices to Employees

Contributed by Noah A. Frank

Employers may be appalled to learn that their standard practice of simply mailing (and emailing) notices and other important correspondence to employees may be insufficient to satisfy their obligations under various employment laws. 

Recently, an appellate court held that a former employee’s claim that she never received individual notice defeated the “Mailbox Rule” presumption, and therefore precluded the employer’s ability to obtain summary judgment in a Family and Medical Leave Act (FMLA) matter.  Lupyan v. Corinthian Colleges Inc., No. 13-1843 (3rd Cir. 8/5/2014).  The Mailbox Rule is an evidentiary presumption that mail will be received by the intended recipient if it is properly addressed, with proper postage, and delivered to the U.S. Postal Service.  Employers often conclude (based on this presumption) that their FMLA individual notice mandate is satisfied upon sending such notice via U.S. Mail.

Employer Corinthian Colleges Inc. (CCI) met with employee Lisa Lupyan prior to her leave (though they never specifically discussed her FMLA rights).  CCI followed up the same day with an individual letter detailing Lupyan’s FMLA obligations and rights.  When Lupyan advised CCI that she was ready to return to work 16 weeks later, CCI told her that she needed a full release, which she obtained.  However, rather than return Lupyan to work, CCI terminated Lupyan because (i) she had not returned to work within 12 weeks (the amount of FMLA job-protected leave) and (ii) CCI suffered from low student enrollment.  Lupyan asserted that she never received the letter, and then sued CCI for FMLA interference and retaliation.

The court found that Lupyan’s simple statement indicating “non-receipt” defeated the Mailbox Rule presumption as there was no direct evidence of receipt, creating a jury question.  The court noted that sending a notice via certified mail created a strong presumption of delivery because the return-receipt was a form of evidence, and it was “easy” to do so.

The bottom line is that employers are held to a higher standard than their employees.  As a result, for best practices, employers should:

  • Ensure that any correspondence that may be used as a basis for discipline, termination, or is otherwise legally mandated is sent to the employee in a method that permits tracking and verification of delivery/receipt (g., Certified U.S. Mail with return receipt, UPS/FedEx or other overnight courier, and in-person delivery with the delivery date/time noted and signed on an employer-retained copy).
  • As an extra measure of protection, some employers may wish to also enclose a receipt for the employee to sign, along with a stamped, self-addressed return envelope.  If not timely received, the employer has an opportunity to follow up with the employee – demonstrating that the employer went beyond its legal obligations.
  • Contemporaneously document conversations with employees with an eye towards potential litigation.
  • Review handbooks and posters, and use up-to-date forms to ensure compliance with legally mandated general and individual notices.
  • Discuss with counsel potential risky terminations.

The ‘Big Mac’ is Under Attack: Radical NLRB Labeling the Franchisor as “Joint Employer” of Franchisee Employees

Contributed by Caryl Flannery and Jeffrey Risch

Franchisors across the U.S. may be surprised to learn that the general counsel for the National Labor Relations Board has taken the position that they are likely joint employers with their franchisees under the National Labor Relations Act (NLRA).  The announcement came in the context of finding joint liability for alleged unfair labor practices, but the true impact and purpose is to open the door to unionization of all employees of local franchises as a single bargaining unit of the corporate franchisor.

Since 2012, the NLRB has received 181 complaints from employees of individual McDonald’s franchises claiming that their rights were violated when they were disciplined or fired for participating in union-organized employee protests. On July 29, 2014, the general counsel released a statement saying that his office is prepared to move against the individual franchisees along with franchisor McDonald’s, USA, LLC, as joint employer respondents on 43 charges unless settlements can be reached.  In other words, the NLRB is going to try and muscle McDonald’s into submission.  Time will tell how it all plays out, but it is anticipated that the courts will ultimately have to intervene.

Since the early 1980s, a finding of “joint employer” status requires both entities to exercise direct and immediate control over the employees and the terms and conditions of their employment. Determinative factors include having the power to hire and fire, setting work schedules, determining rates of pay, and keeping employment records.  These factors rarely exist in traditional franchise arrangements.

In June, the NLRB accepted amicus briefs in an active matter involving the joint employer/franchisor issue.  While numerous manufacturing, hospitality, and business associations strongly advocated for retaining the current test, the general counsel’s brief argued that the direction and control test fails to take into account shifts in the U.S. workforce such as increasing use of contingent employees, outsourcing, and franchising.  The result, the GC argued, is to frustrate the purpose of the NLRA by limiting opportunities for collective bargaining.   The general counsel went even further, suggesting (without citing actual specific factual evidence) that corporations have moved to the franchise model for the specific purpose of limiting collective bargaining. The general counsel proposed an “industrial realities” test; arguing that a franchisor’s control over matters such as pricing, inventory, branding, and supply, effectively dictate the terms and conditions of employment that franchise owners could offer their employees.

It is no secret that the current NLRB is all about providing opportunities for collective bargaining and with an estimated 3-5 million fast food workers in the U.S., many of whom are paid at the lower-end of the wage scale, it’s not surprising that unions have focused their efforts on that industry.  The expense and effort of organizing and negotiating with thousands of individual franchise units makes industry-wide unionization difficult. The ability to organize all 700,000+ McDonald’s employees through a single election and secure employment terms for (and dues from) those employees in a single collective bargaining agreement, however, would be a significant game-changer.

Bottom Line for Employers:  The general counsel’s statement does not have the effect of binding law and it could be years before a board decision applying a new joint employer standard works its way through the courts to become law, but franchisors and franchisees should be aware of the writing on the wall and be sure that the franchise documents, policies and practices clearly vest all employee-related decisions and duties in the franchisee.  Additionally, employers should note that the underlying issue involved here goes well beyond the franchisor/franchisee relationship.  The real issue in play here is the larger INDEPENDENT CONTRACTOR or SUBCONTRACTOR relationship.  From temporary staffing relationships (see http://laborandemploymentlawupdate.com/2014/07/09/nlrb-expanding-joint-employer-standard) to the 1099-worker, the NLRB is attempting to do everything and anything in its power to broaden the employer/employee relationship.  In effect, the NLRB very much wants to allow labor unions to target “dual employers” and consequently organize employees in unprecedented numbers.  Yes, the ‘Big Mac’ is under attack, and all employers who are part of a franchise agreement, supply or use temporary staffing and/or rely on independent contractors should take serious note — and continue to work with competent legal counsel on diminishing “joint employer” liabilities.

EEOC Issues Enforcement Guidance on the Pregnancy Discrimination Act

Contributed by Jill Cheskes

Recently, the U.S. Supreme Court granted certiorari to review a Fourth Circuit opinion holding that an employer did not violate the Pregnancy Discrimination Act (PDA) when it did not offer light duty to a pregnant employee, even though the employer had an established light duty program for certain categories of employees, including those injured on the job. Young v. United Parcel Service, Inc. The following week, the EEOC released enforcement guidance that takes an opposite position to that reached in Young. The guidance was not offered for public comment prior to being released.

The enforcement guidance outlines the EEOC’s position that an employer must offer pregnant employees the same benefits as it offers to employees with other medical-related conditions such as light duty, reasonable accommodations, modified tasks alternative assignments and leave. The EEOC’s position is that if non-pregnant employees are offered these options, an employer must also offer them to pregnant employees to be in compliance with the PDA; absent showing that the policy is job related and consistent with a business necessity. The EEOC also outlined that past, present and potential pregnancies are covered and can be the basis of pregnancy discrimination. Additionally, the EEOC acknowledged that pregnancy itself is not a disability, but it outlined that employers have obligations under the ADA to accommodate pregnant employees. The EEOC noted that many pregnancy-related impairments could be considered disabilities and thus entitled to accommodations.

The enforcement guidance is the first issued on the PDA since 1983. A fact sheet and Q&A were also issued. It is important to note that the EEOC’s enforcement guidance does not have the force of law and courts are not obligated to follow it. However, the EEOC will follow this enforcement guidance in cases argued before it. Note: If the Supreme Court upholds the Fourth Circuit’s opinion, which contradicts the guidance in certain respects, the guidance will be moot and of no significance, even before the EEOC.

Bottom Line: The EEOC enforcement guidance on the PDA attempts to quietly but significantly alter employer’s obligations to pregnant employees and employers should be cognizant of the guidance when making decisions related to pregnant employees and also when defending a pregnancy charge before the EEOC. As to the long-term implications of the enforcement guidance, the U.S. Supreme Court’s decision on Young will determine whether employers need to re-think its employment policies as it relates to pregnant employees or not. As previously reported, Illinois employers are reminded that Illinois law was recently amended to provide broad coverage and protections for pregnant employees.

Micro-Units: Divided They May Rise Before the NLRB

Contributed by Beverly Alfon

The labor world is abuzz about “micro-units” as a result of two recent National Labor Relations Board decisions regarding Union petitions to represent such “micro-units” of employees:  Bergdorf Goodman, 361 NLRB No. 11 (July 28, 2014) and Macy’s, Inc., 361 NLRB No. 4 (July 22, 2014).

What is a micro-unit and why does it matter?

A “micro-unit” is a small and discrete subset of employees at a particular worksite, which a union seeks to represent.  It is the opposite of a “wall-to-wall unit” that would encompass the majority of an employer’s non-supervisory employees. 

The two recent micro-unit cases specifically relied upon the NLRB’s controversial decision in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB No. 83 (2011). The decision was affirmed by the federal Sixth Circuit in 2013, which effectively encourages unions to petition for micro-units.  That decision changed the established test for determining whether or not a Union’s petitioned-for unit is too discrete, by creating a high burden for an employer challenging the appropriateness of a unit to show that any excluded employees “share an overwhelming community of interest with the included employees.”  This matters because a union only needs the votes of 50% + 1 of the group that it seeks to represent (“petitioned-for unit”) in order to become the unit’s certified bargaining representative.  The more limited that a union defines the petitioned-for unit, the less number of employees belong to the unit and the easier it is for the Union to get the necessary votes to win an election. 

In Bergdorf Goodman, the board unanimously held that the petitioned-for unit of Salon Shoes department employees and Contemporary Shoes department employees (located on different floors) was not appropriate because they lacked a community of interest and “the boundaries of the petitioned-for unit do not resemble any administrative or operational lines drawn by the Employer.”  The board had specific trouble with the fact that the petitioned-for unit carved out Contemporary Shoes from the larger Contemporary Sportswear department and then grouped them with the Salon Shoes employees, suggesting that it would have approved an even more discrete bargaining unit. 

In Macy’s Inc., the board affirmed the appropriateness of a proposed unit that only included the store’s cosmetic and fragrance department salespersons. The board held that the store’s cosmetic and fragrance employees constituted an appropriate unit because they are a “readily identifiable group” and “share a community of interest.” The board dismissed the fact that the cosmetic and fragrance employees worked on different floors, the store’s cosmetic beauty advisors only sold a single vendor’s products in contrast to the fragrance beauty advisors who sold all vendors’ products, and the cosmetic beauty advisors wore distinct uniforms.

Bottom line:  The NLRB’s current position encourages unions to petition for micro-units.  If a union petitions for a micro-unit that is based upon the employer’s departmental structure, the NLRB will likely find the unit to be appropriate and reject any attempt to expand the unit to employees in different departments.  An employer must meet a heavy burden to overcome the presumption that the petitioned-for unit is appropriate.  Union petitions for micro-units will also become more problematic if the NLRB finalizes proposed changes to election procedures, including severe limitation on an employer’s ability to challenge the appropriateness of the petitioned-for unit before the election.

Be cognizant of potential union organizing of particular departments. Consider integrating departments and functions between employees.  Identify operational or administrative adjustments that may give you a fighting chance of proving an overwhelming community of interest if a union files a petition for a micro-unit of your employees.

Hobby Lobby May Have Caught our Attention, but Halbig and King are the ACA Cases to Watch

Contributed by Kelly Haab-Tallitsch

In contrast to the Supreme Court’s ruling in the recent Hobby Lobby case, which directly affected only a handful of employers, two cases with the potential to derail the Affordable Care Act (“ACA”) were decided last Tuesday – with conflicting results. Less than two hours after a panel of the D.C. Circuit Court of Appeals ruled in Halbig v. Burwell that the insurance subsidies that help millions of Americans pay for health insurance are illegal in 36 states, the 4th Circuit Court of Appeals issued a contradictory ruling in King v. Burwell, affirming the exact opposite.

The contradictory rulings stem from different interpretations of the language establishing tax credits and subsidies for low- and middle-income individuals. The ACA states that tax credits would be available for insurance purchased through an “exchange established by the state.”  But currently, only 14 states run their own exchanges. In 36 states, including Illinois, Indiana, Wisconsin and Missouri, the exchange is run by the federal government. Plaintiffs in Halbig and King argued that an “exchange established by the state” does not include the federal exchange – an interpretation that makes the subsidies in those 36 states illegal.

ACA supporters argue that such a narrow interpretation is at odds with the law’s goal of providing all Americans with health insurance they can afford. Almost 5 million Americans bought subsidized policies through the federal exchange this year, often reducing their costs by hundreds of dollars a month. The Internal Revenue Service (IRS) is charged with administering ACA tax credits and has interpreted the law to mean that tax credits are available for insurance purchased through any government-run exchange, state or federal.

The Effect on ACA Employer Penalties

Aside from denying tax credits to millions of Americans, why are the Halbig and King cases such a big deal?  If individual tax credits disappear in 36 states, so do the employer penalties. The penalties imposed on large employers for failing to offer health coverage are the backbone of the legislation and the only enforcement mechanism available to encourage employers to comply. But an employer that doesn’t offer the mandated coverage is only subject to a penalty if one or more of its employees receive a tax credit to purchase individual coverage on the exchange.  If none of its employees receive a tax credit, an employer cannot be subject to a penalty.  This result would effectively nullify the ACA in over two-thirds of the country.

What Does This Mean for Employers?

The Halbig and King appellate court rulings have no immediate impact on individuals or employers. Both sides are likely to request review or appeal of last week’s decisions and the Obama administration will almost certainly request a stay of the D.C. court’s decision in the meantime.  But keep watching – the fight is far from over!

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