Author Archives: smithamundsen

Recent Decision Highlights Risk of Post-Employment Retaliation Claims

Contributed by Suzanne Newcomb, July 30, 2019

3d illustration of scales of justice and gavel on orange background

A federal court in Pennsylvania recently ruled that a former employee presented sufficient evidence to warrant a jury trial on a claim she was retaliated against after she resigned. The decision serves as a good reminder that anti-retaliation protections extend beyond the end of the employment relationship to protect former employees.

Cherie Leese complained of sexual harassment while employed by a state agency. She later filed a charge alleging she was issued discipline in retaliation for her report. The parties eventually settled. As part of that settlement, Leese resigned and agreed not to apply for or accept employment within a subset of state agencies. Leese expressly retained the right to seek employment in other areas of state government. When her numerous attempts to secure another position failed, Leese filed a new charge, this time claiming her former employer retaliated against her after she resigned by hindering her attempts to get a new job.

The state, like many large employers, coded former employees based on the circumstances of their separation. Leese was assigned an unusual code, “voluntary resignation contact former agency.” Inquiries regarding Leese were directed to the agency’s general counsel, who responded by stating, “I can make no comment regarding Ms. Leese’s separation.” Leese presented evidence to suggest the code and response were atypical and that they “raised a red flag” which took her out of the running for various positions. 

A well-drafted release protects against claims stemming from conduct occurring before the agreement is signed, but individuals generally cannot waive their rights with respect to future events. As some courts have put it, “an employer cannot purchase a license to discriminate.”

So what steps can an employer take to protect against post-employment retaliation claims?

First, establish a protocol for responding to requests for information regarding former employees, train all supervisors on the protocol, and insist they follow it, regardless of the circumstances underlying an employee’s departure. To better control what information is released, consider directing all requests to a designated individual or department (usually HR). To prove retaliation – whether post-employment or otherwise – a plaintiff must link her protected activity to an adverse action. Leese’s claim was bolstered by evidence that the agency deviated from its usual practice when responding to requests for information about her. The ability to prove that the plaintiff was treated in exactly the same manner as everyone else often allows an employer to avoid trial by defeating a retaliation claim on summary judgment. 

Second, when negotiating severance or a settlement, expressly discuss whether the individual is eligible for rehire and what information the employer will provide in response to reference requests and other inquiries about the individual (** be mindful of restrictions in your local jurisdiction and/or industry – in Vermont, for example, including a no-rehire provision may invalidate a sexual harassment settlement). Incorporating the parties’ agreement on these items into the formal agreement provides certainty for both parties and avoids surprises down the road.

Can Employers Drop their Health Plan and Just Give Employees Cash Instead?

Contributed by Rebecca Dobbs Bush, July 23, 2019

stethoscope on cash cost of healthcare concept

Several years ago, a trend was emerging that consisted of third-party, private marketplaces where employers could have their employees purchase health care with an “allowance” of sorts. This “allowance” could be facilitated by an employer that set up a stand-alone Health Reimbursement Arrangement (HRA). The emerging trend was analogous to the way traditional pension plans evolved to 401(k)s. Then, before things could take off, the Affordable Care Act put a halt to it. Essentially, the ACA said that these stand-alone HRA plans broke the rules because they had annual limits. And, under the ACA, health plans were not allowed to have annual limits on the amount of benefits provided. So, employers moved on and tried to look for a different way to reduce the amount they were spending on health benefits for their employees.

Then, on June 13, 2019, the tide turned and the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Internal Revenue Service (IRS) issued a coordinated set of final regulations that essentially said they changed their mind.

To clarify a bit, the regulations are complex and a business is certainly not free to just start handing out cash to their employees instead of a health insurance card.  However, with the right plan documents in place and the correct administration followed, an employer can set up a scenario where an employee has an “account” that covers all or part of the expense for that employee to purchase individual coverage on his/her own.  In other words, an employer electing this path should make sure he or she is guided by the right attorney, insurance broker, and human resources team.

Why would this arrangement be helpful?  Think of it in this scenario…. Each year most employers hold their breath just a bit while they wait for their renewal rates to be provided by their carrier.  There is almost always some type of increase.  And at that point, an employer must make tough decisions about how much of that increase, if any, they can absorb for the employee.  Worse yet, most employees never really seem to understand or appreciate the full dollar amount the employer is paying on his/her behalf.

Now, in contrast, think about how an employer reimburses employees for cell phone expenses.  The employee individually purchases whatever plan that they want, spending more if they want, buying a nicer phone if they want, etc.  Each month, the employer simply reimburses each employee the same amount – regardless of whether they picked the basic or pricey plan.  Most employees easily understand what cell phone benefits exist and exactly how much the company covers.  It certainly makes things a bit clearer for an employee when they are involved in that transaction each month.

If a company can now potentially treat its health plan expenses the same way?  It could be a game-changer in successfully managing health care expenses. 

California Amendments on Hairstyle-Related Discrimination Will Likely Have Broader Effect

Contributed by Steven Jados, July 19, 2019

Wooden judge gavel with USA state flag on sound block – California

The state of California recently passed legislation that amends the definition of race under the California Fair Employment and Housing Act (the California State statute that prohibits employment discrimination, among other things) to include “traits historically associated with race, including but not limited to, hair texture and protective hairstyles.”  The legislation defines “protective hairstyles” to include, without limitation, hairstyles such as “braids, locks, and twists.”  In passing this legislation, California’s Legislature made clear that the amendment was directed toward addressing persistent, racist norms that certain hairstyles associated with black people are inferior or unprofessional. The amendment is effective January 1, 2020, and several other states are considering similar measures. 

Along similar lines, the New York City Commission on Human Rights issued lengthy legal enforcement guidance relating to hair grooming policies earlier this year. The NYC Commission’s guidance provides an extensive discussion of natural hair textures and hairstyles associated with black people, and the various ways in which discrimination based on hair textures and hairstyles has occurred in the past and present.   

All of this is significant to employers, nation-wide, because even though the jurisdictions that have expressly recognized hairstyle discrimination as a form of race discrimination are limited, courts and governmental agencies across the country are likely to accept hairstyle discrimination as a cognizable theory of discrimination–particularly as more and more light is shed on this issue through actions like those of the California Legislature and the NYC Commission.  

With that in mind, employers must ensure that their managers and decision-makers are aware of this issue, and trained to ensure that discrimination based on hair textures and hairstyles associated with particular races, religions, and other legally-protected categories of employees does not occur.  It is also critical for employers to examine their grooming and dress code policies that cover hairstyles to ensure that such policies are strongly rooted in non-speculative safety and health concerns.  Such policies must not have a tendency to discriminate against natural or other hairstyles commonly associated with black people or any other racial or cultural group (e.g., twists, braids, cornrows, Afros, and hair kept in an otherwise natural state). In particular, employers should not impose a “neat and orderly” hair grooming policy if such a policy prohibits, for example, twists or cornrows, under the presumption that such hairstyles are inherently messy or unkempt. 

The take-away for employers is, as the NYC Commission stated, that an “employee’s hair texture or hairstyle generally has no bearing on their ability to perform the essential functions of a job.”  

ICYMI: Cook County and Chicago Minimum Wages Increased on July 1, 2019

Contributed by Noah A. Frank, Mike Wong, and Sara Zorich

stacked coins showing growth

In case you missed it, on July 1, 2019, the Chicago and Cook County Minimum Wages increased as follows:

·         Chicago: $13.00 per hour for non-tipped employees and $6.40 for tipped employees.

·         O’Hare and Midway Airport Certified Service Providers: $14.10 for non-tipped employees and $7.60 for tipped employees.

·         Cook County: $12.00 per hour for non-tipped and $5.25 for tipped employees.

July 1, 2019 also marks the 2-year anniversary of the implementation of the Cook County and Chicago Paid Sick Leave Ordinances.  While the full details are nuanced, these laws require all companies with a Chicago business license, or physical location or employee who works in Chicago or Cook County to provide up-to 40 hours of job-protected, paid leave (60 hours for employers subject to the FMLA) to employees for certain absences. Employees may accrue up-to 40 hours per benefit year while working in non-opt-out locations, with the right to carry-over some unused leave. Employees may not be required to find their own replacements as a condition for taking leave. Of course, discrimination and retaliation are prohibited.

Employers in municipalities that previously opted-out of the Cook County minimum wage or paid sick leave ordinances initially must stay up-to-date and monitor these laws as they can and do change, especially following an election. For instance, on October 9, 2018, Northbrook voted to repeal its prior opt-out, and so effective January 1, 2019, businesses in Northbrook are required to comply with the Cook County sick leave ordinance. Other municipalities have re-considered the issues over time as well.  Similarly, the state legislature has passed Senate Bill 0001, increasing the Illinois minimum wage as we blogged about in February.  S.B.0001 was signed into law on February 19, 2019 by Governor Pritzker and became PA 101-0001. State wide, Illinois’ minimum wage will increase to $9.25 on January 1, 2020 ($5.55 for tipped employees) and to $10.00 on July 1, 2020 ($6.00 for tipped employees), with regular $1.00 increases each January 1st thereafter until it is $15.00 on January 1, 2025.Employers that are subject to the Cook County or Chicago minimum wage and paid sick leave ordinances should review and make sure that they have the current required poster posted.  The updated poster for the Chicago Minimum Wage ordinance can be found on the City of Chicago website in English, Spanish, Polish and Mandarin; the Paid Sick Leave poster is only available in English.  The Cook County minimum wage and sick leave posters can be found on the Cook County websites and are only in English. Illinois has not updated its minimum wage poster (yet).

Employers that have failed to implement compliant policies, including tracking sick leave accrual or carryover should discuss options with employment counsel to mitigate exposures and minimize risk.

United States Supreme Court Confirms and Limits Court’s Deference to Agency Guidance

Contributed by Allison P. Sues, July 11, 2019

Judge’s Supreme Court gavel with law books

On June 26, 2019, the U.S. Supreme Court confirmed the continued viability of Auer deference, an interpretive doctrine that requires courts to defer to an agency’s reasonable reading of a genuinely ambiguous regulation. In confirming the use of Auer deference, the Supreme Court also narrowed its scope, setting out clear limits to courts’ use of this doctrine. This decision came in the case Kisor v. Wilkie, which involved an ambiguous regulation of a Department of Veteran Affairs rule.  

In affirming Auer deference as a viable interpretive tool for courts to employ when deciding on two readings of a genuinely ambiguous rule, the Court reasoned that Congress generally wants agencies to play the primary role in resolving these questions. As the body that promulgated the rule at issue, the agency is in the best position to know the regulation’s original meaning and possess the expertise needed to interpret rules on specific subject matters. Determining the meaning of an ambiguous rule often requires policy-based judgment calls – a job more appropriate for politically accountable agencies than appointed judges. Finally, deferring to an agency’s interpretation of a rule promotes consistent application of those rules as an agency’s guidance has greater cover than a single district court. 

In confirming the use of Auer deference, the Court was also insistent on its limits. There are several instances in which Auer deference is not warranted. First, the regulation in question must be genuinely ambiguous even after a court has exhausted all of its traditional tools of construction. Second, the agency’s interpretation must be reasonable. Third, the agency’s interpretation must be an “official” or “authoritative” position taken by the agency rather than an ad hoc statement by an agency employee that does not necessarily reflect the agency’s official views. Fourth, the agency’s interpretation must rely on its specific expertise. Finally, the agency’s interpretation must reflect fair, considered, and consistent judgment. 

The Court’s decision in Kisor is a significant one for employers because the DOL and EEOC have issued detailed regulations bearing on various employment statutes, and Courts often look to these regulations in deciphering employment law claims. When the regulation itself does not answer the question, parties may ask the Court to defer to the agency’s guidance on its regulations, be it in the form of a regulatory appendix, compliance manual, or other policy guidance documents or statements. The Supreme Court’s decision in Kisor allows this – but with clear limits. 

Take the Seventh Circuit’s recent decision in Richardson v. Chicago Transit Authority (decided just prior to Kisor but consistent with Kisor’s holdings), which held that obesity is not a disability under the ADA if there is no evidence of an underlying physiological condition. In arguing that his obesity should constitute a disability, the plaintiff pointed to EEOC interpretive guidance that, he contended, indicated that a person has an ADA impairment if his weight is outside of a normal range. The Seventh Circuit held that even if the EEOC guidance did state this, the Court would not defer to the agency’s guidance because it was inconsistent with the text of the regulation. The regulation defined impairment as a “physiological disorder or condition.”  Determining that this regulation was not truly ambiguous, Auer deference was not justified.

So what should employers take away for the Kisor case? Agency guidance, appendixes, and other policy statements should not be ignored. While there are strict limits to the application of Auer deference, courts will continue to defer to an agency’s interpretations of its own rules in certain situations.

NLRB Makes It Easier To Oust a Union

Contributed by Beverly Alfon, July 9, 2019

group of people from different profession stick figure pictogram icons

Did you know that when a private sector employer has evidence that a union has lost support from a majority of its bargaining unit members, the employer can refuse to recognize the union as their bargaining representative?  In 2001, the National Labor Relations Board (NLRB) ruled that employers can unilaterally withdraw recognition from an incumbent union based upon “objective evidence” (typically, a petition signed by at least half of the bargaining unit members indicating that they no longer wished to be represented by a union) that the union has lost majority support (Levitz Furniture Co. of the Pacific, 333 NLRB 717 (2001)). This would allow the employer to withdraw recognition effective upon expiration of the collective bargaining agreement and allow the employer to end bargaining over a successor collective bargaining agreement (CBA). This is referred to as “anticipatory” withdrawal of recognition. This remains law – but in a 3-1 decision issued on July 3 (Johnson Controls, N.L.R.B., 10-CA-151843 (7/3/2019)) – the NLRB significantly changed the legal framework around withdrawal of recognition in favor of employers.

Until now, a significant hurdle for most employers who attempted to withdraw recognition from a union is that they would be at great risk for being subjected to an unfair labor practice charge from the union for failure to bargain in good faith. The crux of the problem was that the Board would look at whether or not the union lacked majority status at the time of actual withdrawal.  This allowed the union to covertly gather evidence of “reacquired” majority status (often consisting of signatures from the same members who signed the anti-union petition) between the time of the anticipatory withdrawal and the date of actual withdrawal on the date of contract expiration. The union was not required to show the employer its evidence prior to the effective date of withdrawal – often leaving the employer on the losing end of the charge, facing an order directing it to bargain with the union, and the union insulated from challenges to majority status from six months to a year (and an additional 3 years if an agreement is reached).

The Key Change for Employers

Now, if an employer receives objective evidence of an incumbent union’s loss of majority support (at least 50 percent of the bargaining unit no longer supports the union) no more than 90 calendar days prior to the expiration date of the relevant collective bargaining agreement (CBA), the employer is free to declare an anticipatory withdrawal of recognition from the union, without fear of being charged with an unfair labor practice. The Board “…will no longer consider, in an unfair labor practice case, whether a union has reacquired majority status as of the time recognition was actually withdrawn.” Instead, if the union wishes to re-establish its majority status, the burden falls on the union to file a petition for election within 45 days from the date that an employer gives notice of an anticipatory repudiation — regardless of whether the employer gives notice more than or fewer than 45 days before the contract expires.  The Board will process the petition without regard to whether the parties’ contract is still in force at the time the petition is filed. 

Some Things Stay the Same

It remains that a “good faith reasonable doubt” of majority status will not cut it as “objective evidence” to support an anticipatory withdrawal of recognition. The objective evidence that an employer relies upon to declare an anticipatory withdrawal of recognition must be free of improper influence or assistance from management. A majority of the bargaining unit (50% +1) would still have to vote “no union” during the election in order to oust the union.  Also, incumbent unions still enjoy insulated periods from challenge during which the union enjoys a presumption of majority status: (1) certification bar – up to one year after the NLRB certifies a union as the exclusive bargaining representative of a unit; and (2) contract bar – the first three years of a collective bargaining agreement. 

Bottom Line

In explaining the appropriateness of this new standard, the NLRB stated as follows: “It ends the unsatisfactory process of attempting to resolve conflicting evidence of employees’ sentiments concerning representation in unfair labor practice cases. Instead, such issues will be resolved as they should be: through an election, the preferred method for determining employees’ representational preferences.”  The NLRB further reasoned that the election process generally moves at a faster pace than the ULP process.  Whether or not this shift has a significant impact on the employer’s rate of success in ousting a union remains to be seen. While a significant legal hurdle has been removed, others remain, and navigating this process requires careful planning.   

Nevada & NYC Roll Out Pre-Employment Cannabis Drug Screening Restrictions

Contributed by Noah A. Frank, July 2, 2019

gavel and scales of justice

Pre-employment drug screening for marijuana is starting to create exposure for employers.  In several states, including Connecticut, Maine and Massachusetts, courts have ruled that employees have a valid claim against an employer for terminating or pulling a job offer because the employee tested positive for marijuana during the pre-employment stage, in order to enforce a drug-free workplace policy. In fact, Illinois’ new recreational cannabis law, effective January 1, 2020, infers that employers could face a claim under Illinois’ Workplace Privacy law for doing the same. 

More recently though, Nevada and New York City passed first-of-their-kind laws expressly restricting pre-employment drug screening for marijuana, respectively effective January 1, 2020 and May 10, 2020.  While Nevada’s Assembly Bill 132 prohibits employers from failing or refusing to hire an applicant because a pre-employment drug screen shows the presence of marijuana, NYC’s Int. No. 1445-A prohibits testing for THC and marijuana in the first place. Employers must understand the significant impacts of these laws, and plan accordingly.

Exceptions

Neither law applies to the extent it is inconsistent with a CBA, federal law (including Department of Transportation regulations), or a position funded by Federal funds (reminder: cannabis is still Federally unlawful, even though Congress has curtailed the DOJ’s enforcement of marijuana where lawful for medical (not adult use) purposes and approved extraction of CBD from hemp). Nevada’s law further does not apply if inconsistent with an employment contract; while NYC exempts positions requiring compliance with other NYC and NY State law. 

In Nevada, positive tests can be used to weed out (pun intended) applicants for positions as firefighter and EMT, operators of motor vehicles for which federal or state law require substance testing, and positions that in the determination of the employer could adversely affect the safety of others; an employee tested in the first 30 days of employment can, at his/her own expense, submit to additional screening to rebut an employer’s initial screening. 

NYC permits pre-employment testing for police and other officers; positions requiring a CDL or supervision of children, medical patients, or vulnerable persons; or any position with the potential to significantly impact the health or safety of employees or members of the public – but only as determined by “the commissioner of citywide administrative services for the classified service of the city of New York, and identified on the website of the department of citywide administrative services” or the chairperson. NYC is expected to promulgate further rules.

Penalties

NYC’s law amends its civil rights law, which provides for injunctive relief (e.g., an order to hire the applicant), back pay/front pay, attorneys’ fees, experts’ fees, costs, and civil penalties of $125,000 to $250,000. Though it does not specifically address penalties, Nevada’s law will likely amend its workplace privacy protections for use of a lawful product outside employment, with similar damages to NYC, plus liquidated damages (equal to lost wages and benefits), and as applicable, reinstatement without loss of position, seniority, or benefits.

Not a Total Ban on Pre-Employment Drug Testing

Neither law is a complete ban on pre-employment substance testing — employers may still test for other controlled substances like barbiturates and amphetamines. Note also the jurisdiction-by-jurisdiction at play. To the extent they permit cannabis – whether medical or adult-use – most other jurisdictions are either silent as to pre-employment testing, or implicate prohibitions vis-à-vis privacy laws. There, courts will likely resolve whether pre-employment screening is permitted or prohibited. Notably, courts have historically been pro-employer on this topic, though that could certainly change given the shift in cannabis regulation (and no company wants to be the test case!).

What Employers Must Do

With marijuana regulation in flux, employers must take steps to shore up their employment policies and practices in light of states and local jurisdictions’ growing acceptance of cannabis and employee protections. This includes updating job descriptions to identify safety sensitive positions, drug testing policies and procedures, and training for supervisors and employees. 

Employers must also ensure that their vendors comply with applicable laws and understand the basis/type of test being performed – it is not a guarantee that a vendor will know to appropriately exclude cannabis for pre-employment versus including it for post-accident/reasonable suspicion purposes. Appropriate contracts with risk shifting and backed up by insurance should be considered.

NYC employers may wish to work with regulators to categorically define positions that impact the health and safety of employees and the public. 

Now is the time to have intimate discussions with legal counsel to understand and address these issues.