Category Archives: Uncategorized

Missouri Has Become the 28th Right-to-Work State

Contributed by Beverly Alfon, February 10, 2017

On February 6, 2017, the newly elected GOP Governor Eric Greitens, signed into law a right-to-work (RTW) bill that passed the state’s Republican-controlled state legislature.

Nuts and Bolts of the Missouri RTW law

  • Effective date:  August 28, 2017
  • Who it applies to:  Both private and public sector employers (except those in the airline and railroad industries, as well as certain federal employers).
  • What it prohibits:
    • No employee can be required to become or remain a union member as a condition of employment.
    • No employee can be required to pay dues, fees or assessments of any kind to a union (or any equivalent of a dues payment to any charitable organization).
  • Penalties for violations:  Criminal sanctions – a violation is a class C misdemeanor, punishable by a fine of $750 and up to 15 days in jail. Civil sanctions – private parties may obtain injunctive relief, damages and an award of attorneys’ fees.
  • Effect on collective bargaining agreements:  For collective bargaining agreements (CBA’s) entered into before August 28, 2017, the law has no effect. However, the law will apply to any CBA renewal, extension, amendment or modification after August 28, 2017. This will likely jolt Missouri unions to seek contract extensions of existing CBA’s in order to delay the impact of the law.

Unions Continue to Battle

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Flag of Missouri

The Missouri AFL-CIO has submitted different versions of a proposed initiative petition to the secretary of state’s office that is aimed at reversing the RTW law. Basically, with enough signatures, it would present the opportunity for Missouri voters to decide in 2018 whether to adopt a constitutional amendment that would protect contracts that require employees to pay union representation fees.

Perspective

Seven of eight states that surround Missouri have existing right-to-work laws, including Kentucky, which passed a right-to-work law last month. The current tally of RTW states includes: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, Nevada, North Carolina,  North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, Wyoming. Just last week, the New Hampshire senate passed a RTW bill, which is awaiting passage by the state House.

On a federal level, two Republican Congressmen re-introduced the National Right to Work Act last week. The bill would amend the National Labor Relations Act and the Railway Labor Act to prohibit the use of union security clauses which require union membership and payment of dues and fees.

If there was any doubt, this flurry of activity confirms that the right-to-work movement is recharged.

2017 Compliance Check Up

Contributed by Sara Zorich, January 19, 2017

We are now almost three weeks into the New Year and while it might be tempting to ease into 2017, the time is now to ensure that the required compliance updates have been made to your payroll and Form I-9 procedure to comply with the 2017 changes.

Minimum Wage

The following 21 states have updates to their minimum wage that affect your payroll for 2017:

  1. Alaska (Effective 1/1/17) – minimum wage increases from $9.75 to $9.80.
  2. Arizona (Effective 1/1/17) – minimum wage increases from $8.05 to $10.00.
  3. Arkansas (Effective 1/1/17) – minimum wage increases from $8.00 to $8.50.
  4. California (Effective 1/1/17) – minimum wage increases from $10.00 to $10.50.
  5. Colorado (Effective 1/1/17) – minimum wage increases from $8.31 to $9.30.
  6. Connecticut (Effective 1/1/17) – minimum wage increases from $9.60 to $10.10.
  7. Florida (Effective 1/1/17) – minimum wage increases from $8.05 to $8.10.
  8. Hawaii (Effective 1/1/17) – minimum wage increases from $8.50 to $9.25.
  9. Maine (Effective 1/1/17) – minimum wage increases from $7.50 to $9.00.
  10. Massachusetts (Effective 1/1/17) – minimum wage increases from $10.00 to $11.00.
  11. Maryland (Effective July 1, 2017) – minimum wage increases from $8.75 to $9.25.
  12. Michigan (Effective 1/1/17) – minimum wage increases from $8.50 to $8.90.
  13. Missouri (Effective 1/1/17) – minimum wage increases from $7.65 to $7.70.
  14. Montana (Effective 1/1/17) – minimum wage increases from $8.05 to $8.15.
  15. New Jersey (Effective 1/1/17) – minimum wage increases from $8.38 to $8.44.
  16. New York (Effective 12/31/16) –minimum wage increases from $9 to $9.70.
  17. Ohio (Effective 1/1/17) – minimum wage increases from $8.10 to $8.15.
  18. Oregon (Effective July 1, 2017) – statewide minimum wage increases from $9.75 to $10.25 (Portland Metro minimum wage increase from $9.75 to $11.25).
  19. South Dakota (Effective 1/1/17) – minimum wage increases from $8.55 to $8.65.
  20. Vermont (Effective 1/1/17) – minimum wage increases from $9.60 to $10.00.
  21. Washington (Effective 1/1/17) –minimum wage increase from $9.47 to $11.00.

Employers should ensure that these required changes have been conveyed to your payroll manager and payroll provider and perform an audit to ensure that the change was made effective in your payroll system.

Form I-9

As we reported on November 17, 2016, U.S. Citizenship and Immigration Services (USCIS) released the new version of the Form I-9 on November 14, 2016. NO LATER THAN January 22, 2017, employers MUST use the revised form (dated 11/14/2016 N) for all new hires and any employee that requires reverification of employment eligibility.

Employers should review their Form I-9 practices, ensure they are complying by using the new form by the deadline, and train employees responsible for completing the form regarding the new form requirements.

Seventh Circuit Opinion Confirms Flexible Analysis of Adverse Employment Actions

Contributed by Allison Sues, November 9, 2016

On October 19, 2016, the United States Court of Appeals for the Seventh Circuit reversed a District Court’s Rule 12(b) (6) dismissal of two plaintiffs’ retaliation claims brought under Title VII and the Illinois Human Rights Act. In Volling and Springer v. Kurtz Paramedic Services, Inc., Case No. 15-3572, two Emergency Medical Technicians (EMTs) alleged that their employer and its new subcontractor refused to hire them because they had reported and/or supported claims of sex discrimination and sexual harassment against the employer’s previous subcontractor to the Equal Employment Opportunity Commission.

gavelbwThe new subcontractor filed a motion to dismiss, arguing that the plaintiffs had not stated a viable retaliatory failure-to-hire claim because the plaintiffs had not applied for the position that they claimed they were denied. The District Court dismissed the retaliation claims after referring to the prima facie case for a retaliatory failure to hire, which required the plaintiffs to allege that they applied for and were qualified for the position sought.

On review, the Seventh Circuit examined the circumstances under which the plaintiffs claimed to have been refused a position to determine whether they alleged an adverse employment action distinct from a straightforward failure-to-hire claim. In this case, the employer terminated its contract with the previous subcontractor following the plaintiffs’ reports of misconduct and replaced it with a new subcontractor. The employer informed all the EMTs who had worked with the previous subcontractor, with the exception of the two plaintiffs, on how to apply for unpublished vacancies with the new subcontractor. The new subcontractor hired all of these applicants. The plaintiffs never applied and were not hired. The Seventh Circuit reasoned that the plaintiffs alleged a discriminatory practice slightly different than a failure to hire – the failure to inform them of the vacancies where other employees who had not engaged in protected activity received notice of the positions. The Seventh Circuit stated, “plaintiffs’ failure to apply stemmed from the very discriminatory practice they complained of, and their failure to apply need not bar their retaliation claims.”

Employers should note that a court’s analysis of retaliation claims may be flexible and stretch outside confines of oft-repeated prima facie cases. Discrimination and retaliation claims can stem from not only a failure to hire an applicant because of his or her protected characteristic or prior protected activity, but also for any disparate treatment in the way employers publicize or recruit for the position prior to the hiring decision.

Recent Federal Court Decision Requires Employees to Shoulder Some of the Burden of Disability Accommodations

Contributed by Steven Jados, October 3, 2016

The Americans with Disabilities Act (ADA) and the laws of many states generally require employers to provide “reasonable accommodations” to certain employees with disabilities. This requires the employer and employee to participate in an interactive process aimed at finding job changes that allow the employee to continue working. For many employers, that requirement raises many questions for which there are no simple, definitive answers—which forces employers to make accommodation decisions amid considerable uncertainty.

gavelbwBut the recent decision in Dillard v. City of Austin, Texas, from the U.S. Court of Appeals for the Fifth Circuit, may help employers handle situations when employees cause a breakdown in the interactive process. The plaintiff in the case, Derrick Dillard, was employed to operate machinery and perform manual labor until he was injured on-the-job in March 2011. Thereafter, he received FMLA leave and, after that ran out, additional discretionary leave. In early 2012, Dillard was cleared to return to work for the first time, albeit in a limited capacity that did not allow him to resume his former job.

In an effort to accommodate Dillard’s medical restrictions and return him to work, the City offered him a position as an administrative assistant, even though he had no relevant experience and his qualifications for the position were lacking. Dillard expressed reservations, but ultimately took the job in May 2012.  As an attempt to ensure that Dillard succeeded as an administrative assistant, the City provided him typing and computer training, allowed him to “shadow” another administrative assistant, and provided Dillard access to additional training programs. But Dillard’s skills did not improve and he did not pursue additional training. Instead, he played computer games, made personal calls, repeatedly arrived late, left early, or missed work altogether—and lied about his work time. By September 2012, the City determined that Dillard’s performance was unsatisfactory, and terminated his employment.

Shortly thereafter, Dillard sued the City, alleging that it unlawfully failed to accommodate his disability and terminated him because of it. The trial court ruled against Dillard, and, on appeal, the Fifth Circuit stated that the law required Dillard “to make an honest effort to learn and carry out the duties of his new job with the help of the training the City offered him.” But because Dillard did not do that, the court determined that Dillard was solely responsible for the breakdown in the reasonable accommodation process, and the City was not liable under the ADA or Texas State law.

Now, employers should note that this decision is not necessarily the law of the land for the entire U.S., because decisions of the Fifth Circuit are controlling law only in the states of Louisiana, Mississippi, and Texas. Employers must also realize that reasonable accommodation cases are extremely fact-specific, which makes it unlikely that this outcome can be expected every time an employer faces an ADA lawsuit. In particular, if the City had not been so accommodating, and if the employee’s lack of good faith effort was not so clear, the case might have been decided differently.

The bottom line is that although employers must engage in good faith efforts to find a reasonable accommodation, the employee has the same obligation—so employers should not hesitate to document instances in which an employee stands in the way of making a successful accommodation, because such documentation may later provide a basis for disciplinary action, as well as a defense to claims of discrimination and failure to accommodate.

Officials Not Entitled to Qualified Immunity in First Amendment Retaliation Claim

Contributed by Carlos Arévalo, September 9, 2016

Recently, the United States Court of Appeals for the Second Circuit ruled that police officials in Madison, Connecticut are not immune from liability for a fired police officer’s claim that she was retaliated against for her First Amendment speech. The case of Ricciuti v. Gyzenis, No. 12-432 (2nd Cir. August 24, 2016) involves a police officer who shortly after being hired inquired about the poor condition of police vehicles and was told that the department needed funds to cover overtime. On her own initiative, Rebecca Ricciuti prepared a work schedule that would have reduced the amount of overtime and presented it to a supervisor. In response, Ricciuti was told by the supervisor that “scheduling was none of her business” and that he needed the overtime to “pad [his] pension.”

pay-overtimeRicciuti later raised her concerns with the Chief of Police, Robert Nolan, who asked her to provide her suggestions. Ricciuti, working with Officer Scott Pardales, prepared a proposal that identified the scheduling problems and contained proposed reforms. The proposal generally addressed scheduling, but did not specifically make reference to the supervisors assigning themselves unnecessary overtime. Separately, however, Ricciuti prepared a second document – an overtime matrix – which directly addressed what Ricciuti deemed questionable overtime practices. In the matrix, Ricciuti characterized the department’s overtime practices as “mismanagement.”  In addition, Ricciuti identified unnecessary overtime costs of approximately $100,000.  Ricciuti claimed that she prepared the matrix on her own after researching publicly available documents. Officer Pardales shared the matrix with an elected official. Meanwhile, Ricciuti shared the matrix with a local critic, who had also been researching the overtime issue.

After negative public reaction to the matrix findings, Chief Nolan had a lieutenant conduct an internal investigation of Ricciuti.  Ricciuti was subsequently fired for “insubordination” during the investigation. Ricciuti sued police officials claiming that she was terminated in retaliation for speaking out about the department’s overtime practices. Defendants filed a motion for summary judgment arguing that under the Supreme Court’s 2006 decision in Garcetti v. Ceballos, Ricciuti’s speech “was not protected because she had spoken as an employee addressing private workplace grievances.” In Garcetti, the Supreme Court held that speech was not protected if it was made pursuant to the employee’s official job duties. The court denied the motion and concluded that officials were not entitled to qualified immunity because they should have known that they could not fire an employee for speaking out “as a citizen about a matter of public concern.”

On appeal, the Second District agreed with Ricciuti and rejected defendants’ qualified immunity argument noting that a public employee’s speech as a citizen on a matter of public concern has First Amendment protection.

While overtime practices in the Madison Police Department may be an exception to the rule, it is a certainty that employees will periodically voice concerns about management officials’ direction, policies and decisions. Such concerns may or may not be legitimate. The valuable lesson to be learned from Ricciuti and Garcetti is that public employers have to carefully consider employee speech and avoid a reactionary response to any employee condemnation or criticism of workplace practices and instead focus on whether such speech is the result of the employee’s duties evaluating internal matters or the employee simply voicing concerns as a member of the public.

Overpaying for Company Stock Lands ESOP Fiduciaries in Hot Water

Contributed by Kelly Haab-Tallitsch

The U.S. Department of Labor (DOL) recently announced a $1.1M judgment in favor of employees in the Gruber Systems Inc. Employee Stock Ownership Plan (ESOP). The department filed suit against Gruber Systems Inc., a California corporation, and its CEO in May of 2015 alleging they caused Gruber ESOP participants to lose money when the ESOP bought company stock at considerably more than fair market value. The DOL alleged that money used to fund stock purchases to shore up the company during financial troubles should have been used to fund the retirement accounts of Gruber employees. The consent judgment requires Gruber and its CEO to return $1.1 million to the Gruber ESOP and pay $220,000 in civil penalties, and permanently bars them from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan.

CashThe announcement of the Gruber consent judgment came on the heels of another DOL suit filed January 20, 2016, against Florida-based Commodity Control Corp. to recover losses to its ESOP due to alleged overvaluation of the company stock. In 2009, the owners of Commodity Control sold their entire ownership interest to the Commodity Control Employee Stock Ownership Plan resulting in the ESOP owning 100% of the company. In its complaint, the DOL alleges the ESOP overpaid for the company stock due to a failure on the part of the defendants, including the former owners, the company and the ESOP, to obtain an accurate and current appraisal of the company stock. The DOL is asking the court to require the defendants to restore the losses to the ESOP and to require the former owners to disgorge any payments or proceeds they received from the sale of their stock to the ESOP.

These targeted suits by the DOL illustrate the department’s continued focus on ESOPs, and valuations of private companies in particular.

So how can you stay out of the headlines as an owner or manager of an ESOP company or other ESOP fiduciary?

Ensure an accurate valuation of your company with the following guidelines:

  1. Choose your valuation advisor carefully. Use a reputable source that won’t be influenced by conflicts of interest.
  2. Provide complete, accurate, and up-to-date information and data to the valuation advisor.
  3. Check and double-check the valuation report you receive and assess it for consistency and accuracy. Review assumptions about growth projections, financial statements, business risks and other factors that might influence stock value, and make sure it’s reasonable.

 

DOL Issues Controversial Union Persuader Rule Impacting Reporting Requirements for Companies and Their Attorneys

Contributed by Michael Wong

The U.S. Department of Labor has issued the Persuader Rule which has been hotly debated and protested by employers and attorneys.

First proposed in 2011, the Persuader Rule amends the federal Labor Management Reporting and Disclosure Act to require employers and labor relation consultants (including attorneys) to submit detailed reports including the type of consulting or legal services provided and any fees paid.

Historically, under the “Advice Exception,” lawyers have been excluded from this reporting requirement, as long as they did not directly interact with workers. The “Advice Exception” allowed employers to seek labor advice without fear of potential disclosure of attorney-client privileged information (e.g., the very fact that the company has hired an attorney to assist with counter-organizing campaign).

The Persuader Rule completely eviscerates the “Advice Exception” by requiring employers and lawyers to report all actions, conduct, or communications that have a direct or indirect object to persuade employees, including among other things:

  • Planning, direction, or coordination of managers to persuade workers;
  • Planning, directing or conducting employee meetings;
  • Training managers, supervisors or employer representatives in conducting meetings;
  • Coordinating or directing the activities of supervisors or employer representatives;
  • Providing persuader materials to employers to disseminate to workers;
  • Establishing or facilitating employee committees;
  • Drafting, revising or providing speeches;
  • Conducting union avoidance seminars; and
  • Developing or implementing personnel policies or actions to persuade workers; and
  • Identifying employees for disciplinary action, reward, or other targeting.

Legal RulesWhile the final Persuader Rule still recognizes attorney-client privilege, if the attorney-client discussions are not solely legal and also involve advice on persuading employees regarding union representation the Persuader Rule puts into question whether the attorney-client privilege will apply. Moreover, the Persuader Rule expressly requires the disclosure of the identity of a lawyer’s client, the fee arrangement and the scope and nature of the persuader agreement in cases where the lawyer is providing services other than legal services, which are intended to persuade employees regarding union representation.

The Persuader Rule will be effective July 1, 2016;  however, it is anticipated that there will be many legal challenges to the enforceability of the new regulations. Employers and lawyers will need to monitor these developments closely to determine their reporting obligations under the law.

It should be noted that while public-sector employers are excluded from coverage under the NLRA, they are subject to state laws, which can include specific regulations on the use of persuaders. For example, in Illinois the law prohibits the expenditure of public funds to any external agent or consultant in an attempt to influence the outcome of a union election – but expressly provides that seeking or obtaining advice from legal counsel is allowed. The Persuader Rule could create issues for Illinois public sector employers as it puts into question interpretations of the state law by broadly defining what it considers “persuasion” that must be reported and expressly providing that persuasion advice that is not solely legal advice by an attorney must be reported.

As such it is important to consult with experienced labor and employment law attorneys when faced with these issues.