OSHA Issues Memo on Incentive Programs and Drug Testing

Contributed by Matthew Horn, October 16, 2018

OSHA

Computer with “OSHA” on the screen

On October 11, 2018, OSHA issued an additional memorandum to further clarify its position on incentive programs and drug testing. While the memorandum does not set out drastic changes to OSHA’s earlier rule and guidance, it does indicate that OSHA will take a more practical approach to incentive programs and drug testing than previously indicated.

With regard to incentive programs, it indicates that traditional incentive programs based on a lack of injuries during a particular time period will not be deemed violative of OSHA if the employer has measures in place to ensure that employees are reporting injuries regardless of the programs. With regard to drug testing, it indicates that drug testing is allowed in the following circumstances: 1) random testing; 2) drug testing unrelated to an injury; 3) testing pursuant to a state’s workers compensation laws; 4) testing pursuant to federal law, including U.S. DOT rules; and 5) testing employees whose conduct could have caused or contributed to an incident or injury.

Notably, this memorandum appears to be another step in the right direction by the current administration to implement a more business friendly OSHA

Register Now! Protecting Intellectual Property Through Employment Contracts and HR Best Practices

Register

Protecting-IP_-11_1All businesses own some sort of intellectual property (IP), whether it’s trade secrets or proprietary business information – IP touches nearly every aspect of business. Employment contracts can be a deciding factor in determining IP ownership and avoiding or resolving IP disputes. HR professionals have a significant role to play in promoting the understanding of IP.

Join Jeffrey Glass and Jennifer Lacroix on Thursday, November 1 at 12:00 PM CT for the latest installment of our Labor & Employment Quarterly Series. They will discuss how the wording of IP provisions in employment contracts can make all the difference and why HR professionals should address IP with employees during both onboarding and exit interviews.

Who should attend? In House Counsel, C-Suite Executives, Risk Managers, HR Executives, Operations Professionals

Register

Help! Our New Hire Showed Up with a Service Dog!

Contributed by Suzanne Newcomb, October 8, 2018

guide dog silhouettes

Silhouette of two guide dogs with owners

Reasonable accommodation issues often require an employer to balance the needs of the employee requesting accommodation with the needs of other employees who are impacted by the decision. These issues can be magnified when an employee relies on a service dog. Most employers are unfamiliar with the issue, and courts and enforcement agencies provide little guidance on service dogs in the employment context. As a result, when the issue arises, many employers scramble to answer the most basic questions: Are we required to allow a service dog in the workplace? What if another employee complains or is allergic?

First and foremost a request to bring a service dog to work is a request for a reasonable accommodation and should be analyzed in a manner consistent with other accommodation requests. That means:

Step 1: Engage interactively to determine whether the individual has a disability and can perform the essential functions of the job with or without reasonable accommodation. Check state and local laws. This article addresses federal law, but state and local laws may impose additional requirements.

Step 2: Will the service dog’s presence allow the employee to perform the essential functions of the position? In at least one reported case, the court concluded the employer was not required to allow the service dog because the employee failed to prove that the assistance the service dog provided was related to his job duties. Remember, however, service dogs provide assistance in a variety of ways. It is widely known that dogs can be trained to assist people with visual impairments but service dogs can also be trained to assist people with seizure disorders, PTSD, and a wide range of physical and mental impairments. There is no legally recognized service dog certification. In fact, dogs are often training to meet a particular person’s unique needs.

Step 3: Will the business be burdened by the service dog? If so, are there less onerous ways to accommodate the employee? The ADA requires an employer to provide reasonable accommodation unless it can prove that doing so imposes an “undue burden.” However, the employee is not entitled to dictate the nature of the accommodation. The employer can chose from alternative accommodation options so long as the accommodation provided is effective.

“Undue burden” is difficult to prove. While the determination is necessarily fact sensitive, it is unlikely a co-worker’s allergy will be sufficient. If the issue arises, the employer should look to ways to mitigate the impact on the co-worker. Is it feasible to have the dog use a particular entrance and remain in a specific area that the allergic co-worker can then avoid? What other changes can be made to meet the needs of both employees?

Employers should insist that the dog is well behaved and properly controlled at all times while in the workplace. If problems arise they should be addressed promptly and be well documented.

 

Main Street Employee Ownership Act Signed

Contributed by William Scogland, October 3, 2018

EMPLOYEE STOCK OWNERSHIP PLAN CONCEPT

Employee Stock Ownership Concept with laptop and phone in background

On August 13, 2018, as part of the John S. McCain Fiscal Year 2019 National Defense Authorization Act, President Trump signed into law the Main Street Employee Ownership Act, which was originally introduced by Senator Gillibrand and Representative Velazquez, a rare bipartisan achievement.

Employee Stock Ownership Plans (ESOPs) are often established using a loan to finance the purchase of company stock by the plan. ESOPs only infrequently default, so this is an area in which the government can be confident that the taxpayers will get their money back. The Small Business Administration (SBA) was authorized to make ESOP loans in 1979, but it was done only infrequently because it was so cumbersome.

The Act facilitates the establishment of ESOPs by revising the rules under which the SBA may assist small employers to transition to employee ownership.

Specifically, it:

  • Permits the SBA to make loans to companies that can then re-lend to ESOPs (prior law only allowed direct loans made to ESOPs, but commercial ESOP loans are almost always made to the company and relent to the ESOP);
  • Permits ESOP loans to be made under the SBA’s preferred lender program, which should expedite the process;
  • Provides that ESOPs do not need to have full voting rights to qualify, which aligns more closely with Federal income tax rules;
  • Makes an exception to an SBA rule that sellers of a company cannot have an ongoing role in the firm (the Act codifies in statute a recently released SBA policy that allows the seller to stay on as an owner, officer, director, or key employee of the company, when the ESOP acquires a controlling interest i.e., 51 percent or more, but any seller who remains as an owner, regardless of percentage of ownership interest, would be required to provide a personal guarantee, which is often required in commercial ESOP loans in any event);
  • Helps finance transition costs, which can be expensive, by allowing transaction costs to be financed as part of the SBA loan; and
  • Grants SBA the authority to waive equity requirements (SBA currently requires an equity injection of at least 10 percent of the total project cost for loans that finance change of ownership, but under the Act SBA may waive that requirement on a case by case basis for loans that finance a change of ownership to an ESOP).

Small businesses, which may be considering a switch to employee ownership, should be aware of these changes that may make the transition easier. In some limited circumstances, one or more of these changes may even be the deciding factor in proceeding with a transaction.

 

Village of Lincolnshire’s Right-to-Work Zone Struck Down by 7th Circuit

Contributed by Carlos Arévalo, October 2, 2018

36419114 - hand about to bang gavel on sounding block in the court room

Judge with gavel

Last week, the 7th Circuit Court of Appeals (covering Illinois, Indiana and Wisconsin) held that Section 14(b) of the National Labor Relations Act (NLRA) does not permit local governments to create local “right-to-work” zones that seek to ban union-only shops in the private sector. The court further concluded that bans on requiring union hiring halls and compulsory union dues checkoff agreements are also invalid under the NLRA.

In 2015, the Village of Lincolnshire adopted an ordinance that banned union-security agreements, within the Village, by forbidding any requirement that private sector workers join a union or compensate a union in order to keep their job working at a unionized worksite. Interestingly, the ordinance was overwhelmingly supported by the Village’s residents and taxpayers. The ordinance also barred any requirement that employees “be recommended, approved, referred, or cleared for employment by or through a labor organization” (aka a union hiring hall). Finally, the ordinance prohibited employers from making any payment to unions pursuant to signed authorizations revocable by employees at any time (aka dues check-off). A number of unions successfully sued the Village in district court and the Village appealed.

Chief Judge Diane Wood, writing for a unanimous three-judge panel, noted that the issue of whether a local law, rather than a state-wide law, falls within the scope of Section 14(b) is a subject that has divided courts. Specifically, Judge Wood pointed to a 2017 6th Circuit decision in United Automobile, Aerospace & Agricultural Implement Workers of America v. Hardin County, Kentucky that held that a right to work law adopted by Hardin County was not preempted by the NLRA and, therefore, valid.

Judge Wood acknowledged that the 7th and 6th Circuits are in agreement and the law is clear that local governments cannot regulate hiring halls and dues checkoff obligations as negotiated and made part of a private collective bargaining agreement. However, this left the issue of compulsory union membership in order to maintain employment with a private unionized employer as the central question for the court to decide and here is where the 7th Circuit split from the 6th Circuit (which covers Kentucky, Ohio, Michigan and Tennessee).

In the decision, the court rejected arguments that as a political subdivision of Illinois, the Village can exercise federal laws granted to the State. To do so would result in an administrative nightmare of having over 38,000 local governments (as opposed to 50 states and a few territories) adopt their own right to work laws. “Permitting local legislation under section 14(b) threatens ‘a crazy-quilt of regulations.’ The ‘consequence of such diversity for both employers and unions would be to subject a single collective bargaining relationship to numerous regulatory schemes thereby creating an administrative burden and an incentive to abandon union security agreements.’” This, the court explained, undermines the Supreme Court’s pronouncement that “Congress enacted the NLRA to create national uniformity in labor law.” Accordingly, according to the 7th Circuit, Section 14(b) simply does not extend to the political subdivisions of the states to enact local “right-to-work” zones whereas Illinois could if it wanted to. NOTE:  Indiana and Wisconsin have previously enacted Right-to-Work laws so this decision, for now, only impacts Illinois private employers and employees.

While the U.S. Supreme Court declined to review the 6th Circuit decision in Hardin County, this split sets up a potential United States Supreme Court review. Thus, the stakes are raised even higher on the imminent appointment of retired Justice Anthony Kennedy’s replacement. On that subject, one thing is certain – we’ll have a clearer picture in the next couple of months. Maybe…  stay tuned!

New Forms! FMLA & FCRA

Contributed by Noah A. Frank, September 27, 2018

48895877 - hand with pen over application form

hand with pen over form

In September 2018, the U.S. DOL published “updated” FMLA forms and the U.S. Consumer Financial Protection Bureau published updated FCRA forms.

DOL – Family and Medical Leave Act Forms

The DOL’s September 4, 2018 update is trivial: only the expiration date changed (now extended to August 31, 2021). There are no other changes to information, questions, or even layout (indeed, they maintain their prior revision date). Nonetheless, employers should promptly update their files with these new template forms. 

The forms are all available from the DOL’s  Wage and Hour Division be individually downloaded by clicking on the following links, or simply send an email and we will gladly provide them to you:

CFPB – Fair Credit Reporting Act Form Notice

On September 12, 2018, the CFPB released an updated Fair Credit Reporting Act Notice.  This is an important document to be provided to employees when using a third-party provider to obtain a “consumer report,” such as criminal background check or financial history inquiry.

Enforced by the U.S. EEOC in the employment context, failure to strictly comply with the FCRA has resulted in a significant increase in employment class action and discrimination lawsuits, including by professional plaintiffs — those who never really intended to work for the company, but found an opportunity to make a few dollars from a noncompliant company through threatening litigation and obtaining a nice settlement.

As part of the company’s regulatory compliance, ensure that the company and any third-party vendor immediately updates their FCRA notices, available from the CFPB in English and Spanish. 

As always seek the advice of competent employment counsel if there are any concerns with the use, completion, or interpretation of any of these government documents.

 

Keep Calm and Be Cautiously Optimistic – Recent NLRB Developments

Contributed by Beverly Alfon, September 25, 2018

Gavel2

Gavel on white background 

The National Labor Relations Board (NLRB) is taking more steps towards positive, significant change for private-sector employers:

Joint Employer Standard

CURRENT LAW:  The Board may find that two or more entities are “joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.”  Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015). The primary inquiry is whether the purported joint-employer possesses the actual or potential authority to exercise control over the primary employer’s employees.

DEVELOPMENT:  On September 14, the Board issued a proposed rule that would consider an employer a “joint employer” of another employer’s employees “only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision and direction.” However, the purported joint employer “must possess and actually exercise substantial direct and immediate control over the employees’ essential terms of employment in a manner that is not limited and routine.” It reflects the current Board majority’s initial view, and is subject to potential revision in response to public comments.  Public comments are due by November 13, 2018.

Construction Industry Collective Bargaining Agreements – Section 9(a)

Most collective bargaining relationships between employers and unions are governed by Section 9(a) of the National Labor Relations Act, which requires a union to have the support of a majority of employees in the bargaining unit. In the construction industry, however, these relationships are presumed to be governed by Section 8(f) of the Act, which allows an employer to enter a collective bargaining agreement with the union without an election or other proof of majority support. Key distinction: An 8(f) relationship can be unilaterally terminated upon expiration of the agreement, but a 9(a) agreement obligates the employer to engage in good faith negotiations with the union for a successor contract.

Current lawA union can convert an 8(f) relationship to a 9(a) relationship based on contract language alone.  Staunton Fuel & Material, 335 NLRB 717 (2001). Typical language in a one-page memorandum of agreement states that the union requested and was granted recognition as the majority or 9(a) representative of the bargaining unit, based on the union having shown, or having offered to show, evidence of its majority support – regardless of whether the union actually presented or offered to present such proof of majority.

DEVELOPMENTOn September 11, the Board invited the public to file briefs regarding whether or not it should revisit this standard. Construction industry employers should be pushing hard for this reevaluation. Briefs from interested parties must be submitted on or before October 26, 2018.

Employee Use of Company Email for Union Organizing

Current law: Employees may use company computer systems for the purpose of union organizing.  Purple Communications, Inc., 361 NLRB 1050 (2014).  This applies to both union and non-union employers.

DEVELOPMENT: Last month, the Board invited briefs on whether they should uphold, modify or overrule Purple Communications. The public comment period has been extended to October 5, 2018. On September 14, the NLRB General Counsel filed an amicus brief in a pending case and took the position that employers should be allowed to restrict non-work use of its email systems in a non-discriminatory manner, as it does with other company-owned resources.

Be cautiously optimistic, but remain cognizant of the current law.  Stay tuned.