Friday, April 24, 2015

Joint Employment: Whose Employees Are You Liable For?



Much has been written in recent months about the National Labor Relations Board (NLRB) standard for joint employment liability between separate businesses, especially with respect to franchisor McDonald’s Corporation, which is facing dozens of cases in which it has been named as a respondent along with its franchisees. The NLRB’s General Counsel has been advocating for a change to the joint employer test currently used by the NLRB.  An arm of the U.S. Chamber of Commerce recently published a 40-page report on how the NLRB’s proposed new joint employer test threatens small businesses.

Even without a change to the legal standard, though, businesses and nonprofits have often been caught off-guard by the types of arrangements that can give rise to claims of joint employer liability against an entity that doesn’t serve as the employer on paper or issue workers’ paychecks or Form W-2’s. Besides the franchise relationships at issue in the McDonald’s cases, arrangements with heightened joint employer risks include independent contractor relationships, the full range of temporary or contingent worker service models, and workforce supply arrangements. The latter sometimes come in the form of employee leasing or Professional Employer Organizations (PEO’s). Also, joint employment issues can arise when two companies are affiliated by some measure of common ownership or control.

Business organizations would be wise in this current legal climate to take a proactive approach to minimizing joint employment risks. Worthwhile steps to consider taking now include:
  • Reviewing employee handbooks and manuals for possible joint employer issues
  • Auditing workplace practices and procedures
  • Training directors, officers, and management on key joint employment risks
  • Reviewing affiliations with other entities, as well as service contracts, to assess and take steps to minimize joint controls and joint employer risks
  • Conducting insurance coverage audits and considering insurance against joint employment risks
Unfortunately, joint employer liability is not an area of the law that is well-defined and uniform.  The standards for determining joint employment can vary depending on the legal context and jurisdiction, and there are not many bright-line rules. Businesses can, however, enhance their chances of avoiding joint-employer surprises by being proactive and seeking legal counsel to navigate through these challenging issues.

Thursday, April 16, 2015

EEOC Issues Important Transgender Rights Ruling, Finding that Restroom Use Should Match Gender Identity

The Equal Employment Opportunity Commission (EEOC) forged new ground earlier this month when it ordered the U.S. Army to pay damages to a transgender employee based on a discriminatory restroom policy. We have reported in past posts on the EEOC’s increased enforcement focus on transgender rights in the workplace under Title VII of the Civil Rights Act of 1964, as well as the increased societal focus on this issue. (See, prior posts here and here.) The EEOC’s recent April 1st ruling in Tamara Lusardi v. John M. McHugh, Secretary, Department of the Army reflects this trend and sets forth important guidance on the EEOC’s position on transgender restroom rights.

The EEOC’s ruling stemmed from a charge of discrimination filed by Tamara Lusardi, a transgender woman. In its ruling, the EEOC found that the Army discriminated against Lusardi by prohibiting her from using the female restroom that matched her gender identity, repeatedly referring to her by male, rather than female, pronouns, and making other hostile remarks. In 2010, Lusardi talked with her supervisors about her process of transitioning her gender presentation/expression from male to female. At the time, Lusardi agreed to use a unisex restroom rather than the women’s restroom until she had undergone a planned surgery. On several occasions when the unisex restroom was unavailable, however, Lusardi used the women’s restroom. On each such occasion, she was confronted by her supervisor, told that her female restroom use made others uncomfortable, and that she must use the unisex restroom until she could show proof of having undergone a “final surgery” to become female.  

The EEOC found that the Army’s restroom restriction was a discriminatory adverse employment action based on Lusardi’s sex, noting that equal access to restrooms is a significant, basic condition of employment and a crucial aspect of a transgender employee’s transition. The EEOC found that it was improper for the Army to condition access to the female restroom on any medical procedure, stating:

“Nothing in Title VII makes any medical procedure a prerequisite for equal opportunity (for transgender individuals, or anyone else). An agency may not condition access to facilities – or to other terms, conditions, or privilege of employment – on the completion of certain medical steps that the agency itself has unilaterally determined will somehow prove the bona fides of the individual’s gender identity.” 

In ruling against the Army, the EEOC rejected the Army’s defense that Lusardi had agreed to use the unisex restroom, holding that an employee cannot prospectively waive Title VII rights. The EEOC also rejected the Army’s argument that the discomfort of other employees was a legitimate reason to restrict a transgender individual’s restroom use.

The EEOC also found that the harm to Lusardi extended beyond the denial of equal access to a resource open to others. By restricting Lusardi to use of a unisex bathroom, the EEOC found that the Army had isolated and segregated Lusardi from other persons of her gender and perpetuated the sense that she was not worthy of equal treatment, dignity, and respect.

The EEOC’s decision in Lusardi makes clear the EEOC’s position that transgender individuals must be permitted to use the workplace restroom that matches the individual’s gender identity. While the Lusardi decision is not binding on federal courts, federal courts often defer to the EEOC’s position on federal discrimination laws. As such, employers should review their restroom policies and practices to avoid discrimination risks and should be training managers and employees on transgender rights in the workplace.







Thursday, April 9, 2015

Increased Governmental Scrutiny for Employee Confidentiality Restrictions


Employers should be aware of recent federal agency activity that may require modifications to employee confidentiality agreements. The federal Securities and Exchange Commission (SEC) issued a press release on April 1, 2015, trumpeting the SEC’s first enforcement action against an employer based upon the company’s use of confidentiality agreements for its employees that included “improperly restrictive language.” In its press release, the SEC announced that KBR Inc., a Houston-based technology and engineering company, had entered into a settlement agreement with the SEC agreeing to pay a $130,000 penalty and agreeing to amend the company’s confidentiality statement to make clear that its employees are free to share information with the SEC. The SEC was driven by a concern that confidentiality language used by KBR could have a “chilling effect” on possible employee whistleblowers, causing them to be reluctant to report possible securities violations to the SEC.

The SEC's action taken in the KBR matter should cause all companies, not just publicly traded companies, to review their existing employment-related agreements and policies to ensure that they do not run afoul of whistleblower protections. Similar considerations may also arise from the perspective of other governmental agencies including the Equal Employment Opportunity Commission (EEOC), the National Labor Relations Board (NLRB), and analogous state agencies, to name a few. Careful employment law attorneys regularly ensure that confidentiality provisions that exist in a variety of employment-related agreements do not improperly restrict the right of an employee (or former employee) to provide assistance or input to the EEOC on an investigation of the employer. Similarly, careful employers – and their attorneys – should be mindful of confidentiality requirements that might be perceived by the NLRB to improperly encroach upon workers’ rights to organize or exercise rights under the National Labor Relations Act (applicable to all employers, whether with unionized workforces or otherwise).

Considerations about potentially over-reaching confidentiality clauses may be raised by a variety of documents commonly generated and used in the workplace, including, for example:
  • Separation/severance agreements
  • Internal compliance/investigation process documents
  • Front-end confidentiality agreements/employment agreements
  • Other confidentiality policies used in the workplace
It would be prudent for employers to review their current confidentiality agreement wording, in all of these types of documents or agreements, to ensure that the language does not inadvertently run afoul of these “whistleblower stymying” concerns or other concerns of governmental agencies. At the same time, employers should still continue to be aware of the significant value that confidentiality provisions may provide in protecting a company’s sensitive business information. The key for these provisions continues to be that if they are to be used, they require careful consideration when drafting them. Using “off-the-rack” agreements or wording can be risky. 

Wednesday, April 1, 2015

The Latest in Labor Law - New Handbook Rules for All Employers


The federal National Labor Relations Board (NLRB) is at it again. This time, the Board’s general counsel has issued a March 18, 2015, Report Concerning Employer Rules. The Report is a detailed document setting forth the NLRB’s position on the types of employee handbook policies that comply with or run afoul of Section 7 of the federal National Labor Relations Act (NLRA).  Under Section 7, all non-management employees have a legally protected right to engage in group activity aimed at improving their terms and conditions of employment. Many employers are surprised to learn that Section 7 rights apply in both unionized and non-unionized workplaces. 

In light of the NLRB’s new Report, it is time to dust off your employee handbook and check on whether your policies put you at risk of an unfair labor practice charge by the NLRB.  As you engage in this process, you will find that, while sometimes helpful, the NLRB’s new Report also includes maddeningly fact-specific and contextual policy analysis that often feels counter-intuitive.  Based on our “deciphering,” here are a few specific takeaways for employers on the types of policies that, according to the NLRB, are either lawful or unlawful based on their “chilling” effect on the exercise of Section 7 rights:

 Confidentiality Rules:
  • UNLAWFUL
o   Expressly or implicitly prohibiting discussions of terms and conditions of employment, including but not limited to wages
o   Expressly or implicitly prohibiting discussion of “employee” or “personnel information” given that this could “chill” discussions of employment terms and conditions
  • LAWFUL
o   Broadly prohibiting disclosure of unspecified “confidential” information
o   Prohibitions on disclosing partner, vendor, customer or client data, rather than coworker data

Employee Conduct Toward Company and Supervisors:
  • UNLAWFUL
o   Requiring employees to be “respectful” of the Company or management, given that employees have the right to be negative about the company and its managers in connection with trying to improve work conditions
o   Expressly or implicitly prohibiting employees from making statements that might damage the Company’s business or reputation
  • LAWFUL
o   Prohibiting rudeness toward customers or clients
o   Requiring cooperation with supervisors, coworkers, customers, and vendors

Employee Conduct Toward Colleagues: 
  • UNLAWFUL
o   Expressly or implicitly prohibiting online arguments, insults, or hurtful comments about company management or other company employees
o   Expressly or implicitly prohibiting the sending of unwanted or inappropriate emails, although limiting such emails to “non-working” time is permissible
  • LAWFUL
o   Expressly or implicitly prohibiting coercing, intimidating, or harassing behavior or statements

Employee Interaction with Third Parties: 
  • UNLAWFUL
o   Banning employee interaction with the press or government agencies
  • LAWFUL
o   Requiring the Company’s response to be made by designated spokesperson(s)

Use of Company Logos, Copyrights, Trademarks:  
  • UNLAWFUL
o   Prohibiting the use of logos or company graphics in social media   
  • LAWFUL
o   Requiring employees to respect copyright and trademark law

Photography and Recording Restrictions: 
  • UNLAWFUL
o   Completely banning photography or recordings on job-site 
  • LAWFUL
  Requiring pre-approval for cameras to be allowed on job-site



Tuesday, March 31, 2015

The Supreme Court's Opinion in UPS v. Young


In an update to a previous post, the highly anticipated United States Supreme Court decision in UPS v. Young was announced last week. In a 6-3 decision, the Court vacated rulings of the district court and the Fourth Circuit Court of Appeals, both having issued summary judgment in favor of UPS. The Court remanded the decision to determine whether the policies of UPS were legitimate and nondiscriminatory. The Court stated the Fourth Circuit had not yet considered the combined effects of UPS' other accommodation policies or the strength of UPS' justifications for the policies.

In its decision, the Supreme Court rejected the interpretations of the Pregnancy Discrimination Act argued by both parties. Notably, the Court rejected Young’s "most favored nation" status argument, that the Pregnancy Discrimination Act afforded the best accommodations previously afforded to other, non-pregnant employees. Similarly, the Court rejected UPS' argument that the Pregnancy Discrimination Act defines sex discrimination to include pregnancy discrimination.

Instead, the Court held that a claim of pregnancy discrimination should be analyzed under the McDonnell-Douglas framework. According to the Court, a pregnant employee may make out a prima facie case by showing she belongs to a protected class, sought an accommodation from her employer, the employer rejected her request for an accommodation, and the employer accommodated other employees "similar in their ability or inability to work." The employer then has an opportunity to show it did not intend to discriminate against pregnant workers, and instead has legitimate, non-discriminating reasons for denying the employee’s accommodation request. The employee then must show that, even though it was not intended to be biased, the employer's policies put a significant burden on pregnant workers and the employer’s proffered reasons were not strong enough to justify the burden.

In issuing its opinion, the Court did not adopt the EEOC’s approach from its 2014 published guidance, in part questioning the basis under which the EEOC developed its guidance. The Court also noted that amendments to the Americans with Disabilities Act expanding the definition of "disability" and the EEOC's interpretation of these amendments¾requiring employers to accommodate employees whose temporary lifting restrictions originate off the job¾may limit future significance of its decision.

In the meantime, employers should review their accommodation policies in light of the Court's decision. Additionally, employers faced with a pregnancy accommodation request should carefully consider the Court’s decision and assess how a pregnant employee’s accommodation request is similar to those accommodation requests of other non-pregnant employees.

Thursday, March 26, 2015

Important News on the Equal Opportunity Jerk: Minnesota Workplace Bullying Bill Is Reintroduced

When I present harassment training, I tell my audience that harassment is usually unlawful only when based on a protected-class status, such as race, gender, age, disability, etc. During the training, I often tell the story of the "equal opportunity harasser"the individual in the workplace who is a jerk to everyone and does not discriminate in picking the targets of his/her jerkiness (that's my technical term). This is the person who is a jerk to everyone. Because this person's behavior is status-blind, it doesn't violate discrimination or harassment laws.

Some Minnesota legislators are, however, trying to raise the legal stakes surrounding bullying. On March 20th, the Minnesota legislature introduced a bill that proposes to make workplace bullying unlawful. The bill would prohibit employees from engaging in "abusive conduct" in the workplace. In addition, the law would make employers liable for such conduct unless the employer can establish an affirmative defense, such as prompt and appropriate action to stop and remedy the behavior. The proposed law defined "abusive conduct" as "conduct, including acts or omissions, that a reasonable person would find hostile, based on the severity, nature, and frequency of the conduct."  The definition goes on to provide some examples that seem targeted at severe, egregious mistreatment of others. You will, however, find no mention of legally protected-class status as a condition of liability.

So, it looks like our equal opportunity harasser is in big trouble, right? Well, not so fast. The "new" bill is actually a reintroduction of a bill that was proposed in 2011 and, at that time, went nowhere. The proposed Minnesota bill is modeled after the "Healthy Workplace Bill"—a bill that has been introduced in 29 states over the years—including 8 states in 2015. So far, none of these proposed state laws have passed, and the chances of the proposed Minnesota bill becoming law seem slim given that Republicans control the Minnesota House.

So, our equal opportunity harasser is in the clear again, right? Again, ... not so fast.  The movement to pass workplace bullying law is growing and, at some point, it might succeed. In the meantime, there are other serious issues to consider.  As discussed in a previous post, workplace bullying is bad for business, negatively impacting morale, attendance, productivity, work quality, customer service and the bottom line. Given these serious business costs, employers don't need to and shouldn't wait to prohibit bullying and to discipline bullies.  Shortly before the first Minnesota workplace bullying bill was introduced in 2011, my colleague gave wise advice in our earlier post about the steps an employer should take to reduce workplace bullying. These are steps that still make sense and can be made today to crack down on and get rid of the bad effects of an  equal opportunity "jerk."

Thursday, March 19, 2015

Are More Protections for Minnesota Working Parents on the Way?

We recently alerted you to proposed legislation that, if passed, would expand last year’s Minnesota Women’s Economic Security Act (WESA) by requiring paid “sick and safe” time off benefits for almost all Minnesota employees and extending pregnancy accommodation and parental leave obligations to all Minnesota employers.  You should be aware that Minnesota lawmakers are at it again. Late last month, additional legislation (HF 1093 and SF 1085) was proposed that is aimed at benefiting working parents. Together with the earlier proposed sick and safe leave bill, the legislation is being referred to as the “Working Parents Act.” 

If enacted, the Working Parents Act would considerably expand WESA and impose a number of significant new obligations on all Minnesota employers related to work schedules, pay, breaks, and flexible work schedules. While most of the proposed changes appear to be the type that would normally be aimed at non-exempt employees subject to timekeeping and overtime pay requirements, the legislation is drafted to extend to all employees – whether exempt or non-exempt. As currently proposed, the “Working Parents Act” would include the following new requirements:

Fair Scheduling: All Minnesota employers would be required to:
  • Provide each employee a written work schedule, including any on-call time, at least 21 days in advance; 
  • For new employees, provide a written work schedule on or before the beginning of employment covering the employee’s first 21 days;
  • Notify each employee of any changes in his/her work schedule before the change takes effect and provide a revised written work schedule reflecting the changes within 24 hours of making the change;
  • Post a written schedule of the shifts of all current employees at the worksite, whether or not they are scheduled for work or on-call that week, at least 21 days before the start of each work week and update the posting  within 24 hours of any change;
  • Start an employee’s work week on the same day of each week;
  • Not require an employee to work hours not included in the employee’s written work schedule without the employee’s written consent; and
  • Not require an employee to seek or find a replacement employee for any shifts or hours the employee is unable to work.
Predictability Pay: All Minnesota employers would be required to provide compensation to an employee for certain changes made to the employee’s work schedule less than 21 days in advance, as follows:
  • If the change or cancellation is made less than 21 days but more than 24 hours in advance, the employer would pay the employee one hour of “predictability pay” in addition to the wages earned during the changed shift;
  • If the change is made less than 24 hours in advance, but does not reduce the total hours of the shift, the employer would pay the employee one hour of “predictability pay” in addition to the wages earned during the changed shift; and
  • If the change or cancellation is made less than 24 hours in advance and reduces the total hours of the shift, the employer would pay the employee “predictability pay” equal to the lesser of four hours or the number of hours originally scheduled, in addition to the wages earned during the changed shift.
Nondiscrimination Based on Hours of Work: Minnesota employers could not pay employees a different rate of pay based on the number of hours the employee is scheduled to work. In addition, employers could not condition eligibility for leave, time off, raises, or promotions on the number of hours an employee is scheduled to work, but would be able to pro-rate employee leave or time off based on hours worked.

Right to Rest: Employees would have the right to decline work hours that occur either: (1) less than eleven (11) hours after the end of the employee’s prior shift or (2) during the eleven (11) hours following the end of a shift that spanned two days.  Employers would be required to compensate employees who do work such hours at one and one-half times the employee’s regular rate of pay.

Rest and Meal Breaks: The new law would require one paid rest break of at least 10 minutes for every four consecutive hours of work and one unpaid meal break of at least 30 minutes for employees who work at least five consecutive hours.

Interactive Process for Flexible Work Arrangements: All Minnesota employers would be required to engage in an “interactive process” in response to an employee’s request for a “flexible working arrangement,” such as a modified work schedule, changes in start and end times, a predictable and stable schedule, part-time employment, job sharing, telecommuting, changes in job duties or work site, or partial-year employment. If the employee’s request is based on the employee’s serious health condition, responsibilities as a caregiver, enrollment in a career-related educational or training program, or, in the case of part-time employees, second job, the employer “must grant the request.”

In addition, the proposed Working Parents Act would:
  • Require employers to offer additional hours of work available in existing positions to current qualified employees before hiring new employees or contractors.
  • Require employers to provide written statements with detailed information about the terms and conditions of employment to employees annually and at the time of hire.
  • Increase potential penalties for violations of Minnesota wage and hour laws and potential criminal liability for some violations of the Minnesota Fair Labor Standards Act. 
  • Increase the statute of limitations to six years for any claims for the recovery of unpaid wages or overtime.
Stay tuned for developing information about this proposed Minnesota legislation. If so inclined, readers can contact their state representatives to voice their opinions on the Working Parents Act.