News & Events

Shawe & Rosenthal E-Update - December 2012

Submitted By Firm: Shawe & Rosenthal, LLP

Contact(s): Elizabeth Torphy-Donzella, Gary L. Simpler

Author(s):

Kraig B. Long and Byian M. O'Keefe

Date Published: 1/2/2013

Article Type: Legal Update

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NLRB Board Update

The National Labor Relations Board issued a flurry of decisions at the end of the year, overturning prior rulings involving (1) Facebook postings, (2) employee discipline, (3) dues checkoff provisions, (4) Beck rights, (5) witness statements, and (6) backpay awards. These decisions dramatically change both union and non-union employer obligations under the National Labor Relations Act and impact the rights of employees as well.

1. Facebook Postings. The NLRB has released its second “Facebook case” finding that certain Facebook postings constitute protected concerted activity under Section 7. In Hispanics United of Buffalo, an employee threatened to report several of her co-workers to management who she felt did not provide timely and adequate assistance to the organization’s clients. One “criticized” employee learned of this and took to Facebook, posting the allegation from the co-worker. Thereafter, other employees chimed in criticizing the co-worker, defending their own job performance, and complaining about working conditions, such as work load and staffing issues. The employee who started the Facebook exchange never informed the other employees that the complaining employee was going to raise the matter with management. After being made aware of the Facebook posts, the employer terminated the “criticized employees,” believing that their Facebook comments constituted harassment of the employee who had initiated the complaint.

The NLRB sided with the “criticized employees,” finding that their discussion was protected concerted activity. The Labor Board held that the activity was protected because the “employees were directly responding to allegations that they were providing substandard service to the Respondent’s clients” and such “criticism” could “negatively impact . . . their employment.” The postings were concerted, the Board held, because the employees were joined in a “common cause” and “taking a first step towards taking group action to defend themselves against the accusation they could reasonably believe . . . was going to [be made] to management.”

In dissent, Board Member Brian Hayes found that the conduct was not concerted, because the employee who started the discussion on Facebook failed to tell her co-workers that the original employee was going to complain to management, adding that there is a difference between “sharing a common viewpoint and joining in a common cause” and that the employees in question were only “venting to one another in reaction to . . . complaints. This does not constitute concerted activity under the precedent.” The majority, however, rejected this view, instead finding that the employee who started the Facebook conversation had the “object of preparing her coworkers for group action.”

Protected concerted activity cases are a major enforcement priority for the Labor Board. As a reminder, two or more employees have the right to voice complaints about terms or conditions of employment. A single employee is also protected if the employee acts on the authority of other employees, seeks to initiate or induce group action, or expresses a concern which is a “logical outgrowth” of other concerns expressed by a group. The protections afforded by this doctrine apply to both union and non-union employees.

2. Employee Discipline. In Alan Ritchey, the Labor Board addressed whether an employer must bargain with a union concerning intended employee discipline, in the period after the union has become the employees’ bargaining agent but before the parties agreed to a first contract. This issue had come up before in a 2002 case, Fresno Bee. There, the Labor Board adopted the rule that an employer has no duty to bargain with a union before imposing discretionary discipline.

In Alan Ritchey, the Union was elected as the bargaining representative in April. Before the parties agreed to a collective bargaining agreement, the employer continued to issue discipline under its prior progressive disciplinary system. This system afforded the employer considerable discretion in disciplining employees.

The NLRB rejected and overturned Fresno Bee. The Board found that employee discipline during the period in which the employer and union are bargaining regarding a first contract constitutes a unilateral change in terms and conditions of employment, thus triggering an obligation to first bargain with the Union concerning the discretionary aspect of the discipline. The Labor Board then set out two different obligations depending on the type of discipline that was at issue.

• For oral and written warnings, the Board held, bargaining may be deferred until after the discipline is imposed.

• For suspensions, demotions, and discharges, the employer must provide the union with notice and an opportunity to bargain over the discretionary aspects of its decision before proceeding to implement the decision. The employer need not bargain to agreement or impasse, but must continue to bargain with the union after imposing its decision, if agreement or impasse is not reached.

• If an employer is faced with an “exigent circumstance” – such as an employee who has engaged in unlawful conduct, poses a significant risk of exposing the employer to liability, threatens safety, health, etc., - the employer is still free to “quickly remov[e] an employee from the workplace.” The employer should then “promptly notify the union of its action and the basis for it and bargain after the fact” as well as bargain with the union regarding any subsequent discipline.

The NLRB found as the discipline pre-dated Fresno Bee, thus the employer could not have relied on this decision. Given that the Board had failed to “speak clearly and directly to the issue,” the NLRB decided that retroactive application of the new rule was inappropriate for the period subsequent to Fresno Bee.

3. Dues Checkoff. Under a fifty-year old case, Bethlehem Steel, employers were free to discontinue union dues checkoff from employees’ wages under a dues checkoff clause upon the expiration of the collective bargaining agreement. In WKYC-TV, the Labor Board overturned that holding. As a general rule, terms and conditions of employment remain in effect even after the contract expires. Bethlehem Steel had carved out an exception for dues checkoff. Finding that the prior reasoning in that case was “flawed,” the Labor Board held that following contract expiration, an employer must continue to honor a dues-checkoff arrangement established in the contract until the parties reach a new agreement or impasse.

Given that Bethlehem Steel, like Anheuser-Busch, was a long-standing decision on which many employers had relied, the NLRB decided not to apply its new rule retroactively.

4. Beck Rights. In 1988, the United States Supreme Court held that employees could not be compelled to financially support the political/lobbying efforts of unions if they objected. Thus, in Beck v. Communication Workers of America, the Court ruled that an employee may object to paying union dues and must only pay their fair share of the direct costs of negotiating and administering a collective-bargaining agreement, the settlement of grievances and disputes, and activities or undertakings that implement or effectuate the duties of the Union as the representative of the employees.

In Kent Hospital, the NLRB has sought to radically revise the right of so-called Beck objectors. The Labor Board found that lobbying expenditures are chargeable to “objecting employees” “if they are germane to collective bargaining, administration or grievance administration.” The charges can even be assessed for lobbying outside of the employees’ direct bargaining unit if the Union establishes that the charges were reciprocal – i.e., the contributing local reasonably expects other locals to contribute on behalf of it someday.

Although the Board concluded that the question of whether lobbying expenses meet this test will be a “case by case determination,” it suggested that some lobbying expenses will be “presumptively germane” to bargaining; for example, lobbying for or against minimum wage legislation. Other lobbying concerning “general economic stimulus or broad social and environmental policies” would not carry this presumption, according to the Board. To help flesh out this issue, the Board has invited interested parties to submit responsive briefs before March 5, 2013.

5. Witness Statements. In American Baptist Homes, two charge nurses and one CNA observed a union employee sleeping on the job. All three were asked to provide written witness statements as part of the investigation. After reviewing the witness statements, management terminated the sleeping employee. The Union grieved the termination and asked for the witness statements in an information request. The employer refused, relying on Anheuser-Busch, 237 NLRB 982 (1978), which held that when an employer obtains a witness statement as part of an investigation and assures the employee that the statement will remain confidential, the statement need not be turned over to the Union.

The NLRB rejected and overturned its prior ruling in Anheuser-Busch. The new rule is that relevant witness statements must be released to the Union, unless the employer asserts a “legitimate and substantial confidentiality interest.” This interest must “outweigh the requesting party’s need for the information.” The burden is on the party asserting confidentiality to establish that interest. Furthermore, the party asserting such an interest still has a duty to seek an accommodation. Examples of possible “legitimate and substantial confidentiality interests” with witness statements include “the risk that employees or unions will intimidate or harass those who have given statements, or that witnesses will be reluctant to give statements for fear of disclosure.”

The NLRB decided not to apply its new rule retroactively. As a result, where the employer’s refusal to provide witness statements occurred before December 15, 2012 (the date of the decision), the Labor Board will continue to apply the Anheuser-Busch rule. If the refusal occurred after that date, the new American Baptist Homes rule will govern.

6. Backpay. In Latino Express, the Labor Board held that when an employer awards lump-sum backpay to an employee, the employer is responsible for reimbursing the employee for any additional federal and state income taxes the employee may owe as a consequence of the lump-sum payment. This usually arises if the lump-sum payment boosts the employees’ income into a higher tax bracket. The Labor Board will also now require employers to submit appropriate documentation to the Social Security Administration so that when backpay is paid, it will be allocated to the appropriate calendar quarters.


TAKE NOTE

Arbitration of Statutory Claims. Maryland’s Court of Special Appeals ruled that an employee who signs an arbitration agreement can be compelled to arbitrate a claim for wages under the Maryland Wage Payment and Collection Law (MWPCL). In Falls v. 1CI, Inc., the company’s former CEO filed a lawsuit in state court against the company after his employment was terminated, alleging that the company violated the MWPCL when it failed to pay him an incentive bonus provided for in his employment agreement. The former CEO’s employment agreement contained an arbitration clause which provided that “any dispute, claim, or controversy arising out of or relating to this Agreement shall be settled by arbitration by a single arbitrator.” The company moved to dismiss the lawsuit and compel arbitration. The trial court granted the company’s motion, dismissing the lawsuit and ordering that the former CEO submit his claims to arbitration. The former CEO appealed the decision and argued that because he was statutorily entitled to payment of the bonus under the MWPCL, he could not be compelled to arbitrate his claim. The Court of Special Appeals disagreed. Starting from the premise that both state and federal laws strongly favor the enforcement of arbitration agreements, the Court of Special Appeals held that depending on the language used in the contract, an agreement to arbitrate can include statutory claims. The Court found that arbitration clause at issue was so broadly worded that it encompassed the plaintiff’s bonus claim and upheld the trial court’s decision ordering that the former CEO’s claim be submitted to arbitration.

FMLA Intermittent Leave. A federal district court ruled that an employee who was granted intermittent FMLA leave to care for her mother could not use the leave to take extended time away from her desk during lunch and break periods. In Grant v. JP Morgan Chase Bank, NA, the plaintiff worked in the company’s fraud department fielding calls from its customers. To ensure adequate coverage, employees in the fraud department were scheduled to take their rest and lunch breaks at staggered intervals, and were required to strictly adhere to their assigned schedules. The plaintiff had a history of poor attendance and tardiness and had been counseled on several occasions about the company’s attendance standards. During one of the counseling sessions, the plaintiff mentioned that to her supervisor that she was caring for her ailing mother and was eventually approved for intermittent FMLA leave to cover late arrivals and early departures. The employee, however, took intermittent leave on 11 different occasions, and when she did take leave she always took the entire day off. She never used her leave to arrive late to work, to leave early, or take leave during the middle of her shift. After accumulating close to 50 unexcused tardies coming back from break or lunch, the plaintiff was terminated. According to the company, the plaintiff habitually took rest and lunch breaks at times other than she was scheduled to do so, which adversely affected her performance. The employee sued alleging that the company interfered with her rights under the FMLA by penalizing her for taking intermittent leave. The plaintiff claimed that her late arrivals from break and lunch periods qualified as FMLA leave because she was caring for her mother at those times. The district court ruled that even if the plaintiff’s unscheduled breaks and extended lunches were due to her need to care for her mother, they were not protected FMLA leave. The court held that there is no legal authority that would permit an employee to use intermittent FMLA leave for periodic time away from one’s desk throughout the day. Accordingly, it ruled that the plaintiff’s termination for failure to adhere to her schedule regarding break and lunch periods did not violate the FMLA.

Fair Labor Standards Act – Automatic Meal Break Deductions. If an employer maintains a policy of automatic payroll deductions for meal breaks, can it be liable where it fails to pay an employee who missed his/her break? As we noted in our September 2012 E-Update, a Maryland federal district court decision that found a hospital’s policy of automatically deducting a 30 minute meal break from employees’ hours worked could constitute a violation of the Fair Labor Standards Act (FLSA) and state wage laws, where management knew that employees regularly worked through the break. The district court, however, held that an automatic deduction policy may not run afoul of the FLSA if it provides employees with the means to report when the automatic deduction should not apply because they worked during the meal break. Recently, in White v. Baptist Memorial Health Care Corp, the U.S. Court of Appeals of the Sixth Circuit (covering Kentucky, Michigan, Ohio, and Tennessee) rejected an employee’s FLSA claim for compensation for working during her break where the employee failed to follow the employer’s procedures set forth in the employee handbook for reporting when the employer’s automatic meal break deduction should not apply. Although the employee occasionally told her supervisors that she was not getting a meal break, she never told them that she was not being compensated for missing them. Thus, the employer did not know that the employee was not being paid for her missed meal breaks and could not be held liable under the FLSA. These cases demonstrate the importance of employment policies that alert employees of the need to report payroll discrepancies promptly to human resources or other designated company officials.

Employment Background Checks. Employers that utilize third parties to perform background checks on job applicants or employees are subject to the Fair Credit Reporting Act (FCRA). The FCRA requires employers to provide notice to applicants and employees before ordering a background check or taking an adverse employment action based on the results of the background check. Effective January 1, 2013, responsibility for enforcement of the FCRA will move from the Federal Trade Commission to the Consumer Financial Protection Bureau (CFPB). As a result, the CFPB has issued new and updated notices, including the important “Summary of Rights Under the Fair Credit Reporting Act” that is required to be provided with various FCRA notice letters. The new notices do not change any of the requirements under the FCRA, but rather reflect that the CFPB is now responsible for the Act’s enforcement.


TOP TIP

EEOC Issues New Enforcement Priorities – Get Ready for Increased Scrutiny

The EEOC recently approved a strategic plan for the next four years that will focus its enforcement efforts on hiring, pay and harassment claims. The plan also sets priorities in protecting immigrant, migrant and other “vulnerable” workers; addressing emerging and developing issues; and preserving access to the legal system. The EEOC’s stepped up efforts in these areas will bring increased scrutiny on employer and industry practices and policies.

These national enforcement priorities were created with the expectation that a concentrated and coordinated approach by the EEOC will result in reduced discrimination in these areas. The Commission believes that some of the priority categories, such as hiring discrimination, raise challenging and complicated issues that the EEOC is better suited to address than are private attorneys given EEOC’s access to data, documents and potential evidence of discrimination. For example, in focusing on eliminating barriers in recruitment and hiring, the EEOC will target class-based intentional recruitment and hiring discrimination and facially neutral recruitment and hiring practices that adversely impact particular groups, such as racial, ethnic, and religious groups, older workers, women, and people with disabilities. These include exclusionary policies and practices, the steering of individuals into specific jobs due to their status in a particular group, restrictive application processes, and the use of screening tools (e.g., pre-employment tests, background checks).

Employers can reduce the risk of an EEOC charge that would trigger an investigation by undertaking the following steps:

Ensure That Personnel Policies Are Clear and Compliant With Today’s Employment Laws
Promulgating clear policies and procedures can prevent liability, settle disputes before they start, and protect both the employer and the employee from confusion and the potential of litigation. With the ever changing legal landscape for employers (see Labor Update above), it is essential that handbooks be reviewed periodically to ensure that they comply with existing law. As rule of thumb, handbooks should be updated periodically.

Train Managers And Supervisors
The outcome of most employment lawsuits hinge upon the actions or inactions of management. Thus, it is crucial that every manager or supervisor is trained on:

• Proper recruiting, interviewing, and hiring practices;
• Having legitimate business reasons for employment decisions;
• Recognizing and dealing with inappropriate workplace conduct;
• Federal, state and local anti-discrimination and harassment laws;
• Dealing with leaves of absence and accommodations;
• Wage and hour laws

Maintain Well Crafted Anti-Discrimination and Anti-Harassment Policies
Harassment and discrimination lawsuits often result in costly EEOC settlements or adverse jury verdicts—not to mention embarrassing and unwanted media publicity. The key to avoiding discrimination or harassment lawsuits is to develop and implement effective anti-discrimination and anti-harassment policies. Such policies should foster an atmosphere free of discrimination and harassment, encourage reporting if incidents do occur, and require swift disciplinary action for violations.

Be Proactive and Consistent
Upon any indication of a possible violation of federal, state, or local employment laws, promptly investigate the matter and attempt to resolve it before the employee feels forced to report it to external authorities. Obviously, it is important that employers be consistent in following procedures for discipline and termination; terminated employees are less likely to sue if they feel that they have been heard and treated fairly and consistently.

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Client Successes

Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

Boyd Coffee Company

Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

As an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld
Partner 

Hollywood Entertainment Corporation

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Ingram Micro

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Konami Gaming

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Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

Until recently, I was unaware of the ELA's existence. We have subsidiaries and affiliates throughout the United States, as well as in Asia, the Middle East and Europe. When a recent legal issue arose in Texas, our long-time Nevada counsel, who is a member of the ELA, suggested that this matter be handled by his ELA colleague in Dallas. We are very pleased with the quality and timeliness of services provided by that firm, and we are excited to now have the ELA as an important asset to help us address employment law issues worldwide.

Palm, Inc.

The ELA network has been immensely important to our company in helping us address an array of human resources challenges around the world. I strongly encourage H.R. executives who have employees located in many different jurisdictions to utilize the ELA's unparalleled expertise and geographic coverage.

Stacy Murphy
Former Senior Director of Human Resources

Rich Products

As the General Counsel for a company with 6,500 employees operating across the U.S. and in eight countries, it is critical that I have top quality lawyers on the ground where we do business. The ELA is an indispensable resource. It has taken the guesswork out of finding the best employment counsel wherever we have a problem.

Jill K. Bond
Senior Vice President/General Counsel, Shared Services and Benefits

Ricoh Americas Corporation

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Roberts-Gordon LLC

Our affiliated companies have used the Employment Law Alliance in connection with numerous acquisitions, and have always been extremely pleased with our ability to obtain the highest quality legal advice on due diligence issues from jurisdiction to jurisdiction. We have found the Employment Law Alliance firms to be not only first rate with respect to their legal advice but also responsive and timely in assisting us with federal and state law issues critical to our due diligence efforts. We consider the Employment Law Alliance to be an important part of our team.

Rockwell Collins, Inc.

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Elizabeth Daly
Assistant General Counsel

Sanmina-SCI

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Starwood

We own, manage, and franchise hotels throughout the U.S. and in more than 90 countries. With more than 145,000 employees worldwide, ensuring that we comply with the complex web of local labor and employment laws in every one of these jurisdictions is a daunting task. The Employment Law Alliance has served as an important resource for us and we have benefited greatly from its expertise and long reach. When a legal dispute or issue has arisen in some far-flung place, Employment Law Alliance lawyers have always provided responsive, practical, and cost-effective assistance.

Wilmington Trust Corporation

Wilmington Trust has used the ELA to locate firms in California, Washington State, Georgia, and Europe. Our experience with the ELA lawyers with whom we have worked has always been one of complete satisfaction and prompt, practical advice.

Michael A. DiGregorio
General Counsel  

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