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Shawe & Rosenthal -- E-Updates: January 2013

Submitted By Firm: Shawe & Rosenthal, LLP

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

Author(s):

Bryan M. O'Keefe

Date Published: 1/30/2013

Article Type: Legal Update

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RECENT DEVELOPMENTS

D.C. Circuit Finds President’s NLRB “Recess” Appointments Unconstitutional

The United States Court of Appeals for the District of Columbia recently held that President Obama’s “Recess” Appointments to the National Labor Relations Board are unconstitutional.

Facts of the case: In Noel Canning v. NLRB, the Union charged that the employer violated Section 8(a)(1) and 8(a)(5) of the NLRA by refusing to honor a collective bargaining agreement. The Company contended that the two parties never agreed on the CBA. The ALJ sided with the Union. A three-member panel of the NLRB—consisting of Members Hayes, Flynn, and Block—affirmed the ALJ decision on February 8, 2012.

Despite having not raised the issue before the NLRB, on appeal to the D.C. Circuit, the Company argued that the Board was acting without proper authority. In order to conduct business, the NLRB must have a quorum of three members. On the date the case was decided, the Board purportedly had five members—Chairman Pearce and Member Hayes who had been confirmed by the Senate on June 22, 2010, and Members Griffin, Flynn, and Block, all of whom were recess appointments by the President on January 4, 2012. On that day, it was undisputed that the Senate was not in an “intersession” recess and was, instead, operating and meeting every three business days. The Company argued that these recess appointments were unconstitutional because the Senate was not truly in recess during this time period. Thus, the only members of the Board at the time of the decision were two members, Chairman Pearce and Member Hayes. These two members are not enough to constitute a quorum and, as a result, the Board’s decision was invalid.

The NLRB argued that the appointments were constitutional because the Senate was in an “intrasession” recess. The Labor Board also rested part of its defense on practical grounds, arguing that, because of the President’s difficulty in confirming NLRB appointments in the Senate, the agency’s ability to function was in jeopardy and the President could not fulfill his own obligation to ensure that laws are faithfully executed.

The Court's Ruling: In a unanimous decision, the D.C. Circuit ruled in favor of the employer, finding that the appointments are unconstitutional, the Board did not have a proper quorum to conduct business, and the Board’s decision should be vacated.

As a preliminary matter, the Court found that it would consider the constitutional issue even though the Company never raised it before the NLRB because of the “extraordinary circumstances” involved in the case.

Turning to the merits, the Court engaged in a thorough analysis of the clause of the Constitution permitting recess appointments which states that the “President shall have Power to fill up all Vacancies that happen during the Recess . . . .” The Court found that the article “the” and singular “Recess” meant that the President could make such appointments only during the “two or sometimes three sessions per Congress” when Congress is not in session—not during an “intrasession recess.” In support of its view, the Court cited to the rarity of such “intrasession recesses” historically. The Court noted that no president made such an “intrasession” appointment for 80 years after the Constitution was ratified and only three such appointments were made prior to 1947.

As for the NLRB’s practical argument, the Court was not persuaded. The Court cited to many federal agencies that Congress has empowered to appoint temporary and acting members in the name of staving off administrative inefficiencies. Congress has not given the NLRB this power. Beyond that, the Court found that even “if some administrative inefficiency results from our construction of the original meaning of the Constitution, that does not empower us to change what the Constitution commands.” The Court went on to say that the “power of a written constitution lies in its words” and that “when those words speak clearly, it is not up to us to depart from their meaning in favor of our own concept of efficiency, convenience, or facilitation of the functions of government.”
 

As a result, the three recess appointments were unconstitutional, the Board lacked a quorum to decide the merits of the case, and the order to enforce the Board’s decision was vacated.

In a press release from the NLRB after the D.C. Circuit ruling, the NLRB emphasized that the Labor Board disagreed with the decision and that the decision itself was limited to this case. It is likely that the NLRB will either appeal this ruling to the Supreme Court or ask the D.C. Circuit to rehear the case en banc.


Mere Risk of Drug Abuse Relapse Entitles Employee to Long-Term Disability Benefits

The United States Court of Appeals for the First Circuit has found that the mere risk of a drug abuse relapse is a current disability and entitled an employee to long-term disability payments under an employee benefit plan, even if the plan’s own administrative review process denied the benefit.

Facts of the Case: In Colby v. Union Security Insurance Co., a doctor was found to have tested positive for an opioid used in her medical practice. The doctor entered an inpatient substance abuse program and applied for long-term disability benefits through a group employee benefit plan. The plan approved the payments from the end of a 90-day waiting period till the time the doctor left the inpatient facility, but refused to pay benefits past that point because a “risk for relapse” was not a current disability. The doctor appealed through the administrative appeals process, but the appeal was denied.

The Court’s Ruling: While noting its review was deferential to the administrative appeals process, the First Circuit agreed with the District Court and found that the Company’s position was arbitrary and capricious and the benefits determination was not sustained. The Court noted that the plan found that substance abuse, dependence, and addiction were a “sickness” under the plan and that medical experts testified that the plaintiff remained “disabled” after her discharge from the inpatient treatment center. The Court criticized the Company for a “single-minded insistence” that a relapse could never constitute a disability and found that this insistence essentially resulted in an exclusion of the disability, which was found nowhere in the plan documents. As a practical matter, the Court also found that the benefits determination created a “perverse incentive” because, without disability benefits, the plaintiff would have been more likely to return to work and put herself and patients at risk. The Court noted that, in a similar case, the United States Court of Appeals for the Fourth Circuit had reached a contrary conclusion, but the First Circuit cited to a dissenting opinion in that case as having the better argument. The doctor was awarded benefits retroactively and attorneys’ fees.

Practical Impact: While providing long-term disability benefits for only the mere risk of a drug relapse might seem absurd, the Court’s ruling shows that employers must either evaluate the individual circumstances of each employee and determine if the employee is disabled according to the terms of the plan, or write a direct prohibition on providing this benefit into the plan documents.


TAKE NOTE

FLSA Travel Time. The United States Court of Appeals for the Fifth Circuit recently ruled that travel time spent on mandatory employer buses was not compensable under the Fair Labor Standards Act. In Griffin v. S&B Engineers, the company’s laborers were required to park and ride company buses to a worksite approximately six to seven miles away. Before boarding the buses, the employees had to walk through turnstiles and scan identifying badges. While on the buses, the employees were required to follow the company’s Transportation Rules of Conduct, which prohibited using tobacco, alcohol, and cell phones. The Plaintiff’s argued that the time spent on the buses should be compensable since it was mandatory and “integral and indispensable” to work. The Fifth Circuit disagreed, holding that a mandatory transportation scheme does not make the travel time compensable per se. Instead, the Court looked at a number of other factors, such as that the Plaintiff did not perform any work prior to the beginning of shift, nor did he receive any work-related instructions prior to or during the bus rides. The Plaintiff was also free to engage in some personal activities on the bus rides such as sleeping and reading. The Court concluded that the Transportation Rules of Conduct were only “marginally restrictive” and not “integral and indispensable” to the Plaintiff’s work as an electrician. The Court also cited to the Department of Labor’s own interpretative statements on travel time, which previously found that travel time on buses was not compensable.

NLRB – Employee Handbooks. The National Labor Relations Board continues to scrutinize employee handbooks. In Direct TV, the employer promulgated a rule which stated, “If law enforcement wants to interview or obtain information regarding a DIRECTV employee, whether in person or by telephone/email, the employee should contact the security department in El Segundo, Calif., who will handle contact with law enforcement agencies and any needed coordination with DIRECTV departments.” While noting that employers sometimes have a legitimate purpose with such a rule – the desire to afford employees legal counsel during such interviews – the Labor Board still concluded that the rule was overly broad and could be read as interfering with a Labor Board investigation since Board agents function as “law enforcement.”

In another rule, the Company prohibited employees from releasing “company information” and further defined “company information” to also include “employee records.” The NLRB found that the rule was unlawful as well, holding that the prohibition against releasing “employee records would reasonably be understood by employees to restrict discussion of their wages and other terms and conditions of employment.”

As a reminder, the NLRB is bringing many of these employee handbook cases under the theory that the overly broad handbook language unlawfully infringes on an employees’ right to engage in protected concerted activity or that the rule interferes with an NLRB investigation. The right to engage in protected concerted activity and the NLRB’s right to investigate unfair labor practices extends to non-union workplaces.

FMLA. The Department of Labor recently released an administrative interpretation defining a “son or daughter” under the FMLA. The FMLA entitles an eligible employee to take up to 12 workweeks on unpaid, job-protected leave during a 12-month period to care for a son or daughter with a serious health condition. In order to meet the FMLA’s definition of a “son or daughter,” an adult child must have a mental or physical disability and be incapable of self-care because of that disability.

In its administrative interpretation, the Department first clarified that the benefit applies even if the disability begins when the son or daughter is an adult, e.g., begins for the first time to suffer from the disability at age 30. Next, in defining disability, the Department adopted the definition of disability found in the ADAAA, which states that an individual is disabled if an impairment limits one or more major life activities. The ADAAA significantly broadened the definition of “major life activities” and this same definition will now be used in determining if a “son or daughter” is disabled as well.

In discussing the “incapable of self-care” requirement, the Department stated that this is a fact-specific determination and that the determination must focus on whether the individual currently needs active assistance or supervision in performing three or more “adaptive activities” (such as grooming, bathing, dressing, eating) or “instrumental activities of daily living” (such as cooking, cleaning, shopping, etc.). The Department also noted that the parent must be “needed to care” for the son or daughter, but that “needed to care” would include “providing psychological comfort and reassurance that would be beneficial to a son or daughter with a serious health condition who is receiving inpatient or home care.”

Social Media Discovery. As noted in our November E-Update, courts continue to grapple with the challenges of what information on a plaintiff’s social media website should be subject to discovery in litigation. In Reid v. Smith, a plaintiff sought physical and emotional damages resulting from alleged sexual harassment. The defendant claimed that the postings and photographs from the plaintiff’s public portions of her Facebook account contained information that contradicted her claim of mental anguish, and that, as a result, the non-public portions of her social media accounts may also be relevant to her claims and subject to discovery. The Court held that based upon her public postings, the private postings may contain relevant information reflective of her emotional state. The Court found that the plaintiff had no expectation of privacy in her postings because the postings were available to her friends on Facebook. Still, the Court did not believe that “full disclosure of all materials” contained in the plaintiff’s social media accounts was necessary because not all postings were relevant to her claims. Instead, the plaintiff was ordered to produce only“ social media communications and photographs that reveal, refer, or relate to events that could reasonably be expected to produce a significant emotion, feeling, or mental state.” While many employers are justifiably concerned about employee social media use, in litigation, social media can provide useful evidence to limit emotional damages claims.


TOP TIP

With Valentine’s Day around the corner, employers should remember to have policies in place regarding workplace romances. It is legally desirable for an employer to have a separate policy in its handbook stating that managers or supervisors are strictly prohibited from engaging in consensual romance or sexual relationships with any lower-level employees. This policy should supplement a preexisting Sexual Harassment policy.

For non-management co-workers, such romances can also present legal challenges. For instance, in a case in the United States Court of Appeals for the Ninth Circuit, a female co-worker continuously propositioned a male co-worker, including writing him love notes, giving him pictures of herself, and eventually making daily comments about her desire for him. At first, the male co-worker brushed off the advances, but eventually felt uncomfortable and brought his concerns to management. Management did not take his concerns seriously and failed to strictly enforce the Company’s sexual harassment policy.

The Ninth Circuit reversed summary judgment in favor of the Company. The Ninth Circuit recognized that not every romantic advance amongst non-supervisory co-workers is sexual harassment – if the offending employee had only asked the male co-worker to go on a date or see whether they had an interest in a romantic relationship, then the conduct would not have constituted sexual harassment. But the behavior was well-beyond that, a fact which a thorough HR investigation should have discovered.

The bottom line is that if an employee complains about sexual harassment from another co-worker, the complaint should be treated seriously and the Company can determine if the contact reflected only a romantic overture or rises to the level of sexual harassment.

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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

As the Vice President for Litigation & Associate General Counsel for my company, I need to ensure that we have a team of top-notch employment lawyers in place in every jurisdiction where we do business. And I want to be confident that those lawyers know our business so they don't have to reinvent the wheel when a new legal matter arises. With more than 3400 stores and 35,000 employees operating in all 50 U.S. states and across Canada, we rely on the ELA to partner with us to help accomplish our objectives. I have been delighted with the consistent high quality of the work performed by ELA lawyers. I encourage other in-house counsel to use their services, as well.

Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

Our company, Konami Gaming, Inc., is growing rapidly in a very diverse and highly regulated industry. We are aggressively entering new markets outside the domestic U.S., including Canada and South America. I have had the recent opportunity to utilize the services provided by the ELA. The legal advice was both responsive and professional. Most of all, the entire process was seamless since our Nevada attorney coordinated the services and legal advice requested. I look forward to working with the ELA in the future, as it serves as a great resource to the legal community.

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

We have direct sales and service offices all over the U.S., but have not necessarily had the need in the past for assistance with legal work in every state where we have a business presence. From time to time, we suddenly find ourselves facing a legal issue in a state where we have no outside counsel relationship. It has been a real benefit to know that the ELA has assembled such an impressive team of experts throughout the U.S. and overseas.

A few years ago, we faced a very tough discrimination lawsuit in Mississippi. We had never had to retain a lawyer there before. I was absolutely delighted with the Mississippi ELA firm. We received an excellent result. They will no doubt handle all of our employment law matters in Mississippi in the future. I have also obtained the assistance of several other ELA firms around the U.S. and have received the same outstanding service. The ELA is a tremendous resource for our company.

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.

We have partnered with many ELA firms on the development and execution of case management strategies with very positive results. We have been very pleased with the legal advice and counsel provided by the law firms we have utilized who are affiliated with the Employment Law Alliance. The ELA firms we have worked with are customer focused, responsive, and thorough in their approach to handling labor and employment law matters.

Elizabeth Daly
Assistant General Counsel

Sanmina-SCI

Sanmina-SCI has facilities strategically located in key regions throughout the world. Our customers expect that we will provide them with the highest quality and most sophisticated services in the marketplace. We have that same expectation for the lawyers with whom we do business. With operations in 17 countries, we need to be certain that we have a team of lawyers working together to address our employment law needs worldwide. The ELA has delivered exactly what it promised-- seamless and consistent high quality services delivered in each locale around the globe. It has quickly become a key asset for our human resources department.

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.

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