EMPLOYMENT LAW
UPDATE
May 7, 2014
Keith Weddington
PARKER POE ADAMS & BERNSTEIN LLP
AGENDA
I.
II.
Judicial Decisions
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U.S. Supreme Court
•
4th Circuit
•
N.C. Appellate Courts
Legislative and Regulatory Update
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Supreme Court Decisions
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WHO IS A “SUPERVISOR”?
Vance v. Ball State University
(Decided June 24, 2013)
 Definition of “supervisor”
determines those individuals for
whom employers may be held
strictly and vicariously liable.
 Supervisors = management level
employees who are empowered to
take tangible employment actions
– not those who merely oversee
or direct employees’ daily
activities.
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WHO IS A “SUPERVISOR”?
Vance v. Ball State University
(Decided June 24, 2013)
 Tangible employment action: “A
significant change in employment
status, such as hiring, firing, failing to
promote, reassignment with
significantly different responsibilities,
or a decision causing a significant
change of benefits.”
 Supervisory status can “usually be
readily determined, generally by
written documentation.”
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WHO IS A “SUPERVISOR”?
Vance v. Ball State University
(Decided June 24, 2013)
Significance:

Bright line test/definition
Rejected EEOC’s definition
 Status can be determined at SJ
stage – or earlier
 Review job descriptions and
clearly specify whether employee
is empowered to take tangible
employment actions.

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ARBITRATION AGREEMENTS – CLASS
ACTION WAIVERS
American Express v. Italian Water Colors
(Decided June 20, 2013)

Class action waivers in arbitration
agreements are enforceable under
the FAA.

Even if the cost of arbitrating a
federal statutory claim individually
exceeds the potential recovery.
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AUTHORITY OF ARBITRATOR TO ORDER
CLASS ARBITRATION
Oxford Health Plans v. Sutter
(Decided June 10, 2013)
 Arbitrator did not exceed his powers
under FAA by determining arbitration
agreement permitted class arbitration.
 Agreement silent as to class actions
 Parties stipulated that arbitrator
should decide if agreement
authorized arbitration on a classwide basis.
 Narrow decision
 Key: Arbitration agreements should
include express class waivers
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STANDARD OF PROOF FOR TITLE VII
RETALIATION
Univ. of Texas SW Med. Ctr. v. Nassar
(Decided June 24, 2013)
 Plaintiffs must prove protected
activity was “but for” cause
 Rejected lower standard of
“substantial motivating factor”
 “But for” standard will help courts
dismiss “dubious claims at the
summary judgment stage”
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DEFENSE OF MARRIAGE ACT (“DOMA”)
U.S. v. Windsor
(Decided June 26, 2013)
 § 3 of DOMA required that in
determining the meaning any federal
statute, regulation or ruling of federal
agencies,
 “marriage” means only a legal
union between one man and one
woman
 Held unconstitutional – violated equal
protection component of the Fifth
Amendment’s Due Process Clause
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DEFENSE OF MARRIAGE ACT (“DOMA”)
U.S. v. Windsor
(Decided June 26, 2013)
 FMLA leave to care for a legally




married same sex spouse with a
serious health condition or for
qualifying military leave
Tax treatment of employer provided
insurance coverage to same sex spouse
Multi-state employers face varying
state law definitions of “spouse”
Spousal privilege in federal
proceedings
Examine benefit plan definitions of
“spouse”
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LIMITATIONS PERIODS FOR
ERISA BENEFIT CLAIMS
Heimeshaff v. Hartford Accident Ins. Co. et al.
(Decided December 16, 2013)
 Here, limitations period began when
“proof of loss” was due under the
plan, even though lawsuit could not
be filed until plan’s internal claims
review process had been exhausted.
 Held: OK to start “shot clock” on
limitations period in ERISA benefit
plan before participant’s cause of
action even accrues, if period is
reasonable.
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LIMITATIONS PERIODS FOR
ERISA BENEFIT CLAIMS
Heimeshaff v. Hartford Accident Ins. Co. et al.
(Decided December 16, 2013)
 Court again emphasized importance
of enforcing plan terms.
 Review plan documents, including
SPD’s, to insure that plan limitations
periods are reasonable under
Heimeshaff.
 Consider amending plan documents to
add reasonable limitations period if
current plan has no limitation period.
13
“CHANGING CLOTHES” AND THE FLSA
Sandiffer v. U.S. Steel Corp.
(Decided January 27, 2014)
 Limited ruling affecting unionized
employers.
 Issue: Definition of “Changing Clothes”
under FLSA provision allowing employers
and unions to agree to exclude from
compensable time the time employees
spend changing clothes.
 Time spent donning and doffing
protective clothing – as opposed to
equipment – may be excluded by CBA.
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SOX WHISTLEBLOWERS
Lawson v. FMR LLC
(Decided March 4, 2014)
 SOX whistleblower provisions apply
to private companies providing
products or services to publicly traded
companies.
 Open question: Do SOX
whistleblower protections apply to
contractor’s employees only if the
whistleblowing relates to the
contractor’s work as a contractor for
the public company?
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SOX WHISTLEBLOWERS
Lawson v. FMR LLC
(Decided March 4, 2014)
 Private employers should:
 Determine what products or services
are provided to publicly traded
companies – and which employees
serve those customers.
 Be sure anti-retaliation policy covers
whistleblowing activity.
 Train supervisors regarding SOX
whistleblower provisions and the
impact on your company.
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SOX WHISTLEBLOWERS
Lawson v. FMR LLC (Cont’d.)
(Decided March 4, 2014)
 Encourage employees to raise
concerns of suspected fraud,
especially at public companies they
serve.
 Remember that employers face a
higher standard of proof in
defending SOX whistleblower
claims— “clear and convincing”
evidence that employee would have
faced same action regardless of
protected activity
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FICA TAX ON SEVERANCE PAY
U.S. Quality Stores, Inc.
(Decided March 25, 2014)
 Severance pay = wages and is subject
to FICA withholding tax.
 Employers that have not withheld
FICA on severance payments may
need to file amended returns.
 Open question: Whether
supplemental unemployment benefits
(paid via SUB plans) linked to receipt
of state unemployment benefits are
subject to FICA.
18
STILL PENDING
NLRB v. Noel Canning
 Issue: validity of recess
appointments of NLRB commissioners
 Impacts lots of NLRB actions, which
may have been taken without a
quorum if the recess appointments
are held to be invalid
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FOURTH CIRCUIT DECISIONS
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AFFIRMATIVE DEFENSE FOR EMPLOYER
Crockett v. Mission Hosp., Inc.
(Decided May 30, 2013)
 Upheld SJ for employer on sexual
harassment claim
 Keys:
 Sound anti-harassment policy and
complaint procedures
 Prompt investigation
 Plaintiff’s refusal to cooperate in
investigation established her
unreasonable failure to avoid harm
21
NLRB NOTICE POSTING RULE
Chamber of Commerce of U.S. v. NLRB
(Decided June 14, 2013)
 NLRB exceeded its authority by
issuing rule requiring employers to
post notice of employee’s NLRA rights
 NLRB serves statutorily defined
reactive roles—conducting
representation elections and
resolving ULP charges
 NLRA does not grant NLRB authority
to issue notice posting rule sua
sponte
22
SPINNING WAL-MART v. DUKES?
Scott et al. v. Family Dollar Stores, Inc.
(Decided October 16, 2013)
 Wal-Mart v. Dukes: allegations regarding
manager discretion over employee pay
were insufficient to satisfy commonality
requirement for class actions.
 Allegations distinguishable from Dukes:
 specific company-wide practices re:
employee pay
 discretionary authority exercised by
high-level managers
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SPINNING WAL-MART V. DUKES?
Scott et al. v. Family Dollar Stores, Inc.
(Decided October 16, 2013)
 Amendment was not futile--reversed
district court’s denial of motion to
amend
 Vigorous dissent challenging
majority’s interpretation of Dukes
 Stay tuned--we haven’t seen the last
of this case
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TEMPORARY IMPAIRMENTS UNDER ADA
Summers v. Altarum Inst., Corp.
(Decided January 23, 2014)
 Temporary impairment may be a
covered disability under ADA
Amendments Act.
 Must be sufficiently severe to limit a
major life activity
 Makes no difference if impairment is
due to temporary injury vs.
permanent condition
 Mitigating measures are irrelevant to
determination of disability
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TEMPORARY IMPAIRMENTS UNDER ADA
Summers v. Altarum Inst., Corp.
(Decided January 23, 2014)
Employers should:
 Make sure HR and supervisors
understand that temporary
impairments can trigger protection.
 If in doubt, err on side of assuming
condition is a disability
 Engage in interactive process to
determine if reasonable
accommodation is available without
undue hardship
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LIABILITY FOR 3RD PARTY
HARASSMENT
Freeman v. Dal-Tile Corp., et al.
(Decided April 29, 2014)
 Claims for Title VII harassment by
third parties are subject to same
standard for employer liability as
claims for coworker harassment.
 Employer is liable if:
 Knew or should have known of
harassment, and
 Failed to take prompt remedial
action reasonably calculated to end
the harassment
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LIABILITY FOR 3RD PARTY
HARASSMENT
Freeman v. Dal-Tile Corp., et al.
(Decided April 29, 2014)
 Supervisor failed to act, despite
having witnessed 3rd party’s offending
behavior and receiving complaints
from plaintiff
 After 3 years, plaintiff complained
directly to HR, which investigated and
barred communication with plaintiff
by 3rd party harasser
 Held: employer knew or should have
known and failed to act promptly.
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LIABILITY FOR 3RD PARTY HARASSMENT
Freeman v. Dal-Tile Corp., et al.
(Decided April 29, 2014)
 Per Vance v. Ball St. Univ., make clear
who is a supervisor—may impact
whether knowledge is imputed to
employer
 Train supervisors re: 3rd party liability
and importance of promptly escalating
complaints and observations
 Employer’s response must be prompt
and reasonably calculated to end the
harassment
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North Carolina
State Court Decisions
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BONUSES—NC WAGE & HOUR ACT
Morris v. Scenera Research, LLC
(Decided August 20, 2013)
 Jury’s award of bonus compensation
turned on questions of when bonus
was “earned” and whether bonuses
were “calculable” at time of
separation
 No written agreement or bonus plan
specifying:
 When bonus was earned
 Whether payment conditioned on
continued employment
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BONUSES—NC WAGE & HOUR ACT
Morris v. Scenera Research, LLC
(Decided August 20, 2013)
 Use written bonus and commission
plans to clearly define terms and
conditions
 Give timely written notice of changes
 Employer will bear the risk of
ambiguities or lack or clearly written
plans or agreements
32
CONTINUED ASSAULT ON
NONCOMPETES
 Two N.C. Ct. of Appeals cases deny
enforcement of noncompetes due to
scope of activity exceeding what was
necessary to protect employer’s
legitimate business interests.
 CopyPro, Inc. v. Musgrove (Feb. 4, 2014)
 Horner Intl. Co. v. McKoy (March 4, 2014)
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CONTINUED ASSAULT ON
NONCOMPETES
 Court could have easily denied
enforcement due to other factors—3
year term, no geographic limitation—
yet chose to focus on scope of activity
 Caution for employers!!
 Revisit your existing noncompetes to
reexamine them through the lens of
these cases and amend as needed
 Amendment may require new
consideration
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Legislative and Regulatory
Activity
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NLRB
THE CONTINUED QUEST FOR
RELEVANCE
 Section 7 of the NLRA:
 “other concerted activities for the
purpose of collective bargaining or
other mutual aid or protection.”
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NLRB
 Social Media Policies
 Confidential and Proprietary
Information
 “At will” statements in handbooks
 Challenges to termination of
employment
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EMPLOYER POLICIES HELD UNLAWFUL
BY NLRB
 Policy prohibiting gossip about
company, employees and customers
 Dress code prohibiting insignias or
message clothing
 Confidential information, defined to
include “personal or financial” info or
“any non-public” info
38
EMPLOYER POLICIES HELD UNLAWFUL
BY NLRB
 Policy prohibiting use of company
logo on social media sites
 “At will” clause in handbook that says
at will relationship cannot be
amended or modified
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EMPLOYER POLICIES/ACTIONS UPHELD
BY NLRB
 Prohibition on recording
conversations during working time
 Prohibition of display of negative
attitude toward customers and
coworkers
 Termination of employees for
Facebook chatter suggesting they
would ignore management’s
directions and run teen center’s
operations as they saw fit.
40
EMPLOYER POLICIES/ACTIONS UPHELD
BY NLRB
 Termination for Facebook comments
of personal contempt for supervisor—
not comments re: shared concerns re:
terms and conditions
 Statements limiting to certain officers
the authority to modify “at will”
relationship
 Statements requiring modification of
“at will” relationship to be in writing
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NLRB
 Fact specific/case-by-case
 Policy in question often not used as
basis for adverse action
 Use disclaimers emphasizing policy is
not intended to interfere with rights
to engage in concerted activity
 But—NLRB now says disclaimer in
acknowledgment may not suffice.
Instead, disclaimer may need to be
proximate to the policy in question.
74
EEOC GUIDANCE ON ACCOMMODATION
OF RELIGIOUS DRESS AND GROOMING
 EEOC’s default position: absent other
compelling circumstances, employers
are expected to modify usual dress
and grooming policies to
accommodate religious beliefs.
 Limited circumstances rise to undue
hardship: main exception is
workplace safety
 Customer preference ≠ undue
hardship
 Image or brand ≠ undue hardship
43
EEOC and FTC—BACKGROUND CHECKS
 Joint guidance re: background checks
 Two publications: one for employers,
one for applicants and employees
 Both agencies consider background
checks affecting employment to be a
priority
 EEOC and FTC may share information
44
FAIR LABOR STANDARDS ACT
Home Care Services
 DOL has finalized regs to apply FLSA
to workers employed by businesses
providing home care services
 Exemption for certain companionship
services is limited to family members
and similar caregivers
 Due to take effect January 1, 2015.
45
FAIR LABOR STANDARDS ACT
Potential Changes Re: OT Exemptions
 DOL to consider changing FLSA regs
re: executive, administrative and
professional overtime exemptions
 Potential increase of current
minimum salary level of $455/week
 Potential changes to the duties test
 Changes would have to be made via
formal rulemaking process
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Office Locations
•
•
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Charleston, SC
Charlotte, NC
Columbia, SC
Raleigh, NC
Spartanburg, SC
Keith Weddington
Direct Dial 704-335-9035
keithweddington@parkerpoe.com
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